193 Pa. 194 | Pa. | 1899
Opinion by
The bill in this case was filed by plaintiff to compel, defendants, by proper decree, on the facts averred by her, to assign a certain bond in sum of $30,000 secured by mortgage upon land in Warwick township, Lancaster county, to the Real Estate Guarantee and Investment.Company of Delaware. The learned judge of the court below has set out twenty distinct findings of fact, on which he bases most elaborate legal conclusions. It is manifest to us that a large number of these findings are wholly immaterial, because they have no bearing on the issue raised by the bill and answer. By not eliminating things not material the learned judge permitted himself to be lured into disquisitions on, and application of legal and equitable principles, wholly outside the case.
The issue is a narrow one. The complainant avers : 1. That
We shall endeavor to state, as concisely as possible, the facts not in dispute. One Levi H. Miller, prior to April 11, 1893, was the owner of the land mortgaged, and had been the owner for many years ; he was a man of considerable wealth, consisting of lands and personalty. In the latter part of the year 1892, Sutton, a son-in-law of Miller, purchased 30,000 shares of the capital stock of the Atkinson House Furnishing Company, a Maine corporation. The par value of the stock was $10.00 per share, or $300,000; the purchase price was $250,000. In part payment Sutton gave his promissory notes at four months in sum of $100,000, indorsed by his father-in-law, Miller. The corporation, with the aid of Sutton, procured these notes tobe discounted in the regular course of business by a number of banks in Philadelphia, Camden and Wilmington. In March, 1893, before the notes matured, the House Furnishing Company failed. Immediately prior to the maturity of the notes Miller, by conveyance and assignment to several persons, put all of his property out of his possession. The land, which is the subject of the mortgage in dispute, he conveyed, on April 11, 1893, as before noticed, to one H. S. Rheiner, taking in payment the bond for $30,000, secured by the mortgage; this mortgage, seven days later, Miller assigned without consideration to one Joseph Cooper, who the next day assigned it to the Sussex Land and Cattle Company, the name of which company was afterwards changed to “ The Real Estate Guarantee and Investment Company,” in whose interest this suit is prose
After the failure of the House Furnishing Company, it was reorganized as the Furnishing Company, and stock in the new company of the par value of $240,000 delivered to trustees to be held in trust for Sutton, in settlement of his interest in the old company; Sutton’s interest in this stock was also attached by the banks, sold, and purchased for their benefit by James Goodwin, trustee.
As the banks, by the purchase of Miller’s interest in the stock held by Cooper, had become practically the owner of all but a small minority of the stock of the Sussex Land and Cat-
“ Now, therefore, be it resolved, That the officers of the Sussex Land and Cattle Company are authorized and directed to purchase said judgments and all the above mentioned property and collaterals by giving its notes for the amount of said judgments, with interest and costs and all expenses and counsel fees which the said plaintiffs have incurred, payable at such times as said officers may deem proper, and can best arrange for the interests of the stockholders of this.company; and in order to secure the due payment thereof to mortgage sufficient real estate and to assign a sufficient number of mortgages belonging to this company unto said plaintiffs or to their nominee or nominees.”
It will be noticed that when this resolution was adopted, the creditor banks were by regular judicial proceedings practically the owners of 25,800 shares of the company; of the remaining shares issued, D. K. Joslin owned 400, and he had been active in bringing about the agreement and the adoption of the
In pursuance of the resolution, the president and secretary, with the corporate seal affixed, made the transfers of the collateral to the banks aggregating over $100,000; the company had delivered its notes to the three attorneys for the creditors, these defendants, each in the sum of $5,000, their fees, and also a note of $1,000 costs and expenses. The National State Bank of Camden held one of Sutton’s notes in the sum of $8,261.84, and was a party to the purchase of Sutton’s interest in the Furnishing Company; the cattle company desiring to purchase this claim, it was not included in the $100,000 indebtedness ; so, to secure the counsel fees, expenses and this Sutton note, the mortgage and bond for $30,000 were assigned to Edward Dudley as trustee, he executing and filing a declaration of trust, setting out fully the consideration and his trusteeship. The mortgage not having been paid, and representatives of Miller remaining in possession, after a delay of nearly two years, sci. fa. was issued and judgment obtained ; when levari facias was issued, this bill was filed, and proceedings enjoined. After a hearing, the court below, both on facts and law, found for plaintiff, and decreed a reassignment of the mortgage.
So far as we have narrated the facts, we ca2inot discover a2iy material dispute. On their face, they disclose 2iothing which should move a chancellor to destroy a written contract of assig2iment. But the learned judge of the court below, as a2i inference .from the facts attending the adoption of the resolution for the assignment of the mortgage, is of the opinion that counsel for the creditors, these defenda2its, in collusion with Joslin, perpetrated a fraud upon the company, and therefore, as to the party defrauded, the resolution and the assignment are void. His first suggestion is that there was no consideration to the company for the payment of these fees; in this he is clearly mistaken. The unavoidable conclusion from the testimony, the whole 'of it, and there is no possible other conclusion, is that Miller, after deeply involving himself by his indorsements for his son-in-law, and knowing after the failure of the House Furnishing Company that he must pay the notes which are about to mature, sought to cover up his prop
Next, the learned judge suggests as a fact pointing to fraud that the counsel had rendered no bill to their clients for fees and expenses before demanding them from the company as part of the price of settlement; assuming this to be correct, the evidence shows that their clients directed them to demand their fees as part of the consideration; that they had rendered no bill, and their clients did not know the exact amount of their demands, if this were a fact, was no business of the company; it was not their client; they had rendered it no professional service. The only question for its consideration was whether it could afford to pay the fees in addition to the debt; the manager and directors of the company were not children, but grown men, familiar with business affairs. After consultation and deliberation they concluded to pay. That ended that matter.
Again, the learned judge is of the opinion that the circumstances preceding the adoption of the resolution by the board show collusion between the manager, Joslin, Bacon, the secretary, and the defendants, to perpetrate a fraud on the company. The testimony of Mr. Dudley, one of defendants, is to the effect that Mr. Ridgway, counsel for the company, had first framed the resolution, and the first draft did not include counsel fees; when it was shown to him next day, and before it had been presented to the board for action, he objected to it in that form, and insisted it should be amended so as to cover counsel fees and expenses; the question in dispute was, not whether a resolution to pay counsel fees should be adopted, but whether it should be embodied hi the general resolution for the settlement or in a separate one. When he saw the resolution, there were present Joslin, the general manager, and Bacon, the secretary of the company, with Sparhawk and Hoffeeker;
It was argued in the court below that the lands conveyed by Miller, and which since 1873 stood in his name of record, were his wife’s, and the ostensibly fraudulent transfer was but an effort to prefer his wife as a creditor. Although the court seems to credit this, there was no evidence worthy the name to support this view. Sutton undertakes to state what he had heard, that the farm bound by this mortgage had come to Mrs. Miller from her father, Jacob Erb. But titles to property are not settled by such statements, and it is well they are not.
The court is further of the opinion that, under the proceedings by attachment resulting in the sale of Miller’s interest, no title passed to the creditors, and therefore they had nothing to give the company as a consideration for the purchase price. Assuming this to be correct, both parties treated the title as having vested in the creditors; the right of the latter was sufficiently probable to warrant litigation to judicially establish it; pending such litigation, the title was as effectual to arrest the business of the company as if it had been unquestioned. It has been decided over and over in this state that the surrender of a doubtful claim or right is a good consideration for a contract; therefore, the absence of an undisputed title in the creditors was an immaterial fact.
As to the authority of the board of directors of a corp oration to make such a contract, which the court elaborately denies, citing general principles as to the corporate power of a board of directors in support of its view, the entire opinion in this particular is based on a misconception of the facts. All the assets of the company, as well as nearly all its stock, were seized and held by the creditors; for the time being, at least, the corporation was powerless to move; a future judicial determination might establish beyond controversy the right of the creditors ; if the corporation had the power, fraudulently as to the creditors, to take over the entire assets of Miller, it clearly had
We have not taken up the rulings of the court below in their regular order and disposed of them, because we have tried not to wander from, but to confine ourselves to, the issue; we have said enough to indicate our opinion that the court was misled by immaterial outside facts into wholly unwarranted inferences, and was thereby impelled to an erroneous decree.
The only issue raised by the bill and answer was whether the assignment of the mortgage to Dudley to secure counsel fees and expenses was to that extent valid. As it was made by the authority of the board of directors for an ample consideration, without any evidence of fraud or overreaching on part of defendants, we hold it good as against the corporation which received and still holds a full consideration therefor, and as a consequence, good as to this plaintiff. As the inferences of fact by the learned judge are wholly unwarranted, the law cited and declared by lfim has no application.
The decree is reversed, the injunction is dissolved, and bill dismissed at costs of appellee.