Mosher v. Lansing Lumber Co.

Grant, J. (after stating the facts). This case is ruled by First Nat. Bank of Ionia v. Michigan Trust Co., 105 Mich. 107, unless the provisions of contract No. 3 bring the complainants without it. Neither the trust company nor any of the creditors of the Lansing Lumber Company had knowledge of the existence of this contract at the time the compromise was effected between that company and its creditors which resulted in the execution of the trust deed, nor did either know of its existence until after the fire. A committee of creditors was appointed to examine into the affairs, and report upon the assets and liabilities, of the company. They went to Dodge, the place where the mill plant and the lumber and logs were situated, and reported to the creditors. Among the assets so reported was an item of lumber amounting to $43,533, and logs amounting to $71,864.55, in which were included the lumber and logs in contro [521] versy. The committee for the creditors, as well as the creditors themselves, made this settlement upon the basis that the lumber and logs in the mill yard and boom at Dodge were the property of the lumber company. The complainants stood by, knowing the situation, and made no claim to it, and did not inform the committee or any of the creditors of the existence of contract No. 3. The trust company obtained insurance upon this property as its own, and without any knowledge of that contract. After the property was destroyed, Mr. Fisher said to Mr. Withey, the president of the trust company: “I sat by, and let the Lansing Lumber Company make this mortgage, and never said a word about my claim, because I always had a high regard for Mr. O. M. Barnes, and did not want to do anything that would stand in his way.” Mr. Barnes was largely interested in that company. Complainants cannot therefore be now permitted to set up this contract as creating a lien upon the insurance money, as against other creditors. This is not the case of the ordinary assignee, who acquires no greater rights than his assignor. The trust deed was a compromise between the company and the creditors, made by the latter without knowledge of the complainants’ claim, and in reliance upon this property as constituting a part of the assets, and for a good consideration. Decree reversed and bill dismissed, with costs of both courts. The other Justices concurred.