Brent v. Gay

• Decision Date: 03 October 1912
• Citation: 149 S.W. 915,149 Ky. 615
• Parties: BRENT v. GAY et al.
• Court: Kentucky Court of Appeals

149 S.W. 915

149 Ky. 615

BRENT v. GAY et al.

Court of Appeals of Kentucky.

October 3, 1912

Appeal from Circuit Court, Clark County.

Action by David S. Gay and others against N. Ford Brent. From a judgment sustaining a demurrer to defendant's answer as amended, he appeals. Reversed, with directions.

Pendleton Bush & Bush, of Winchester, and Harmon Stitt, of Paris, for appellant.

Jouett & Jouett, of Winchester, Talbott & Whitley, of Paris, and Shelby & Shelby, of Lexington, for appellees.

CARROLL J.

The appellees Gay and others, who were plaintiffs below, brought this suit against appellant, Brent, to recover damages for breach of contract.

The petition set out, in substance, that the plaintiffs David S Gay, J. S. Wilson, and E. F. Spears & Son, on June 1, 1906 entered into written articles of partnership to do business under the style of the Central Kentucky Blue Grass Seed Company, and that Prunty, a coplaintiff, entered into a contract with the defendant, Brent, by which Prunty bought and defendant sold to him 15 tons of 20-pound extra fancy Kentucky blue grass seed, to be delivered in September, 1906, at $1.30 per bushel of 14 pounds; that on September 1, 1906, Prunty assigned the contract to E. F. Spears & Son for the benefit of the Central Kentucky Blue Grass Seed Company; that the plaintiffs were ready, willing, and able to perform their contract, and offered so to do, but that the defendant refused and failed to perform his contract; that at the time the seed was to have been delivered under the contract, namely, in September, 1906, the market price of seed had advanced 38 cents per bushel, and that, had the defendant performed his contract, the plaintiffs would have realized a profit of 38 cents per bushel on the seed; and that by reason of his failure to comply with his contract they were damaged in the sum of $814.28, for which amount they asked judgment.

To this petition, an answer and amended answers were filed; and, after the demurrers to the defense interposed had been disposed of, the case was submitted, and judgment went against appellant, Brent, for the amount asked for, and he prosecutes this appeal.

The articles of partnership referred to in the petition, and which were signed by E. F. Spears & Son, James S. Wilson, and David S. Gay, read in part as follows:

"We, the undersigned do hereby organize ourselves into an association which shall be known as the Central Kentucky Blue Grass Seed Company, and its purpose shall be the buying and selling of blue grass seed of the crop of 1906 only on joint account. The capital stock shall be five hundred dollars ($500), which shall be subscribed to in equal amounts by the three members. The officers of the company shall be secretary and treasurer. Any one member can call a meeting to transact business. The majority of votes shall control the buying and selling and all questions presented. All members shall share and share alike in profit and losses resulting from the business. This agreement shall continue in force from this date, June the first, 1906, to May the first, 1907.

"None of the members of this company shall sell stripped seed to another than a member unless by special permit from the other members, except in lots of one hundred (100) bushels or less to neighboring farmers. Gains from such sales to be turned into association. *** The cleaning shall be divided equally. The cleaners are to furnish all money necessary for handling the seed they clean. The cleaners are to be paid at the rate of six per cent. interest per annum on all money due them from reports of seed cleaned and other bills accepted by the company. ***

"No sales or purchases are to be made in the name of the company. Members in making sales shall assume personally the risk of loss from not collecting account or otherwise. ***

"Each member agrees to ship no seed that has not first been formally turned in to the company.

"Inspector or inspectors may be appointed any time to examine or verify the count of stock held by members. ***

"The first part of each week, not later than Tuesday, cleaners are to send in to the secretary their bills for such cleaned seed cleaned during the week, statement of stock of cleaned seed and rough seed on hands, quantity of rough seed bought but not delivered, and quantity of cleaned seed sold for future shipment. *** Should any member, with the consent of the others, contract to clean for any one else, it is understood that the amount of seed so contracted to be cleaned shall be divided equally unless all members can agree on basis whereby the member so contracting shall clean it all. ***

"In regard to the old stock, it is understood that unless members can agree on basis that it shall be turned over to the company. The holding of it shall be controlled by the company and five cents per bushel shall be allowed them for the selling and sales shall be in proportion that number of bags of old seed bears to number of bags of new seed handled by the company during the season.

"The price of cleaning shall be figured at seventy-five (75) cents per bushel for stripped seed and one dollar and twenty-five ($1.25) per bushel for fancy. If stripped seed is bought for less than seventy-five (75) cents per bushel, the cleaner pays the difference to the company. If stripped seed costs more than seventy-five (75) cents per bushel, the company pays the difference to the cleaner. D. S. Gay is elected treasurer; J. S. Wilson secretary, with salary of one hundred (100) dollars.

"Seed bought by members from the stripper shall be figured to the company at seventy-five (75) cents per bushel, dry, f. o. b. Paris or Winchester."

To fully understand the nature of the defense set up by Brent, it will be necessary to set out so much of his answer and amended answer as present the questions for decision in this case.

In the answer Brent charged, in substance, that C. E. Prunty, acting as the agent of the Central Kentucky Blue Grass Seed Company in its effort to control the blue grass seed market, purchased from him the seed in question, concealing from him the fact that he was acting as such agent, and leaving him under the impression that he was buying the seed on his own account. He further averred that this concealment of his agency was a part of a fraudulent scheme devised by the Central Kentucky Blue Grass Seed Company to purchase seed from him and others; and that he would not have sold the seed to the Central Kentucky Blue Grass Seed Company, or to Prunty, or any person representing or acting as the agent for the company, if he had known of such agency. He also averred that this fraudulent scheme, devised by the company for the purpose of securing the seed purchased by Prunty, was an effort to form a pool and trust of the blue grass market, in unreasonable and unlawful restraint of trade; and that these facts invalidated the contract.

In an amended answer he averred: "That prior to June 1, 1906 when the agreement copied in the petition was alleged to have been entered into, the said plaintiffs, E. F. Spears & Son, J. S. Wilson, and David S. Gay were separately and independently engaged in the business of buying up, cleaning, and manufacturing the rough blue grass seed grown in the state of Kentucky and elsewhere into what is known as cleaned and dressed blue grass seed, and in selling, shipping, and delivering the same, *** and were at the same time, prior to said date, in competition one with the other in the said state, interstate and foreign commerce; *** that by far the greater portion of blue grass seed is grown and so manufactured into cleaned seed in Kentucky, and shipped from Kentucky to the markets of the world; that the said three plaintiffs in their several businesses carried on and did a large portion of said trading in blue grass seed, and by the said combination formed through said contract of June 1, 1906, they were able to control and monopolize a large portion of said blue grass seed business done in the state of Kentucky, but were not at that time fully able to act as a complete monopoly; that only a small quantity of blue grass seed is grown outside of the state of Kentucky, and practically all of the blue grass seed that is grown in the world is cleaned and manufactured into dressed seed in Kentucky, and thus prepared for market; *** that the cleaners and manufacturers of blue grass seed, if they are combined in Kentucky or controlled by one head, can regulate and control absolutely the price of blue grass seed in the markets of the world, and that the plaintiffs signed, executed, and delivered the alleged agreement of copartnership of June 1, 1906, set out in the petition, and entered into the same for the purpose and with the intent to, and by entering into said agreement they did thereby, form and create a pool, trust, combine, agreement, confederation, and understanding with each other, and one with the other, for the purpose of regulating, controlling, and fixing the price of blue grass seed, and to enhance, and they did so enhance and raise, the price and cost thereof above its real value, but that at the said time on June 1, 1906, when said agreement was entered into between the plaintiffs it was a part and parcel of said trust and pool, plan, and arrangement between the plaintiffs that they would secure ...