Borches & Co. v. Arbuckle Bros.

• Decision Date: 31 October 1903
• Citation: 78 S.W. 266
• Parties: BORCHES & CO. v. ARBUCKLE BROS.
• Court: Tennessee Supreme Court

Page 266

78 S.W. 266

BORCHES & CO. v. ARBUCKLE BROS.

Supreme Court of Tennessee.

October 31, 1903.

Appeal from Chancery Court, Knox County; Joseph W. Sneed, Chancellor.

Action by Borches & Co. against Arbuckle Bros. From a judgment in favor of plaintiffs, reversed by the Court of Chancery Appeals, both parties appeal. Reversed.

Shields, Cates & Mountcastle, for complainants. Sansom & Welcker, for defendants.

NEIL, J.

On the 6th day of August, 1900, Arbuckle Bros. brought a suit in the United States Circuit Court at Knoxville against Borches & Co. to recover from them $5,750, alleged to be due for 500 cases of coffee which it was averred Borches & Co. had bought, and had failed to pay for.

The declaration in that case alleged, in substance, that Arbuckle Bros. had sold to Borches & Co. the 500 cases of coffee referred to, at the price stated, had delivered 420 cases, and were ready and willing, or, as expressed in the declaration, "tendered," the remaining 80 cases; that none of the contract price had been paid; and that the whole of the $5,750 was due and owing.

The defendants to that case, Borches & Co., pleaded non assumpsit, nil debit, and payment.

Upon these issues the cause was brought to a hearing in the United States Circuit Court. His honor, Judge Clark, presiding in that court, exercising his rights according to the practice obtaining in federal tribunals, peremptorily charged the jury that the testimony showed that Arbuckle Bros. had sold to Borches & Co. the 500 cases of coffee, and, in effect, settled this issue against Borches & Co. and in favor of Arbuckle Bros.; saying to the jury that the evidence was such that, if they should come to a different conclusion upon this issue, he would have to disregard their finding.

His honor Judge Clark, however, did submit to the jury, as raising doubtful questions of fact, the matters arising upon the issues of nil debit and payment. Bearing upon these issues, there was evidence tending to show that Borches & Co. had paid the whole sum in controversy, $5,750, to one Gaut, as the agent of Arbuckle Bros. There was also evidence tending to show that the money was paid to Gaut in his individual character, and not as agent. Judge Clark left it to the jury to say whether the money had been paid to Gaut individually, or as the agent of Arbuckle Bros.; expressing his opinion however, to the jury, that the payment had been made to Gaut as agent.

He also submitted to the jury, under the issues of nil debit and payment, the question as to whether Gaut had authority to receive payment for Arbuckle Bros., as their agent and representative; it having been insisted on behalf of Arbuckle Bros. that Gaut was only a sales agent, and not entitled to collect, and that this fact was known to Borches & Co.; and, on the other hand, it having been insisted, in behalf of Borches & Co. that Gaut was a general agent, with authority not only to sell, but to collect as well.

Under the charge of the court, the jury returned a general verdict finding "the issues in favor of the defendants and against the plaintiffs." Judgment was rendered on this verdict in favor of Borches & Co. and against Arbuckle Bros. for the costs of the cause on March 26, 1901.

On appeal to the Circuit Court of Appeals at Cincinnati, the foregoing judgment was affirmed.

On March 11, 1902, after this judgment of affirmance, the present suit was brought in the chancery court of Knox county to recover the price of the 80 cases of coffee which had been paid for, but had not been delivered. The bill set out fully the foregoing proceedings in the federal court, and pleaded the judgment therein as res adjudicata. It also alleged, in terms, a purchase by Borches & Co. of 500 cases of coffee, at $5,750, from Arbuckle Bros., the payment to the latter of the purchase price, the delivery of only 420 cases, and the failure to deliver the remaining 80 cases.

Arbuckle Bros. filed an answer in which they denied that they had ever made a sale of 500 cases of coffee to Borches & Co., or that they had delivered 420 cases, or that they had ever received any payment from Borches & Co.

After putting in this general denial, they then averred that Borches & Co. had bought the coffee from their agent, Gaut, individually; that Borches & Co. had corrupted this agent, and had misled them by false statements, and that they did not know what the real facts were until they heard the testimony in the federal court case; and that a fraud was thus practiced upon them. They alleged that, by corrupting this agent, Borches & Co. had fraudulently gotten possession of the 500 cases of coffee, and had never paid for them. They therefore sought by cross-bill to recover against Borches & Co. a judgment for $5,750, the value of the 500 cases of coffee. This pleading likewise asked that the federal court's judgment be set aside because of "fraud, surprise, mistake, and accident."

Arbuckle Bros. also insisted in their pleading that Borches & Co. could in no event recover the value of the 80 cases of coffee, because they had declined to receive these 80 cases when tendered, and also because they had denied purchasing the coffee at all.

In the cross-bill, Arbuckle Bros. prayed for a decree adjudging Borches & Co. their debtors for the 420 cases of coffee, or $11.50 per case; also that it be adjudged that the proceedings in the federal court case were not res adjudicata in every respect, or, if the judgment in that case should be held res adjudicata, then that it be set aside on the ground of fraud, accident, and mistake.

To this cross-bill Borches & Co. filed a demurrer, making the point that the judgment in the federal court case was res adjudicata upon the claim put forward for the recovery of the price of the 420 cases. They also demurred to so much of the bill as sought to set aside the judgment in the federal court because no sufficient allegations of fraud were made in the cross-bill.

The chancellor sustained both grounds of demurrer filed, as above stated, to the cross-bill. He sustained the original bill of Borches & Co., and granted them a judgment against Arbuckle Bros. for $920, the contract price of the 80 cases of coffee, together with interest from the filing of the bill, $77; in all, $997.

From the foregoing decree Arbuckle Bros. prayed and obtained an appeal. The case was tried by the Court of Chancery Appeals, and in that court the decree of the chancellor was reversed in so far as it directed a judgment in favor of Borches & Co. for the $997. In other respects it was affirmed. From that decree both parties have appealed to this court.

In the opinion filed by the Court of Chancery Appeals only a passing notice is given to the appeal prosecuted by Arbuckle Bros. in respect of the chancellor's disposition of the cross-bill, the court being clearly of the opinion that that claim was concluded by the judgment in the federal court; and really no serious contention is made to the contrary in this court, as, indeed, there could not be. The conclusion of the Court of Chancery Appeals upon this point is so manifestly sound that we need not consume any further time in considering it.

The real controversy arises over the claim preferred by Borches & Co. to recover the $920 and interest for the 80 cases of coffee undelivered.

The Court of Chancery Appeals considered this matter in two aspects. The first standpoint from which the controversy is viewed is as to whether Borches & Co. are entitled to the benefit of res adjudicata as to the question of there having been a sale to them by Arbuckle Bros. of the 500 cases of coffee. The second view considered is whether Borches & Co. are estopped by their pleadings and their testimony in the federal court case.

The first of these controversies was determined against Borches & Co. on grounds to be presently stated, and the second was also determined against them.

In considering the second question, the Court of Chancery Appeals held, in substance that Borches & Co. were estopped by their pleas to the effect that no such sale had been made as that alleged in the declaration in the federal court case. They also recited the testimony given by Mr. Borches in that case, and based on this an estoppel. They found that Mr. Borches had stated the real facts of the...