Woo King-Hsun v. Pemberton & Penn, 6967.

• Citation: 66 F.2d 811
• Decision Date: 06 September 1933
• Docket Number: No. 6967.,6967.
• Parties: WOO KING-HSUN v. PEMBERTON & PENN, Inc.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

66 F.2d 811 (1933)

WOO KING-HSUN v. PEMBERTON & PENN, Inc.^*

No. 6967.

Circuit Court of Appeals, Ninth Circuit.

September 6, 1933.

Fessenden and Holcomb, of Shanghai, China, and Chickering & Gregory, Donald Y. Lamont, and Frederick M. Fisk, all of San Francisco, Cal., for appellant.

Schuhl & Lurton, of Shanghai, China, and Pillsbury, Madison & Sutro, Alfred Sutro, and Eugene M. Prince, all of San Francisco, Cal., for appellee.

Before WILBUR, SAWTELLE, and MACK, Circuit Judges.

SAWTELLE, Circuit Judge.

This is an appeal from a judgment in favor of appellee, defendant below, on its counterclaim in an action brought by appellant to recover damages for alleged breach by appellee of a contract of agency and to recover from appellee certain other moneys, alleged to be due and owing to appellant. The amount of the counterclaim offset the amount of damages claimed by appellant. The nature of the counterclaim and the transaction out of which it arose will be more fully described hereinafter.

The contract of agency between the parties commonly known as a compradore agreement, was executed on February 15, 1931, and provided that appellant and one Zar Dong-Zsu, appellant's partner, both citizens of China, would act as compradores, or commission merchants, on behalf of appellee, an American corporation doing business in China, for the sale of the latter's tobacco in China, on a commission basis, for a period of one year from the date of the agreement.

Various pertinent provisions of the contract are as follows: "The compradores shall undertake to further to the fullest extent of their ability the business of the Company in leaf tobacco of all grades and descriptions in which the Company does or may deal." "The compradores do hereby authorize each other as their duly accredited and rightful agents in all dealings with the Company, and the signature of either of the compradores shall be binding upon both of the compradores in all future dealings with the Company." "The compradores shall not be interested in the sale of any American leaf tobacco other than that of the Company, and shall devote their entire time and energy to the sale of the leaf tobacco of the Company, to the exclusion of all other interests." "This agreement may be only terminated after three (3) months notice in writing is given by one party to the other party."

The compradores also agreed to "assume full responsibility for payment of all accounts due to the Company from native buyers to whom they have sold goods of the Company for the account of the Company and whose memorandum of purchase they have guaranteed to the Company." Certain sums were deposited with appellee by the compradores "as security for the fulfillment and correct performance by the compradores and of all customers introduced and/or guaranteed by them to the Company hereunder and of all the terms, covenants and conditions and obligations of this agreement by the compradores to be kept, fulfilled, performed and observed."

The contract was terminated by appellee on September 28, 1931, after notice of such intention was given to the compradores on July 15, 1931.

In October, 1931, Zar Dong-Zsu, the partner, assigned to appellant all of his right, title, and interest in the contract with appellee.

Appellant then brought this action against appellee to recover specific damages for alleged breach of the contract and to recover the moneys deposited with appellee for the faithful performance of the contract, as well as certain unpaid salaries and commissions.

In its answer, appellee denied that it had breached the contract, but admitted its liability to account for the deposit received by it from the compradores to guarantee the faithful performance of the contract. On the trial appellee also admitted its liability for the unpaid salaries and commissions sought by the complaint.

By way of counterclaim, however, appellee alleged that the compradores are indebted to appellee in excess of any sum due them, by reason of a certain sale of sixty hogsheads of tobacco to the Hwa Ching Tobacco Company, for which payment had not been received, the indebtedness therefor being chargeable against the guaranty deposited by the compradores.

The court, sitting without a jury, rendered judgment in favor of appellee on its counterclaim, in full settlement and satisfaction of appellant's claim.

An additional counterclaim filed by appellee was dismissed by the court for insufficiency of the evidence to support it, and it is not involved here.

Neither is appellant's unsuccessful claim for specific damages for alleged breach of the contract by appellee here involved.

The only issue here relates to the holding of the court in allowing appellee's counterclaim as a set-off against the moneys deposited with appellee by the compradores to secure the faithful performance of the contract and to insure appellee against any loss resulting from a sale made pursuant to the agreement.

The findings of the court in connection with the counterclaim are as follows:

"That on or about the 20th day of July, 1931, Zar Dong-Zsu, acting under and pursuant to the compradore agreement, undertook to sell sixty hogsheads of defendant's tobacco to the Hwa Ching Tobacco Company, a local concern.

"That Zar Dong-Zsu at the time of such undertaking, to-wit, on July 20, 1931, requested Burnett, the then acting general-manager of defendant's business in Shanghai, that he, Burnett, should say nothing to Zar's co-compradore, Woo King-Hsun, with respect to the proposed sale of the sixty hogsheads of tobacco to the Hwa Ching Tobacco Company, to which said proposal Burnett agreed.

"That thereafter Zar Dong-Zsu represented to Burnett, as the general-manager of the defendant, that he, Zar Dong-Zsu, had obtained a contract from the Hwa Ching Tobacco Company for the purchase of the sixty hogsheads of tobacco from the defendant, whereupon the sixty hogsheads of tobacco were delivered by order of the defendant to the warehouse of the Hwa Ching Tobacco Co.

"That thereafter, in some manner not fully disclosed by the evidence, the sixty hogsheads of tobacco which had been delivered by the defendant to the warehouse of the Hwa Ching Tobacco Company got into the possession of Zar Dong-Zsu and were by him converted to his own use, and that the defendant has never received payment for the same."

It appears from the record that the reason given by Zar Dong-Zsu to Mr. Burnett, the manager...