U.S. Cast Iron Pipe & Foundry Co. v. Henry Vogt Mach. Co.

• Decision Date: 13 December 1918
• Citation: 182 Ky. 473,206 S.W. 806
• Parties: UNITED STATES CAST IRON PIPE & FOUNDRY CO. ET AL. v. HENRY VOGT MACH. CO. ET AL.
• Court: Kentucky Court of Appeals

206 S.W. 806

182 Ky. 473

UNITED STATES CAST IRON PIPE & FOUNDRY CO. ET AL. v. HENRY VOGT MACH. CO. ET AL.

Court of Appeals of Kentucky.

December 13, 1918

Appeal from Circuit Court, Webster County.

Suit by the Henry Vogt Machine Company against the Providence Water &amp Utilities Company, in which the United States Cast Iron Pipe & Foundry Company and others intervened. From the judgment in favor of the Machine Company and S. K. Luton, the Cast Iron Pipe & Foundry Company and another appeal. Reversed in part and remanded, with directions.

Gordon Gordon & Cox, J. F. Gordon, and Gordon & Gordon & Moore, all of Madisonville, for appellant United States Cast Iron Pipe &amp Foundry Co.

Hunt & Bennett, of Dixon, and Helm & Helm and Hugh B. Fleece, all of Louisville, for appellant Louisville Trust Co.

Baker & Baker, of Dixon, Cannaday & Withers, of Providence, and Laffoon & Waddill, of Madisonville, for appellees Vogt Mach, Co. and Luton.

W. H. Yost, of Madisonville, and Hazelrigg & Hazelrigg, of Frankfort, for appellees Wynns and Nesbitt.

Garrett L. Withers, of Dixon, for appellees National Ammonia Co. and others.

HURT J.

The Providence Water & Utilities Company was a corporation organized under the laws of the state of Delaware, and we can only surmise as to what powers it had under the articles of incorporation from what it thereafter attempted to do, as the articles of incorporation are not included in the record. It became the owner of a franchise, as is presumed, that gave it the right to operate a waterworks system and an ice plant factory in the town of Providence, Ky.; but there is no copy of the franchise in the record, nor pleading, nor evidence, to show what the franchise authorized it to do. Commencing in the autumn of the year 1914, it undertook to build and to operate a waterworks system in the town of Providence, and also an ice plant; but in the autumn of the next year it seems to have become insolvent and unable to pay its obligations, and this action was instituted by the Henry Vogt Machine Company to recover a debt which the corporation owed it for the machinery which went to make up the ice plant, and thereupon the various creditors and bondholders of the corporation became parties to the suit, including the trustee for the bondholders, and the final result was a sale of all the property of the corporation and a distribution of the proceeds adjudged between the bondholders and creditors, according to their liens and priorities. From this judgment the Louisville Trust Company, as a trustee under a deed of trust, or mortgage, for the benefit of the bondholders, and the United States Cast Iron Pipe & Foundry Company, a creditor, have appealed, as against the judgments rendered in the action in favor of the Henry Vogt Machine Company and S. K. Luton. The corporation itself is not made a party to the appeal, and no cross-appeal is filed by either the Henry Vogt Machine Company, S. K. Luton, or any of the parties to the suit as it existed in the trial court. In an action of this kind, we are by necessity confined to the statement, as provided by section 739, Civil Code, to determine who it is that is seeking relief by the appeal, and against what parties the relief is sought, and the judgments in favor of and against which parties are to be considered.

The stockholders of the Providence Water & Utilities Company, on the 9th day of September, 1914, determined to issue the negotiable bonds of the corporation to the amount of $75,000, and to execute a mortgage to the Louisville Trust Company, as a trustee for the holders of the bonds, to secure the payment of the bonds and the interest which might accrue upon them. The mortgage was executed upon the 10th day of September, 1914, and was recorded in the office of the clerk of the county court of Webster county, wherein the town of Providence is situated, on the 25th day of November, 1914. The resolution of the stockholders, which directed the directors to issue the bonds and to execute the mortgage, describes themselves, as the stockholders of the "Water Company," and directs the mortgage to be placed on the "plant, franchise, and equipment, and all the property, of every kind, real, personal, mixed, which this company may now own or have, or which it may hereafter acquire, situated in the county of Webster and state of Kentucky." The resolution of the stockholders further authorized the "directors of said Water Company" to "use and dispose of the bonds as in their judgment may be necessary for the purpose of financing the installation of a waterworks system, or other work of public improvement, or for manufacturing purposes, in the city of Providence, Ky. or for such other uses, for corporation purposes, as in the judgment of the board of directors may be advantageous." The form of bonds to be issued, and copied into the mortgage, contains the following clause:

"These bonds are issued under, and equally secured by, a first mortgage, deed of trust, on the waterworks, reservoir, pumping station, filtering plant, pipe lines, real estate, income, franchise, rights, and privileges now held by the Providence Water & Utilities Company, or hereafter to be acquired by it," etc.

The description of the property embraced, and intended to be covered by the mortgage, is described in it as follows:

"The entire waterworks plant of the said first party, located or to be located, built or to be built, acquired or to be acquired, in the county of Webster and state of Kentucky, including the pipe lines or water mains from the source of supply on Trade Water river, to the city of Providence, Ky. together with all the rights of way, easements, or interest in any land or lands through or over which it may pass, for the purpose of rights of way, together with all pipe lines, water mains, or appliances used by it in furnishing water in the city of Providence, or in connection with its plant, whether the said property be located within or without the corporate limits of the city of Providence, Ky. and especially including any and all real estate of which it may be now possessed, or which it may hereafter acquire, for the purpose of pumping stations, filtration plants, with all buildings which it may now have erected thereon, together with franchise or income derived from the property and operation of the business, as herein stated and set forth, especially including all property, both real, personal, or mixed, now belonging to said company, or that may hereafter be acquired by it during the life of this instrument."

By another clause of the mortgage the corporation undertook to execute additional deeds of mortgage to the trustee, or deeds, writings, or other instruments--

"for the better assuring unto the trustee, upon the trust and for the purpose herein expressed or intended, all and singular the premises herein conveyed in trust, or appearing, purporting, or intending so to do, or which may hereafter be required or possessed or created, or belonging to said Water Company, whether the same be now owned or possessed or vested in the Water Company, or be hereafter acquired by or vested in it, as by the trustee, or its counsel, may be reasonably requested or required."

While in the part of the mortgage describing the parties, at the beginning, the corporation executing the mortgage is described as the Providence Water & Utilities Company, and also just above the signature, yet elsewhere, and in numerous places in the instrument, it describes itself as the "Water Company."

On the 27th day of February, 1915, the appellee Henry Vogt Machine Company contracted to sell to and install for the Providence Water & Utilities Company a 15-ton exhaust ice machine, with certain fixtures, for the sum of $9,231; and on March 16 1915, it contracted to sell to and to install for the company a horizontal return tubular boiler, for the sum of $1,298. Certain percentages of the price to be paid for the ice machine and equipment were to be paid upon approval of the contract and upon shipment of the machinery, and the remainder at a future date. The contracts were written, and provided that the title to the machinery should remain in and be held by the selling company until the entire purchase price should be paid. The Henry Vogt Machine Company began the delivery and installation on the 3d day of April, 1915. The title to the lot of ground upon which the machinery was installed was held at that time by the appellee S. K. Luton, who had a short time theretofore contracted to sell it to the Providence Water & Utilities Company for the sum of $1,500, but had never executed nor delivered any writing in evidence of the contract. Luton had also agreed to lend to the corporation as much as $5,000, to be used in paying its obligations. There appears, in the record, a contract in writing, which was subscribed by Luton, and also by the corporation, by Luton as its vice president, and of date April 10, 1915, by which it was provided that, for the purpose of completing the contract for the purchase of the ice plant machinery, whatever sum Luton should pay to the Henry Vogt Machine Company in satisfaction of its debt against the corporation, for the price of the machinery of the ice plant which had been purchased from the Vogt Machine Company, Luton should succeed to, and have as security, whatever security the Machine Company held for the payment of its debt. The board of directors of the corporation enacted and entered upon its records a resolution which substantially provided for the same arrangement. Under this arrangement Luton paid upon the debt for the machinery, on April 12, 1915, the sum of $1,052.90; on May 5, 1915, the further sum of $1,100; and thereafter an amount sufficient to make his payments...