Hall v. American Bankers Safety Company , 116 Miss. 606 ( 1917 )

Stevens, J.,

delivered the opinion of the court.

The controlling facts, as we interpret the record, are as follows: One- Hardin Adams attempted to organize and establish a. small banking institution at Longview in Oktibbeha county with a capital of ten thousand dollars. Organization was effected about August 18, 1913. Adams was likewise interested in the organization of a bank at French Camp, Miss. On July 8, 1913, Adams went to the offices of appellee, the American Bankers’ Safety Company at Cincinnati, and placed an order with appellee for two bank safes, one for the Longview Bank, the other for the French Camp Bank. The written con-tract for the two safes and vault doors was executed by Hardin Adams individually, for a total consideration of one thousand six hundred and twenty dollars. There was a provision in the contract that “said safe to re main the property of the American Bankers’ .Safety Co. until paid for in full.” The contract further provided that “safe and doors to be ordered out when wanted by Mr. Adams. These orders to be shipped when notified,” and contained the further provision, “bill to Longview Bank, Longview, Mississippi, also Bank of French Camp, French Camp, Mississippi.” The net price of each safe and vault door was eight hundred and ten dollars. There was an understanding, however, between Adams and appellee company, the seller of the property, whereby the latter was to render a statement to the Bank of Longview showing a larger and fictitious Consideration and Adams was to receive the difference between eight hundred and ten dollars and the price which appellee should finally collect from the bank. About the time the Bank of Longview was organized, Adams ordered the safe and vault doors to be shipped to the Longview Bank, but canceled the order for the French Caínp Bank. The safe was duly received by the Long-view Bank and installed and accepted by the bank -as its property. It appears that Adams and his brother controlled eight thousand five hundred dollars of the capital stock, but the capital stock of the bank was-never in fact paid in, and there never was at any time any real basis of credit for the corporation. As stated by counsel, the bank was organized “on wind,” and Adams, after realizing all he could for himself, fled the country and left the bank without assets. In this attitude a receiver was appointed to take charge of and wind up the affairs of the failed corporation. In the administration of the estate, appellee company filed a petition in the chancery court having jurisdiction of the insolvent estate, setting out the fact that petitioner had sold the safe and vault door to “one Hardin Adams, the organizer and active functionary,” of the said bank, and exhibited the written contract retaining the title, and prayed that the receiver be directed to turn over the safe to appellee as the real owner. This petition was answered by the receiver, acting for the bank, and in the answer it is averred that Hardin Adams was the real purchaser of the property at eight hundred and ten dollars; that the property was .sold to Adams for purposes of resale to the bank; that appellee knew Adams intended to sell the property to the bank at a profit; that Adams conspired with appellee in having the latter bill the property to the bank at the price of one thousand four hundred and twenty-five dollars in order that Adams could make an unlawful profit of six hundred and fifteen dollars; and that appellee by its conduct had waived the provision of the contract whereby title was retained. It is further averred in the answer that Adams is indebted to the bank in approximately the sum of eight thousand dollars, which the bank ought to be permitted to offset against the purchase price of the property. Proof was taken and the issue heard and decided by the chancellor, who rendered a decree granting the prayer of appellee’s petition and from this decree the receiver prosecutes an appeal.

Looking through the form to the substance, the Bank of Longview purchased the bank safe and vault door from appellee, and not from Hardin Adams. Adams at all times was acting as the promoter, organizer, or agent of the Bank of Longview. Of this appellee company was fully advised. Appellee never at any time agreed to ship Hardin Adams a safe on credit. It took an order in his name for a safe to be shipped and billed to the, Longview Bank. This is evidenced by the original contract itself. Bill for the purchase price was to be sent direct to the Longview Bank and collection for the property made from the bank. The name of the Longview Bank was painted upon the face of the safe before it was shipped. Adams was not only the ostensible agent or organizer of the bank, but he in fact was the dominant voice, and had the controlling interest in the attempted or abortive organization, and became the president and- manager of the institution. The record does not show any resolution of the directors authorizing the purchase of this property, but certain it is that the bank had no contract to purchase the safe from its own president and organizer. Adams was not a trader or dealer in bank safes, and never at any time assumed to sell the Longview Bank a safe of any kind. There was fraud and shameful collusion between the American Bankers’ Safety Company and Hardin Adams, whereby Adams expected to pocket a “rake-off” or unlawful commission. If this were a suit by appellee for the unlawful consideration of one thousand four hundred and twenty-five dollars, appellee could not recover. But does the fraud shown prevent appellee from repossessing its property? In the administration of the estate the receiver found and took possession of the safe with the knowledge that the property had not been paid for. In returning his inventory he stated the facts. Appellee had not been, paid anything on the purchase price, and it • could not, without the authority of the chancery court, bring an action of replevin. The petition in this case is an ancillary petition asking the court to direct the receiver as to what disposition he shall make of property in his possession. The bank on discovering the fraudulent understanding between appellee and Adams could have rescinded the trade; and upon doing so would return the property to the seller. The bank could also elect to pay the net price of eight hundred and ten dollars and keep the property. The court in the final decree found that if the safe was sold by the receiver it would not likely bring the purchase price of eight hundred and ten dollars, and for that reason elected to return the property to complainant. The court, we think, disposed of the controversy in a sensible way, and we see no cause to upset the result reached. Authorities on our “sign” statute and on the legal proposition that a seller waives retained title provisions of a contract when the property sold is delivered to a trader or other person for purposes of resale have no application to the present issue. The only question in this case is whether the door of the court should he opened at all to the complainant. On this point both parties are not free from criticism. Appellee could not sue the receiver in-an action of replevin without the permission of the chancellor. The hank was never legally organized, and never had any capital stock sufficient to buy a safe. On the facts of this particular record we are of the opinion that the learned chancellor was justified in returning to appellee its property.

Affirmed.