Textor v. Orr

Briscoe, J., delivered the opinion of the Court. In April, 1896, Daniel R. McCauley, who was then carrying on the business of barrel making, was indebted to the appellant, Textor, for materials purchased in the sum of $1,256.34. In order to secure this indebtedness and to obtain further credit from Textor, the following agreement was entered into between [the parties : “ This agreement, made this second day of April, 1896, in Ellicott City, Baltimore County, State of Maryland, between D. R. McCauley of said city, in Baltimore County, of the first part, and Anton Textor, of the city of Baltimore, also in State of Maryland, of the second part: Witnesseth, that the said D. R. McCauley, of the first part, hereby gives the hoops which are now stored in the old stone foundry now owned by the C. A. Gambrill Manufacturing Company, said foundry is in Ellicott City, in Baltimore County, Maryland, as security for the payment of four notes, which are all dated April 2nd, 1896, drawn by John W. McCauley, favor of D. A. McCauley, say running for 40, 60, 90 days and four months, amounts $300.00, $300.00, $300.00 and $356.43, total, $1,256.34-100. “That said Anton Textor hereby agrees to release his claim against said hoops upon the payment of the last aforesaid note, amount $365.43—100 ; that the storage of said lot of hoops is to be paid by the said McCauley. ³⁹⁷ “That said McCauley claims that there are about three hundred thousánd hoops in the old stone foundry, that said lot of hoops to be the property.of said Anton Textor in the event of any of said notes not being paid at their maturity. “Witness our hands and seals this second day of April, 1896. D. R. McCauley, [Seal], “Witness: Anton Textor, [Seal], Geo.

A. Nicklas.” The hoops mentioned in this contract were stored at the time of its execution in a building under the control of Mc-Cauley and remained in his possession without any delivery, actual or constructive, to the appellant, until December 9th, 1896, when McCauley in his own right and as surviving partner of the firm of D. R. McCauley & Co. executed a general assignment of all his property for the benefit of creditors to the appellee, W. L. Orr. This assignee took possession of the hoops referred to, then amounting to about 280,000, and the appellant filed a petition in the Court below, which had assumed jurisdiction over the administration of the trust, asking that the agreement be enforced as creating a first lien in his favor on these hoops, taken into possession by the trustee. It is clear, we think, that the contract above set forth did not constitute a pledge of the hoops as security for the debt, because transfer of possession of the thing pledged to the pledgee or to a third party for his benefit is essential to the creation of a pledge. Casey v. Cavaroc, 96 U. S. 490 ; Moors v. Reading, 167 Mass. 322 .

In the case now before us, the hoops remained in the possession and under the control of McCauley. Nor can the agreement be effective as a bill of sale or chattel mortgage, as against third parties, because it is not acknowledged and recorded as required by the Code, in all cases where the seller or mortgagor of chattels remains in possession. Art. 21, sec. 40 of Code. It is obvious, however, that the intention of the parties ³⁹⁸ in this case was that the hoops described in the contract should be held by McCauley in trust as security for payment of his indebtedness to the appellant.

The evidence shows that the appellant received verbal assurances from McCauley and his agent that they would not deal with or dispose of any of the hoops without his consent. The purpose of the parties was therefore in