Reed v. Bradley

Scates, 0. J. The charter of the Southern Michigan Telegraph Company, fully authorizes them, as we think, to make the several mortgages relied on by the plaintiff, as showing property and a right of possession in him. If the exigency of their affairs, and the interests of the company demanded that these incumbrances should be made, and of this they must be allowed to judge, and not a stranger, we should not feel warranted in setting aside a fair contract, with which both parties were content, although it be at the instance of a creditor, unless such creditor can show that his rights are prejudiced by it. These are under the signature of the president and the seal of the company regularly made, and the subject matter of them, calculated to promote the objects contemplated by, and within their charter, and the interests of the company. The seal is prima facie evidence of the assent of the company. Lovett v. Steam Saw Mill Association et al., 6 Paige R. 54; Johnson v. Bush, 3 Barb. Ch. R. 207; Angell and Ames on Corp., 192, Sec. 6, 194, Sec. 7. We have heard no solid or valid objection urged against the fairness or legality of these mortgages. The plaintiff has insisted upon his right to retain the possession of the telegraph line, with all its fixtures and attachments, under a right of lien in the nature of the lien of mechanics, for labor in making or repairing articles of personal property, and upon the materials they may provide and use for these purposes. (See for this principle of law Moore v. Hitchcock, 4 Wend. R. 292; Gregory v. Styker, 2 Denio R. 628.) But I am not prepared to admit the analogy, or the application of the principle to this case. The plaintiff does not present himself in this record as a mechanic, but rather as a capitalist. Rather as investing his money in an enterprise of others, taking a mortgage of the property and the management of the expenditure, and the operation of the enterprise for a security. Neither does he stand before us in the character of a vendor, insisting upon retaining possession of the article sold, until paid the price. He is in the attitude of bailee or mortgagee, and upon that he must stand, and defend his rights. In this character he has very clearly shown title in himself sufficient to entitle him to recover the articles replevied, unless defendants can show that the rights of Lombard, the attaching creditor of the Telegraph Company, is injured thereby, or has paramount right to satisfaction out of this property, as the property of the company. There is nothing shown in the transaction itself, as between the plaintiff and the telegraph company, to set the mortgages and arrangements aside. On the contrary it not only appears to have been fair, and bona fide, but eminently for the benefit of the company, as well as their creditors. When Reed took it, the enterprise seems to have proven a failure, either for want of sufficient means to develops it, mismanagement, or its intrinsic worthlessness. Having furnished the means to repair, rebuild, and put it in operation, under his management it had already on the day of trial, within about a year, repaid him from profits about $3,793.73, which had been indorsed upon the mortgages. The only grounds presented, to impeach this transaction, and subject the property to the payment of the company’s debts, without regard to Reed’s rights, are, that it has been held out to the public as the property, and in the name of the company, in a circular inviting patronage, and that Lombard is a creditor of the company. Taking all this for truth, and still the rights of Reed are not impaired or affected. The simple existence of a debt, does not put it out of a debtor’s power to sell or incumber his property in an ordinary, fair, business way. It must be fraudulent, or done to hinder and delay creditors. This does not appear. Besides the equity of redemption in the debtor, mortgagors may be liable to Lombard’s claim. Taking this, might be just and right, while it would be iniquitous to take with it, not only all that they pledged to Reed for security, but some five thousand dollars’ worth of Reed’s money spent in improvements upon it. Defendants should have shown that Lombard was a creditor by proving a debt from the company to him, in order to put him and themselves in a position to question this transaction as between the parties. How and when was that debt contracted ? Was credit given the company on account of the circular? No such facts are shown. See Damon v. Bryant, 2 Pick. R. 413; Pierce v. Gibson, 2 Carter Ia. R. 408. The use of the name of the company was proper and necessary in the management of the telegraph line. The company, and not Reed, owned the franchise to build and operate the line. This franchise had not been forfeited, lost or waived by the mortgage arrangement; nor had Reed any right to exercise this franchise in his own name, but only in the name, and as assignee, of the company. He was assignee only of the property with liberty to operate and manage—which could only be in the name of the corporation. This he had a right to use for the purposes provided in the mortgages. We use these arguments as illustrations of this case only; for Reed, in this case did not claim, or profess to operate this line in his own name, but under the company as mortgagee in possession. We, therefore, pass no judgment on his right to exercise the corporate franchises in his own name as mortgagee or purchaser. The explanation seems full, fair and consistent, why the circular invited public patronage in the name of the company. But at the same time the property was, and had been actually in Reed’s possession under the mortgage, which was notice to all concerned to put them upon inquiry. It is true that George Allen was, a portion of the time, both secretary of the company and agent for Reed. No one might know his character either as secretary or agent, without inquiry—and by it, they could easily learn that he claimed and possessed the property, as agent of Reed. He^ held the secretaryship for the convenience of keeping the mutual accounts. His possession should have put Lombard upon inquiry into the ownership, before he trusted the company, on the faith of the property. Such inquiry would have led him to a true knowledge of all the facts. In every light in which we have been able to view these facts, injustice seems to have been done Reed by the finding and judgment. After hearing a second argument of this cause and careful consideration of the bill of exceptions, we deem the same sufficient to show that all the evidence in the case is set forth in it. This is all that is required by Stickney v. Cassell, 1 Gil. R. 420. And it is not obnoxious to the objection in Buckmaster v. Coal, 12 Ill. R. 74, of being a mere outline. This bill recites at large the evidence of both parties, and concludes that “ upon the evidence aforesaid” the cause was submitted, and the court found the issues. This phraseology necessarily excludes that any further, other, or more was before it. Judgment reversed and cause remanded. Judgment reversed.