Barker v. Stearns Coal & Lumber Co.

• Citation: 291 Ky. 184,163 S.W.2d 466
• Parties: BARKER v. STEARNS COAL & LUMBER CO.
• Decision Date: 16 June 1942
• Court: Kentucky Court of Appeals

163 S.W.2d 466

291 Ky. 184

BARKER v. STEARNS COAL & LUMBER CO.

Court of Appeals of Kentucky

June 16, 1942

Appeal from Circuit Court, McCreary County; Flem D. Sampson, Judge.

Action by C. M. Barker, doing business as Citizens Milling Company against the Stearns Coal & Lumber Company, to recover the amount of scrip issued by defendant to its employees and acquired by plaintiff. Judgment was entered for plaintiff for the amount of a verdict directed by the court, and the petition was dismissed to the extent that it sought to recover more. From the judgment, plaintiff appeals and defendant cross-appeals.

Judgment reversed on direct appeal and affirmed on cross-appeal.

Kennedy & Kennedy, of Somerset, for appellant.

H. C Gillis, of Williamsburg, for appellee.

STANLEY Commissioner.

C. M Barker, doing business as Citizens Milling Company, at Somerset, acquired $18,000 of scrip issued by the Stearns Coal & Lumber Company. These tokens were redeemable only in merchandise equivalent in value to the amounts indicated by numbers stamped on them. They were also marked as non-transferable. Barker demanded payment of the scrip in cash on a regular payday of the company but it was refused and he sued to recover the aggregate value. His petition was dismissed on demurrer. We reversed a judgment on the ground that Chapter 44, Acts of 1932, published as Section 4758b-2, Statutes, under which the scrip had been issued, was unconstitutional. Barker v. Stearns Coal & Lumber Company, 287 Ky. 340, 152 S.W.2d 953.

Upon the return of the case to the trial court the defendant answered. The first paragraph of the answer was a traverse. The second paragraph alleged that the scrip had been issued to the defendant's employees for wages earned and unearned under the Act of 1932, and, since that was void, the tokens and promises represented by them were likewise void. The third paragraph pleaded that the plaintiff had not complied with the terms of Section 4758b-1, of the Statutes, which is an Act of 1924, separate and distinct from the 1932 Act, in that he nor anyone else had kept a record showing the names of the persons from whom the scrip was acquired, the amounts paid therefor, and other information, nor presented same to the defendant when payment was demanded as is required by that statute. It pleaded that the observance of these terms were and are conditions precedent to the right to require redemption of the scrip in cash and to the maintenance of the action, and that the failure of the plaintiff to comply constituted a complete defense. Paragraph four of the answer alleged that "a large amount of the scrip sued on by the plaintiff herein was issued by the defendant to its employees as a medium of credit for unearned wages, or in anticipation that labor would be performed thereafter, or upon the credit standing and rating of employees to whom same was issued, and upon the faith and confidence of the defendant in the integrity and ability of such employees to pay, or for other reasons, and not as credit for, or in payment of, wages earned or labor performed; and a large part of said scrip was issued in payment for mine timbers, produce and other commodities purchased by the defendant, and in payment of other obligations of the defendant, and all such scrip was issued and accepted upon the conditions that same was non-transferable and payable in merchandise only to the employees or other persons to whom same was issued, and such scrip was, and is, non-transferable and redeemable only in merchandise, and plaintiff has acquired no right, title or interest therein and has no cause of action thereon and the defendant is under no obligation to redeem any of said scrip so issued from the plaintiff, and the defendant is not now, and at no time has been, under any obligation to redeem such scrip except in merchandise from the employees or other persons to whom same was issued."

A demurrer was sustained to the second paragraph of the answer. The court also sustained the plaintiff's motion that the defendant be required to make the allegations of the fourth paragraph more definite and specific in stated particulars. When the defendant had responded that it was physically impossible to comply with the order of the court and that it was, therefore, forced to decline to do so, on plaintiff's motion paragraph four of the answer was stricken.

The reply admitted the plaintiff had not kept the records or presented the verified statement stipulated by the 1924 Act. Section 4758b-1 of the Statutes. In avoidance of the defenses it pleaded that the company had waived the record and its presentation by (a) its actions, and (b) its long custom of issuing and permitting the use of its scrip in McCreary and adjoining counties as a medium of monetary exchange and in recognizing title to have passed thereto by delivery only, in which manner the plaintiff had acquired the scrip sued on. It was further pleaded the conditions of the statute were not applicable because (c) none of the scrip had been acquired directly from the company's employees to whom it had been issued, but from third persons, retail merchants, in exchange for flour and other mill products at face value, and (d) plaintiff has acquired title by assignment and delivery through different hands. A rejoinder completed the issues. When all the evidence had been introduced the court peremptorily instructed the jury to return a verdict in favor of the plaintiff for $6,612.90, with interest, Judgment for that sum was entered and the petition dismissed to the extent that it sought to recover more. The plaintiff appeals and the defendant has filed a cross appeal.

Since it was not within the power of the legislature to authorize non-transferable scrip, redeemable only in merchandise, as payment of earned wages because of the provision of Section 244 of the Constitution, as held in the opinion on the first appeal of this case, the scrip issued under the unconstitutional statute must be regarded as subject to the terms of the 1924 Act, which authorizes the issuance of transferable scrip, redeemable in cash upon compliance with conditions designed for the protection and convenience of the employer. The terms of that Act became integral parts of the scrip. Carrs Fork Coal Co. v. Johnson Drug Company, 249 Ky. 371, 60 S.W.2d 952. True, we expressed the opinion of a majority of the court that there is no hindrance to the enactment of a statute authorizing the issuance of non-transferable scrip, redeemable in merchandise, as a means of evidencing the extension of credit for unearned wages; nevertheless, for reasons stated, it was necessary to declare the 1932 Act unconstitutional in its entirety. The record as it then stood showed all the scrip involved in the suit had been issued for wages. However, the record now is that the defendant, Stearns Coal & Lumber Company, issued scrip not only in payment of wages, both earned and unearned, but in large amounts for mining timbers and other commodities and some as charity; also in satisfaction of liability under the Workmen's Compensation Act--the spirit if not the letter of that act apparently to the contrary notwithstanding.

We cannot agree that because the particular statute under which the scrip was issued was void, the obligations themselves became void. No person or private corporation can escape liability for its admitted obligations upon such ground. Sec. 244 of the Constitution, which requires the payment of wages of workmen for corporations to be paid in lawful money is self-executing; and the right to substitute even a temporary promise to pay has always been questioned. The 1924 Act authorizes scrip to be issued to labormen for wages upon the theory of it being the equivalent of and redeemable in lawful money on regular paydays. Neither that nor any statute authorizes issuance for any other purpose. Scrip issued and accepted for purposes other than wages constitute due bills or promises to pay according to their terms, coupled with general custom in relation thereto. The undisputed testimony is that above 75% of all the business transacted in McCreary County is done by and with the defendant's scrip, and that its tokens pass by delivery among the people as money. The officers of the company testified, however, that no scrip had been redeemed in cash except on rare occasions for the churches, where it had been placed in the collection plates, and when given as contributions to the children's milk fund. The scrip was accepted by the company not only for merchandise in its ten or eleven retail stores, but in payment of rent, admissions to pool rooms and picture shows, for funeral bills and any other service or commodity which the company had to sell.

In the first opinion we drew a distinction between scrip given as payment of earned and as an advancement of unearned wages and held that it should be presumed that all the scrip then and yet involved had been issued for earned wages;...