Union Trust Co. v. Mabley & Co.

Grant, J. (after stating the facts). The city had no lien upon the .goods, because no levy had been made, and, if the collector had threatened to levy, the receiver could have paid under protest, and maintained a suit to recover the money paid. Lyon v. Receiver of Taxes, 52 Mich. 276. It must follow that the receiver could not, of his own motion and without consideration, agree to the existence of a lien, and give it preference over the secured creditors. The difficulty is one not of law, but of fact. The situation was this: Mabley & Co. had failed. They had favored some creditors by mortgage. Other creditors attacked the transaction as fraudulent. Among them was the city, which threatened to take legal steps to secure its claim. The receiver was trying to make a sale. The secured creditors were anxious that the sale should [483] 'be made. If the city took the action it proposed to, the sale could not he accomplished. The city would forbear action only upon the condition that the receiver would retain from the amount of the sale sufficient to pay these taxes. The purchaser would buy upon this condition only. The receiver agreed to it. Action by the city was forborne. The sale was accomplished and the money retained. The creditors cannot retain the benefit of the sale, and repudiate the terms upon which it was made, even if the receiver, acting for them, exceeded his authority. Mr. Hance does not deny the positive statements made by Webster and Joslyn. He only seeks to avoid their effect by giving his interpretation of them. This he cannot do. If we give the conceded statements their natural interpretation, we cannot escape the conclusion that the agreement to withhold this money for the payment of the taxes was made, and that without it the sale would not have been consummated. The arrangement was favorable to all parties interested, and must be sustained. Order affirmed, and the receiver directed to pay the taxes out of the amount in its hands. Long, O. J., Montgomery and Moore, JJ., concurred. Hooker, J., did not sit.