Mason v. Wylde
| Decision Date | 24 February 1941 |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
| Parties | GEORGE H. MASON, trustee in bankruptcy, v. JOHN WYLDE& others. |
September 22, 23 1936.
Present: FIELD, C.
J., DONAHUE LUMMUS, QUA, DOLAN, COX, & RONAN, JJ.
Trust Receipt. Bankruptcy, Trustee's rights, Fraudulent conveyance. Preference. Mortgage, Of personal property: what constitutes recording, validity, foreclosure, redemption. Fraudulent Conveyance. Insolvency. Practice, Civil, Exceptions: what is subject to exception: Requests, rulings and instructions Auditor: findings, trial on report only, ordering of judgment on report.
An exception lies to the allowance of a motion for judgment at the hearing of an action at law solely upon the report of an auditor whose findings were not final.
Requests for rulings of law, at the hearing of an action at law solely upon the report of an auditor whose findings were not final, have a legal standing; and a refusal to act on them is an implied denial and is subject to exception.
An exception by the defendant "to the finding, ruling and order" of a judge, who heard an action at law solely on the report of an auditor whose findings were not final and ordered judgment for the plaintiff, presented the question, whether the general finding by the judge, imported by the order of judgment, was permissible on the fact-found by the auditor and reasonable inferences therefrom.
An instrument, entitled a "trust receipt," signed by a dealer in automobiles who had taken title to an automobile from the manufacturer by purchase made with funds advanced to him by a distributor, in which instrument he acknowledged that he had received possession of the automobile from the distributor, "the owner thereof," and that it had been "purchased under credit opened by the distributor" for his account, and agreed to hold it "in trust for the distributor" with liberty to sell it with the distributor's consent, "the intention being to preserve intact the distributor's title" until full payment should have been made of any indebtedness of the dealer to the distributor and with a right in the distributor, in case of insolvency of the dealer, to "repossess" the automobile and sell it and apply the proceeds to advances made for the dealer's account, passed title to the distributor for security only and was in effect a chattel mortgage; and, although unrecorded, was under G.
L. (Ter. Ed.) c. 255, Section 1, valid as between the immediate parties to it from the time it was executed and delivered.
When the distributor above mentioned, upon learning that the dealer had become insolvent, in good faith took possession of the automobile to foreclose his security before bankruptcy of the dealer, he acquired a title good against the world except as to the right of the dealer to redeem during such possession.
A trustee in bankruptcy, if he attempted to enforce under G. L. (Ter. Ed.) c. 255, Section 4, a right to redeem automobiles, possession of which had been taken before bankruptcy by one who was in substance a chattel mortgagee under a so called trust receipt, had the burden of proving that the right of redemption had not been foreclosed and was precluded from relying on such right as against the security holder where it appeared merely that the security holder had taken possession of the automobiles two days before the bankruptcy and "later sold them," acting in good faith and without objection from the trustee, for a price not in excess of the debt secured.
Circumstances in which a distributor of automobiles, within four months before a dealer's bankruptcy, took title to certain automobiles from him under an unrecorded "trust receipt" which was in substance a chattel mortgage, as security for amounts then advanced to the dealer for their purchase, and, afterwards, upon being informed by the dealer of his imminent bankruptcy, took possession of the automobiles under the provisions of the "receipt" and in good faith sold them for a sum not in excess of the debt secured, would not have warranted a finding of actual intent of the dealer to defraud his creditors or of a conveyance in fraud of creditors under G. L. (Ter. Ed.) c. 109A.
Even if, at a time when a dealer in automobiles executed and delivered an instrument, in substance a chattel mortgage of automobiles, his business was diminishing in volume, which was a normal condition at that season, he was "low on funds," and his financial condition was "poor but not necessarily insolvent," a conclusion was not warranted that he was then insolvent, although about two weeks later he was insolvent and was adjudicated a bankrupt; and the giving of the instrument was not a preference under the bankruptcy act, U.S.C. Title 11, Section 96.
CONTRACT OR TORT. Writ in the Superior Court dated April 15, 1933. The case was heard by Whiting, J.
The case was argued at the sitting of this court in September, 1936, before Rugg, C.J., Crosby, Field, Donahue, & Lummus, JJ., and, after the retirement of Crosby, J., and the death of Rugg, C.J., was submitted on briefs to Qua, Dolan, Cox, & Ronan, JJ.
C. W. Rowley, for the defendants. H. Zarrow, for the plaintiff.
This is an action of tort or contract brought by the trustee in bankruptcy -- duly authorized to bring this suit -- of the Worcester Motor Company, Inc., herein referred to as the company, to recover the value of sixteen automobiles. The declaration is in four counts, all for the same cause of action, the first count alleging a conversion, the second a voidable preference, and the third receiving goods of the bankrupt with intent to hinder and delay other creditors, and the fourth being for money had and received. The defendants' answer was a general denial. The case was referred to an auditor whose findings of fact were not to be final. The auditor filed a report and, after recommittal, a supplementary report. The plaintiff moved for judgment on the auditor's reports. In accordance with Rule 88 of the Superior Court (1932) trial was had on the auditor's report and supplementary report only. The defendants made requests for rulings upon which the trial judge indorsed: "I do not act on the within requests." He "allowed" the plaintiff's motion for judgment and found for the plaintiff in the sum of $3,291.76. The defendants excepted to the "refusal" of the judge to grant their requests for rulings and "to the finding, ruling and order" of the judge.
First. The hearing on this motion for judgment under Rule 88 was a trial of fact on evidence -- the only evidence being the auditor's reports. And the allowance of the plaintiff's motion for judgment and the finding for the plaintiff in the sum of $3,291.76 constituted an order for judgment for the plaintiff in that sum. See Edinburg v. Allen-Squire Co. 299 Mass. 206 . To such an order an exception lies. Ballou v. Fitzpatrick, 283 Mass. 336 . DiDonato v. Renzi, 295 Mass. 113 , 114, 116-117. And in a case so heard -- unlike a case heard on an auditor's report where the findings of fact are to be final -- requests for rulings have legal standing, and to the denial of such a request an exception lies. See Nutter v. Mroczka, 303 Mass. 343 , 347-348. The judge in the present case, in making a decision for the plaintiff without passing upon the defendants' requests for rulings, impliedly denied all such requests as were relevant and inconsistent with the decision. Simmons v. Poole, 227 Mass. 29 , 34. Bankoff v. Coleman Bros. Inc. 302 Mass. 122 , 123.
Second. The defendants' exception "to the finding, ruling and order" of the judge presents the question whether there was error of law in ordering judgment for the plaintiff on the auditor's reports -- not as a ruling of law but as a finding of facts -- stated conversely, whether the finding for the plaintiff made by the judge as a trier of facts on the auditor's reports as the sole evidence -- which the order of judgment imports -- was permissible on the facts found by the auditor and reasonable inferences therefrom. The effect of findings of auditors -- whose findings of fact are not agreed to be final -- was fully discussed in Cook v. Farm Service Stores, Inc. 301 Mass. 564 , and the statements there made need not be repeated. It is clear, in accordance with what was there said, that the finding of the auditor for the defendants in the original report, that "if, as a matter of law, on the facts found by me, the defendants were entitled to do the acts which they did, the finding should be for the defendant[s], and I so find for the defendant[s]," did not preclude the judge from finding for the plaintiff, if such a finding was warranted by the other facts found by the auditor. We are of opinion, however, that a finding for the plaintiff was not so warranted.
Facts found by the auditor include the following: The company was adjudicated bankrupt on August 5, 1932. (It does not appear that the proceedings were involuntary.) During the year 1931 and until August 1, 1932, it was engaged in the business of buying selling and dealing in motor vehicles, making use of money advanced by the defendants upon the security of such motor vehicles that were held by the company. The money was advanced by the defendants on so called trust receipts, hereinafter described, which were not recorded. Advances of money by the defendants and the purchasing of automobiles by the company were carried on in the following manner: The company ...
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