Manhattan Trust Co. v. Sioux City Cable Ry. Co.

• Decision Date: 28 October 1896
• Citation: 76 F. 658
• Parties: MANHATTAN TRUST CO. v. SIOUX CITY CABLE RY. CO. (WESTINGHOUSE ELECTRIC & MANUFACTURING CO. et al., Interveners).
• Court: U.S. District Court — Northern District of Iowa

76 F. 658

MANHATTAN TRUST CO. v. SIOUX CITY CABLE RY. CO. (WESTINGHOUSE ELECTRIC & MANUFACTURING CO. et al., Interveners).

United States Circuit Court, N.D. Iowa, Western Division.

October 28, 1896

Swan Lawrence & Swan, for complainant.

Wright & Hubbard, for intervener Sioux City Electric Co.

Joy Call & Joy, for intervener Westinghouse Electric &amp Manufacturing Co.

SHIRAS District Judge.

The original bill in this case was filed by the Manhattan Trust Company for the purpose of foreclosing a mortgage upon the property of the Sioux City Cable Company, and a receiver of the property was appointed in the usual manner. The case is now before the court upon petitions of intervention filed on behalf of the Westinghouse Electric & Manufacturing Company and the Sioux City Electric Company, presenting the question of the rights of the parties to a certain electric generator which was furnished by the Westinghouse Company under a written contract entered into with John Peirce, either in his individual capacity, or as president of the Sioux City Cable Company, and dated April 20, 1894. In this contract it is provided that:

'The title and ownership of the property called for and furnished under the terms of this agreement shall remain in the company until the full and final payments therefor shall have been made by the purchaser according to the terms agreed upon, and until notes, if any, shall have matured and been settled in full.'

This contract was not acknowledged or recorded, and for that reason it is claimed to be of no force against the rights of the bondholders represented by the Manhattan Trust Company. When this contract was entered into, the property of the cable company was in the hands of a receiver appointed by the district court of Woodbury county, Iowa, upon a petition filed by John Peirce, and that court had authorized the receiver to contract with John Peirce to change the railway from a cable to an electric road, which change was made; and subsequently the receiver was discharged, and the railway line went into the possession of a new company, known as the 'Consolidation Company.' Subsequently the Manhattan Trust Company filed the present bill for the foreclosure of the mortgage executed by the Sioux City Cable Company to secure the bonds issued by the company; the mortgage being dated July 1, 1889. The Westinghouse Company, with leave of court, filed in the case a petition of intervention, for the purpose of asserting its right to the generator, which had not been paid for. This petition was on file when the decree for the sale of the mortgaged property was entered, and it was stipulated between the parties in interest that the decree and sale should not affect the rights of the parties in and to the generator, but that the ownership thereof should be determined the same as though the mortgage sale had not been had.

The Code of Iowa (section 3093) provides that:

'No sale, contract or lease wherein the transfer of title or ownership of personal property is made to depend upon any condition, shall be valid against any creditor or purchaser of the vendee or lessee in actual possession obtained in pursuance thereof, without notice, unless the same be in writing, executed by the vendor or lessor, acknowledged and recorded the same as chattel mortgages.'

In the case of Myer v. Car Co., 102 U.S. 1, this section of the statute came before the supreme court for construction and it was held that a contract such as is found in the written agreement of April 20, 1894, whereby the title of the generator was to remain in the Westinghouse Company until the same was paid for, was valid, as against a prior mortgage, although the same had not been acknowledged or recorded. The ground of the ruling is that, when the mortgage was executed and accepted by the mortgagee, the property in question...