Lazear v. Ohio Valley Steel Foundry Co.
| Decision Date | 02 February 1909 |
| Citation | 63 S.E. 772,65 W.Va. 105 |
| Parties | LAZEAR et al. v. OHIO VALLEY STEEL FOUNDRY CO. et al. |
| Court | West Virginia Supreme Court |
Submitted September 11, 1908.
Syllabus by the Court.
Although section 3101, Code 1906, by recording notice thereof, as prescribed, gives the seller right of reservation of title to goods and chattels sold, as security for unpaid purchase money, nevertheless, when such reservation of title relates to property sold to special receivers, to be used by them in original construction and completion of a manufacturing plant, which is subject to prior liens of creditors, and also to the prior and paramount lien of receivers' certificates, fixed by decree under which such special receivers are authorized to act, such reservation of title to the property sold, affixed and become a part of such plant will be protected only when it can be done without detriment or injury to the rights and priorities of such prior lienors.
[Ed Note.-For other cases, see Receivers, Dec. Dig. § 77 [*]]
Where a sale of such manufacturing plant has been decreed, and sale made as a whole, by commissioners, and reported and confirmed to the purchaser, without exception, and the proceeds thereof are inadequate to pay the holders of such receivers' certificates, the court will not attempt to adjust alleged equities of vendors by virtue of such reservation of title to the property purchased from them and used by such special receivers in original construction and completion of such plant.
[Ed Note.-For other cases, see Receivers, Dec. Dig. § 145. [*]]
Where special receivers of a manufacturing plant are authorized by decree to issue and sell a limited amount of receivers' certificates, estimated as adequate for completing the plant and putting it in operation, such certificates to constitute a first lien on all and singular the real estate and personal property, rights, franchises, and assets, of whatsoever kind and wheresoever situate, then belonging to the defendant company, or thereafter acquired, and also upon the income and earnings of said property, and also to be prior to all liens or claims against said company existing at the time of the issuance thereof, and with authority given by such decree "to enter into such contracts and agreements as may be necessary and expedient for the maintaining and preserving of said property, the completion of the said plant, and the operation of the same," such decree will not be construed as implying authority, on grounds of necessity or expediency, to purchase property for original construction on credit, or partly on credit, with reservation of title to the sellers as security for unpaid purchase money, so as to endanger the security of the holders of receivers' certificates fixed by such decree.
[Ed. Note.-or other cases, see Receivers, Dec. Dig. § 128. [*]]
Where such receivers' certificates are issued, and the court, as in this case, impresses upon them a preferential lien, good faith requires that its promise should be redeemed, in the absence of fraud shown in the issuance thereof.
[Ed. Note.-For other cases, see Receivers, Cent. Dig. §§ 205-222; Dec. Dig. § 128. [*]]
The rights of such certificate holders are so far vested rights that a court is as powerless to divest them as it would be to divest or displace any other prior lien without the consent of the lienor.
[Ed. Note.-For other cases, see Receivers, Cent. Dig. §§ 202-222; Dec. Dig. § 128. [*]]
A receiver is an officer of the court, and is not in any sense an agent or representative of either party to the cause; he is not such general agent as to have any implied power; and a receiver can make no contract, effectual against the trust, which is not first lawfully authorized or subsequently ratified by the court.
[Ed. Note.-For other cases, see Receivers, Cent. Dig. §§ 173-175; Dec. Dig. § 95. [*]]
For other definitions, see Words and Phrases, vol. 7, pp. 5993-5997; vol. 8, pp. 7780, 7781.]
Where a person tacitly encourages an act to be done, he cannot afterwards exercise his legal rights in opposition to such consent, if his conduct or acts of encouragement induced the other party to change his position so that he will be pecuniarily prejudiced by the assertion of such adversary claim.
[Ed. Note.-For other cases, see Estoppel, Cent. Dig. §§ 144, 145; Dec. Dig. § 58. [*]]
Appeal from Circuit Court, Wetzel County.
Bill by George W. Lazear and others against the Ohio Valley Steel Foundry Company and others. Decree for plaintiffs, and defendants Mackintosh, Hemphill & Co. appeal. Modified and affirmed.
Thos. P. Jacobs, for appellants.
Hall & Hall, Wallace & Watson, and E. O. Keifer, for appellees.
MILLER, P.
The decrees appealed from were pronounced in two suits, consolidated, brought by lien creditors against defendant corporation, insolvent, for the appointment of a receiver of its property, located at Paden City, Wetzel county, and to subject it to the payment of their liens. At the time of the institution of the suits the plant had not been completed. Much in building and necessary machinery remained to be supplied. A vendor's lien of $15,000 remained on the land, and, in its then condition, creditors had little chance of realizing much by a sale of the property. With the purpose of trying to better conditions, the special receivers, upon their petition, all the creditors acquiescing, by order entered on June 6, 1904, were authorized to issue and sell 500 receivers' certificates, of $100 each, aggregating $50,000, the same to constitute a first lien on all and singular the real and personal property, rights, franchises, and assets, of whatsoever kind and wheresoever situate, then belonging to the defendant company, or thereafter acquired; and also upon the income and earnings of said property; and also to be prior to all liens or claims against said company existing at the time of the issuance thereof, no certificates to be sold until at least $40,000 thereof should be subscribed, to be equal in priority, without regard to date of issuance. The receivers were authorized and directed to apply the proceeds of the sale thereof to the payment of the expenses of maintaining and preserving the property, and of completing the mill, in course of construction, ready for operation, and in the operation thereof when completed; and to that end they were authorized "to enter into such contracts and agreements as may be necessary and expedient for the maintaining and preserving of said property, the completion of the said plant, and the operation of same." They were also authorized to apply $15,000 of the proceeds of the sale of said certificates to secure a release of said purchase-money lien. The said order also provided that nothing therein should in any way affect the priority of liens or equities as between creditors.
The record shows that, of more than $40,000 receivers' certificates subscribed for, $34,900 were actually sold, and from the cash proceeds thereof $6,837.86 was paid appellants Mackintosh, Hemphill & Co.; $4,300 were issued to appellants Hoovens-Owens-Rentschler Company in part payment of their account, and $2,500 to J. E. Schlieper & Co.; $900 to D. L. Gillespie & Co., and $500 to Savage Fire Brick Company, in part payment for other machinery and supplies purchased by said special receivers from them; and, of the remaining certificates sold and purchased by the appellees, Harry Watson holds $20,900, and Thomas Watson $1,700.
August 26, 1904, the receivers entered into a contract with the Hoovens-Owens-Rentschler Company for certain machinery to be manufactured, placed in and attached to said plant, at the price of $13,000, on the terms of one-third cash on bill of lading, one-third in 9 months, and one-third in 12 months with interest. Said contract, not recorded in the county clerk's office until January 7, 1905, also contained the following provision relied on:
And on October 3, 1904, the receivers also undertook to accept two propositions in writing of Mackintosh, Hemphill & Co., one dated September 16, 1904, the other dated September 26, 1904, by the first of which they purchased one bar shear, with steel casting gears, with electric motor for driving same, at the price of $1,050; and by the second, a lot of other machinery and appliances, at the price of $11,000, all to become affixed to the plant; payments on both contracts to be made on monthly estimates of material furnished and work done, of which 80 per cent. was to be paid monthly until 60 per cent. of the price should be paid, and if said 60 per cent. should not be paid when said machinery should be completed the same to be held until such payment was made, the remaining 40 per cent. to be paid in one year from date of shipment. Each of said contracts or propositions also contained the following provision, relied on by appellants: "The title or ownership of the machinery called for under the terms of this contract shall remain with us until full and final payment shall have been made according to the terms herein stated, until notes, if any, shall have been matured, and have been...
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