Whitehead v. Am. Lamp & Brass Co.

• Decision Date: 29 December 1905
• Parties: WHITEHEAD et al. v. AMERICAN LAMP & BRASS CO.
• Court: New Jersey Court of Chancery

62 A. 554

70 N.J.E. 581

WHITEHEAD et al.

v. AMERICAN LAMP & BRASS CO.

Court of Chancery of New Jersey.

Dec. 29, 1905.

Action by William R. Whitehead and others against the American Lamp & Brass Company. From an order of a receiver of defendant company disallowing the claim of the Fostoria Glass Company, it appeals. Reversed in part.

E. C. Long, for appellant. F. S. Katzenbach, for the appellee receiver.

BERGEN, V. C. The Clark Bros. Glass Manufacturing Company, a partnership, was engaged in the business of manufacturing glass, and assembling parts of lamps with which they made the completed article. The lamps were made for the insolvent corporation, which had been organized under the laws of this state and carried on its business in the city of Trenton. The Fostoria Glass Company, prior to August 1, 1903, had sold to the Clark Bros. Company a considerable quantity of goods, and applied to its debtor for a guaranty of the payment, not only of the amount due, but of all future purchases by the Clark Bros. Company. In reply to this application, which was referred to the defendant company, it wrote to the Fostoria Company, the following letter, signed by its proper officers: "Trenton, N. J. Aug. 1, 1903. Fostoria Glass Company, Moundsville, West Va., W. A. V. Dalzell, Pres.—Dear Sir: The Clark Bros. Glass Manufacturing Company of Elwood City have referred to us your letter of July 30th regarding your account against them, and, as the goods which they buy of you are used in the manufacture of lamps for our account, we are willing to guaranty to you the ultimate payment of all purchases from you up to date, as well as any future purchases during this year, regardless of whether the account is an open one or has been closed by their note. As this letter is a standing guaranty covering all transactions, it will obviate the necessity of indorsing any note sent you from time to time, so that settlement need not be referred to us for specific guaranty in each instance." The appellant company shipped to the Clark Bros. Company goods as ordered by them until the month of February, 1904, when that partnership was declared insolvent and an assignee appointed for them in the state of Pennsylvania, and about the same time the defendant in this cause was declared to be an insolvent corporation, and Robert S. Woodruff was appointed its receiver by this court. At the time of the insolvency of the Clark Bros. Company it was indebted to the appellant in the sum of $5,229.52, and it is for this debt that the claim of the Fostoria Glass Company was presented to the receiver of the defendant company; payment being claimed from it, based upon the guaranty alleged to be contained in the foregoing letter. This claim the receiver has rejected, and from such determination this appeal has been taken.

The Clark Bros. Company and the defendant company kept separate books of account, and at the time of the adjudication of insolvency of the Clark Bros. Company the defendant company was their creditor to an amount exceeding $27,000. That the power to guaranty the payment of the past and accruing indebtedness of a third party is not within the chartered powers of the insolvent corporation is the ground upon which the receiver bases the disallowance of this claim. Whether an indemnity to one who is to furnish material to another for the purpose of being used in the manufacture of goods for the account of the guarantor is beyond the corporate powers of a manufacturing company organized under the laws of this state, it is not necessary here to determine, because I am of the opinion that the corporation is estopped from setting up the plea of ultra vires to so much of this claim as accrued during the year 1903, after August 1st, the date of the guaranty. The written indemnity is limited to "any future purchases during this year," the...