Joseph Turk Mfg. Co. v. Singer Steel Co.

• Citation: 111 F. Supp. 485
• Decision Date: 12 December 1951
• Docket Number: Civ. A. No. 26814.
• Parties: JOSEPH TURK MFG. CO. v. SINGER STEEL CO.
• Court: U.S. District Court — Northern District of Ohio

111 F. Supp. 485

JOSEPH TURK MFG. CO. v. SINGER STEEL CO.

Civ. A. No. 26814.

United States District Court N. D. Ohio, E. D.

December 12, 1951.

Morris Berick and Edwin Knachel (both of Halle, Haber, Berick & McNulty), Cleveland, Ohio, for plaintiff.

Ezra Z. Shapiro and Joseph H. Persky, Cleveland, Ohio, for defendant.

McNAMEE, District Judge.

Plaintiff is a corporation organized under the laws of Illinois and is a citizen of that state. Its business is the manufacture of furniture.

Defendant, an Ohio corporation, is engaged in the business of warehousing and jobbing steel at Cleveland, Ohio.

Steel Producers, Inc., is an Ohio corporation with its main office at Dayton, Ohio and a rolling mill located at Toronto, Ohio.

This action is based upon the claim that 171 tons of steel which had been delivered to Steel Producers, Inc., under an agreement reserving title in plaintiff, were converted by the defendant.

Defendant denies the alleged conversion and asserts the additional defenses:

1. That the title to the steel had passed to Steel Producers, Inc.

2. If title had not passed, the transaction between plaintiff and Steel Producers, Inc., was a conditional sale, and plaintiff's failure to file the conditional sale agreement for record, as required by Section 8568, G.C. of Ohio, made plaintiff's reservation of title void as to defendant, a subsequent purchaser for value in good faith.

3. That plaintiff is estopped to assert that defendant converted the steel.

The record discloses a series of relevant primary and collateral transactions requiring for their exposition a somewhat lengthy statement of facts.

In May, 1948 the Joseph Turk Manufacturing Company purchased 1,000 tons of steel sheet bars from a mill at Portsmouth, Ohio. This purchase was made for plaintiff by Briggs & Turivas, acting through its Vice President, Harry Alpirn. Plaintiff proposed to have the sheet bars rolled into steel sheets for use in the manufacture of furniture.

In June, 1948 plaintiff entered into a contract with Steel Producers, Inc., wherein the latter agreed to roll 500 tons of steel sheet bars for the plaintiff at a cost of $39.95 per ton. In consideration thereof plaintiff agreed to sell to Steel Producers, Inc., the balance of 500 tons of steel sheet bars at a price of $105 per ton f. o. b. Toronto, Ohio, to be paid for by applying the cost of rolling the first 500 tons on the purchase price and paying the balance to plaintiff in cash.

It was also expressly agreed that the 500 tons of steel bars sold to Steel producers, Inc., were to remain the property of the Joseph Turk Manufacturing Company "until paid for by Steel Producers, Inc."

No formal conditional sale agreement was executed or recorded, as required by Section 8568 of the General Code of Ohio.

The 500 tons of sheet bar to be rolled for the Joseph Turk Manufacturing Company were received by Steel Producers, Inc., at Toronto, Ohio, between July 8 and July 17, 1948.

During the month of July, 1948 Albert Singer, President of the defendant company, learned of the transaction between plaintiff and Steel Producers, Inc. Singer obtained this information from David Stein, who had acted as agent for plaintiff in negotiating the transaction between plaintiff and Steel Producers, Inc.

On July 27, 1948 Albert Singer loaned Stein $2,500, taking as security therefor an assignment of Stein's commission agreement with plaintiff. About this time Singer, at the solicitation of Stein, was also considering making a loan to Steel Producers, Inc. In this connection he made a trip to Toronto, Ohio, with Stein to inspect the rolling mill of Steel Producers, Inc. Stein knew all of the facts connected with the transaction between plaintiff and Steel Producers, Inc., having received from the principals copies of the letters embodying the terms of their agreement. He claims to have given all this information to Singer. This is denied by Singer.

Early in August, 1948 defendant received an inquiry from one of its customers for a substantial amount of 13 gauge steel sheets. At this time the 500 tons of steel bar sold by Turk to Steel Producers had not been delivered; nor had these bars been manufactured or rolled by the mill at Portsmouth, Ohio. Both Stein and a representative of the Singer Steel Company called Harry Alpirn of Briggs & Turivas, who, at their request, obtained the consent of plaintiff to a change in the footweights of the undelivered 500 tons of steel bars so as to make them suitable for rolling into steel sheets of 13 gauge. The telephone call received by Alpirn from defendant was from either Albert Singer, President, or Mervas, then General Manager of the Singer Steel Company.

In this telephone conversation either Singer or Mervas told Alpirn that the Singer Steel Company "wanted to get the sheet bar rolled to 13 gauge." Alpirn inquired what footweight would be required, and was informed by the representative of the Singer Company to whom he was talking, that the mill would be able to make that determination from the size of the steel sheets that were specified.

In this same telephone conversation Alpirn told the Singer representative "that the sheet bar belonged to the Joseph Turk Manufacturing Company and we would have to take it up with them before we could get permission to change the size of the sheet bar."

After obtaining the consent of the Joseph Turk Manufacturing Company to the desired change in the specifications of the steel bars, Alpirn so informed Stein, who notified Singer that Steel Producers, Inc., would be able to fill defendant's order for 13 gauge steel.

On August 9, 1948 Singer Steel Company placed an order with Steel Producers, Inc., for approximately four hundred tons of 13 gauge steel at $11.50 per hundred-weight, delivery to be made within four weeks. This order was accepted by Steel Producers, Inc., on September 21, 1948.

Between September 28 and October 14, 1948 Singer paid $30,000 in advance to Steel Producers, Inc., to apply on its order of August 9, 1948 and made an additional payment of $5,000 on November 29, 1948.

The 500 tons of steel sold by the Joseph Turk Manufacturing Company to Steel Producers was shipped from the mill at Portsmouth, Ohio, on or about September 27, 1948 and received by Steel Producers, Inc., in Toronto, Ohio, on September 28, 1948. Without making payment for the steel bars, Steel Producers, Inc., used a portion thereof to fill defendant's order.

Steel Producers, Inc., commenced shipments on Singer Steel's order for 13 gauge steel on October 23, 1948. A total of 145.8 tons were delivered pursuant to Singer's order. This was processed out of 171 tons of sheet bar which was received by Steel Producers, Inc., from the Joseph Turk Manufacturing Company on September 28, 1948.

In October, 1948 Singer, together with Stein and one Galente, organized the G & S Corporation. Singer had a one-third interest in this company. Later in the same month the G. & S. Corporation loaned Steel Producers, Inc., the sum of $100,000, taking as security therefor a chattel mortgage on the equipment of Steel Producers, Inc., and an assignment from all of its stockholders of their interest in the corporation. At the same time the G & S Corporation obtained signed, undated resignations from the officers of Steel Producers, Inc.

On December 7, 1948, after learning that Steel Producers, Inc., had used plaintiff's steel in filling the order for defendant, Joseph Byron, Secretary of the Joseph Turk Manufacturing Company, together with plaintiff's counsel, Philmore Haber, and Harry Alpirn, met Albert Singer in the latter's office. Also present at this meeting were Frank A. Weidman, President of Steel Producers, Inc., and Messrs. Polizzi and Novasel, who were associated with Steel Producers, Inc.

At this meeting Singer admitted that he knew that steel of the Joseph Turk Manufacturing Company was used by Steel Producers, Inc., in filling defendant's order. Singer also promised to pay for the steel that was used. In connection with these admissions and promises by Singer there was discussed a purchase by the Singer Steel Company from plaintiff of the unused portion of the latter's steel at the mill in Toronto, Ohio. Thereafter counsel for the Singer Steel Company and counsel for the Joseph Turk Manufacturing Company met on several occasions and prepared drafts of an agreement embodying the proposals that defendant pay the Joseph Turk Manufacturing Company for the 171 tons of steel used by Steel Producers, Inc., in filling defendant's order and the purchase by defendant of the unused portion of the steel belonging to Turk. While counsel were attempting to arrive at a satisfactory written agreement, Singer became convinced that he could not get the steel rolled at Steel Producers' mill and refused to execute the contract.

No payment was made by Steel Producers, Inc., for the 500 tons of steel bars purchased by it from plaintiff.

There can be no doubt that plaintiff's sale of 500 tons of steel bars to Steel Producers, Inc., was a conditional sale.

"A contract which provides that the chattel sold is to remain the property of the vendor until the purchase money is paid is a conditional sale contract." Bellish v. C. I. T. Corp'n, 142 Ohio St. 36, 50 N.E.2d 147, 150; Speyer v. Baker, 59 Ohio St. 11, 51 N.E. 442; Schlitt v. Cleveland Store Fixture Co., 22 Ohio Cir.Ct.R.,N.S., 168; 35 O. J. Sec. 260, p. 999.

As between the parties an unrecorded conditional sale is valid. 35 O.J. 1009; York Mfg. Co. v. Cassell, 201 U.S. 344, 26 S.Ct. 481, 50 L.Ed. 782.

Section 8568, G.C., provides in effect that a conditional sale agreement that is not executed and filed for record as therein specified shall be void as to "subsequent purchasers and mortgagees in good faith and for value, and creditors".

The purpose of the recording statute is to prevent secret liens and to protect "subsequent purchasers and mortgagees in good faith and for value, and...