The Allianca

• Citation: 73 F. 452
• Parties: THE VIGILANCIA. v. THE VIGILANCIA et al. THE ALLIANCA. ATLANTIC TRUST CO.
• Decision Date: 07 April 1896
• Court: U.S. Court of Appeals — Second Circuit

73 F. 452

THE VIGILANCIA. THE ALLIANCA. ATLANTIC TRUST CO. v. THE VIGILANCIA et al.

United States Court of Appeals, Second Circuit.

April 7, 1896

James McKeen, for appellant R. Hutson.

Maxwell Evarts (Robt. D. Benedict, on the brief), for appellants Collis P. Huntington and others.

W. P Butler and Cary & Whitridge, for appellants John Crosby Brown and others.

Edmund L. Baylies (Carter & Ledyard and Walter F. Taylor, on the brief), for appellee.

Before WALLACE, LACOMBE, and SHIPMAN, Circuit Judges.

WALLACE Circuit Judge.

The steamships having been sold upon a writ of venditioni exponas issued upon a decree in rem in a suit in the district court of the United States for the Southern district of New York the proceeds, after satisfying the decree, were paid into the registry of the court. The Atlantic Trust Company, claiming title to the proceeds as a mortgagee of the vessel, under two mortgages executed to it, as a trustee for bondholders, by the United States & Brazil Mail Steamship Company, filed its petition, praying that the proceeds be paid over to it towards satisfying the bonds secured by the mortgages. The appellant Hutson intervened, and answered in the proceeding claiming a lien upon the proceeds under an execution issued upon a judgment against the United States & Brazil Mail Steamship Company, levied upon the steamships prior to the act. It is insisted by the appellant that the mortgages of the Atlantic Trust Company did not transfer the title of the steamships and, consequently, of the proceeds, as against him, because (1) they were void for usury; (2) they were not filed conformably with the state statutes respecting mortgages; and (3) they were never validly executed by the steamship company.

The United States & Brazil Mail Steamship Company was a corporation in the city of New York, duly organized pursuant to an act of the legislature, entitled 'An act for the incorporation of companies formed to navigate the ocean by steamships,' and the various acts amendatory thereof, having its principal office for managing its business in the city of New York. It was the owner of three steamships, the Alliance, the Advance, and the Finance,--vessels duly registered in the office of the collector of the port of New York. December 12, 1889, for the purpose of borrowing money to pay off its outstanding obligations, and of constructing and equipping two new steamships, the corporation, by its president and treasurer, pursuant to a vote of authorization of its then acting board of directors, executed a mortgage, bearing date July 1, 1889, to secure the payment of 1,250 bonds, of $1,000 each, to the Atlantic Trust Company, as trustee, upon the three steamships, and upon all its right, title, and interest which it then had or might thereafter acquire in two new steamships then in process of construction at Chester, Pa., but unfinished, and not admitted to registry, to be named, respectively, the Seguranca and Vigilancia, or by whatever name the same should be known. The mortgage contained a covenant that the mortgagor would execute and deliver to the mortgagee a further mortgage upon the two new steamships as soon as they should be completed and entitled to a certificate of registry. December 12, 1889,the mortgage was duly recorded in the office of the collector of the port of New York. The Vigilancia was completed on the 4th day of December, 1890, and on that day duly registered in the office of the collector of the port of New York. June 5, 1891, the steamship company, by its vice president and treasurer, acting by the authority of its board of directors, executed and delivered to the Atlantic Trust Company a supplementary mortgage on the steamship Vigilancia to secure said bonds, as required by the covenants in that regard in the original mortgage. June 13, 1891, the supplementary mortgage was duly recorded in the office of the collector of the port of New York.

Because of the lien acquired by his execution, the appellant is in a position to challenge the validity of the mortgages, and, even though they were sufficient, as between the mortgagor and the mortgagee, to transfer the title to the vessels, if they were void by force of the statutes against usury, or in respect to chattel mortgages, his lien must prevail. Unlike a creditor at large, who has no status in that behalf, except through the medium of a representative of the whole body of creditors, such as a receiver, a lien creditor can invoke any statute which invalidates a hostile lien. In the absence of some such statute, a lien creditor by judgment and execution can have no better title to the property against which he asserts his lien than he acquired from the judgment debtor; and any previous transfer of the property by the judgment debtor, which was valid as between the immediate parties to it, is equally valid as to him. Osterman v. Baldwin, 6 Wall. 116; Sisson v. Hibbard, 75 N.Y. 542; Lamont v. Cheshire, 65 N.Y. 30.

The bonds which the two mortgages were created to secure were negotiated at 80 cents on the dollar of their face value, and the appellant contends that the mortgages were void for usury. A sufficient answer to this contention is found in the statute of New York (Laws 1850, c. 172), which declares that no corporation shall hereafter interpose a defense of usury. According to the repeated and uniform construction placed upon it by the highest courts of the state, this statute operated as a repeal of the statutes of usury as to all contracts with corporations stipulating to pay interest. Curtis v. Leavitt, 15 N.Y. 85; Trust Co. v. Packer, 17 N.Y. 52; Rosa v. Butterfield, 33 N.Y. 665; Stewart v. Bramhall, 74 N.Y. 87; Bank v. Wheeler, 60 N.Y. 613; Gamble v. Water Co., 123 N.Y. 108, 25 N.E. 201; Duncomb v. Railroad Co., 84 N.Y. 190. As thus construed, the statute has become a rule of property, and to question it now would unsettle titles in which enormous investments have been made. A very large proportion of the bonds secured by corporate mortgages are originally negotiated at a discount beyond the legal rate of interest; and it is quite too late to urge that the language of the statute only operates upon a corporation in personam, and not upon the contract it has made.

The contention, for the appellant, that the mortgages are void, because not filed and refiled as required by the provisions of the state statute in regard to chattel mortgages, is sufficiently met by the proof that they had been duly recorded in the office of the collector of the port before the appellant acquired his lien, and even before the debt originated upon which his lien is founded. State statutes are inoperative as to vessel mortgages, which have been properly recorded pursuant to the laws of congress. Bank v. Smith, 7 Wall. 646; Aldrich v. Aetna Co., 8 Wall. 491.

It is insisted, for the appellant, that the first of the two mortgages was not properly executed, because the board of directors who authorized the president and treasurer to execute it had not been duly elected, the stockholders' meeting at which their election took place not having been called conformably with the by-laws of the company. The by-law required notice of the time and place of holding the election to be published 'not less than twenty days previous thereto, in a newspaper printed in the city of New York. ' The meeting was held May 28, 1889, and the first publication of the notice was May 8, 1889. Whether...