Revelle v. McQuay

Miller, President: In a suit by creditors of McQuay the principal question presented by the appeal of the Laurel River Lumber Company is whether as alleged in the bill and denied in the answer but decreed against appellant, it obtained from McQuay a preference in the sum of $2,094.77, or in any sum, rendered void as such by section 2, chapter 74 of the Code¡ The record shows that the alleged preferences, aggregating $2,094.77 and decreed to the special receivers, consisted: first, of a check of the Reese-Sheriff Lumber Company, dated March 6, 1915, payable to appellant, for $500.00; second, of three items, one of May 28, 1915, for $96.74, one.of June 15, 1915, for $196, and the other of September 11, 1915, for $15.06, proceeds of the sale of certain lots of lumber; third, the sum of $1,286.97, the value of certain lumber turned over to appellant, through McQuay, by the Reese-Sheriff Lumber Company, all ante-dating the institution of the plaintiffs’ suit. The main contention of the appellant is that the money so paid and the lumber turned over by the Reese-Sheriff Lumber Company, though the lumber was purchased by that company from McQuay, was at the time of such payments and delivery of the lumber to appellant the money and property of the Reese-Sheriff Lumber Company and not of McQuay, and that plaintiffs and the other creditors of McQuay have no right to pursue the money and property so received by appellant into its hands as unlawful preferences. The bases of appellant’s claim is: first, that by contract in writing between McQuay and the Reese-Sheriff Lumber Company, made September 15, 1914, and recorded in the county clerk’s office November 23, 1914, McQuay, as party of the first part, agreed to sell and did sell, and the Reese-Sheriff. Lumber [131] Company agreed to purchase all the lumber of the various kinds and amounts therein set forth, which McQuay should manufacture on his operation located at Jenningston, West Virginia, and which was to be manufactured during the season of 1914 and the early part of 1915, in accordance with the orders of the purchaser, the contract describing in detail the approximate amounts of each kind of lumber covered thereby. Another part of the agreement and one relied on to support the finding of the commissioner and the decree complained of, is that the prices agreed upon were f. o. b. cars at Hendricks, West Virginia, on the Western Maryland Railroad, implying, if not stipulating, as it is contended, that the title to the lumber should not pass to the purchaser until delivered on board ears at Hendricks. But a subsequent paragraph of the contract and one relied on to show the intention of the parties to pass title earlier, is the agreement on the part of the lumber company to make an advancement of $8.00 per thousand feet by its notes on or about the fifteenth of each month for all lumber manufactured and put on sticks the previous month, of the various kinds set forth, the same to be marked up as the property of the lumber company as per their brand, the lumber to be shipped out as fast as good shipping conditions would permit, the balance after deducting the $8.00 per thousand feet advanced to be made on the regular terms of cash less 2% discount. Another provision of the contract cited in support of the decree and the construction of the contract by appellees is that McQuay agreed to take out a policy of life insurance for $5,000.00 in favor of the lumber company to be held as additional collateral security to cover said advancements. The commissioner to whom the cause was referred to state the account was of opinion that this contract did not vest title to any of the lumber contracted for until delivery f. o. b. cars at Hendricks, and that although the payments in money and the lumber made to appellant represented lumber actually manufactured and put on stick and branded as provided in the contract, and paid, not by McQuay, but by the Reese-Sheriff Lumber Company, nevertheless the lumber was not the property of the lumber company but of McQuay, wherefore a preference in favor of appellant, voidable as such by the statute, and the [132] court 'below, in overruling the exceptions of appellant thereto, adopted the view of the commissioner and pronounced the decree complained of. We can not agree with the court and commissioner in their construction o'f the contract. In our opinion it was the. manifest purpose of the parties* that the title to the lumber was to pass to the purchaser as and when it was put on stick and branded as stipulated. What else could the parties have intended in so disposing of the lumber and providing for payment by advancements ? ‘ How else was the purchaser to be protected in its advancements except as provided in the contract? When by the terms of the contract the parties make or manifest their intentions to pass title before delivery, their intentions must be allowed to govern; so held in the recent case of Poling v. Hoffman 84 W. Va. 199, 99, S. E. 415; Thomas v. Lewis, Hubbard & Co. et al., 79 W. Va. 138; Lynch v. Merrill, 72 W. Va. 514, 516; Hood v. Bloch Bros., 29 W. Va. 244; Moore v. Patchin, 71 W. Va. 192. That the purchaser had fully complied with its contract at the time of the payments and delivery of the lumber to appellant is not questioned. So much as to the location of the title to the lumber when disposed of to appellant. The facts and circumstances attending the payments of money and delivery of lumber to appellant are these. McQuay’s mill was located on the private railroad of appellant, and he and the Beese-Sheriff Lumber Company had no way of getting the lumber to market except over this private railroad. McQuay in his operations had incurred a large indebtedness to appellant for supplies for his men, and at this stage of his account, appellant gave notice to McQuay and the Beese-Sheriff Lumber Company that it would not haul out any more of the lumber until its account was paid or secured to be paid. There was then quite a large quantity of the lumber on the mill yard branded as the lumber of the purchaser. Desiring to remove this lumber, the Beese-Sheriff Lumber Company, through a representative present on the ground, at first agreed to settle appellant’s account against McQuay with its notes; but after consideration, instead of making its notes as agreed, it sent appellant its cheek for $500.00 and directed McQuay, on condition that appellant would allow the six car loads of lumber [133] then at the mill to go out on its order, to turn over to appellant the residue oí the lumber on the yard, estimated at about 150,000 feet, or a sufficient part thereof to satisfy its account. This proposition was accepted, the six ears of lumber shipped out, and the lumber remaining in the yard turned over to appellant, and, except a small part thereof, sold and shipped out by it, and the money derived therefrom, together with the $500.00 cash payment by the Reese-Sheriif Lumber Company, make up the sum of money decreed against appellant as an unlawful preference. If the cash payment of $500.00 and this lumber, when so paid and delivered to appellant, was the property of the Reese-Sheriif Lumber Company, as we hold it was, it can not detract from the rights of appellant that the arrangement was in part made and carried out through the agency of McQuay, or that one or two of the small lots of lumber sold was sold and billed out in his name. The question is, whose lumber was it, and who was actually entitled to the proceeds thereof? As to this, as already indicated, we think there can be but one answer. It is proven by McQuay and not denied by anyone, that at the time the Reese-Sheriif Lumber Company made the $500.00 payment to appellant and turned over to it the lumber, the purchaser had then advanced to McQuay on this lumber at least $5,000.00 in excess of the price of the lumber actually shipped out by it, and which, including the cash payment of $500.00, exceeded the value of the lumber turned over to „ appellant. It is said the Reese-Sheriif Lumber Company is not •complaining here; which is true; but what of that? How does that fact effect the rights of appellant? The Reese-Sheriif Lumber Company is a non-resident corporation; whether served with process does not appear. In the order of reference its name is not recited among the other defendants served with process •or appearing in the cause; nor does any subsequent decree recite service of process upon it. As it clearly appears that little will be left out of the estate of McQuay for distribution to general creditors, it is not unlikely, if served with process, it was regarded not worth while to bother with a defense. Our conclusion is to reverse the decree in so far as it adjudges against appellant the sum of $2,430.59 with interest, as .an unlawful preference, and as to that part of the subject mat [134] ter dismiss the bill. When the case goes back to the circuit court the decree in .favor of appellant as a general creditor' should be corrected by debiting it, as of the proper dates, with the payments made on behalf of MeQuay by the Reese-Sheriff Lumber Company. In all other respects the decree will be affirmed. Affirmed in part. Reversed in part. Remanded.