Buckeye Cotton Oil Co. v. Sloan

• Decision Date: 12 April 1918
• Docket Number: 2919.
• Parties: BUCKEYE COTTON OIL CO. v. SLOAN.
• Court: U.S. Court of Appeals — Sixth Circuit

250 F. 712

BUCKEYE COTTON OIL CO. v. SLOAN.

No. 2919.

United States Court of Appeals, Sixth Circuit.

April 12, 1918

[Copyrighted Material Omitted] [Copyrighted Material Omitted]

W. B Miller, of Chattanooga, Tenn. (George H. Warrington, of Cincinnati, Ohio, of counsel), for plaintiff in error.

G. T. Fitzhugh, of Memphis, Tenn., for defendant in error.

Before KNAPPEN and DENISON, Circuit Judges, and SANFORD, District judge.

SANFORD District Judge.

This is an action of slander brought by James Sloan, a citizen of Tennessee, hereinafter called the plaintiff, against The Buckeye Cotton Oil Company, an Ohio corporation, hereinafter called the defendant, in the Circuit Court of Shelby County, Tennessee, and removed by the defendant to the District Court below. The trial resulted in a verdict in favor of the plaintiff for $40,000.00 as compensatory and $10,000.00 as punitive damages. On motion for new trial, the plaintiff, upon a conditional requirement by the court, remitted $25,000.00 of the compensatory damages: and judgment for $25,000.00 and costs was thereupon rendered against the defendant; which has brought this writ of error. Manifold errors are assigned.

1. Upon the institution of the suit the defendant employed local counsel at Memphis to take charge of the case in its behalf and remove it to the Federal Court. Before the declaration had been filed they filed in the State court a proper petition for removal, based on diversity of citizenship, with bond. The declaration was filed later on the same day, without notice to them. An order of removal having been subsequently made by the State court, the defendant's counsel entered in the District Court a copy of the record in the State court.

This contained, unknown to them, a copy of the declaration. After the expiration of thirty days from the entry of such record, a judgment by default was entered against the defendant in the District Court. Subsequently an order consented to and approved by the attorneys of record for both parties was entered, reciting that 'by consent of parties' this default was set aside 'on condition that the defendant shall file its pleas within five days from this date. ' Thereafter other counsel employed meanwhile by the defendant, appeared and presented, without the approval or consent of the defendant's record counsel, a motion to modify the previous consent order and allow the defendant to file three preliminary motions: (a) to strike the declaration for duplicity; (b) to expunge parts thereof; and (c) for more specific statement of the cause of action. This motion was denied on the grounds that such preliminary motions were dilatory and without merit, and that even if meritorious, the defendant was bound by the former consent order setting aside the default to file 'pleas to the merits' within the time specified. The defendant thereupon filed pleas of the general issue.

We pass, without determination, the question whether the declaration, although filed in the State court after its jurisdiction had been terminated by the filing of the petition for removal and bond (Crehore v. Ohio Railway, 131 U.S. 240, 243, 9 Sup.Ct. 692, 33 L.Ed. 144; Marshall v. Holmes, 141 U.S. 589, 595, 12 Sup.Ct. 62, 35 L.Ed. 870), was nevertheless so incorporated in the record entered by the defendant in the District Court as to have properly subjected it to judgment by default under sec. 29 of the Judicial Code (Act March 3, 1911, c. 231, 36 Stat. 1095 (Comp. St. 1916, Sec. 1011)). However this may be, the action of defendant's counsel in consenting to the setting aside of the default upon the express condition that the defendant should 'file its pleas' within five days thereafter, was an election by which the defendant treated the declaration as properly filed and waived its right to make defense thereto otherwise than by the filing of 'pleas' as specified. The trial judge was hence entirely justified in declining to thereafter permit the defendant to file the preliminary motions tendered. Furthermore such motions were in the main, if not entirely, dilatory in their nature and without substantial merit. And in any event, the denial of leave to file them resulted in no prejudice to the defendant by reason of various rulings subsequently made on the trial--including the entire withdrawal of two counts of the declaration from the consideration of the jury-- by which the defendant received the full benefit of the contentions sought to be made by such motions, to the extent, if any, that they were meritorious.

2. The declaration contained four counts. At the conclusion of the evidence the defendant moved for a directed verdict on each and every count. This motion was sustained as to the first and fourth counts, and overruled as to the second and third counts. At the conclusion of the charge the defendant renewed its application for a directed verdict under the third count, in the form of a request for a special instruction to the jury; which the court declined to give. In submitting the case to the jury under the second and third counts the court directed that if they found for the plaintiff under both counts they should state that they found for him and assess the damages under both counts as one sum, separating only the compensatory and punitive damages; but if under one count only, they should state under which and assess the damages thereunder. The jury returned a general verdict in favor of the plaintiff, as above stated; which must be treated as a verdict on both the second and third counts, assessing the aggregate damages thereunder.

The second count alleged that the defendant, through one H. J. Schoettelkotte, its authorized agent and representative, in a discourse concerning the plaintiff in his capacity as manager of properties operated by the defendant, had at Chattanooga, Tenn., in the presence of one Reynolds, falsely and maliciously said of him that he was short with the defendant in an amount around ninety thousand dollars, meaning thereby that he had fraudulently misappropriated to his own use funds of the defendant and imputing to him the felonies of fraudulent breach of trust or embezzlement. The third count alleged that the defendant, through said agent and representative, and in a like discourse concerning the plaintiff, had at Memphis, Tenn., in the presence of one Murphee, falsely and maliciously said of him that he was short in his account with the defendant in the sum of about sixty thousand dollars, and, it was said, had made a complete confession of the shortage, meaning thereby that he had fraudulently appropriated to his own use the funds of the defendant to such amount. The defendant plead the general issue merely, with no plea of justification; thereby rendering inadmissible any evidence that the alleged charges were true; and, in effect, admitting their falsity. Tenn. Code, Sec. 2910 (Thomp. Shan. 4631); McCampbell v. Thornburgh, 3 Head. (Tenn.) 109, 111; Bank v. Bowdre Bros., 92 Tenn. 722, 730, 23 S.W. 131; Newell, Slander & Libel (3d Ed.) 767, and cases cited.

The defendant earnestly insists that the trial court was in error in denying it a directed verdict on both the second and third counts. The determination of this question involves a consideration of all the evidence, which is unnecessarily voluminous, confused and in many matters conflicting; as well as of the rules of law applicable thereto. It is impracticable, within reasonable limits, to set forth the details of the evidence, which is largely of a circumstantial nature, relating, among other things, to many conversations with various of the defendant's officers and their conduct prior to and after the alleged slanderous utterances, and including many documentary exhibits; or even, without extending this opinion to undue length, to give a summary of the evidence adequately representing the respective contentions of the parties. We shall hence merely state the general conclusions which we have reached on the controlling questions in issue, after giving to all the evidence our careful consideration.

The defendant, which was engaged in crushing cotton seed for the production of cotton seed oil, owned and operated various mills located at different southern points; among others a mill at Memphis, of which Schoettelkotte was the local manager. It had also leased from the Richmond Cotton Oil Company two mills, located at Corinth, Miss., and Kennett, Mo., which it also operated. The plaintiff, who was a stockholder in the Richmond Company and had formerly been its general manager, was employed by the defendant as manager of the two Richmond mills; his office being at Memphis. The operation of the defendant's Memphis mill, under Schoettelkotte, and of the two Richmond mills, under the plaintiff, were entirely separate; Schoettelkotte as manager of the Memphis mill having nothing whatever to do with the plaintiff's management of the two Richmond mills.

During the last year of the lease, the plaintiff, at different times, used large amounts of the defendant's funds aggregating at least $25,000.00, which had been sent to him for carrying on the operations of the Richmond mills, in the purchase of cotton futures, on margins, through bucket shops at Memphis. These purchases resulted in heavy loss. The plaintiff testified, however, that no part of these purchases were made on his own account; and there was material evidence to the effect that they were in fact made solely as advances to and on the account of the Planters' Gin Company, a ginning company which was under contract, in consideration of advances made, to furnish the Richmond mills with the cotton seed which it ginned, and were hedges intended to protect said Gin Company from losses on purchases of spot cotton. ...