Anglo-American Provision Co. v. Davis Provision Co.

• Decision Date: 10 January 1902
• Citation: 112 F. 574
• Parties: ANGLO-AMERICAN PROVISION CO. v. DAVIS PROVISION CO. et al.
• Court: U.S. District Court — Southern District of New York

112 F. 574

ANGLO-AMERICAN PROVISION CO. v. DAVIS PROVISION CO. et al.

United States Circuit Court, S.D. New York.

January 10, 1902

Henry Wilson Bridges, for complainant.

Frank E. Smith, for defendants.

The complainant recovered a judgment against the defendant, the Davis Provision Company in the circuit court of Illinois on the 6th day of January, 1899, for the sum of $5,049. The defendant, the Davis Provision Company, recovered a judgment against the complainant on the 13th day of December, 1895, in the supreme court of New York, for the sum of $9,241, which judgment was subsequently modified and affirmed and final judgment was entered for $9,678 on the 16th day of July 1900. The cause of action in the Illinois suit might have been counterclaimed in the New York suit and vice versa. The complainant seeks to have the first of these judgments set off, pro tanto, against the second. Both of these corporations were organized under the laws of Illinois. The Davis Provision Company is insolvent, having no substantial assets of any kind. The case was before this court upon demurrer to the bill (105 F. 536), where it was held that such an action might be maintained. Various defenses are alleged in the answer, but at the argument the only two relied on were as follows: First, That by virtue of an agreement made October 23, 1893, the various choses in action which culminated in the judgment of $9,678, were, on the 27th day of May, 1895, for a valuable consideration, assigned to the defendant Smith M. Weed. Second, That the complainant has been guilty of laches in not setting up the cause of action upon which the Illinois judgment was obtained as a counterclaim in the New York action.

COXE District Judge.

Since the decision on the demurrer the question of jurisdiction is no longer an open one in this court. The first question now to be decided is whether the judgment recovered in the name of the Davis Provision Company belongs to that company or to the defendant Smith M. Weed. The following facts seem to be established: In December, 1892 the Davis Company gave the Anglo Company three notes aggregating $23,546, in settlement of its account, which notes were transferred to Fowler Bros., Limited, an English corporation, having the same interests and being identical with the Anglo Company so far as the transactions in controversy are concerned. In October, 1893, a judgment for about $19,000 was recovered against the Davis Company on the notes. In order to pay this judgment it was necessary to borrow $13,500 from the Plattsburg bank. The bank agreed to loan the money provided the defendant Smith M. Weed would indorse the paper, the Davis Company to give him as security the claims against the Anglo Company and certain stock which turned out to be worthless. The proceeds of the discount then made paid the Fowler judgment and was, practically, a payment to the Anglo Company. There is still owing the bank on account of this loan about $10,000 on renewal notes made or indorsed by the defendant Weed. The loan of $13,500 was negotiated by Henry Davis the president, treasurer and general manager of the Davis Company, who, in doing so, was acting within the scope of his authority. The court is unable to find any proof that the Davis Company was insolvent at the time of this discount or any direct proof that Weed knew at that time of the claims which were soon afterwards included in the Illinois suit. On the 27th of May, 1895, during the pendency of the action which resulted in the $9,678 judgment the Davis Company transferred, by written assignment, the claims in controversy to said Weed. Thereafter the action proceeded in the name of the original plaintiff, but this is permitted by the Code of Civil Procedure of New York, Sec. 756. The court has searched the record in vain for any evidence of fraudulent or collusive conduct on the part of the defendants in relation to the transfer of these claims. It is true that the business was informally and carelessly done, that the records of the Davis Company fail to disclose the transaction, that Weed was vice president of the company at the time and that there is evidence tending to show that the company exercised dominion over the claims after the assignment to Weed. But all this is insufficient to overthrow the positive made. In order to reach a contrary conclusion the court must arbitrarily reject the uncontradicted testimony of a number of intelligent and unimpeached witnesses. This cannot be done. If the transaction were one where a director has taken or concealed the property of the company for his own advantage to pay his antecedent debts or to prevent it from being reached by the creditors, a very different case would be presented. Here, on the contrary, the action of Weed in procuring $13,500 on his personal credit and paying...