American Agricultural Chem. Co. v. Robertson

• Court: Supreme Judicial Court of Massachusetts
• Writing for the Court: SANDERSON
• Citation: American Agricultural Chem. Co. v. Robertson , 273 Mass. 66, 172 N.E. 871 (Mass. 1930)
• Decision Date: 09 October 1930
• Parties: AMERICAN AGRICULTURAL CHEMICAL CO. et al. v. ROBERTSON et al.

273 Mass. 66

172 N.E. 871

AMERICAN AGRICULTURAL CHEMICAL CO. et al.

v.ROBERTSON et al.

Supreme Judicial Court of Massachusetts, Suffolk.

Oct. 9, 1930.

Appeal from Superior Court, Suffolk County; Morton, Judge.

Suit by the American Agricultural Chemical Company and others against Hugh J. Robertson and another. The master's report was confirmed by an interlocutory decree, followed by a final decree for some of the plaintiffs, and defendants appeal.

Modified and affirmed.

T. F. Quinn, of Boston, for appellant Robertson.

F. H. Stewart, of Boston, F. X. Daly, of Roxbury, and C. S. Wing, of Boston, for appellant Murphy.

S. C. Rand and M. E. Foster, both of Boston, for appellees.

SANDERSON, J.

This is a suit brought to obtain an accounting of corporate funds and other property alleged to have been unlawfully diverted from the plaintiff corporations by the defendants Robertson and Murphy for the use of themselves and others associated with them, and for other relief. After answers were filed by the defendants the case was sent to a master under an order of reference requiring him to hear the parties and their evidence and to report his findings to the court together with such facts and questions of law as either party may request. The master's report first filed was recommitted for purposes not now necessary to discuss, and a supplemental report filed. Murphy filed motions to recommit, to report all the evidence, to order the master to report certain evidence and exhibits, and to place the stenographic report of the evidence on file. All these were denied and an interlocutory decree was entered confirming the report, followed by a final decree granting relief to certain of the plaintiffs. Robertson and Murphy, who will be referred to as the defendants, appealed from the several orders and decrees adverse to them, but Robertson filed no brief and must therefore be deemed to have waived all rights under his appeal, and matters affecting his rights will not be considered except as they are necessarily involved in determining the rights of Murphy.

The plaintiff the American Agricultural Chemical Company, hereinafter called the chemical company, owns and controls all the capital stock, except qualifying shares, of the plaintiffs Eastern Oil and Rendering Company, of Boston, referred to as the Eastern Oil, the Brown Company, Inc., of Philadelphia, and the Millenbach Brothers Company, of Detroit. During the time covered by the bill these companies were engaged in the business of purchasing materials from markets and butcher shops and rendering them into edible and nonedible oils, tallows and other products. Robertson was the manager of the rendering department of the chemical company, and in that capacity exercised authority over the Brown Company, Inc., and Millenbach Brothers Company, as well as over the Eastern Oil of which he was president and a director. Murphy was president, treasurer and a director of the Brown Company, Inc., and in charge of its business. Charles E. North, not a party to this suit, was president, a director and manager of Millenbach Brothers Company and in charge of its business. The defendants and North were also employees of the chemical company.

Questions raised by the appeals of Murphy from orders of the court denying certain motions will first be considered. His motion to recommit the report, with a request that the master be instructed to report additional findings of fact, was based on two grounds: (1) That the master had excluded certain material and competent evidence appearing in an offer of proof incorporated in the report, and (2) that he had failed and refused, though duly requested, to make findings of material facts and to report material facts with his findings thereon alleged to be based upon uncontradicted and uncontroverted testimony of witnesses for the plaintiffs, is more specifically set forth in the defendant Murphy's objections to the report.

The exception to the exclusion of the evidence contained in the offer of proof was saved under the following circumstances: Murphy having testified that he went into the slaughtering and rendering business in 1913 or 1914 in a concern that was in 1916 merged with the Co-operative Slaughtering & Rendering Company, herein referred to as the slaughtering company, and that he ceased to do rendering in that company because of competition with the Eastern Oil and others, was asked, ‘Tell the master what happened to you.’ When asked by the master, upon objection being made by the plaintiffs, how this was important, counsel for Murphy made a detailed offer of proof to the effect that the group of renderers in Boston forced him to deliver his material to one of them under a threat of ruination if he did not, that the plaintiffs constituted an illegal combination formed to restrain trade, stifle competition and create a monopoly to the injury of the defendant Murphy, and that Robertson managed the operations of the combination for the purpose of maintaining it. The master then excluded the evidence offered to prove that the plaintiffs had formed an illegal combination or that such was their ulterior purpose; but, as we interpret the record, no evidence was excluded tending to prove knowledge of or acquiescence in or approval by the plaintiffs of the advances, payments and loans referred to in the bill of complaint, or to prove that the plaintiffs authorized the making of the contracts and loans, or that the contracts were prepared by counsel for the plaintiffs and with their approval. This ruling excluding evidence would be justified on the ground that the evidence offered was not responsive to the question asked but it was right on broader grounds.

The suit against Murphy is based in part upon breaches of fiduciary duty toward the plaintiffs, arising out of his employment in a capacity of trust and confidence, and in part upon his co-operation with Robertson and with North in their violation of similar duties to the corporations by which they were employed or of which they were officers. The fact that Murphy had previously been driven out of an independent business as a result of the monopolistic schemes of the plaintiffs can have no bearing on such a suit. The contract with Murphy and the relationship of trust flowing from it stand unimpaired. No previous ill or illegal treatment of Murphy at the hands of the plaintiffs would justify him in entering into such a relationship and subsequently using this trust and confidence as a cloak to hide the fraudulent diversion of the plaintiffs' property. Nor can Murphy escape liability for his part in the transactions in Detroit, to which reference will hereafter be made, by proving that the plaintiffs were there operating as an illegal combination and that the current prices of materials there were fictitious and arbitrary. In Pelosi v. Bugbee, 217 Mass. 579, 581, 105 N. E. 222, the court said: ‘The fact that the owner of property has violated the law with reference to it is not a bar to an action by him against a wrongdoer to whose wrongful act the plaintiff's illegal conduct has not contributed.’ Murphy's personal wrongdoing, upon the facts found, arose independently of any action of the plaintiffs asserted to be illegal in Murphy's offer of proof, and the evidence excluded would afford no defense to this suit. Duane v. Merchants' Legal Stamp Co., 231 Mass. 113, 117, 120 N. E. 370;Boylston Bottling Co. v. O'Neill, 231 Mass. 498, 121 N. E. 411, 2 A. L. R. 902;Commonwealth v. Dyer, 243 Mass. 472, 486, 138 N. E. 296;Berenson v. H. G. Vogel Co., 253 Mass. 185, 191, 148 N. E. 450;Connolly v. Union Sewer Pipe Co., 184 U. S. 540, 22 S. Ct. 431, 46 L. Ed. 679;D. R. Wilder Manuf. Co. v. Corn Products Refining Co., 236 U. S. 165, 35 S. Ct. 398, 59 L. Ed. 520, Ann. Cas. 1916A, 118;Strait v. National Harrow Co. (C. C.) 51 F. 819.

With respect to the second ground of the motion to recommit, what was said in A. T. Stearns Lumber Co. v. Howlett, 260 Mass. 45, 73, 157 N. E. 82, 52 A. L. R. 1125, is applicable: ‘The order of reference stipulated, that the cause be referred to the master ‘to hear the parties and their evidence and report his findings to the court together with such facts and questions of law as either party may request.’ Cook v. Scheffreen, 215 Mass. 444, 447, 448 [102 N. E. 715]. But, the request not having been made before the parties were informed of the contents of the draft report, these exceptions must be overruled. Tuttle v. Corey, 245 Mass. 196, 203, 204 [140 N. E. 249];Daniels v. Daniels, 240 Mass. 380, 384 [134 N. E. 235].' Murphy contends that the facts alluded to in the second ground of the motion differentiate the case because they are ‘undisputed facts,’ basing this contention on his statement that the facts were admitted by officers of the plaintiffs or other witnesses called in their behalf. But upon this record the evidence, whatever its nature may have been, is not before us, and the contention that the findings are not supported by the evidence is not open to the defendant. Chamberlain v. Henry, 263 Mass. 63, 65, 160 N. E. 317;Goodman v. Goldman, 265 Mass. 85, 87, 88, 163 N. E. 867;Brown v. Little, Brown & Co., Inc. (Mass.) 168 N. E. 521, 66 A. L. R. 1284. The motion to recommit was properly denied as to the second ground.

The motions that the stenographic report of the evidence be placed on file and that the master report all the evidence were properly denied. ‘When a party goes to trial before a master under an order of reference which does not direct him to report the evidence in whole or in part, it is too late to ask that that be done at least after the terms of his draft report have come to the knowledge of the parties. The purpose of such an order of reference is to leave to the master the final determination of the facts, and there is no justice in giving to the unsuccessful party who his taken his chances of a final determination in his favor an...