Jennings v. Whitney

224 Mass. 138 | Mass. | 1916

Bbaley, J.

It is settled by Elmore v. Symonds, 183 Mass. 321, that where the debtor merely gives his personal promise to pay his creditor from a particular fund, the fund is not chargeable with an equitable lien. See in this connection Westall v. Wood, 212 Mass. 540; Old Colony Trust Co. v. Medfield & Medway Street Railway, 215 Mass. 156, 160, 161; Coram v. Davis, 216 Mass. 448, 454. But in the case at bar the bankrupt corporation assigned to the plaintiff all moneys accruing under its contract with the United States to secure the payment of its promissory notes, and by the terms of the assignments an equitable lien or charge as between themselves attached to the contract price when earned in so far as might be required for repayment of the notes. Security Bank of New York v. Callahan, 220 Mass. 84, and cases cited.

The plaintiff’s failure to give notice to the bankrupt’s contractee did not affect the plaintiff’s rights as against the assignor. Kingsbury v. Burrill, 151 Mass. 199, 203. Richardson v. White, 167 Mass. 58, 61. Walton v. Horkan, 112 Ga. 814. Columbia Finance & Trust Co. v. First National Bank, 116 Ky. 364. Muir v. Schenck, 3 Hill, 228. Cogan v. Conover Manuf. Co. 3 Rob. (N. J.) 809. Barnes v. Alexander, 232 U. S. 117, 121; 2 R. C. L. Assignments, § 30, and cases cited in notes.

Nor is the lien invalidated by U. S. Rev. Sts. § 3477, declaring that all transfers and assignments of any claim upon the United States or any part or share thereof or interest therein shall be absolutely null and void. The sole purpose of the statute was to protect the government and not the interests of the parties. Freedman’s Savings & Trust Co. v. Shepherd, 127 U. S. 494. Ball v. Halsell, 161 U. S. 72, 79. Forrest v. Price, 7 Dick. 16, 28. York v. Conde, 147 N. Y. 483, 493. It was so assumed in the reasoning in Jernegan v. Osborn, 155 Mass. 207, 210. And the provisions in article sixth of the contract, “that any transfer of the contract, or of any interest therein, to any person or party by the said party of the first part- shall annul the same, so far as the United States are concerned,” would not affect the validity of the assignments.

The remaining question is whether the proceeds of the contract in the possession of the defendant corporation is subject to the lien. The assignments being valid at the date of filing the petitian, the receivers held whatever rights the bankrupt had in the contract subject to the lien. Hurley v. Atcheson, Topeka & Santa Fé Railway, 213 U. S. 126, 134. Sexton v. Kessler, 225 U. S. 90. U. S. St. 1898, c. 541, § 67e. The money had been lent to enable the bankrupt to go on with the contract, which had not been fully performed at the date of the bankruptcy. It appears, however, to have been an undertaking from which upon completion a very appreciable profit would be realized, and the receivers filed a petition in the bankruptcy court reciting that it was essential that the property should be sold as a “going concern” subject to all incumbrances, and asking leave to sell the machinery, tools, stock on hand, furniture, patents, interests in patents and contracts. A decree accordingly having been entered, a sale followed to the defendant Whitney, to whom the bankrupt was largely indebted as a creditor. The receivers in their report of the sale asked that, upon receipt of the consideration, they be authorized to transfer by proper instruments “all the right, title and interest in said property, subject to all incumbrances,” and the order of confirmation was in accordance with the request. It is found that acting under the order they delivered the property to Whitney, “but gave him no written bill of sale or other written transfer except assignments of contracts of the company other than that herein involved.” The trial judge further found that while this omission was intentional, all the parties knew of the assignments and of the indebtedness to the plaintiff, who never has proved his claim in bankruptcy.

It results from these proceedings that no property of the bankrupt remained undisposed of, nor did the receivers intend that there should be any; and Whitney by force of the decrees or orders succeeded to all the assets of the bankrupt, including the contract, with the right to complete it and receive the consideration if the assent of the government could be obtained. C. H. Batchelder & Co. Inc. v. Batchelder, 220 Mass. 42, 44. Federal Trust Co. v. Bristol County Street Railway, 222 Mass. 35.

The defendant company bearing the same corporate name as the bankrupt was thereupon organized under our laws by Whitney, with whom one of the receivers and one Danforth were joined, for the purpose “in particular to acquire the business formerly carried on by the Sub-Target Gun Company, with the plant, machinery, stock and all other properties connected with the business, and the good will of the business, and the benefit of the pending contracts and the stock in trade thereof.”

The findings of fact that the receivers and the promoters intended the new corporation should be the successor of the old company whose property was to be taken over and its business resumed and prosecuted in so far as possible as if bankruptcy had not intervened and that all the property acquired by Whitney under the orders of sale passed to the defendant company even if he designedly omitted to assign specifically the contract in question, are justified by the evidence reported.

It is clear from the answers to the interrogatories propounded by the plaintiff and from the findings that the company made no new contract with the government but went on and performed the original contract and the consideration received therefor is subject to the lien. Westall v. Wood, 212 Mass. 540, 544. Gage Lumber Co. v. McEldowney, 207 Fed. Rep. 255. Goodnough Mercantile & Stock Co. v. Galloway, 171 Fed. Rep. 940. In re Olzendam Co. 117 Fed. Rep. 179.

The decree should be affirmed with costs.

Ordered accordingly.