88 W. Va. 595 | W. Va. | 1921
Review of the decree complained of on this appeal involves conflicting claims and contentions as to validity and priority of liens upon the assets of an insolvent corporation, the business and affairs of which are wound up and disposed of by that decree. The appellant, South Side Trust Company of Pittsburgh, complains of denial of the validity of a mortgage for the sum of $17,500.00, held by it, as executor of the will of Charles E. Breitweiser, deceased. It also complains of the interpretation of a vendors lien in favor of the plaintiff, .Aca-dian Coal and Lumber Company, under which liens for large amounts were adjudicated in its favor. Two judgment creditors, the Burnsville Milling Co. and the Burnsville Grocery Co., in whose favor liens were adjudicated, are not entirely satisfied with the position accorded them, and they complain of certain alleged errors in the decree.
The defunct corporation whose affairs are involved is known as the Brooks Run Lumber Company. Its property consisted originally of the timber on a tract of land containing 1,430 acres and certain mills, logging roads and other timbering instrumentalities and implements, all of which it indirectly obtained from the Acadian Coal and Lumber Company, by means of a deed and a contract executed by the vendor to one A. G. Breitweiser, who, with his associates, organized the Brooks Run Lumber Company and conveyed the property to it. Before the conveyance the original owner had started the timbering operation on the land and expended considerable money therein. It and A. G. Breitweiser entered into a contract pertaining to the timber, purchase money and rights of way and privileges, and bearing the same date as the deed by which the conveyance was made, December 29, 1916. Rec-ordation of the deed seems to be admitted, but the contract .admittedly was not recorded until after this suit was instituted and a receiver appointed.
Tested by the terms of the contract, the sale was by the
The commissioner and the court reached this conclusion by reading them in connection with the recorded deed by which A. G-. Breitweiser conveyed the property to the Brooks Run Lumber Co. By that deed, he conveyed, in consideration of $10.00 paid and other valuable considerations, all the right, title and interest in and to the timber on the 1,430 acres of land, conveyed to him by the Acadian Coal and Lumber Co.? “by deeds and writings, dated December 29th, 1916, and also all lumber, railways, buildings and equipment whatever used” by him, in connection with his lumber operations at and about Brooks Run, Laurel Creek. The real consideration, of. course,
No attempt will be made to define the transactions following the execution of the first deed, beyond the extent of necessity. The twenty-five notes were endorsed by the payee, Acadian Coal & Lumber Company, and redelivered by it to A. G-. Breit-weiser, the maker, to be used by him in efforts to raise funds for payment of .the purchase money and expenses of carrying on the work of manufacturing and selling the timber. Fourteen of them were negotiated to the Union National Bank of Clarksburg, four of which were afterwards paid by the Brooks Run Lumber Co. Seven of them were taken by Charles E. Breitweiser and are now held by the appellant as his executor. The remaining four were deposited with the People’s National Bank of Pittsburgh as collateral security for a $4,000.00 note of the Brooks Run Lumber Company, on which Charles E: Breitweiser was endorser or guarantor. On that note the maker paid $2,500.00 and Breitweiser paid the other $1,500.00 and took an assignment of the four $1,000.00 notes deposited as collateral. The bill filed by the Acadian Coal and Lumber Company alleges that about $16,000.00 of the money raised on the notes was applied to the payment of its obligations and the residue, $9,000.00, advanced by it to the Brooks Run Lumber Company.
Near the date of the purchase of the timber Breitweiser and his associates organized another corporation known as the Breitweiser Lumber Company, which seems to have been the sales agent of the Brooks Run Lumber Company, and its successor, the Miners’ & Manufacturers’ Lumber Company, claims large indebtedness to the agent company was incurred by its
The affairs of the Brooks Run Lumber Company being in bad condition and two judgments having been obtained .•against it, one by the Burnsville Milling Company for $467.32 and costs and the other by the Burnsville Grocery Company for $1,151.78 and costs, and executions issued thereon having been levied upon some of its lumber, the Acadian Coal and Lumber Company, claiming to be a lien creditor in large amounts, brought this suit, praying in its bill for the appointment of a receiver to take charge of' the property and operate it. Agreeably to the prayer, C. H. Bland was appointed receiver, and as such conducted the operations for a considerable period of time.
From the receiver’s report and the findings of the Commissioner, it has been ascertained that'about 4,222,000 feet of lumber was obtained from the land, 3,100,000 feet shipped before appointment of the receiver, 463,000 feet on the yards ■at that time and 659,000 feet manufactured by the receiver. 'The plaintiff claims and has been allowed, on the basis of this ■quantity, $16,981.00, as being secured by the vendor’s lien in the deed as aided and expanded by the $3.00 per 1000 clause of the unrecorded contract, which sum is very much less •than it was entitled to by the terms of the contract, on account of the excess over $25,000.00 and the cost of the equipment.
At the date of the decree appealed from, there was in the hands of the special receiver, including the proceeds of the sale
As the two execution creditors would obtain the full amount due them under this decree, it is insisted that they are not. prejudiced by any errors that may have been committed. This may be true, but, if the contentions of the appellant am
Appellant’s fifth assignment of error assaults the interpretation of the vendors lien provision of the deed and denies that the Acadian Coal and Lumber Company has any lien for the sum of $16,981.00 allowed, on the basis of the value of the timber in excess of $25,000.00 and the cost of equipment. But, if the mortgage is fraudulent and void on its face because fraudulent, appellant is likely not prejudiced by any error in the decree, pertaining to the claims of other creditors. Hence, the first inquiry is whether the mortgage is void.
The provision upon which it was adjudged and held to be fraudulent per se reads as follows: “The mortgagor shall retain the possession and control of its business, being that of the manufacture and sale of lumber at its place of business at Prestonia, West Virginia, and shall in all respects proceed with the manufacture and sale of timber or of other property in the course of its business without interference on account of this mortgage and with full power to pass legal title to any and all property and lumber that it may sell in the progress of its business, but the said mortgagor shall until the said debt shall have been paid retain on sticks on its lumber yards at least as much as 500,000 feet of lumber.”
This provision must be read in connection with others, to ascertain the legal effect of the instrument and the intention of the parties, as disclosed by its terms. It acknowledges indebtedness to the extent of $17,500.00, payable in installments of $1,500.00 per month at the least, the first one of them toi be paid one month after its date, and contains an express promise so to make payments. It also provides for right of foreclosure by suit or proper judicial procedure at any time after default made as to any of the installments.
Considered in the light of the character of the property it conveyed, the instrument does not fall within the class of those held to be fraudulent on their faces, because so drawn as to enable the debtor to appropriate the property to his own use or to protect him in the possession and enjoyment
Nor does the instrument on its face disclose any evidence ■of fraudulent intention respecting creditors. The nature of the property and the purpose and privileges of the possession ■clearly indicated intention to effect payment of the debt out ■of the subject of the mortgage. The principal part of that subject was standing timber, real estate, insusceptible of ready conversion into money. The mortgagor was not authorized to sell the standing timber. It was left in possession .and.control of its business, the manufacture and sale of lumber, with power to sell lumber or other property, in the course ■of such business. This language does not import intention to allow it to sell the standing timber and appropriate the proceeds of the sale. To work out the timber on so large a tract of land required a considerable period of time and the' expenditure of large sums of money. 'The evident purpose was to provide for payment of the debt out of the sales of the lumber and permit the use of portions of the proceeds of sales, in discharge of the operating expenses. The property was not of a transitory nature. It was radically different from a stock of goods in a store and from materials and ma
It is suggested in the briefs as well as in the report of the commissioner that the mortgage debt was not proved. We are unable to concur in that view. An itemized account of the indebtedness was filed with the answer of the Miners. and Manufacturers Lumber Company, successor of the Breit-■weiser Lumber Company, and the correctness of that account was fully proved by the testimony of a witness under whose supervision it was made up from the books and who further testified to his personal knowledge of all of the transactions upon which the account is based. Although this witness said, on cross-examination, that part of the money was advanced to A. G. Breitweiser, before the Brooks Eun Lumber Company was organized, the account and the mortgage make it very clear, that such money went into the timber enterprise and was treated as a debt of the company. It is in the account and the mortgagor promised in the mortgage to pay it.
This conclusion necessitates inquiry as^ to whether the lien of the mortgage conflicts with the vendors lien and, if so, to what extent. Both cover the standing timber and, in so far as they conflict, the latter prevails, of course. But, if it does not extend to all of the subjects of the mortgage lien, there is no conflict as to what it does not include. It is necessary, therefore, to determine now the amount of the debt secured by it and the subject of such security.
Unless the terms of the lien can be enlarged by the unrecorded contract, it secures only the twenty-five $1,000.00 notes. As it does not in any way mention or refer to the contract, it is not perceived how it could constitute notice, to any
They were secured upon the timber and rights granted by the deed and upon timber and lumber manufactured “while on the premises. ” The limitation of the lien by its terms logically applies to the propert3r as well as the debt. There can be no reason for a distinction in this respect. The lien must be created by express contract. It cannot arise by implication. Hence, it cannot extend beyond the terms of the contract in any respect. Timber and lumber not on the premises, or that has been removed from the premises, is not inr eluded. The word “premises,” however, does not necessarily mean the 1430 acre tract of land. It means all of the grounds or tracts of land on which the lumber operations are conducted. The purpose of the recorded reservation is to give notice to purchasers and fix the status of lien creditors. It is not unusual for the mill and lumber yards of such an
It is impossible in view of these conclusions and other facts now to be stated, to find a statutory vendors lien in favor •of the Acadian Coal and Lumber Company, for more than the item of $3,702.49, and its right to that is resisted. All but four of the notes secured by the lien were actually negotiated ■and seventeen of them remain unpaid. Four of those that were sold have been paid off by the Brooks Run Lumber Company. The four not sold were merely pledged for the debt of the Brooks Run Lumber Company and redeemed to the extent of $2,500.00, by payment on the debt for which they were pledged. How the Acadian Coal and Lumber Company •can have any lien for the amount of the four actually paid off after negotiation thereof to the Union National Bank, as against a lien creditor or even a purchaser with notice, it is impossible to see.. If the money originally obtained for them was used by the lumber company, the lien was held after ■sale thereof, by the bank, not the Acadian Company. Payment of these notes extinguished them as obligations and pro tanto extinguished the lien. If the vendor permitted the vendee to use the money for which they were sold, a new obligation must have arisen between them, for the bank then held the lien, not the vendor. The latter was a mere unse
"The status of the $2,500.00 paid on the $4,000.00 note of' the Brooks Run Lumber Company, for- which four of the $1,000.00 notes were pledged, is different. They were merely pledged and then redeemed. Chas. E. Breitweiser was not a. purchaser thereof. He paid nothing for them. He simply paid the $1,500.00 he was liable for on the note and took the collateral by assignment, for indemnity. Reimbursement for his payment, with interest, makes him whole, and that is all he is entitled to. Those four notes are unpaid and Breitweiser’s-estate is entitled to $1,500.00 out of them and the Acadian Company to the residue of $2,500.00. In other words, the’ four unpaid notes with their interest are secured by the lien and.the amount is to be divided on the basis here indicated,, between appellant and the Acadian Coal and Lumber Company.
This definition and limitation of the statutory vendors-lien, however, does not terminate the inquiry as to the right, of the Acadian Coal and Lumber Company. It claims a. common law lien, known as the seller’s lien, based upon the right of detention of personal property after sale thereof and passage of the title, until it is paid for. The vendor of standing timber to be cut and removed from his land by the ven-dee, has such a lien on the timber and the lumber manufactured, as long as it remains upon his premises, unless it is. otherwise stipulated in the contract. While it remains on. his premises, it is deemed to be within his possession, not
Whether this lien on the timber extends beyond the excess of the purchase money thereof, over the $25,000.00 represented by the notes, namely, $3,600.00, and includes the sale price of the equipment, and the lien for the price of the equipment covers the timber as well as the equipment, depends upon the provisions of the contract and the interpretation thereof. By the contract, separate prices were put upon the timber and the equipment, but that manifestly was done only for purposes of convenience. The timber was priced by the acre and the equipment at its cost left open for subsequent ascertainment. Both were sold together, at the same time and by the same contract. Part of the entire consideration was provided for by notes and the vendors lien, and the contract provided that “the residue on account of the timber and other property and payments made in improvements and preparation for the manufacture of the timber into lumber shall be paid monthly and at the rate of Three Dollars per thousand feet for the lumber shipped.” Obviously, the contract was entire and the seller’s lien included all of the purchase money not provided for in the notes and extended to all of the property. There can be no doubt about the entirety of the contract. Rollyson v. Bourn, 85 W. Va. 15; Herman v. Goddard, 82 W. Va. 520. As it was entire, we think it clearly follows that the common law lien extends to all of the debt, except the notes, and all of the property as to which it has not been released by relinquishment of possession.
Just how much of the fund now in the hands of the court was derived from the sale of the standing timber cannot be safely determined from the record as it now stands. But, as to that part, there is no lien in favor of the Acadian Coal and Lumber Company, except for its share of the four notes secured by the vendors lien above described amounting, with its interest, to $3,702.49. As to the residue of that fund, the mortgage debt of the appellant constitutes the fifth lien and will fully absorb it if prior liens leave anything.
This lien takes precedence over the mortgage, Justice V. Moore, cited, and also over the execution levied on the lumber on the yards. Wall v. N. & W. Railway Co., 52 W. Va. 485; Withers v. Carter, 4 Gratt. 407.
• From these conclusions it obviously results that the decree complained of erroneously accorded to the Burnsville Milling Company the fifth place in the order of liens, the Burnsville Grocery Co., the sixth and the Acadian Coal and Lumber Co. the seventh, and also erroneously postponed the
The decree complained of will be reversed in so far as it adjudicates invalidity of appellant’s mortgage and postpones the mortgage debt to all other liens and general debts and fixes the liens of the Burnsville Milling Company, the Burns-ville Grocery Company, the Acadian Coal and Lumber Company’s lien for $16,981.00, the general debts and said mortgage debt, and overruled appellant’s third and fourth exceptions to the Commissioners report. It will be so modified as to sustain said exceptions and accord the lien debts, as to which it is erroneous as aforesaid, the places, priorities, rank and dignity in the order of liens hereinbefore ascer
Reversed in part. Affirmed in part. Remanded.