A mortgage was executed by D. G. as the agent of the Union Steam
Mill Company, conveying to the mortgagee certain lands in Rhode
Island, with a woolen mill and other buildings, with the machinery
in the mill. D. G. was, and had been the general agent of the
company, and as such had made all purchases and sales for the
company, and the mortgage was executed by him, with the consent and
authority of the persons who at the time of its execution were
members of the company. The machinery and other movables had been
taken in execution by the Marshal of Rhode Island, under an
execution issued on a judgment obtained after the mortgage against
the company. The Court held that although the mortgage was not
valid as the deed of the corporation, it was sufficient to convey a
title to the mortgagee in the machinery, and that he could maintain
an action of replevin for them against the marshal.
The mortgage was recorded by the town clerk of the place where
the property was, he being the proper officer to record such
instruments under the statute of Rhode Island. He kept two books,
in one of which he recorded mortgages, which included real estate,
and in the other mortgages upon personal property only. The
mortgage in this case was first recorded in the book kept for
recording mortgages on real estate. And he gave a certificate
"lodged in the town clerk's office to record, November 20, 1837,
at 5 P.M., and recorded same day, in the record of mortgages in
East Greenwich, book No. 4,"
&c. The Court held that this certificate was properly
received in evidence in the circuit court.
It is a well settled rule, though a very technical one, that one
partner cannot bind his co-partners by deed. And it is equally well
settled that one partner may dispose of the personal property of
the firm. One partner may bind his co-partner by deed, if he is
present and assent to it. The seal of one partner, with the assent
of the co-partner, will bind the firm.
Where a statute requires that mortgages on personal property
shall be recorded in a book to be specially kept for the purpose,
and says nothing as to the book in which mortgages on real and
personal property shall be recorded, and in the conveyance the
personal and real property is so blended as to be inseparable, to
require a double record would seem to be an unreasonable
construction of the statute. The record of the mortgage in the book
kept for recording mortgages on real estate is within a fair
construction of the Rhode Island statute.
The defendant in error, Cyrus Butler, in 1838 instituted an
action of replevin against Barrington Anthony, the Marshal of the
United States for the District of Rhode Island, to recover from him
certain machinery and articles used in the manufacture of goods
which had been the property of the Union Steam Mill Company, and
which were claimed by the plaintiff under a mortgage alleged to
have been executed to him by the Union Steam Mill Company on 20
November, 1837, to secure to him the payment of sixteen thousand
four hundred and fifty-nine dollars loaned to the company by Cyrus
Butler.
The defendant in the circuit court, the Marshal of the District
of Rhode Island, ordered the taking of the goods under an execution
issued out of the circuit court of the United States for that
district on a judgment against Daniel Greene, William P. Salisbury,
and Rufus W. Dickinson, which execution had been so levied upon
Page 38 U. S. 424
the goods as of said Greene, Salisbury, and Dickinson for the
purpose of satisfying the debt and costs.
The cause was tried before a jury in November, 1838, and a
verdict and judgment were rendered for the plaintiff. The defendant
prosecuted this writ of error.
The matters of law arising in the case were presented on a bill
of exceptions taken by the counsel for the defendant on the
trial.
The bill of exceptions stated that the plaintiff in support of
his title to the articles named in the replevin, produced a certain
deed dated 20 November, 1837, executed by one Daniel Greene as
agent for the Union Steam Mill Company, the said company being a
corporation, conveying the property of the company, the articles
mentioned in the replevin included, to the plaintiff on mortgage,
and proved the execution of the deed, and produced the act of the
Legislature of Rhode Island incorporating the company, and produced
the record of the corporate proceedings of the company, having duly
proved the said proceedings. The execution of the deed of 20
November, 1837, was in the following form. "Union Steam Mill
Company, Daniel Greene [L.S.]." The plaintiff also produced and
read in evidence a deed dated 18 May, 1837, from William P.
Salisbury to Daniel Greene by which all the property of said
Salisbury, in the Union Steam Mill Company was conveyed to Daniel
Greene. The plaintiff also proved that Daniel Greene was and had
been agent from the time of the formation of the company, and that
the deed to the plaintiff was executed by him by and with the
consent and authority of the company.
The plaintiff insisted that the deed of Daniel Greene was the
corporate deed of the Union Steam Mill Company, and conveyed to him
the articles mentioned in the replevin, and he further insisted
that if it was not their corporate deed, it was sufficient to
convey a valid title to the property to him, inasmuch as the said
deed was made and executed by and with the consent of those who at
the time were members of the company, and that Daniel Greene, as
the general agent of the company, was authorized to convey the
articles named in the plaintiff's writ.
The defendant objected to the deed as inoperative, the Union
Steam Mill Company having had no corporate existence at the time it
was executed, and the court decided that the corporate existence
was not so proved as to allow the deed to be given in evidence as
the deed of the corporation, but if inoperative as the corporate
deed, it was sufficient and competent to convey the articles in the
replevin to the plaintiff. To this opinion the defendant
excepted.
The defendant also objected to the deed as it did not appear to
have been recorded according to the law of Rhode Island regulating
the recording of mortgages on personal property prior to the
defendant's levy on the goods.
On the back of the deed was the endorsement of the town clerk of
the place where the property was situated stating that the deed had
been
"lodged in the town clerk's office, to record, November
Page 38 U. S. 425
20, 1837, at 5 o'clock, P.M. and recorded same day in the record
of mortgages in East Greenwich, book No. 4, pages 49, 50 and
51."
The town clerk is the proper recording officer by the laws of
Rhode Island.
The defendant's counsel objected to the sufficiency of the
certificate as evidence that the deed was duly recorded, and
produced evidence that there was a book kept by the town clerk in
which mortgages of personal property only were recorded, and other
mortgages which included real estate were recorded in other books
kept in the office, and after recording the deed in the book of
mortgages of real estate on 20 November, 1837, the deed was taken
by him to the office of the town clerk, on 14 November, 1838, and
was recorded in the book kept for mortgages on personal property.
The court decided that the certificate was sufficient evidence that
the said deed was duly recorded. The defendant excepted.
Page 38 U. S. 431
MR. JUSTICE McLEAN delivered the opinion of the Court.
The defendant, Cyrus Butler, commenced an action of replevin
against the plaintiff in error for various articles of personal
property specified in the writ of replevin and claimed by him under
a mortgage dated 20 November, 1837. The defendant had taken
possession of the property by virtue of an execution directed to
him as marshal on a judgment against the mortgagors.
On the trial, certain exceptions were taken to the rulings of
the court, which bring the questions decided before this Court.
The mortgage was executed by one Daniel Greene as the agent of
the Union Steam Mill Company, said company being a manufacturing
corporation, conveying to the plaintiff below certain lands, with a
woolen mill and other buildings, with the machinery in said mill,
&c. And the incorporating act and several acts amendatory
thereto were read in evidence. And also a deed from William P.
Salisbury to the said Greene dated 18 May, 1837, conveying all his
interest in the real and personal property of the Union Steam Mill
Company.
And it was proved that Daniel Greene who executed the deed first
aforesaid, was and had been from the time of the formation of said
company the general agent, and as such had made all purchases and
sales for the company, and that the deed was executed by him with
the consent and authority of said company, and also by and with the
consent and authority of the persons who at the time of the
execution thereof were members of said company.
The court decided that the said corporation was not so proved as
to entitle the deed to be read to the jury as the deed of the said
corporation, but that the deed was good to convey a valid title to
the articles named in the writ of replevin. To this decision the
counsel for the defendant excepted.
And it was further objected to said deed that it did not appear
that the same had been recorded prior to the defendant's levy on
the articles by the writ of replevin, in conformity to the statute
on the subject. The counsel for the plaintiff produced and read to
the court an endorsement on the back of said deed, signed by the
clerk of the town of East Greenwich, in the words and figures
following, to-wit:
"Lodged in the town clerk's office, to record, Nov. 20, 1837, at
5 o'clock P. M., and recorded same day in the records of mortgages
in East Greenwich, book No. 4,"
&c.
Page 38 U. S. 432
It was proved that the said clerk kept a book in which all
mortgages of personal property only were recorded, and all other
mortgages, which included real estate, were recorded in other books
kept in the office. After the deed was recorded, it was taken away
by the plaintiff below, and afterwards, on 14 November, 1838, was
returned by him to said office, when it was recorded in the book
kept for mortgages of personal property. And the court decided that
said certificate was sufficient evidence that the deed was duly
recorded. To which decision the defendant excepted.
The above exceptions present two points for examination.
1. Whether the mortgage deed was valid.
2. Whether it was duly recorded.
To the decision of the court that the evidence did not show that
the stockholders had organized themselves under the act of
incorporation so as to enable them to execute a corporate deed
there was no exception. This ruling of the circuit court is not,
therefore, brought before this Court.
The deed of mortgage purports to be executed by the corporation.
The Union Steam Mill Company is the name of the corporation, and on
the face of the deed, the company is stated to have been legally
incorporated. Daniel Greene as the agent of the company, and in its
name, signed the deed, and affixed to it the seal of the
corporation.
And the counsel for the plaintiff in error insist that this
mortgage can only be operative as the deed of the corporation. That
if it be not the deed of the corporation, it is no deed. And that
in no sense can it be considered the deed of the stockholders of
the Union Steam Mill Company, as partners, independent of the act
of incorporation.
This, it is said, would be giving a different effect to the deed
from that which was intended by the parties who executed it. They
bind themselves as corporators, and convey, as such, the property
of the corporation, and to hold that the deed binds them in any
other capacity, or conveys the property in any other, would not
only essentially vary the terms of the deed, as clearly expressed
upon its face, but it would be a fraud against the creditors of the
company. And it is also insisted that the deed, being under seal
and executed by only one of the partners, cannot bind the
company.
From the record it appears that this company did business before
the act of incorporation was passed, and that Daniel Greene acted
as its agent. And that after the deed of William P. Salisbury
conveying to the company all his interest in the property in May,
1837, Daniel Greene and R. W. Dickinson composed the stockholders
of the company. And it appears, after they assumed their corporate
functions, much formality was observed in the record of their
proceedings.
Greene acted as chairman and Dickinson as secretary; motions
were made and, as it would seem, were unanimously decided. A
special meeting of the stockholders was called on the subject of
executing
Page 38 U. S. 433
the mortgage, by a formal note addressed by R. W. Dickinson, as
clerk, to Daniel Greene and another to himself.
In their business proceedings generally as well as in the
execution of the mortgage, these individuals assumed to act as a
corporation. But they were not authorized to act in this capacity.
This fact must be taken as granted, at least so far as the decision
of the present case.
And here a question arises whether the acts of these individuals
in their assumed character as corporators are void. May they hold
themselves out to the world as entitled to certain corporate
privileges when they were not so entitled, and afterwards avoid
their contract on this ground? This would be a somewhat new and
certainly a most successful mode of practicing fraud. It would be
enabling a party to take advantage of his own wrong.
As the present controversy involves only the right to the
personal property named in the deed of mortgage, it is not
necessary to consider the validity of that instrument beyond the
effect it has on this property.
It is a well settled rule, though a very technical one, that one
partner cannot bind his co-partner by deed. And it is equally well
settled that one partner may dispose of the personal property of
the firm.
In this case, had an absolute sale and delivery of this property
been made by Greene, no one, in the absence of fraud, could have
questioned the title of the purchaser. But the mortgage was
executed under seal, and Greene, it is alleged, could not bind his
partner by deed.
That these individuals, not being responsible on their contracts
as a corporation or liable as co-partners, is too clear to admit of
doubt. The property of the company, both real and personal, was
vested in them, and they controlled its entire operations.
The mortgage deed was executed on 20 November, 1837. And it
appears from the record that Greene and Dickinson unanimously
resolved that the mortgage should be executed by Greene as agent of
the corporation. And it was accordingly executed on that day.
Now that one partner may bind his co-partner by deed if he be
present and assent to it is a well established principle.
The signature and seal of Greene are affixed to the mortgage,
and that this was done with the assent of his co-partner Dickinson
is unquestionable. But was Dickinson present at the execution of
the mortgage, and did he then assent to it? We think the facts in
the record will warrant such a conclusion. The resolve of the
partners to give the mortgage and the execution of it bear the same
date, and may well be considered the same transaction. This seems
to be the fair result of the facts stated, and must be received as
prima facie evidence of the due execution of the deed.
These facts are liable to be rebutted by anyone who questions
the validity of the deed.
Page 38 U. S. 434
All those parts of the deed which refer to the corporation,
including the corporate seal, may be rejected as surplusage, which
do not vitiate it. They are considered as merely descriptive, and
being false in fact can have no effect on the deed.
The seal of one partner to a deed, with the assent of the
co-partner, will bind the firm.
From these considerations, we think the circuit court did not
err in receiving the mortgage deed in evidence, treating it was a
valid instrument as it respects the rights involved in this
suit.
2. Was this mortgage duly recorded? By an act of the Legislature
of Rhode Island passed at the January session, 1834, entitled "an
act to prevent fraud in the transfer of personal property," it is
provided that no mortgage of personal property, except as between
the parties, shall be valid unless possession accompany the deed or
it be recorded in the office of the town clerk. In the second
section it is made the duty of the clerk to record such mortgages
in a book kept for that purpose.
It appears from the evidence that the town clerk kept a book in
his office in which he recorded all mortgages of personal property,
and all other mortgages which included real estate, or real estate
and personal, were recorded in other books kept in said office, in
one of which this mortgage was recorded. And the question is
whether such a registration is sufficient under the statute.
The object of the recording act is to give notice to subsequent
purchasers. The statute undoubtedly requires the clerk to record
mortgages for personal property only in a book kept for that
purpose. This being the requirement of the law, to which the clerk
strictly conformed, there could be no uncertainty in searching the
record for a personal mortgage.
But it seems that the statute did not expressly provide in what
book a mortgage like the one under consideration, for both real and
personal property, should be recorded. And it appears that it was
the usage of the office to record such mortgages in the book which
contains mortgages for real estate.
Now if this be insufficient, nothing short of recording such a
deed in both books could be held a compliance with the statute.
And can this be necessary? The conveyance of the personal and
real property is so blended in the mortgage as to be inseparable.
To require a double record would seem to be an unreasonable
construction of the statute, as it cannot be necessary to
effectuate its object. Both records are kept in the same office,
and by the same person, who performs the duties of the office and
must always be well acquainted with its usage. And inquiry of the
clerk for the record of a mortgage like the one under consideration
would as certainly lead to it under the usage as if it were
recorded in both books.
If this mortgage had been recorded in the book for personal
mortgages, the same strictness as now contended for might be
urged
Page 38 U. S. 435
against such record book, as it would not then be kept
exclusively for personal mortgages.
We think that this mortgage has been recorded in a book kept,
though not exclusively, for the purpose of recording mortgages
which convey real and personal property, and that it is within a
fair construction of the statute.
We think also that the circuit court did not err, in deciding
that the certificate of the clerk was sufficient evidence that the
mortgage deed was duly recorded. The judgment of the circuit court,
not being erroneous, is
Affirmed with costs.
