Agency of Canadian Car & Foundry Co. v. American Can Co.

• Decision Date: 21 April 1919
• Docket Number: 148.
• Citation: 258 F. 363
• Parties: AGENCY OF CANADIAN CAR & FOUNDRY CO., Limited, et al. v. AMERICAN CAN CO.
• Court: U.S. Court of Appeals — Second Circuit

258 F. 363

AGENCY OF CANADIAN CAR & FOUNDRY CO., Limited, et al. v. AMERICAN CAN CO.

No. 148.

Circuit Court, of Appeals. Second Circuit.

April 21, 1919

This cause comes here on appeal from a decree entered in the United States District Court for the Southern District of New York, on August 14, 1918. The Agency of Canadian Car &amp Foundry Company, Limited, hereinafter called the 'Agency Company,' is a corporation organized under the laws of the state of New York, and is a citizen of that state, having its principal place of business in the city of New York. The Recording & Computing Machine Company, hereinafter called the 'Recording Company,' is a corporation organized under the laws of the state of Ohio, and is a citizen of that state, having its principal place of business in the city of Dayton, in that state. The American Can Company is a corporation organized under the laws of the state of New Jersey, and is a citizen of that state, having its principal place of business in the city of New York. The Canadian Car &amp Foundry Company, Limited, hereinafter referred to as the 'Canadian Company' is a corporation under the laws of the Dominion of Canada.

On respectively, February 27, 1915, and March 8, 1915, two contracts were entered into at Petrograd, Russia, between the Chief Artillery Board of the Russian government and the Canadian Company. The first contract was for 2,500,000 high explosive shells and 500,000 shrapnel shells. The second contract was for 2,000,000 shrapnel shells. The 2,500,000 shrapnel shells so contracted for required 2,500,000 time fuses. This caused the Canadian Company in March, 1915, to enter into a contract with the Recording Company, in which the latter company agreed to manufacture for the former company 2,500,000 time fuses. In pursuance of these contracts the Russian government, through its attorney, advanced to the Canadian Company between April 20, 1915, and November 8, 1915, $9,904,997.

In October, 1915, there was organized the Russian Supply Committee in America, which took charge on behalf of the Russian government of all matters arising out of the contracts; and between November 22, 1915, and January 5 1917, the attorney for this Committee, acting under its instructions, turned over to the Canadian Company, on account of the purchase price stipulated in the contracts, various amounts aggregating $64,000,000, which with the advances made prior to November 22, 1915, aggregated $74,000,000. On March 8, 1916, the contract of February 27, 1915, and the contract of March 8, 1915, were amended, and as amended were assigned with the consent of the Russian government to the Agency Company. After March 8, 1916, the performance of the contracts was carried on exclusively by the Agency Company.

Under date of August 23, 1916, an agreement was made between the Recording Company and the defendant for the manufacture by the Recording Company of 1,250,000 '22-second Russian combination fuses.' Under date of October 31, 1916, an agreement was made between the Agency Company, the Recording Company, and the defendant, whereby the Agency Company waived any claim or lien which it had upon the time fuses manufactured by the Recording Company for the defendant under the contract of August 23, 1916, In the contract of October 31, 1916, the defendant agreed to pay to the Agency Company $1 of the purchase price of each fuse delivered 'until all sums which may now or hereafter be due from and payable' by the Recording Company to the Agency Company should be adjusted or otherwise satisfied. This agreement is one of especial importance in this case. The Agency Company claimed that as a result of the dealings between the Recording Company and itself the latter was indebted to it in a large amount, and under date of November 17, 1916, what is known as the 'Arbitration Agreement' was entered into between these two companies. They therein agreed to adjust and settle all accounts and claims arising under the agreement between them.

On January 2, 1917, the Agency Company assigned, among other things, to the Chief Artillery Board of the Imperial Russian government, which was referred to in the assignment as 'the government,' 'all debts, accounts, and sums of money now due and owing, or accruing due from the manufacturer to the Agency Company up to, but not in excess of,' $2,352,315.63. The agreement also assigned to the (Russian) government the agreement of October 31, 1916, 'with full right and authority on the part of the government to receive from the American Can Company all sums of money payable to the Agency Company under the terms of said agreement. ' And the agreement expressly provided that the government would pay to the Agency Company 'the aggregate amount of the sum or sums that may now be due or hereafter ascertained to be due or accruing due from the manufacturer to the Agency Company, under the terms of said agreements first above referred to, and to make such payments to the Agency Company as and when such sums respectively are ascertained, or are admitted by the manufacturer to be due or accruing due: Provided, however, that the government shall not be liable to pay any sum or sums due or accruing due from said the Recording & Computing Machines Company in excess of the aggregate amount of two million three hundred and fifty-two thousand three hundred and fifteen dollars and sixty-three cents ($2,352,315.63), and that for any sum or sums due or hereafter accruing due from the manufacturer to the Agency Company, in excess of the amount paid by the government in respect thereof, the Agency Company shall retain its rights to receive payment for the same from the manufacturer and the said Ohmer: And provided, also, that the rights of the Agency Company to issue execution on any judgment recovered by it against the manufacturer and/or the said Ohmer in respect of the same shall not be exercised by the Agency Company until after the government has been reimbursed by the manufacturer and the said Ohmer for any and all sums paid and/or credited to the Agency Company hereunder, nor until all contracts which the manufacturer now has or may hereafter have for the manufacture of Russian time fuses have been completed by the Recording & Computing Machines Company.'

On January 11, 1917, the Recording Company agreed with the Russian government that each firm or corporation having a contract with it for time fuses (including thereby the defendant) should deduct $1 from the purchase price of each fuse and pay the same to the government until payment should be made in full of the amount which the government was required to pay to the Agency Company under the agreement referred to in the preceding paragraph. On September 14, 1917, the defendant by letter acknowledged that it held $1,500,000 (or $1 per fuse upon the fuses manufactured for it) for account of the Agency Company or the Imperial Russian government as their interests might appear, and it agreed to retain the same 'until such time as there shall have been made a final settlement and adjustment of accounts' between the parties interested, to wit, the Recording Company, the Agency Company, the Imperial Russian government, and the defendant, 'or until their interests shall be finally determined by law. ' The agreement of September 14, 1917, also contained an important agreement as to the payment of interest, to which more specific reference is made in the court's opinion.

On December 18, 1917, an agreement was made between the Agency Company, the Recording Company, and the Russian government acting through Gen. Khrabroff, the president of the Russian Supply Committee in America, which it is claimed was a complete and final settlement, adjusting and determining all matters of account including the amount due from the Recording Company to the Agency Company; and on that day the Recording and Agency Companies by a separate instrument stated and adjusted their accounts, and the Recording Company conveyed to the Agency Company an interest, constituting a prior claim, to the extent of $713,176.07 in the fund of $1,500,000 held by the defendant; and on the same day last above named the Russian government assigned to the Agency Company and to the Recording Company all its right, title, and interest either in law or in equity in and to the sum of $1,500,000, and such interest as may be payable thereon, held by defendant, in such proportion that the Agency Company 'shall have and enjoy the sum of $713,176.07 out of said moneys and the Recording Company shall have and enjoy the balance of $786,823.93 of said moneys and such interest as may be payable upon said moneys to be divided equally between said companies.'

This suit is brought to compel the defendant to pay to the plaintiffs the moneys which they claim are improperly withheld from them by the defendant. The defendant admits that it is indebted in the amount of $1,500,000, and declares that it has been ready and willing to pay the same as soon as payment thereof would relieve it from possible liability to pay the same again in whole or in part to some other claimant or claimants. The defendant denies that the governments referred to in the various averments of said bill of complaint as 'the Russian government' were the same governments; and it declares that it is without knowledge whether any rights or property alleged in said bill of complaint to have been acquired or vested in any Russian government have been acquired or vested in any other or subsequent Russian government in said bill of complaint mentioned, or in the complainants, or either of them, or whether any person, natural or corporate, or persons or body of persons, referred to in said bill of complaint or in any exhibit thereto as acting or purporting to act...