Geilfuss v. Corrigan

• Decision Date: 23 February 1897
• Citation: 95 Wis. 651,70 N.W. 306
• Parties: GEILFUSS v. CORRIGAN ET AL.
• Court: Wisconsin Supreme Court

95 Wis. 651

70 N.W. 306

GEILFUSS

v.CORRIGAN ET AL.

Supreme Court of Wisconsin.

Feb. 23, 1897.

Appeal from circuit court, Milwaukee county; D. H. Johnson, Judge.

Action by A. B. Geilfuss, assignee and receiver of the Commercial Bank of Milwaukee, against James Corrigan, Stevenson Burke, and others, to recover the value of certain land. There was a judgment for plaintiff, and defendants Corrigan and Burke appeal. Reversed.

This is an action to recover the value of 10,800 tons of pig iron levied on by the sheriff of Mercer county, Pa., on the 19th day of July, 1893, upon an execution issued out of the court of common pleas of Mercer county, Pa., upon a judgment in favor of Price McKinney, receiver of Corrigan, Ives & Co., for $178,908, against the Douglas Furnace Company, a corporation under the laws of the state of Illinois. The title to the iron is the question in controversy in this case. The plaintiff, as assignee of the bank, claims a right in this iron, as pledgee of the Buffalo Mining Company, a Wisconsin corporation, and of Ferdinand Schlesinger, to secure certain loans made by the bank to the Buffalo Mining Company and to Schlesinger. The defendants, who are members of the firm of Corrigan, Ives & Co., justified the seizure and subsequent sale of the iron under the said execution against the Douglas Furnace Company, on the ground that the attempted transfer or pledge of the same was fraudulent and void as against creditors of the Douglas Furnace Company.

The action was tried by the court, without jury, and the facts developed upon the trial were substantially as follows:

In the year 1893 the Buffalo Mining Company was a mining corporation, engaged in mining iron ore in the northern peninsula of Michigan. and was a lessee of the Buffalo Mine and a number of others. At the same time, the Douglas Furnace Company was an Illinois corporation, engaged in smelting iron ore and manufacturing pig iron in Mercer county, Pa., where it owned three furnaces near Sharpsville and Sharon, in said county, which furnaces were known as the Sharpsville, Douglas, and Sharon Furnaces, respectively. For some time prior to the year 1893, and up to the 7th day of July in that year, the defendants Corrigan and Burke, with one Franklin T. Ives (who was not served on, and did not appear in this action), were copartners, doing business at Cleveland, Ohio, under the firm name of Corrigan, Ives & Co., and were engaged in the business of selling iron ore and making advances thereon for a commission as factors. Both of the corporations were under the absolute control of Ferdinand Schlesinger, who owned all, or nearly all, of the stock in each corporation. Schlesinger's business was conducted at the city of Milwaukee. One Max Hirschfeld was the president of the Douglas Furnace Company, and there seems to have been nominally a board of directors of that corporation. Hirschfeld's place of business was at Sharpsville, Pa., and he was the active manager of the furnace company's business, acting entirely under the direction of Mr. Schlesinger. The office of the Buffalo Mining Company seems to have been at Milwaukee, and this corporation also, while it nominally had officers, was absolutely under the control of Mr. Schlesinger, and its officers did his bidding. In the early part of the year 1893, both of the corporations were doing a large business in their respective fields, and so was the firm of Corrigan, Ives & Co. In February, 1893, a contract was made by the Buffalo Mining Company with Corrigan, Ives & Co., whereby the latter firm made advances to the Buffalo Mining Company, and chartered vessels for the transportation of its ore, and handled the ore output of the Buffalo Mining Company, as factors upon commission. They were also to collect the proceeds of sales of ore which, when collected, were to be applied in payment of the advances made to the mining company under this contract. Between February 1st, and about the 1st of July, 1893, Corrigan, Ives & Co. had received and handled from the Buffalo Mining Company ore amounting in value to between $200,000 and $300,000, and had made advances thereon to the Buffalo Mining Company amounting to about $200,000. It appears that Corrigan, Ives & Co. did not know, prior to the month of June, 1893, of the relationship of Schlesinger to the Douglas Furnace Company. Between January 1 and July 18, 1893, Corrigan, Ives & Co. sold and delivered to said Douglas Furnace Company large quantities of iron ore, nearly all of which came from the Buffalo Mining Company, upon which there was a balance owing on the 18th of July, 1893, of $178,908.85, part of which had matured, and part had not then matured. During the time from January to July, 1893, the Douglas Furnace Company was actively engaged in smelting iron ore, and making pig iron, and selling the same from its furnaces and yards in Pennsylvania, such pig iron being nearly all made from the ore of the Buffalo Mining Company sold to the furnace company by Corrigan, Ives & Co. During the aforesaid time some 70,000 tons of pig iron were manufactured by the furnace company, and, on the 18th of July aforesaid, there were left on hand in its yards 22,000 tons of such pig iron. On this 18th day of July, 1893, therefore, Corrigan, Ives & Co. had made advances upon ore to the Buffalo Mining Company of about $200,000; the Douglas Furnace Company was indebted to Corrigan, Ives & Co. in the sum of more than $178,000, as the purchase price of ore sold to it; and at the same time the Douglas Furnace Company had in its yards 22,000 tons of pig iron manufactured from the ore which had been sold to it by Corrigan, Ives & Co. In January, 1893, Mr. Schlesinger became desirous of borrowing money for his various enterprises of the banks in the city of Milwaukee, by means of so-called “storage warrants” upon the pig iron which was accumulating in the furnace yards at Sharpsville. On the 21st of January, he addressed a letter to Mr. Hirschfeld, at Sharpsville, as follows: “I see that quite an amount of pig iron is accumulating. What do you think of taking out some storage warrants against such iron, or could you, without taking out storage warrants, borrow some money on the pig iron in the yards? Please let me know your suggestion about it, and it would be very desirable if you could have the pig iron turned into money right along.” Mr. Hirschfeld replied by letter on the 25th of January, in which he said that the only way of borrowing money on the pig iron would be by taking out storage warrants through the medium of a storage company, but that such a course would be expensive, and would require a sublease of the iron yards, and that, as he did not need any large amount of money before the middle of February, he would have time to look the matter up and make a report. About the 1st of February, 1893, Mr. Hirschfeld was in Milwaukee, and had a personal consultation with Mr. Schlesinger on the subject of issuing storage warrants, and Mr. Hirschfeld then explained to Mr. Schlesinger that it was very expensive to have storage warrants issued by a storage company; that they charge so much a month for each ton of pig iron covered by the warrants. Mr. Schlesinger then said: “I do not think we need a storage company. I think we can issue our own warrants,”--and he told Hirschfeld he would get some warrants printed, and send them down to Sharpsville, and he (Hirschfeld) could fill them out as he (Schlesinger) would write for them. Mr. Schlesinger then had 15 formal storage warrants written out in the office by a typewriter, and Mr. Hirschfeld signed them, as president of the Douglas Furnace Company. Just how many tons of pig iron were represented in these 15 warrants does not definitely appear. The following was in the form of the warrants:

Warrant.

+-----------------------------------------------------------------------------+
                ¦Number  ¦Amount received, ______ tons. Less loss in weight from handling by  ¦
                ¦______. ¦scale, rust, or sand, if any, not to exceed ______ tons.            ¦
                +-----------------------------------------------------------------------------+
                

Douglas Furnace Company, Sharpsville, Mercer Co., Pa., hereby acknowledge to have received ______ tons of pig iron, and will deliver the same, less loss in weight from handling by scale, rust, or sand, if any, not to exceed ______ tons, to the order of Buffalo Mining Company, at its yards at Sharpsville, Pa., upon payment of storage and charges, and the surrender of this warrant properly indorsed.

Memorandum.

Charges from 189-, viz.: Labor included, ______ cts. per ton. Storage, per month, ______ cts. per ton. If reweighed when delivered, ______ cts. per ton. Storage charges named above payable every six months from date. If not paid, interest will be charged. Reported brand ______, said to be ______, record book page ______. Sharpsville, Mercer county, Pa., ______, 1893.

By Douglas Furnace Company.

Max Hirschfeld, President.

F. F. Osborne, Secretary.

Mr. Hirschfeld then returned to Sharpsville, and, on the 8th of February, Mr. Schlesinger, through his secretary, Mr. Krielsheimer, wrote a letter to Mr. Hirschfeld in which he said: “You may charge the issued storage warrants to the Buffalo Mining Company at the market price; but it is best that you charge them at round figures per ton,--say $12.50 or $13.00,--so that you may credit the warrants at the same figure when we return them.” On the 11th day of February, Mr. Schlesinger wrote again to Hirschfeld, as follows: “We have this day forwarded to you by express a book of storage warrants. Of the warrants you left with us here, we have used 1 to 15, inclusive, and herewith return to you Nos. 16 and 17, for which you will discharge our account. On receipt of the book sent you to-day, you will please issue for the inclosed two new warrants, and also issue and send us as many more 100 and 200 ton warrants as you have pig iron against which you have...