Hadden v. Linville

Page, J., delivered the opinion of the Court. In this case an attachment was issued out of the Superior Court of Baltimore City, at the instance of the appellants, against the Natchaug Silk Company, a Connecticut corporation. It was laid in the hands of Charles H. Linville, garnishee, who has pleaded non assumpit on behalf of the defendant, and nidia bona as to himself. ²²⁵ At the trial the plaintiffs having first offered other evidence to establish their claim, introduced the garnishee himself, and proved by him that he has been the agent of the Silk Company in Baltimore; and as such, had in his possession on the 25 th of April, 1895, certain of its goods. That up to the 27th of December, 1895, when the attachment was laid in his hands, he still retained the possession' of the goods, or the proceeds of the sale thereof; and that he yet holds them, exactly as he had before.

On cross-examination, he testified that on the 26th of April, 1895, Mr. Chaffee, the president and general manager of the Silk Company, told witness, that “ to recompense or make good a claim which the bank had against the company,” the goods in his hands had been transferred to Mr. Dooley (who was the receiver of the bank), and also asked witness if he would “ continue to represent the bank or Mr. Dooley inthe sale of the goods.” This he- consented to do ; and thereupon received from Solomon Lucas, then present, as the attorney for Dooley, an authority in writing to so act. Subsequently witness received letters from Dooley about the goods, a copy of one of which, recognizing Linville as his agent, is exhibited in the record. That under this authority, the witness, after the 26th of April, held the goods as agent of Dooley. To the admission of the evidence thus given on cross-examination, the plaintiffs objected on the ground that the conversation between Chaffee and the witness was hearsay, immaterial, and particularly because it was not shown that Lucas had any authority at that time to represent Dooley.

As to the last objection, we think it clear that Dooley, by his letter of 12th of July, recognized the authority of Lucas and ratified his act. The witness having testified that on the 25th of April he had in his possession goods of the Silk Company, and that he still held “these same goods,” it was entirely proper to interrogate him on cross-examination, how, and for whom he held them, after that date. Such facts were germane to and connected with the main issue, which was, to whom the goods belonged at the time ²²⁶ the attachment was laid in the garnishee’s hands. Griffith v. Diffenderfer, 50 Md. 479 .

There were present on the occasion referred to by witness, the president and general manager of the Silk Company, the representative of the receiver of the bank, and the person who had actual possession of the goods as agent of the Silk Company. The general manager directs the agent that the goods had been transferred, and inquires if he- will continue to hold them as agent of the receiver ; the agent consents to do so, and receives the authority to so hold them from the attorney of Dooley. Now, if it be assumed that there had already been a contract for the sale of the goods by the proper authority, or if Chaffee had power to transfer them, the effect of all this was to make a delivery of the property to the receiver and to constitute Linville his agent for the custody and saleof the goods. Thompson, Garn., v. B. & O. R. R. Co., 28 Md. 396 .

The witness was then asked by the plaintiffs whether there was any written assignment, and replied he “thought there was a bill of sale, but whether on that day or prior thereto he was not sure, and he did not think that he had ever seen that bill of sale.” The plaintiffs then further •objected to so much of the tesimony of the witness as purported to prove a transfer; on the ground the transfer was made by written instruments. Respecting this, it is sufficient to say that it had not appeared the transfer had been •effected by written instruments. The witness only said, “ he thought ” there was a bill of sale, but had never seen it. Such evidence is hearsay, and not sufficient to support the objection made by the plaintiffs.

From what has been said, it follows we find no error in the rulings of the Court set out in the first and second exceptions. At the conclusion of the evidence, the Court at the instance of the garnishee, instructed the jury that there was no evidence before them from which they could find that there was in the hands of the garnishee at the time of the ²²⁷ laying of the attachment or since, any of the goods, chattels or credits of the defendant. The propriety of this ruling, is the question presented by the third and only other exception. It must be borne in mind, that the goods attached, it is conceded, were on the 25th of April, 1895, the property of the Silk Company ; also the fact, that up to and at the time the writ was laid, that is to the 27th December following, the garnishee still retained the possession of them.

The only issue therefore between the parties seems to be, did the goods or the proceeds of the sale of them, for any reason, at any time between those dates, cease to be the property of the Silk Company? In presenting this question, many points were raised and exhaustively and ably argued. In our view, however, it will not be necessary for us to consider more than a single phase of the case. At the outset, we may remark, there is no evidence in the record tending to prove the transfer to the bank or its receiver, except that contained in the testimony of the garnishee.

There is some evidence that sometime in 1890 and 1894, certain papers called by the witness “bills of sale” were made, but there is no proof whatever that the specific articles mentioned in them included any of the goods that were attached in this case. The first of these so-called bills of sale is dated January 1st, 1890 ; it is only a bill of goods alleged therein to have been sold by the Silk Company to O. H. Risley, cashier of the First National Bank, with the word “ paid” at the end, and signed “ Barrows,” a bookkeeper of the Silk Company. The two others are like the first, except are appended the words, “ the goods represented by this bill are pledged to the National Bank of Willimantic as security for loans made by said bank to the Natchaug Silk Company;” they are signed by J. I). Chaffee, president, and Charles Fenton, treasurer.

Of these instruments the treasurer, Fenton, testifies that no record was made of them in the books of the Silk Company or anywhere else; they w'ere never brought up at any meeting of the company ; ²²⁸ none of the directors knew of them, “ as far as he knew; ” and none of the goods mentioned in them or either of them, was ever delivered to the bank or set apart for it, but were sold from time to time and used in filling orders, “the same as any other stock.” Without pausing to inquire how far such instruments under all these circumstances could operate to transfer such a title to goods, either in Connecticut or Maryland, as to defeat the claims of an attaching creditor in the latter State, it can be safely stated there is nothing in them on the face of the papers themselves, or connected with them by proof, that in any manner affects the goods in the hands of this garnishee. It must be assumed, therefore, as we have already said, the whole case turns upon the effect of Linville’s statement; and if upon the case made by his evidence, the transfer to the bank or its' receiver was not successfully effected, the title is still in the Silk Company, and the attachment of the plaintiffs must be maintained, although it may appear the receiver of the Silk Company was appointed before the alleged transfer, it being conceded that the right of a creditor to attach goods in Maryland, is not impaired by the previous appointment of a receiver in the State of Connecticut. Now Linville’s testimony is that on the 26th April, Chaffee came to his office in Baltimore ; that he (Linville) had been the agent in that city of the Silk Company for five years, and prior to that time had known Chaffee “only as having been president, manager and everything else connected with the company. ” Chaffee told him, “ that to recompense or to make good a claim which the bank had against the company, these goods had been transferred to Mr. Dooley, and then belonged to him, and he asked witness if he would continue to represent the bank or Mr. Dooley in the sale of the goods.” Linville consented, received from Lucas, the attorney of Dooley, the authority to so act, and did so act up to the date of the attachment. This proceeding on the part of Chaffee was unknown to and without the authority of the directors of his company, and was never ratified by them. ²²⁹ Dooley, subsequently at a meeting of the directors in the company’s office in Willimantic, stated that “Mr. Chaffee fiad been to New York, Chicago, St. Louis and Baltimore, in an effort to secure the bank of goods of the Natchaug Silk Company, that were held in these offices, and that it was very necessary that the board * * should ratify what had been done.” This request was not however acceded to ; “ in fact,” says a witness, “ they refused to ratify what had been done.” It thus appearing that Chaffee’s act in making the transfer was without the prior specific authority of his company, and was not subsequently ratified by the board of directors, it remains to inquire whether Chaffee as president, or general manager, zdrtute officii or by usage or otherwise, possessed the power and authority thus to bind the company?

To properly meet this question, a brief statement of other facts in the case is required. The Natchaug Silk Company, organized originally as a joint stock association, was incorporated by the Legislature of Connecticut in 1889. Its business was the manufacturing and dealing in silk, leather, wool, or other substances composed wholly or in part of those materials, and to do such other things as are incident to that business. Chaffee was its president and general manager from the beginning.

In the course of its business, it became a large borrower of the First National Bank of Willimantic. The record shows that its indebtedness on this account as far back as 1893, amounted to more than $300,000, and it remained at not less than $285,000. It was enabled to secure this large credit with the bank by reason of the fact that the Silk Company’s financial agent, Risley, was also the cashier of the bank. It was this credit only that for several years enabled it to maintain itself as a going concern.

In fact it had not been solvent since 1890. Risley died on the 12th of April, 1895, and on the 22nd of the month the bank went into the hands of the receiver; and by reason of these facts the principal, if not the only source of credit of the Silk Company, was entirely cut off. To Chaffee as well as ²³⁰ to all who knew the situation, it became evident that the Silk Company’s affairs must also pass at no distant period, into the hands of a receiver. Under these circumstances Chaffee determined to make an effort to secure the bank by transferring to it the goods of his company held in the offices of its agents in New York, Chicago, St. Louis and Baltimore.

Probably it was to make his action more effective that shortly after Risley’s death he forwarded goods of large value to New York, assigning as a reason therefor that as he could get no more money from the bank he would make arrangements elsewhere. Almost all the debts, of the Silk Company were to become due on the twenty-second of April or within a few days thereafter. Chaffee seems to have kept his purpose strictly to himself. As he was about to start on