Davis v. Bessemer City Cotton Mills

• Decision Date: 13 April 1910
• Docket Number: 827.
• Citation: 178 F. 784
• Parties: DAVIS et al. v. BESSEMER CITY COTTON MILLS et al.
• Court: U.S. Court of Appeals — Fourth Circuit

178 F. 784

DAVIS et al. v. BESSEMER CITY COTTON MILLS et al.

No. 827.

United States Court of Appeals, Fourth Circuit.

April 13, 1910

Frederic D. McKenney (William G. Wilson, on the brief), for plaintiffs in error.

Charles A. Moore (Moore & Rollins, on the brief), for defendants in error.

Before PRITCHARD, Circuit Judge, and WADDILL and CONNOR, District judges.

CONNOR District Judge.

Orris K. Eldredge, a citizen of New York, sued defendants in error citizens of the Western District of North Carolina, declaring upon a judgment recovered by him in an action against them in the Supreme Court of the county of New York, for the sum of $5,138.30. Defendants in error answered, denying that any service of process 'personally or otherwise' was made on them in the action alleged to have been brought by plaintiff against them, or 'that any valid judgment was rendered against them in such action.'

They also denied 'that they were liable to the plaintiff in any sum whatsoever or in any other way.'

For further answer and by way of counterclaim defendants in error allege:

That on June 20, 1904, the Bessemer City Cotton Mills, hereinafter after called the 'Mills,' was and have since said date been continuously engaged in the manufacture of cotton goods in Gaston county, N.C. That on said day said Mills, in consideration of a loan, executed its promissory note to plaintiffs' testator, Orris K. Eldredge, for the sum of $5,000, with defendant John A. Smith as indorser, and on the same day, and as a part of the same transaction, executed the contract, a copy of which is attached, in the following words, to wit:

'This agreement made by and between the Bessemer City Cotton Mills, a corporation of the state of North Carolina, and J A. Smith, of Bessemer City, state of North Carolina, parties of the first part, and Orris K. Eldredge, of the city and state of New York, party of the second part, witnesseth:

'That, for and in consideration of a loan of five thousand dollars ($5,000) by the said Orris K. Eldredge, the said Bessemer City Cotton Mills and J. A. Smith hereby covenant and agree to consign the entire product and output of said mills and factories to said Orris K. Eldridge or to any firm or copartnership with which he may be at any time connected upon his written request and designation of same, and for the sale of such product and output upon commission, which commission, based upon the prices at which the same shall be sold, shall be at the rate of five per cent. (5%).

'If, for any reason at any time, the said Bessemer City Cotton Mills and J. A. Smith wish to transfer this account and its said consignments to any other party or parties, the said Bessemer City Cotton Mills and J. A. Smith shall and hereby covenant and agree that they will, as an essential preliminary to, and condition of such change and transfer, repay, purchase, or cause to be purchased of the said Orris K. Eldredge, or his personal representative, the said loan of five thousand dollars ($5,000), together with all accrued indebtedness, should he so desire, and to further liquidate all indebtedness upon the said account for advance and any other indebtedness, which may have been incurred upon or by reason of the same to the firm or copartnership in which said Orris K. Eldredge is interested.

'In witness whereof, said Bessemer City Cotton Mills has caused its corporate seal to be hereto affixed and these presents to be signed by its president and J. A. Smith personally, and the said Orris K. Eldredge has hereunto affixed his hand and seal this twentieth day of June, A.D., 1904.'

That at the same time, and in pursuance of said agreement, said Mills entered into an agreement with the firm of Eldredge, Lewis & Co., by which it agreed to ship its output of goods to said firm to be sold on commission. That plaintiff O. K. Eldredge is a member and managing partner of said firm. That the amount of said note was credited to said Mills on the books of said firm of Eldredge, Lewis & Co. That, in pursuance of said contract, the said Mills immediately thereafter began to ship its entire output to Eldredge, Lewis & Co. 'under direction of plaintiff.' That said Mills continued to ship its goods to said firm 'under directions of the plaintiff' until the . . . day of October, 1904, when the same was discontinued by order of plaintiff. 'That at said time the said firm had in its possession a large quantity of the goods of said Mills, worth more than enough to repay the plaintiff and his said firm all advances made by it, including the note for $5,000, which he has unlawfully, and in violation of said contract, converted to his own use; that upon a just and proper accounting between the plaintiff and the defendant the plaintiff would be due the Bessemer City Cotton Mills the sum of $3,050.43.'

'Attached hereto is a statement of the amount and value of the goods marked 'Exhibit B,' for which the plaintiff is liable to the defendant corporation at the price therein stated.'

Plaintiff's testator filed a reply to the new matter and counterclaim, admitting the first, second, and third paragraphs except the averment that 'the defendants were stopped from shipping the goods to the firm of Eldredge, Lewis & Co. by this plaintiff'; that allegation being denied.

Replying to the fifth paragraph, plaintiffs' testator alleged:

'It is true as alleged in said paragraph that at or about the time therein mentioned the firm of Eldredge, Lewis & Co. had in their possession some of the goods of the Bessemer City Cotton Mills, which had been shipped to it by the said cotton mills, under the agreement hereinbefore referred to, and to be sold by said Eldredge, Lewis & Co. as factors and commission merchants, under the usual terms and conditions applicable to such relations and transactions in the New York market; but it is also true that at the same time the Bessemer City Cotton Mills were indebted to the said firm of Eldredge, Lewis & Co. for divers large advances made upon the first of the shipments to them by the Bessemer City Mills, for which the said firm had a lien upon the goods then in their possession belonging to the said Mills, and that the said goods were duly sold by the said Eldredge, Lewis & Co. as such factors, and commission merchants and the proceeds arising from such sale were duly applied to the credit of the said Mills and full statement and account thereof duly made and furnished to said Mills, and upon said statement of said account there were found to be due the said Mills from Eldredge, Lewis & Co. on account of said sales about the sum of $50 which was duly credited.'

Plaintiffs' testator further alleged that he was advised that the transaction with regard to the shipment of the goods, the sale thereof, etc., were matters entirely between said firm and defendants, 'and that he had, and could have, no connection whatever with them,' etc. After the pleadings were filed, plaintiff O. K. Eldredge died, leaving a last will and testament, appointing Daniel A. Davis and Elliott M. Eldredge executors, who offered said will for probate, qualified in the state of North Carolina, and were duly made parties plaintiff. No further pleadings were filed. Upon issues submitted to the jury, they found for their verdict: First. That no process was served on defendants in the action in the Supreme Court of New York county, and that no valid judgment was rendered against them in said action. Second. That the $5,000 for which the note was given to O. K. Eldredge by defendants 'was part and parcel of the contract entered into by the Bessemer City Cotton Mills with Eldredge, Lewis & Co., when they became agents for the sale of their goods in the city of New York. ' Third. That on the 17th day of January, 1907, the said firm had on hand, under said contract, goods of the Mills of the value of $23,622.72. Fourth. That the said Mills owed said firm for advancements made on said goods, exclusive of the note, $8,144.33. Fifth. That, after deducting the note of $5,000 due O. K. Eldredge, the balance due the Mills by said Eldredge, Lewis & Co. was $3,144.43 less interest on note.

Judgment was rendered for defendant cotton mills against plaintiffs' executors for said amount. A number of exceptions to the admission of evidence, the refusal to strike out the counterclaim, and instructions given the jury were noted, assignments of error based thereon made, and plaintiffs sued out this writ of error. Before proceeding to discuss the assignment of error, it will be well to ascertain what facts are alleged, and admitted by the pleadings.

Defendants executed the note to O. K. Eldredge, a member of the firm of Eldredge, Lewis & Co., of New York, commission merchants, and at the same time, and as a part of the contract or agreement, upon which said loan was made, defendants and O. K. Eldredge executed the contract set out and marked 'Exhibit A.' Pursuant to said contract, defendants agreed to ship the output of the mills to said firm upon the terms as to advancements, commissions, etc., agreed upon. Pursuant to said agreement, defendant Mills shipped large quantities of goods to said Eldredge, Lewis & Co. to be sold by them as commission merchants on account of the Bessemer City Mills. The shipments continued until some time in October, 1904, when Eldredge, Lewis & Co. had on hand a quantity of their goods and had made advancements on them to a large amount (neither the quantity of goods nor amount of advancements are stated in the pleadings). The firm sold the goods, and applied the proceeds to the credit of the Mills. These facts are disclosed by the pleadings.

The first question raised by the assignments of error relates to the rulings of the court below regarding the validity of...