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company; second, because no notice of the assignment was given to the board of chosen freeholders of the county of Mercer, the debtor, and third, because the C. B. Walton Company was insolvent at the time the assignment was made, and that therefore the assignment is, under the statute, void as against creditors.
As to the first reason: True it is that the board of directors did not authorize the execution of the assignment to Allen, but, irrespective of what the by-laws provide concerning the powers of the treasurer with reference to the making of orders for the payment of money, I hold that Mr. C. B. Walton, the treasurer of the company, had power to make the assignment in question because the directors of this corporation since its organization in 1903 had permitted him to exclusively manage and control its affairs. Said the court of errors and appeals in Fifth Ward Savings Bank v. First National Bank, 48 N. J. Law (19 V1.) .5133 (at p. 527):
“There are cases in which the powers of an officer of a corporation and his authority to act for the company are enlarged beyond those powers which are inherent in his office. But those are cases in which the agency of the officer has arisen from the assent of the directors, presumed from their consent and acquiescence in permitting the officer to assume the direction and control of the business of the company. Thus, when, in the usual course of the business of a corporation, an officer has been allowed to manage its affairs, his authority to represent the corporation may be implied from the manner in which he has been permitted by the directors to transact its business. These are simply instances of the application of the principle that usual employment is evidence of the powers of an agent, and a responsibility will be laid upon the principal for the acts of his agent within the apparent authority so conferred upon the agent-a doctrine which has come to be applied to corporations in many respects as well as to individuals, and with the same qualifications and limitations. In such cases, the authority of the officer does not depend so much on his title, or on the theoretical nature of his office, as on the duties he is in the habit of performing."
See, also, Clement v. Young-McShea Amusement Co., 69 N. J.
Cope v. C. B. Walton Co.
Eq. (3 Robb.) 347; Blake v. Domestic Manufacturing Co., 64 N. J. Eq. (19 Dick.) 480.
As to the second reason: There can be no doubt but that if an order be drawn on a particular fund and presented to the debtor an equitable assignment is worked even though the debtor refuses to accept the notice; that is, refuses to recognize it or to be bound by its terms. Superintendent v. Heath, 15 N. J. E. (2 McCart.) 22; Bradley & Currier Co. v. Berns, 51 N. J. Eq. (6 Dick.) 437. The question, therefore, is, whether the board of chosen freeholders had notice of this assignment. The assignment was lodged with the county collector, the financial officer of the county, who was the disbursing officer of the board. I have no doubt that notice to the county collector was notice to the freeholders of Mercer of this assignment. Trenton Banking Co. v. Woodruff, 2 N.J. Eq. (1 Gr. Ch.) 117. But it seems that it is unnecessary that the freeholders of Mercer should have had notice of the assignment, for, in Cogan v. Conorer Manufact z tring Co., 69 N. J. Eq. (3 Robb.) 809, the court of errors and appeals held:
“As between an assignee of a fund under an equitable a s signment and the receiver of the assignor, an insolvent corpora tion, notice of the assignment to the debtor or holder of the fund is not necessary to perfect the title of the assignee.” See, also, United States Fidelity and Guaranty Co. v. City of Vewark, 74 N. J. Eg. (4 Buch.) 454.
As to the third, and in my judgment controlling, reason, namely, that the C. B. Walton Company was insolvent at the time the assignment was made, and that therefore the assignment is void under the statute as against creditors. In my opinion the company was insolvent at the time the assignment was made. It was organized in 1903 and went into the hands of a recei ver in December, 1908, seven months after the giving of the order in question. It never flourished, was generally in financial straits, and was constantly helped by Allen, the defendant, who took the assignment. At the time the assignment was given the company was in arrears for taxes, was unable to pay its insurance, was in default for interest on mortgages, bad a balance of cash in one bank of $3.60, in another $6.91, and in another $2.61. It could
Cope v. C. B. Walton Co.
its current bills in full. Its credit with the banks was exhausted. A little over a year before the date of the assignment, the company had conveyed all its property, both real and personal, to Allen, as security for past due indebtedness and to secure future advances. When requested to endorse the notes for the raising of money to prosecute the road operations. Allen at first refused, saying he had gone as far as he wanted to, but consented to endorse further on condition that the order be given to him. There are other facts and circumstances indicating insolvency, and Allen's knowledge of it, which wili not be adverted to, as enough, I think, has already been pointed out. The company was without funds, and, apparently, could get none without security. The very fact that it could not undertake the road making, unless the entire project was financed by an outsider, was, in itself, a cogent evidence of its financial irresponsibility; in other words, its insolvency.
On the subject of insolvency and notice to the assignee, Regina Music Box Co. v. Otto & Sons, 65 N. J. Eq. (20 Dick.) 582; affirmed, S. C., 69 N. J. Eq. (2 Robb.) 801, is an authority. In that case it was held in the .court of chancery, whose opinion was adopted by the court of errors and appeals, that a security given by a corporation, which is insolvent, or which contemplates insolvency, for a presently moving consideration, is valid if the person taking the security be without notice of such insolvency or contemplation of insolvency. The same doctrine was held by the court of last resort in Cogan v. Conover Manufacturing Co., ubi supra; 69 N. J. Eq. (3 Robb.) at p. 815. These cases are express authority to the effect that an asignment, although for a valid and presently moving consideration, if made by an insolvent corporation, so known to be by the assignee, or by a corporation contemplating insolvency, with such contemplation known to the assignee, will be void as against creditors. Judged by these standards, the assignment under review is invalid and must be avoided in favor of creditors. Insolvency is the only thing that dethrones the Allen assignment.
There is, I understand, $8,008.39 in the hands of the county under this contract, with laborers' liens, entitled to priority, amounting to $156.50, which leaves $7.851.89 for distribution.
The priority of the lien claimants to the balance of the fund will be established as follows: Cope's first lien for $3,754.51; George R. Cain's lien for $131; Cope's second lien for $6,674.43;
Van Sant's lien for $96; Cope's third lien for $88.81; Joseph B. Hill's lien for $134.95. It is perfectly apparent that the fund will be exhausted by the payment in full of Cope's first lien, Cain's lien and partial payment of Cope's second lien.
The claim of the Indian Refining Company is disallowed because the company failed to comply with the provisions of the statute requiring the filing of notices by claimants. The claim of the defendant Yuzzolina is disallowed for the same reason, and for the additional reason that he did not perform any labor or furnish any materials toward the performance of the completion of the road in question. His bill is for the board of laborers who did the actual work. He does not fall within the statute.
A decree will be advised in conformity with the above views.
FLORENCE M. ALLEN, D. P. FORST & Co. et al.
[Decided September 21st, 1910.]
1. In a contest between judgment creditors for surplus moneys in a foreclosure suit arising from the sale of the judgment debtor's land con veyed by him to defraud his creditors, the surplus will be awarded to that judgment creditor to be applied on his judgment, so far as it will extend, who alone, not only recovered judgment and made a levy on the land, but also filed a bill in this court in aid of his judgment to have the debtor's conveyance set aside as fraudulent and void as to such creditor, and prosecuted such suit to a decree in his favor, notwithstanding the other judgment creditors have prior judgments and prior levies on same land.
2. A creditor's suit in this court in aid of a judgment at law is eu tirely self-serving, and one for the benefit of the complainant alope.
On bill, &c. On exceptions to master's report.
Messrs. John S. Applegate & Son, for Humphrey & Martin.
Mr. Clarence H. Murphy, for Lynch & Livingston.
Mr. Edwin C. Long and Mr. Linton Satterthwait, for D. P. Forst & Co.
Mr. Joseph Reiley, for Florence M. Allen.
WALKER, V. C.
Robert E. Allen, late of the county of Monmouth, being seized of certain land and premises there situate, mortgaged the same to the complainants, his wife joining in the mortgage and releasing her dower. Afterwards Allen conveyed the mortgaged premises to a third party, his wife likewise joining therein and releasing her dower. After divestiture of title judgments were recovered against Allen by Lynch & Livingston, Humphrey & Martin and D. P. Forst & Co., in the order named, although Humphrey & Martin issued execution and secured a levy prior to Lynch & Livingston. The premises afterwards, by mesne conveyances, became vested in Mrs. Allen.
I). P. Forst & Co. filed a bill in this court in aid of their judgment to have the conveyances set aside as fraudulent and void as against them. This suit they prosecuted to a finality and obtained a decree avoiding the conveyances in favor of their judgment and execution.
Subsequent to the recovery of these judgments suit was instituted to foreclose the complainants' mortgage and the judgment creditors were made parties defendant. Such proceedings were had therein that a sale of the mortgaged premises was made under fi. fa. and the sum of $590.01 surplus money, has been raised. Humphrey & Martin have petitioned for this surplus upon the ground that their execution was first levied upon the mortgaged premises. The master reports that they are entitled to the fund, and that Lynch & Livingston have the second Jien, and D. P. Forst & Co. the third lien.