H. K. Porter Co. v. Boyd

• Decision Date: 03 March 1909
• Docket Number: 26.
• Citation: 171 F. 305
• Parties: H. K. PORTER CO. v. BOYD. E. I. DUPONT CO. v. JOHN SHIELDS CONST. CO.
• Court: U.S. Court of Appeals — Third Circuit

171 F. 305

H. K. PORTER CO. v. BOYD.

E. I. DUPONT CO. v. JOHN SHIELDS CONST. CO.

No. 26.

United States Court of Appeals, Third Circuit.

March 3, 1909

R. W Archbald, Jr., for appellant.

R Stuart Smith, for appellee.

Before GRAY, Circuit Judge, and BRADFORD and LANNING, District Judges.

BRADFORD District Judge.

In December, 1905, the court of chancery of New Jersey, on a bill filed by certain stockholders and creditors of The John Shields Construction Company, hereinafter referred to as the construction company, a corporation of that state, on behalf of themselves and other creditors and stockholders of that company, appointed a receiver for it on the ground of insolvency. Subsequently ancillary proceedings were instituted in the circuit court of the United States for the eastern district of Pennsylvania, wherein Halsey M. Barrett was, December 30, 1905, appointed ancillary receiver of the construction company, and thereafter, certain vacancies by resignation having occurred in the ancillary receivership William H. Boyd was, July 13, 1907, appointed such ancillary receiver. He duly qualified for the discharge of his official duties July 29, 1907. The appeal in this case was taken by the H. K. Porter Company, hereinafter referred to as the Porter company, a corporation of Pennsylvania, from a decree in the ancillary proceedings, denying the petition of that company for an order on the ancillary receiver of the construction company to pay to the former company $2,300 being a part of the agreed value of two locomotives hereinafter mentioned, sold by order of the court below. It appears from the record that in May, 1905, the Porter company contracted through its representatives and agents, Wonham & Magor, to sell two locomotives to the construction company and deliver the same to that company at Quarryville, Pennsylvania, for the price of $4,900, to be paid and secured as follows; one-third in cash on shipment, one-third in a note at sixty days, with interest at 6% added, and the remaining third in a note at ninety days, with interest at the same rate added. Pursuant to the above contract the Porter company duly delivered to the construction company at the stipulated place the locomotives, but the latter company wholly failed to perform its part of the contract; neither paying cash nor giving any note or notes on account of the purchase price. But such default did not prevent the property in the locomotives from passing from the Porter company to the construction company. The correspondence and transactions between the parties in May, 1905, constituted both in form and intention a contract of sale followed by delivery of the locomotives. Whether or not the sale could have been avoided for fraud is not a question before us. No fraud in the transaction is alleged against the construction company. Nor was any attempt made by the Porter company aside from procuring the execution of the written instrument of October 16, 1905, to disaffirm or to avoid the sale. There can be no doubt that the construction company in May, 1905, became the unconditional owner of the two locomotives and, notwithstanding its indebtedness for the purchase price, continued to be such owner until the execution of the written instrument above referred to; and during all that time and thereafter, and until the ancillary receiver of the construction company sold them by order of court, the possession of the locomotives continued in that company or its ancillary receiver. If the Porter Company at any time had, by reason of mere failure on the part of the construction company to comply with the terms of payment, a right to reclaim the locomotives and avoid the sale, there was admittedly such delay by the Porter company as to constitute a waiver. The record does not disclose any conduct, act or declaration on the part of the Porter company or construction company prior to the latter part of September, 1905, by way of disaffirmance or inconsistent with an unconditional sale of the locomotives to and their ownership by the construction company. Indeed, the controlling weight of evidence negatives the existence of any intention on the part of either of the two companies before that time to disclaim, disaffirm or otherwise avoid the sale and terminate ownership by the construction company. No redelivery of the locomotives to the Porter company was made or requested. They remained in the possession of the construction company and its ancillary receiver until sold pursuant to the order of the court below. The Porter company repeatedly attempted to collect from the construction company the purchase price, but was unsuccessful. Thus the transaction prior to the correspondence and negotiations between the two companies in the latter part of September, culminating in the execution of the written instrument of October 16, 1905, presented the aspect of and was an absolute sale and delivery of the locomotives to and their ownership by the construction company, and an indebtedness of that company to the Porter company for the whole purchase price with interest. The above mentioned written instrument relates to the two locomotives in question, was executed under seal by and between the Porter company as party of the first part and the construction company as party of the second part, and its body, so far as material to consider in this connection, reads as follows:

'This Indenture, made this sixteenth day of October, A.D. 1905, between H. K. porter Company, of Pittsburgh, Pennsylvania, party of the first part, and The John Shields Construction Co., party of the second part, Witnesseth, That the said party of the first part hath let, and by these presents doth let unto the said The John Shields Construction Co., party of the second part, two certain locomotive engines, * * * for the term of ninety days from date, and for the sum of five thousand ninety one dollars and fifty-one cents, to be paid in the following manner, to wit: Cash, to be paid at once, $1,000; The John Shields Construction Co.'s 60 days' note, dated October 16th, 1905-- due December 15th, 1905, $2,040.70; The John Shields Construction Co.'s 90 days' note, dated October 16th, 1905-- due January 14th, 1906, $2,050.81.

'And It Is Further Agreed, by and between the parties to these presents, that if default be made in the payment of the first, or any of the above named instalments or payments, or if said party of the second part shall undertake to dispose of said locomotive engines, or if the same shall be attached, levied upon, or taken by a third party, then it shall be lawful for, and the said party of the first part may re-enter into possession of said locomotive engines, so described as aforesaid, take away, repossess and enjoy the same as though these presents were not made; but that the re-entry by said party of the first part and repossession of said engines, shall not operate as a payment of the indebtedness of the said party of the second part above contracted, nor discharge said party of the second part from liability for the same; but the said party of the first part shall have the right to dispose of said engines at public or private sale, in good faith without notice, and after payment of costs and expenses of said sale and of said retaking and the other expenses growing out of the default of said party of the second part, shall credit the net proceeds thereof upon the indebtedness of said party of the second part, and if the same shall not be sufficient to pay the full amount of said indebtedness, the said party of the second part shall be liable for, and will at once pay over the balance thereof.

If there be any surplus, the same shall be paid over by the party of the second part. And the said party of the second part covenants and agrees that the said locomotive engines shall be taken to their railroad at Quarryville, in the State of Pennsylvania, and there kept and used, and not removed from the possession and control of the said party of the second part without the written consent of the party of the first part thereto first had and obtained; and at the expiration or sooner determining of the said term, he will quit and surrender the said locomotive engines in as good condition as reasonable wear and use will permit. And the said party of the first part hereby covenants and agrees that the said party of the second part, on paying the above specified instalments, and performing the covenants aforesaid, shall and may peaceably and quietly have, hold and enjoy the said locomotive engines, for the said term. And the said party of the first part hereby covenants, promises and agrees to and with the said party of the second part, that if the said party of the second part shall well and truly keep the covenants herein made, and shall pay the aforesaid instalments, as the same shall become due and payable, and if this lease shall not be determined sooner, by consent or otherwise, they, the said party of the first part, will make, execute and deliver to the said party of the second part, a good and sufficient Bill of Sale for said locomotive engines, the consideration whereof shall be the amount of the above named payments, received for the said term, making in all the sum of five thousand ninety one dollars and fifty-one cents.'

The Porter company relies upon the above instrument to sustain its alleged right to recover from the ancillary receiver the $2,300 set apart by agreement to represent the two locomotives sold by him by order of court. Aside from the contract of October 16, 1905, the claim made by the Porter company would be wholly devoid of color. It is contended that the contract was a lease of the locomotives for a term of ninety days and under its provisions the lessor was,...