In re Merrill & Baker
| Decision Date | 14 February 1911 |
| Docket Number | 142. |
| Citation | 186 F. 312 |
| Parties | In re MERRILL & BAKER. |
| Court | U.S. Court of Appeals — Second Circuit |
The legal questions before the referee and this court are covered by a stipulation as to the facts embracing many matters quite immaterial to a clear statement of the problem presented.
What is material seems to me this: Mr. Jackson was prepared to lend money to the business of his friend, Mr. Merrill. Merrill's business was that of the bankrupt corporation. That corporation conducted its affairs in part through certain subsidiary corporations whose stock was substantially owned by Merrill & Baker. So far as Jackson was concerned the corporations of Merrill & Baker, of C. T. Brainard & Co. and others were all alike-- they were merely the different parts of his friend Merrill's business. In this state of feeling Jackson, at the request of Merrill, loaned to C. T Brainard & Co. (a corporation controlled by Merrill & Baker) $24,387.50, thereupon Brainard & Co. deposited with Jackson certain collateral for this loan, giving Jackson quite ample powers to sell the collateral if the loan was not repaid 'within 60 days after demand.' The agreement of pledge then continued, 'In case the proceeds of sale (of the pledged property) shall be insufficient to pay the principal, interest and expenses as aforesaid,' the Brainard Company promises to pay Jackson 'the amount of the deficiency forthwith after such sale with interest. ' Contemporaneously with the making of this loan and the execution of the agreement of pledge the bankrupt (Merrill & Baker) executed a document stating that it 'hereby guarantees the repayment of said ($24,387.50) to said W. M. Jackson by the said C. T. Brainard & Company in accordance with the written agreement' hereinbefore referred to. The actual and expressed consideration for this guaranty was that most of the money loaned by Jackson to Brainard & Co. was to be immediately handed over to the controlling corporation of Merrill & Baker for its own uses and purposes. The amount of collateral deposited with Jackson by Brainard & Co. under the agreement above referred to was in face value double the amount of the loan, and it was honestly thought to be worth the larger sum, or approximately that.
While this loan was unpaid and while the collateral was unimpaired, Jackson again at the request of Merrill loaned Brainard & Co. the further sum of $9,740, and the Brainard Company executed an agreement whereby it covenanted that the collateral previously deposited with Jackson to secure the $24,000 loan 'shall be held by him as security for the further sum of $9,740 this day loaned * * * giving to said Jackson * * * the same authority over said collateral for the payment of this additional loan that it gave to him' in the pledge agreement first above referred to. Merrill & Baker were to receive the benefit of this loan also, and accordingly that corporation in writing contemporaneously guaranteed to Jackson 'the repayment of said sum.' Merrill & Baker became bankrupt before either of these loans had been repaid by Brainard & Co. in whole or in part and while the collateral held as security for both was still intact in the hands of Jackson or his agents, and before any demand had been made on Brainard & Co. for the payment of either advance. Within a year after adjudication, Jackson filed claims in this proceeding. In each claim he asserted himself to be a creditor of Merrill & Baker for the full amount of his loan to Brainard & Co., although he still held the collateral and had made no demand on Brainard & Co. for payment until after the declared bankruptcy of Merrill & Baker.
The contract made by the corporation of Merrill & Baker on the occasion of Mr. Jackson making each of his loans was admittedly one of guaranty. Let it also be assumed that a guaranty is a mercantile instrument to be construed according to what is to be fairly presumed to have been the understanding of the parties as ascertained from the circumstances accompanying the whole transaction. Lee v Dick, 10 Pet. 482, 9 L.Ed. 503; Mauran v. Bullus, 16 Pet. 528, 10 L.Ed. 1056. $2$ It will, however, still remain true that this particular contract of guaranty was made within the state of New York...
To continue reading
Request your trial
-
Maynard v. Elliott Varney v. Same Smith v. Same Rutherford v. Same
...of the creditor, and dependent upon an event so fortuitous as to make it uncertain whether liability will ever attach. In re Merrill & Baker (C. C. A.) 186 F. 312. Such a claim could not be proved under the Act of 1841 although in terms permitting proof of contingent claims. Riggin v. Magwi......
-
Manhattan Properties v. Irving Trust Co., 465.
...that the solvency of the maker would be determined in season. When that is so, no practical difficulty arises. But in In re Merrill & Baker, 186 F. 312 (C. C. A. 2), there appears to have been no obstacle to such a liquidation of the claim, and no reason to take a different view from In re ......
-
In re Metropolitan Chain Stores
...of the creditor, and dependent upon an event so fortuitous as to make it uncertain whether liability will ever attach. In re Merrill & Baker (C. C. A.) 186 F. 312. Such a claim could not be proved under the Act of 1841 although in terms permitting proof of contingent claims. Riggin v. Magwi......
-
IN RE WISE SHOES
...Maynard v. Elliott, 283 U. S. 273, 278, 51 S. Ct. 390, 75 L. Ed. 1028; Riggin v. Magwire, 15 Wall. 549, 21 L. Ed. 232; In re Merrill & Baker (C. C. A.) 186 F. 312. The claim based upon the bankrupt's covenant to make good any deficiency in rents over the next seventeen years was a claim not......