Anthony v. Butler/Opinion of the Court

This case is brought before this Court by a writ of error to the Circuit Court of Rhode Island.

The defendant, Cyrus Butler, commenced an action of replevin against the plaintiff in error, for various articles of personal property specified in the writ of replevin, and claimed by him under a mortgage dated the 20th day of November, 1837. The defendant had taken possession of the property, by virtue of an execution directed to him as marshal, on a judgment against the mortgagors.

On the trial, certain exceptions were taken to the rulings of the Court, which bring the questions decided before this Court.

The mortgage was executed by one Daniel Greene, as the agent of the Union Steam Mill Company, said company being a manufacturing corporation, conveying to the plaintiff below certain lands, with a woollen mill and other buildings, with the machinery in said mill, &c. And the incorporating act and several acts amendatory thereto were read in evidence. And also a deed from William P. Salisbury to the said Greene, dated the 18th May, 1837, conveying all his interest in the real and personal property of the Union Steam Mill Company.

And it was proved that Daniel Greene, who executed the deed first aforesaid, was, and had been from the time of the formation of said company, the general agent, and, as such, had made all purchases and sales for the company; and that the deed was executed by him with the consent and authority of said company: and also by and with the consent and authority of the persons who, at the time of the execution thereof, were members of said company.

The Court decided that the said corporation was not so proved as to entitle the deed to be read to the jury as the deed of the said corporation; but that the deed was good to convey a valid title to the articles named in the writ of replevin. To this decision the counsel for the defendant excepted.

And it was further objected to said deed, that it did not appear that the same had been recorded prior to the defendant's levy on the articles by the writ of replevin, in conformity to the statute on the subject. The counsel for the plaintiff produced and read to the Court an endorsement on the back of said deed, signed by the clerk of the town of East Greenwich, in the words and figures following, to wit: 'Lodged in the town clerk's office, to record, Nov. 20th, 1837, at 5 o'clock P. M., and recorded same day in the records of mortgages in East Greenwich, book No. 4, &c.' It was proved that the said clerk kept a book in which all mortgages of personal property only were recorded; and all other mortgages, which included real estate, were recorded in other books kept in the office. After the deed was recorded, it was taken away by the plaintiff below; and afterwards, on the 14th November, 1838, was returned by him to said office, when it was recorded in the book kept for mortgages of personal property. And the Court decided that said certificate was sufficient evidence that the deed was duly recorded. To which decision the defendant excepted.

The above exceptions present two points for examination.

1. Whether the mortgage deed was valid.

2. Whether it was duly recorded.

To the decision of the Court, that the evidence did not show that the stockholders had organized themselves under the act of incorporation, so as to enable them to execute a corporate deed, there was no exception. This ruling of the Circuit Court is not, therefore, brought before this Court.

The deed of mortgage purports to be executed by the corporation. The Union Steam Mill Company is the name of the corporation; and on the face of the deed, the company is stated to have been legally incorporated. Daniel Greene, as the agent of the company, and in its name, signed the deed, and affixed to it the seal of the corporation.

And the counsel for the plaintiff in error insist, that this mortgage can only be operative as the deed of the corporation. That if it be not the deed of the corporation, it is no deed. And that in no sense can it be considered the deed of the stockholders of the Union Steam Mill Company, as partners; independent of the act of incorporation.

This, it is said, would be giving a different effect to the deed from that which was intended by the parties who executed it. They bind themselves as corporators, and convey, as such, the property of the corporation; and to hold that the deed binds them in any other capacity, or conveys the property in any other, would not only essentially vary the terms of the deed, as clearly expressed upon its face, but it would be a fraud against the creditors of the company. And it is also insisted, that the deed, being under seal, and executed by only one of the partners, cannot bind the company.

From the record it appears that this company did business before the act of incorporation was passed, and that Daniel Greene acted as its agent. And that after the deed of William P. Salisbury, conveying to the company all his interest in the property, in May, 1837, Daniel Greene and R. W. Dickinson composed the stockholders of the company. And it appears, after they assumed their corporate functions, much formality was observed in the record of their proceedings.

Greene acted as chairman and Dickinson as secretary: motions were made, and, as it would seem, were unanimously decided. A special meeting of the stockholders was called, on the subject of executing the mortgage, by a formal note, addressed by R. W. Dickinson, as clerk, to Daniel Greene, and another to himself.

In their business proceedings, generally, as well as in the execution of the mortgage, these individuals assumed to act as a corporation. But they were not authorized to act in this capacity. This fact must be taken as granted, at least so far as the decision of the present case.

And here a question arises, whether the acts of these individuals, in their assumed character as corporators, are void. May they hold themselves out to the world as entitled to certain corporate privileges, when they were not so entitled; and afterwards avoid their contract on this ground? This would be a somewhat new, and certainly a most successful mode of practising fraud. It would be enabling a party to take advantage of his own wrong.

As the present controversy involves only the right to the personal property named in the deed of mortgage, it is not necessary to consider the validity of that instrument beyond the effect it has on this property.

It is a well settled rule, though a very technical one, that one partner cannot bind his copartner by deed. And it is equally well settled, that one partner may dispose of the personal property of the firm.

In this case, had an absolute sale and delivery of this property been made by Greene, no one, in the absence of fraud, could have questioned the title of the purchaser. But the mortgage was executed under seal, and Greene, it is alleged, could not bind his partner by deed.

That these individuals, not being responsible on their contracts as a corporation, or liable as copartners, is too clear to admit of doubt. The property of the company, both real and personal, was vested in them; and they controlled its entire operations.

The mortgage deed was executed on the 20th of November, 1837. And it appears from the record, that Greene and Dickinson, unanimously resolved, that the mortgage should be executed by Greene as agent of the corporation. And it was accordingly executed on that day.

Now that one partner may bind his copartner by deed, if he be present and assent to it, is a well established principle.

The signature and seal of Greene are affixed to the mortgage; and that this was done with the assent of his copartner, Dickinson, is unquestionable. But was Dickinson present at the execution of the mortgage, and did he then assent to it? We think the facts in the record will warrant such a conclusion. The resolve of the partners to give the mortgage, and the execution of it, bear the same date; and may well be considered the same transaction. This seems to be the fair result of the facts stated, and must be received as prima facie evidence of the due execution of the deed.

These facts are liable to be rebutted by any one who questions the validity of the deed.

All those parts of the deed, which refer to the corporation, including the corporate seal, may be rejected as surplusage, which do not vitiate it. They are considered as merely descriptive, and being false in fact, can have no effect on the deed.

The seal of one partner to a deed, with the assent of the copartner, will bind the firm.

From these considerations we think the Circuit Court did not err, in receiving the mortgage deed in evidence; treating it was a valid instrument, as it respects the rights involved in this suit.

2. Was this mortgage duly recorded? By an act of the legislature of Rhode Island, passed at the January session, 1834, entitled 'an act to prevent fraud in the transfer of personal property,' it is provided, that no mortgage of personal property, except as between the parties, shall be valid; unless possession accompany the deed, or it be recorded in the office of the town clerk. In the second section it is made the duty of the clerk to record such mortgages in a book kept for that purpose.

It appears from the evidence, that the town clerk kept a book in his office in which he recorded all mortgages of personal property; and all other mortgages which included real estate, or real estate and personal, were recorded in other books kept in said office, in one of which this mortgage was recorded. And the question is, whether such a registration is sufficient under the statute.

The object of the recording act is to give notice to subsequent purchasers. The statute undoubtedly requires the clerk to record mortgages for personal property only, in a book kept for that purpose. This being the requirement of the law, to which the clerk strictly conformed, there could be no uncertainty in searching the record for a personal mortgage.

But it seems that the statute did not expressly provide, in what book a mortgage like the one under consideration, for both real and personal property, should be recorded. And it appears that it was the usage of the office, to record such mortgages in the book which contains mortgages for real estate.

Now if this be insufficient, nothing short of recording such a deed in both books, could be held a compliance with the statute.

And can this be necessary? The conveyance of the personal and real property is so blended in the mortgage, as to be inseparable. To require a double record would seem to be an unreasonable construction of the statute, as it cannot be necessary to effectuate its object. Both records are kept in the same office, and by the same person; who performs the duties of the office, and must always be well acquainted with its usage. And inquiry of the clerk for the record of a mortgage like the one under consideration, would as certainly lead to it, under the usage, as if it were recorded in both books.

If this mortgage had been recorded in the book for personal mortgages, the same strictness as now contended for might be urged against such record book, as it would not then be kept exclusively, for personal mortgages.

We think that this mortgage has been recorded in a book kept, though not exclusively, for the purpose of recording mortgages which convey real and personal property; and that it is within a fair construction of the statute.

We think also, that the Circuit Court did not err, in deciding that the certificate of the clerk was sufficient evidence that the mortgage deed was duly recorded. The judgment of the Circuit Court, not being erroneous, is affirmed with costs.