First National Bank v. Kirkby , 43 Fla. 376 ( 1901 )

Per Curiam

(After stating the facts.)

The final decree rendered in this cause is far reaching in extent. It decreed, among' other things, the relief prayed by complainants, Kirlcby, Sedding and Burnsed in their bill, and that they all others holding liens in equal dignity with theirs have liens prior in dignity to all others on the mill, machinery, iron rails, locomotives, cars, log carts and 'Other machinery and implements used in operating the mill mentioned in the bill of complaint, and it was ordered that a special master named take an account of whqt was due complainants and all other creditors of the defendant, the East Florida Land and Produce Company, Limited, who should come in and prove their claims within a time specified, and that said master report to* the court the amounts due the several creditors and the order in which they are entitled to priority of payment from the proceeds of the sales of property mentioned in the bill of complaint; giving priority to complainants and others having labor liens equal in dignity with theirs under the laws of this State. Among the property mentioned in the bill is 350,000 feet of sawed lumber. It was also decreed that the cross-bill of complainant, the First National Bank of St. Augustine, be dismissed, and that the moneys expended by the receiver in paying taxes on the lands should constitute a first lien thereon. By interlocutory order previously made in the cause the court directed the receiver to pay out of the moneys in his hands the sum of $581.27 for taxes on real estate, and the sum of $124.25 taxes on personal property due from the East Florida Land and Produce Company to the State of Florida for taxes in the year 1894. The decree further adjudged that the complainants have a lien upon the lands mentioned in the bill, subject to the lien of the mortgage made to the defendants, Moncrief and Finlay, trustees. The First National Bank of St. Augustine and Middeton and Oliver are the only parties who have appealed and only in their behalf is there any contention that the decree is erroneous.

From an examination of the pleadings in this cause and the evidence submitted it -appears that the interest of Middelton and Oliver is entirely separate from that of the First National Bank. They claim to have purchased the lumber on the mill yard of the East Florida Land and Produce Company and assert no claim to any ®ther property involved in the suit. The Bank’s claim extends to’ other property, and hence appellants have no unity of interest as to the subject-matter of the litigation.

Proceeding with the separate interests of appellants and the several assignments of error which they may urge for our consideration, we find an objection of Middleton & Oliver to the action of the court in overruling their demurrer to the bill of complaint. Under this assignment they contend that there is an improper joinder of parties complainant in the bill filed to enforce the separate liens of the three complainants. The demurrer of- said respondents was for the want of equity. Neither multifariousness nor misjoinder of parties appears to have been assigned as a ground of the demurrer, nor to> have been urged in the court below. Had such objection been so assigned, even ore terms, under the general demurrer filed it would have been properly submitted to the court, but without this having been done it can not be considered here. Darcey v. Lake, 46 Miss. 109; Fay v. Jones, 1 Head (Tenn.) 442; Labadie v. Hewitt, 85 Ill. 341; Cholmondeley v. Clinton, Turner & Russell 107, text 116; Wake v. Parker, 2 Keen 59; King of Spain v. Machado, 4 Russell, 225; Page and Others v. Townsend, 5 Sim. 395; Delondre v. Shaw, 2 Sim 237. The nature of the misjoinder is not such as to invoke the action of this court for its correction sua sponte as was the case of Bauknight v. Sloan, 17 Fla. 284.

The decree rendered in the cause against Middleton & Oliver is assigned bv them as error, and under this assignment it is contended, first, that complainants have no liens under the laws of this State for their respective demands. We are satisfied that complainants are given liens on the lands of the East Florida Land and Produce Company under section 1732 Revised Statutes which provides as follows: “1732. For labor as book-keeper, clerk, etc. — In favor of book-keepers, clerks, agents, porters, and other employes of merchants and transportation companies and other corporations; upon the stock, fixtures and other property of such merchants, companies or corporations.” Kirkby was employed as book-keeper at the mill, and Sedding was employed in keeping the time of other employes at the mill and attending to the commissary of the~company kept in connection therewith, and are entitled to liens on the lumber by the wery terms of the statute. Burnsed was employed, it appears, to haul logs for the mill at five dollars per day and used his own team in doing so'. There was no hiring of the team by the mill company, nor an agreement tp pay Burnsed any amount for the use of the team separate from his services, but the agreement was to pay him so much per day for the hauling with his team, and under such a contract he is entitled, in, our opinion to a lien for the amount due him. It is further contended under this assignment that Middleton & Oliver were purchasers of the lumber in question without notice of the liens of complainants. Ünder section 1742 Revised Statutes persons given liens on personal property, whether in possession or not, are entitled to enforce them against purchasers and creditors with notice, and we are of opinion that the court was authorized to hold, on the showing made, that said respondents were such purchasers, though it was shown that they are also general creditors. They rely upon the defence that they were purchasers, and not as creditors. Creditors without notice within the meaning of said section of the statute means those who have acquired liens by judgment or otherwise, and not general creditors. Rogers v. Munnerlyn, 36 Fla. 591, 18 South. Rep. 669.

The action of the court in directing the receiver to pay taxes due the State on personal and real estate of the East Florida Land and Produce Company out of funds in his hands derived from the sale of lumber and other personal property, is also assigned for error by Middleton & Oliver. The taxes in question were due for the year 1894, and by the fifteenth section of Chapter 4115 acts, approved June 2nd, 1893, it is provided that personal property shall be responsible for the taxes on real estate, and real estate shall be responsible for the taxes on personal property. The State was, therefore, entitled to her taxes- out of any money in the hands of the receiver, whether derived from real or personal property of the East Florida Land and Produce Company. In the order made for the payment o‘f the taxes the court directed that those due on real estate should constitute a charge thereon, and in the final disposition of the case no doubt such order will be carried out and the personal property relieved of .any taxes due on the lands. We see no error in the order made in reference to the payment of the taxes.

These appellants also assign as error the order appointing the receiver, bufas this is also assigned as ■error b)»- the National Bank of St. Augustine, we will consider it in connection with the errors assigned by the latter.

One of the errors assigned by the National Bank of St. Augustine is that the court erred in decreeing that complainants have a lien prior in dignity to all others upon the mill, machinery, iron rails, locomotives, cars, log' carts and other machinery and implements used in operating the mill mentioned in the complainants’ bill. In its answer to the bill the bank claimed to be a mortgage creditor without notice of complainants’ liens, so far as the following property, and no other, was concerned, viz: the two locomotives, twelve railroad cars, ten log carts, and eight miles of railroad iron. The proof shows that this property all belonged to the East Florida Land and Produce Company, a corporation, and that it was all used in connection with the operation of the mill. The railroad iron was laid upon certain lands, presumably of the company, but the proof shows that it was not regarded as being- permanently fixed to the land, but only for temporary purposes, in procuring logs for the mill, and that such iron is frequently moved and relaid on other lands whenever the timber suitable for saw-logs becomes exhausted in the particular locality. We are satisfied that all of this property claimed by the bank is of the character contemplated by section 1732 Revised Statutes, before referred to, and that complainants have under that section a lien upon it, prior in dignity to all others, except as against purchasers and creditors without notice. We, therefore, proceed to ascertain whether the bank was such a purchaser or creditor with respect to the property mentioned. The mortgages relied upon by it and offered in evidence purport to have been executed in, the name of the company, in each instance by an attorney in fact, and in connection with the mortgages the bank offered certified copies from the records of St. Johns county of the powers of attorney under which the attorneys purported to act. These copies and the mortgages were upon complainants’ objections excluded from evidence, and this ruling is assigned as error. As the whole evidence is exhibited to us in the record, that excluded as well as that admitted, we shall not stop to decide the propriety of that ruling, but consider the case as if the excluded evidence had been admitted. It is contended on behalf of the lien claimants that the powers of attorneys so offered in evidence gave no authority to the attorney to execute the mortgages, and we concur with that view. In paragraphs 1 and 11 of the powers of attorney is given in broad terms the right to conduct the business of the company in this country, and to execute any contracts, deeds, writings, etc., necessary thereto. Paragraphs 2 to 10 give special powers in connection with the business, those bearing upon the right of the attorney to execute the mortgages in question being paragraphs S, 9 and 10. The first of these gives the right to open and continue in the name of the company a current account with such bank or banks in the United States as the attorney may think fit, and to draw checks on same, but forbids him to overdraw such accounts without authority from the directors. The ninth paragraph authorizes him to endorse checks, bills of exchange, promissory notes and bills of lading and to draw bills from time to time upon the company or persons or companies having business with it, in any, of the connections aforesaid. The tenth paragraph authorizes the attorney to draw bills from lime to time upon the company for the purpose of providing money for current expenses, and to place the proceeds of any such drafts to the credit of the banking account aforesaid cr to remit the same to the company or otherwise deal with the same as the directors may from time to time appoint. The language used in paragraphs 1 and 11 is oroad, but, this must be construed with reference to the special powers in connection with which the general authority is given (1 Am. &■ Eng. Ency. of Law, 1000, and authorities cited), and where there is a special power given as to a particular feature of the business authorized to be conducted, and express limitations upon the authority of the attorney therein, these will control. The power sought to be exercised was that of mortgaging the railroad iron, log-carts, locomotives and railroad cars of the company in. order to effect or secure loans of money for its use. The powers of attorney had expressly prescribed the manner in which the attorneys could pledge the credit of the company in order to raise funds for the business, by authorizing them to draw on the company for that purpose; and had placed a restriction upon their right to incur even an unsecured indebtedness to the bank by over-draft, without express authority. This excludes the idea that the attorneys were by this instrument authorized not only to> incur the alleged indebtedness to the bank without express authority, but in doing so to mortgage so substantial a part of the company’s property as above described. Nor was the right to mortgage such property within the powers of the attorney as its managing agent. 4 Thompson on Corp. Sec. 4849, citing Dispatch Line v. Bellamy Man. Co., 12 N. H. 205; S. C. 37 Am. Dec. 203; Whitwell v. Warner, 20 Vt. 425. If, therefore, the mortgages are valid, it is because the course of business between the parties or their conduct was such as to show ratification of the act of the agent in executing them, or some grant of authority to the agent other than that claimed in the powers of attorney. -No other grant of authority was attempted to be shown, and after a careful consideration of the testimony the court finds no sufficient evidence to show ratification of any of the mortgages except the one dated September 27, 1890. As to the property embraced in that mortgage, upon which the proof shows there is now due the sum of $1,000 •and interest, the bank is a creditor without notice to' the extent of the amount due on that mortgage, and its rights as such mortgagee are superior to the liens of the complainants, but as to the other property' embraced in the other mortgages, the complainants’ rights are superior to those of the bank, although we hold in a subsequent part of this opinion that these mortgages are subject to foreclosure under the cross-bill against the East Florida Land and Produce Company, Limited. The East Florida Land and Produce Company, Limited, was an English corporation, having its principal office in London, but conducting a saw mill business .in St. Johns county in this State. The management of this business was committed to its managing agent at St. Augustine, who was. also a director of the company, but whose powers as such agent were conferred by the powers of attorney we have already considered. The attorneys are shown to have frequently contracted debts with the bank in the business of the company beyond the scope of the written authority, and most if not all of these debts became known to and were ratified by the company. But it is not shown that the company had any knowledge of the execution of any of the mortg-ages except the first one (dated September 27, 1890), and without such knowledge no ratification can be implied (Oxford Lake Line v. First Nat. Bank, 40 Fla. 349, 24 South. Rep. 480), and no express ratification was attempted to be shown. As to the mortgage of September 27, 1890, it is shown that the company in London made payments upon the- debts secured by it, and never repudiated it, though it had knowledge of its execution, and such conduct is sufficient, in our judgment, to ratify this mortgage.

On the thirtieth of August, 1894, the managing agent for the company executed a written instrument authorizing the bank to take possession of and sell certain property embraced in its mortgages and apply the proceeds to the payment of said mortgage debts. This agent had no authority to do- this under his written power of attorney, and there is no evidence that the company ever ratified his act in this respect.

It is further contended by the bank that the court ’erred in decreeing a first lien’ upon. the property of the East Florida Land and Produce Company in favor of all persons holding liens of equal dignity with complainants, and in decreeing that the master should take an account of what was due all creditors of the company who should' come in and prove' their claims. The bill does not allege that there are any other lien creditors of equal dignity with complainants. It does not allege that the East Florida Land and Produce Company was insolvent, or show any reason for a general marshalling of its assets, or for bringing in any of its lien or general creditors. Under the statutes in force at the time this suit was- brought persons holding several liens of the nature held by these complainants could not properly join in a suit to enforce them under the circumstances disclosed by this bill if a timely objection was interposed. The features of the decree now being considered were, therefore, erroneous.

Another assignment of error on the part, of the bank complains of the dismissal of its cross-bill. This cross-bill sought the foreclosure of the four mortgages already referred to, and to have the foreclosure decree declare the lien of the mortgages superior to the liens of complainants upon the property embraced therein.

A decree pro confesso had been entered against the East Florida Land and Produce Company, the alleged mortgager, which entitled the bank to proceed to a decree against it foreclosing its mortgages, so far as that ccftnpany was concerned. As we have seen, however, none of these mortgages except the one dated September 27, 1890, were, as against the complainants entitled to priority over their liens. The court should, therefore, have retained the cross-bill, and in the decree of foreclosure of the mortgages adjudged the priorities between the bank and complainants as we have stated them to exist. The dismissal of the cross-bill was, therefore, erroneous.

The bank further assigns as error the part of the decree adjudging a lien in favor of complainants Kirkby, Sedding and Burnsed, on the land of the East Florida Land and Produce Company, Limited. The bank is not shown to have any lien on the lands of said company by virtue of any of its mortgages, and its cross-suit is not in the nature of a creditor’s proceeding, nor is the bill of complainants Kirkby, Sedding and Burnsed, as we have already seen., a creditor’s suit, and we do not see that the bank is entitled to assign error on the feature of the decree adjudging a lien on the land. The rights of the bank as a general creditor are not concluded by the proceeding in any way in this suit.

It is further insisted on the part of the bank that the decree pro confesso against the East Florida Land and Produce Company, under the bill filed by Kirkby, Sedding and Burnsed, is erroneous because of defective service on said company. As stated, the Produce Company is not complaining in this court of anything that was done in the lower court, though it did appear there specially to quash the service against it. The entire record in reference to the service on the East Florida Land and Produce Company does not appear to- have been brought up on this appeal, but without reference to this, it does appear from recitals in the order appointing the receiver that all parties, complainants and defendants, then appeared before the court. It can not, therefore, be held that the East Florida Land and Produce Company was not properly before the Circuit Court.

The action of the court below in appointing a receiver for the property of the East Florida Land and Produce Company is assigned as error by each of- the appellants. The bill upon which this action was based alleged that the East Florida Land and Produce Company owned certain mill and railroad property, lumber and lands; that complainants held laborers’ liens upon the property for stated sums aggregating less than $1,000, and that certain other parties, made defendants to the bill, held liens or claims upon the property, but that the hears of complainants were superior to all others except such other labor liens as might be in force against the property. The bill alleged that it was filed for the benefit of such other of these lien holders as should come into the suit, but this, as we have seen, was improper, and can not furnish support .for the appointment of a receiver. There was no allegation in the bill of inadequacy of security for the liens of complainants, no allegation of insolvency of the East Florida Land and Produce Company, and no allegation of any misconduct whatever on the part of said company with regard to its property. Under such a bill as this the appointment of a receiver to take charge of a saw mill, its business and stock on hand, eight miles of railroad and its equipment and 60,000 acres of land, as an incident to the enforcement of liens aggregating less than one thousand dollars was obviously improper, and such decree as against the bank and Middleton & Oliver was erroneous.

Those portions of the decrees which have been pronounced erroneous in this opinion are, as against the appellants, reversed, and in other respects the decrees are affirmed, and the cause is remanded with directions for the court below to enter a decree in accordance with this opinion, to dispose of the matter of receivership according to law, and for such further proceedings as may be proper.