Milan Mill. & Mfg. Co. v. Gorten

• Decision Date: 08 October 1894
• Parties: MILAN MILLING & MANUF'G CO. v. GORTEN et al.
• Court: Tennessee Supreme Court

27 S.W. 971

93 Tenn. 590

MILAN MILLING & MANUF'G CO. v. GORTEN et al.

Supreme Court of Tennessee.

October 8, 1894

Appeal from chancery court, Gibson county; Henry J. Livingston Chancellor.

Bill by Milan Milling & Manufacturing Company against W. E. Gorten the State Bank of Warsaw, Ind., and others, to enjoin the collection of certain notes, and to enjoin the foreclosure of a deed of trust securing them. The defendant bank filed a cross bill for foreclosure of the deed of trust. From a decree for complainant on the cross bill, defendant bank appeals, and from a decree adjudging complainant liable on the notes, complainant appeals. Reversed in part and affirmed in part.

S. F Rankin, Ed. Smith, and Jo Q. Hawkins, for complainants.

Albert W. Biggs and John R. Walker, for defendants.

McALLISTER J.

The original bill in this cause was filed in the chancery court of Gibson county by the Milan Milling & Manufacturing Company against W. E. Gorten et al. for the purpose of enjoining the collection of four notes and the foreclosure of a deed of trust made to secure them. In the year 1892 the Milan Milling & Manufacturing Company entered into a written contract with the Maish & Gorten Manufacturing Company, a foreign corporation, having its office and principal place of business at Warsaw, in the state of Indiana, whereby the latter company stipulated to manufacture, deliver, and put in position for the former company at Milan, in the state of Tennessee, certain milling machinery. The price agreed to be paid by the Milan Milling Company was $5,334, viz. $1,897 in cash upon the arrival of the machinery at the mill, $486 in 60 days, $750 in 6 months $750 in 12 months, and $750 in 18 months, from April 15, 1892, all evidenced by promissory notes. The Milan Milling Company further agreed to execute a first mortgage upon the milling property and lot to secure said deferred payments. In compliance with their agreement, the Maish & Gorten Manufacturing Company furnished said machinery, and adjusted it in the mill building at Milan, and the same was accepted by the Milan Milling Company. The cash payment was made, and notes executed for the deferred payments, which were secured by a first mortgage on the milling property. Shortly after the execution of the notes, they were indorsed by the Maish & Gorten Manufacturing Company to the State Bank of Warsaw, Ind. Default having been made by the Milan Milling Company in the payment of the first note, the trustee advertised the property to be sold in accordance with the provisions of the deed of trust. Thereupon the Milan Milling Company filed their original bill to enjoin the sale, alleging that the Maish & Gorten Manufacturing Company had breached their contract in the manufacture and delivery of said machinery, in consequence whereof the Milan Milling Company had been greatly damaged; and in accordance with the prayer of the bill an injunction issued restraining the trustee from selling the property. The State Bank of Warsaw, in its answer, denied all the material allegations of the bill, claiming to be an innocent purchaser of said notes for value before maturity in due course of trade, and by cross bill prayed a foreclosure of the deed of trust. It appeared in proof that the Maish & Gorten Manufacturing Company and the State Bank of Warsaw are both foreign corporations, chartered under the laws of the state of Indiana, and that neither company has ever complied with the laws of the state of Tennessee requiring foreign corporations, before doing business in this state, to register their charters. Upon final hearing the chancellor was of opinion, and so decreed, that both the State Bank of Warsaw and the Maish & Gorten Manufacturing Company, being foreign corporations, and not having complied with the laws of Tennessee, the said contract to furnish machinery was nonenforceable, and that, the deed of trust having been executed in violation of said statutes, complainant in the cross bill, the said State Bank of Warsaw, was not entitled to have same foreclosed. The chancellor, however, was of opinion that the State Bank of Warsaw was a bona fide purchaser for value before maturity of the notes in question, and as such was entitled to a decree against the Milan Milling & Manufacturing Company on the two notes which had matured at the date of filing the cross bill. The chancellor further decreed that the complainant in the...