Atlantic & N.C.R. Co. v. Atlantic & N.C. Co.

• Decision Date: 15 April 1908
• Citation: 61 S.E. 185,147 N.C. 368
• Parties: ATLANTIC & N.C. R. CO. v. ATLANTIC & N.C. CO.
• Court: North Carolina Supreme Court

61 S.E. 185

147 N.C. 368

ATLANTIC & N.C. R. CO. v. ATLANTIC & N.C. CO.

Supreme Court of North Carolina

April 15, 1908

Appeal from Superior Court, Craven County; Lyon, Judge.

Action by the Atlantic & North Carolina Railroad Company against the Atlantic & North Carolina Company. From a judgment for plaintiff, defendant appeals. Affirmed.

In an action by a lessor against the lessee's assignee to recover indemnity for recovery against it on the assignee's refusal to accept performance of a contract made by the lessor and assigned under the lease, one who had been of counsel for the lessee was not incompetent to testify that the contract was referred to when the lease was made, on the theory the testimony related to a confidential communication, where the fact was necessarily known to both parties, brought out during the negotiation concerning the lease.

Civil action, tried at the November term, 1907. A jury trial having been formally waived by the parties, the court heard the testimony, found facts, and made conclusions of law thereon as follows: "(1) That the plaintiff is a corporation duly organized and existing under the laws of North Carolina. (2) That the defendant is a corporation duly organized and existing under the laws of North Carolina. (3) That on the 1st day of September, A. D. 1904, the plaintiff made, duly executed, and delivered a lease to the Howland Improvement Company, a copy of said lease hereto annexed and made a part of these finding of facts. (4) That the defendant succeeded to the rights and liabilities of the said Howland Improvement Company under said lease. (5) That previous to the execution of said lease the plaintiff used in its locomotives for the transportation of freight and passengers over its railroad wood as fuel, and for the purpose of supplying itself with sufficient quantity of wood the plaintiff had purchased timber lands and standing timber, and had entered into contracts with several persons for cutting timber, among others, one B. W. Ives, for the cutting and delivery to plaintiff of 15,000 cords of wood; and, in pursuance of said contract, the said Ives prior to the date of said lease had cut and delivered large quantities of said wood to plaintiff, and at the time of the execution of said lease the contract between plaintiff and Ives was in regular course of performance by both parties thereto. (6) That, when the defendant took over the property of the plaintiff under the said lease, all of the locomotives which it received were what is known as 'wood burners,' and it was necessary to have an adequate supply of wood as fuel for said locomotives, and that the defendant used in its railroad operations only those locomotives for several months and used up large quantities of wood as fuel, including a portion of the wood cut and delivered to plaintiff by said Ives under said contract. (7) That some months afterward defendant had been in the operation of said railroad under the said lease it changed the locomotives from 'wood burners' to 'coal burners.' (8) That, after the lease, the defendant refused to carry out the wood contract with Ives, or to take any wood from him under and in pursuance of said contract between the plaintiff and said Ives, and thereupon the said Ives demanded of the plaintiff that it carry out said contract, and, upon the failure of the plaintiff to perform said contract, the said Ives on the 28th day of December 1904, brought suit against the plaintiff for the breach of said contract. (9) That upon the institution of said suit the plaintiff notified the defendant to come in and defend the same, which the defendant declined to do, and the plaintiff undertook the defense of said suit, and did defend it to the best of his ability and at considerable expense and cost, but judgment was finally awarded both in the superior and Supreme Courts against the plaintiff and in favor of said Ives for the sum of $8,106.90, with interest and costs. That, in addition to said amount, the plaintiff was forced to pay the following amounts: Interest on said amount, $216.16; cost superior court, $104.60; cost Supreme Court, $23.55 attorney's fee, $700-amounting in all at the time of said payment to the sum of $9,147.21. (10) That the defendant knew of the existence of said contract at the time of the said lease, as shown by the paper writing itself and testimony of Howland, Davidson, and Bryan. (11) That said contract was assignable, and was duly assigned by the plaintiff to the defendant, and was broken by the defendant. (12) That said contract between the plaintiff and B. W. Ives was not in writing, nor was there any writing concerning same at the time of the making of the lease to the defendant. (13) That the defendant is liable to the plaintiff for the amount set out in 9 above, and that judgment be entered in favor of the plaintiff and against the defendant accordingly."

The portions of the lease referred to in finding of fact 3 pertinent to this inquiry are as follows: "Now therefore, for and in consideration of the several sums of money, rents, covenants, agreements, and stipulations here inafter specified and agreed to be paid, kept, and performed by the Howland Improvement Company, the said lessor, namely, the Atlantic and North Carolina Railroad Company, has demised, let, hired, farmed out and delivered and by these presents doth demise, let, hire, farm out, and deliver to the said lessee, namely, the Howland Improvement Company, the entire railroad of the lessor, with all its franchises, privileges, rights of transportation, works, and property, including among other things its superstructure, roadbed, rights of way incident thereto, situated in the state of North Carolina, and extending from Morehead City, in the county of Carteret, to the city of Goldsboro, in the county of Wayne, in the said state; and also all depots, houses, shops, piers, wharves, water fronts, water privileges, buildings, fixtures, engines, cars, and railroad equipment, and all franchises, rights, and privileges and other things, if any, of whatsoever kind and nature to the said lessor belonging and necessary, incident, appurtenant to the free, easy, and convenient operation of the said railroad leased hereby and now or heretofore used in that behalf; and also including the property situated in the said Morehead City, known as the Atlantic Hotel, with all its rights, privileges, hereditaments, and appurtenances, and the furniture, fixtures, equipments, and appliances now therein or used therewith, and also all lands and interests in lands, timber, timber rights, and contracts now owned by the lessor, for the full term of ninety-one (91) years and four (4) months from and after the first day of September, 1904, and to be fully ended, commencing the first day of September, 1904." And further a covenant of indemnity as follows: "And the lessee further covenants to and with the lessor, its successors and assigns, to indemnify and save harmless the said lessor against and from any and all damages which may be recovered from or against it, according to law, by reason of any failure of the said lessee, its agents, employés, successors or assigns, to perform in all things, or its or their violation of, their duties and obligations, whereby the lessor may become liable to any party injured or sustaining injury in his or her person, reputation or property; and the lessor, on its part, covenants to and with the lessee that whenever any suit or action shall be instituted against it, the said lessor, for any causes of action for which the lessee would be liable to the lessor under the terms of this lease, the lessor will immediately give due notice and tender defense of such suit or action to the lessee-such notice to be given to the resident agent of the lessee at either of the following named places, to wit, Morehead City, New Bern, Kinston, or Goldsboro, all in the state of North Carolina." And further: "It is further agreed between the parties that all cash on hand and all bills and accounts receivable, due and payable to the lessor, at the date this lease goes into effect, shall not pass by this conveyance; nor shall the lessee be liable for any debts of the said lessor at said date."

On the findings of fact and conclusions of law there was judgment for plaintiff, and defendant excepted and appealed.

Aycock & Daniels, Simmons, Ward & Allen, and Moore & Dunn, for appellant.

George Rountree and P. M. Pearsall, for appellee.

HOKE J.

The contract, by reason of which this recovery was had, and its effect and binding force as between the original parties, were construed and determined in Ives v. Railroad, 142 N.C. 131, 55 S.E. 74, 115 Am. St. Rep. 732, and it was there held that the contract was for the cutting and delivery to the present plaintiff, on its right of way, a specified amount of cordwood, and was not therefore within the statute of frauds, requiring that contracts concerning land should be in writing. The judgment obtained by Ives in that case having been paid off and discharged, the plaintiff instituted this action to recover of the present defendant the amount of that judgment, and the cost and reasonable expense incurred in defending the suit. Such recovery is resisted on the grounds chiefly: (1) That the contract in question was not assignable. (2) That as a matter of fact it was not assigned. But we are of opinion that neither position can be sustained.

While at common law the rights and benefits of a contract, except in the case of the law merchant and in cases where the crown had an interest, could not be transferred by assignment, a doctrine which Lord Coke attributes to the "wisdom and policy of the founders of our law in discouraging maintenance and litigation, but which Sir...