Thomas Roberts & Co. v. Robinson
| Citation | 118 A. 198,141 Md. 37 |
| Decision Date | 23 March 1922 |
| Docket Number | 51,53. |
| Parties | THOMAS ROBERTS & CO. et al. v. ROBINSON et al. ELLEGOOD et al. v. SAME. TERMINAL WAREHOUSE CO. v. SAME. |
| Court | Court of Appeals of Maryland |
Appeals from Superior Court of Baltimore City; James P. Gorter Judge.
"To be officially reported."
Separate actions by William E. Robinson and another, copartners trading as W. E. Robinson & Co., against Thomas Roberts & Company and another, against James E. Ellegood and others trustees in bankruptcy for W. R. Keel, and against the Terminal Warehouse Company. From a judgment for plaintiff defendants separately appeal. Reversed, and judgment entered.
See also, 140 Md. ___, 118 A. 204.
Vernon Cook and George Ross Veazey, both of Baltimore, for appellants Thomas Roberts & Co. and Terminal Warehouse Co.
Samuel K. Dennis, of Baltimore, for appellants Ellegood and others.
Edward M. Hammond, of Baltimore, and Thomas H. Robinson, of Bel Air, for appellees. URNER, J.
In this action of replevin the plaintiffs are W. E. Robinson & Co. commission merchants of Bel Air, Md., and the defendants are William R. Keel, an operator of packing factories in Wicomico and Caroline counties, for whom his trustees in bankruptcy were substituted, Thomas Roberts & Co., commission merchants, of Philadelphia, and the Terminal Warehouse Company, of Baltimore, in whose warehouse the goods taken under the writ had been stored. The issue in the case is concerned with the right to the possession of three carloads of canned sweet potatoes and one carload of canned tomatoes, which Keel shipped, on November 18, 1919, from the points of production to himself as consignee at the Terminal Warehouse in Baltimore, and upon which he received the same day an advance of $7,600 from Roberts & Co., to whom the bills of lading were duly transferred with a view to the sale of the goods by them on commission. The value of the canned goods, as appraised at the time of their seizure under the writ of replevin, was $11,491.15. Under an agreement with Keel the plaintiffs had furnished him cans and money, for the purposes of his packing business, on account of which he owed them a balance of more than $50,000. After receiving the advance from Roberts & Co., on the bills of lading indorsed to their order, Keel absconded. The pending suit was brought on December 5, 1919, and three days later proceedings in bankruptcy against Keel were instituted.
The claim of the plaintiffs to the possession of the goods in litigation is based upon a written agreement between themselves and Keel, dated February 1, 1919, by which they contracted to sell him all the cans he required for the 1919 packing season, at prices prevailing at time of shipment as ordered, the title to all cans and supplies shipped by the plaintiffs to remain in them until the purchase price was paid. It was provided in the agreement that, if Keel should suspend business or become embarrassed financially, any account or note which the plaintiffs held against him should become immediately due and payable, and they should then be entitled to have delivered to them "all supplies and cans, filled or unfilled, remaining on hand," and, in the event of a replevin suit therefor, no previous demand would be requisite; the intention being expressed that, in any of the events mentioned, the plaintiffs should "have the exclusive right to the possession of said goods." It was further stipulated that the plaintiffs were "to have the sale" of all goods packed under the contract, on a 5 per cent. commission, and should "guarantee payment of same when goods have been accepted by buyers, and apply the proceeds, or so much as may be necessary, to the payment of cans, boxes, or other materials furnished," and to the repayment of any money advanced by or due the plaintiffs, for commissions or otherwise, under the terms of the agreement. It is a conceded fact that the agreement was never recorded.
The suit is resisted by Roberts & Co. on the ground that their advance of money to Keel was made without notice on their part of the contract on which the plaintiffs rely, and that it is ineffective as to third persons without notice, in view of the provisions of Acts 1916, c. 355 (Code, vol. 4, art. 21, § 53a). The defense of the Terminal Warehouse Company is that it was entitled to the possession of the goods replevied until its unpaid storage charges were satisfied. On behalf of the creditors of Keel, the trustees in bankruptcy dispute the validity of the unrecorded contract upon which the suit is based, and contend that, even though the bankrupt may have been bound by its terms, they are authorized to contest it by virtue of the amendment of 1910 to the Bankruptcy Act.
At the trial below the case was submitted to the jury under instructions requiring them to determine whether Roberts & Co. had notice of the agreement referred to, whether the Terminal Warehouse Company had waived its lien for the unpaid storage charges, and whether the cans replevied with their contents were identified as having been furnished by the plaintiffs. The court refused a prayer of the trustees in bankruptcy requesting a directed verdict in their favor, on the ground that as to them the contract on which the plaintiffs depend is void. The verdict and judgment were for the plaintiffs, and all of the defendants have appealed.
The primary question in the case is whether the plaintiffs were entitled to the possession of the property in dispute as against the rights of the creditors represented by the trustees in bankruptcy. There are creditors so represented whose claims accrued after the date of the contract between the plaintiffs and Keel, and while he was the ostensible owner of all the assets of the canning business in which he was engaged. The Maryland statute already cited provides:
"Every note, sale or contract for the sale of goods and chattels, wherein the title thereto, or a lien thereon, is reserved until the same be paid in whole or in part, or the transfer of title is made to depend upon any condition therein expressed, and possession is to be delivered to the vendee, shall, in respect to such reservation and condition, be void as to third persons without notice until such note, sale or contract be in writing, signed by the vendee, and be recorded in the clerk's office of Baltimore city, or the counties, as the case may be, where bills of sale are now recorded; and such recording shall be sufficient to give actual or constructive notice to third persons when a memorandum of the paper writing, setting forth the date thereof, the amount due thereon, when and how payable and a brief description of the goods and chattels therein mentioned shall have been recorded, but it shall not be necessary that said paper writing be acknowledged or an affidavit made to the consideration therein expressed as in the case of bills of sale."
The contract we are considering reserved title in the plaintiffs to the supplies furnished by them to Keel until the payment of the purchase price. It also secured to the plaintiffs the right to sell "all goods packed" under the contract, and to apply so much of the proceeds as might be needed to the payment of the amount due them for cans and other supplies, and for any money advanced. There was the dual purpose, as disclosed by the express terms of the agreement, to retain title in the plaintiffs to the cans and material purchased from them, and to give them a lien on the cans and their contents, when filled with produce obtained from other sources, as security for any balance due them on their sales account or for advances of money. In regard to either of these purposes, and to both combined, the agreement is within the effect of the statute we have quoted. As between the immediate parties the contract is valid, but "as to third persons without notice" it is declared to be void until placed upon the public records in the manner prescribed. The creditors who trusted Keel, in ignorance of the plaintiffs' secret reservations of interest in the property which they committed to his apparent ownership, were undoubtedly included among the "third persons without notice"for whose protection the act was passed. If it had been intended to protect only purchasers and lienors, that purpose would have been expressed. The general terms employed indicate that the statute was designed to safeguard the interests of all persons, acting without notice of the unrecorded contract, who would be injuriously affected if it were permitted to be enforced.
By virtue of that provision the defendant trustees, if the goods in suit had come into the custody of the bankruptcy court would have had the right of a lien creditor to oppose the plaintiffs' unrecorded reservation of title. As the property is not in the custody of that court, the trustees' right to controvert the...
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