Chang v. Meagher

• Decision Date: 28 April 1953
• Docket Number: NO. 2886.,2886.
• Citation: 40 Haw. 96
• Parties: DAVID W. O. CHANG, ANNIE K. CHANG AND WALTER W. T. CHANG, CO–PARTNERS, DOING BUSINESS AS CHANG'S EXPRESS v. WILLIAM G. MEAGHER, JR., THOMAS R. MEAGHER, JAMES F. MEAGHER, ROBERT H. GEDE, JAMES T. GEDE AND JANE V. GEDE, INDIVIDUALLY AND AS CO–PARTNERS, DOING BUSINESS AS INDUSTRIAL DEVELOPMENT CO., AND BANK OF HAWAII (HILO BRANCH) AND BISHOP NATIONAL BANK OF HAWAII AT HONOLULU (HILO BRANCH), GARNISHEES.
• Court: Hawaii Supreme Court

40 Haw. 96

DAVID W. O. CHANG, ANNIE K. CHANG AND WALTER W. T. CHANG, CO–PARTNERS, DOING BUSINESS AS CHANG'S EXPRESS

v.WILLIAM G. MEAGHER, JR., THOMAS R. MEAGHER, JAMES F. MEAGHER, ROBERT H. GEDE, JAMES T. GEDE AND JANE V. GEDE, INDIVIDUALLY AND AS CO–PARTNERS, DOING BUSINESS AS INDUSTRIAL DEVELOPMENT CO., AND BANK OF HAWAII (HILO BRANCH) AND BISHOP NATIONAL BANK OF HAWAII AT HONOLULU (HILO BRANCH), GARNISHEES.

NO. 2886.

Supreme Court of the Territory of Hawai‘i.

Argued March 25, 1953.

Decided April 28, 1953.

EXCEPTIONS TO CIRCUIT COURT FIRST CIRCUIT, HON. W. C. MOORE, JUDGE.

Syllabus by the Court

In the interpretation of a statute the cause that induced the legislature to enact it and the reason and spirit of the law must be considered. (R. L. H. 1945, § 12.)

While the most desirable construction of a statute is that which is consistent with both the spirit and letter thereof, frequently the purpose of an Act justifies a departure from the literal construction of the wording and a thing which is within the intention of the statute is as much within the statute as if it were within the letter, and a thing which is within the letter of the statute is not within the statute unless it be within the intention of the makers.

Where the context of the law demonstrates a particular intent of the legislature to effect a certain object, some degree of implication may be called in to aid that intent.

The intent of Act 183, Session Laws of Hawaii 1945, is to give a party the benefit of testimony of adverse parties or persons connected with them as officers, directors, superintendent or managing agent and having knowledge of the facts without subjecting such witnesses to an attack from such opposite party as adverse witnesses.

The attorney in fact for a California copartnership doing business in the Territory being the only person having knowledge of the facts which plaintiffs wished to establish comes within the purpose and intent of the adverse–witness statute.

Strangers to a written instrument are not bound by the parol evidence rule and it may not properly be invoked by or against them.A. H. Ogawa ( Levinson & Cobb on the briefs) for defendants–appellants.

M. Doi ( C. Garvey, Jr., R. T. Yamaguchi with him on the briefs) for plaintiffs–appellees.

TOWSE, C. J., LE BARON AND STAINBACK, JJ.

OPINION OF THE COURT BY STAINBACK, J.

Plaintiffs–appellees are partners in the trucking and hauling business under the firm name of Chang's Express and have been doing business in the Territory of Hawaii for a number of years. Defendants–appellants are partners in a California partnership called the Industrial Development Company doing business in the Territory of Hawaii.

In June or July, 1948, negotiations were entered into between the copartnership, Industrial Development Company, and the Patterson Construction Company, Limited, an Hawaiian corporation, to form a joint venture for the salvage and sale of scrap within the Territory; the Industrial Development Company was represented in the Territory by one William G. Meagher, Sr., as its attorney in fact. Preliminary negotiations were entered into by the Industrial Development Company, which was represented by Mr. Meagher, Sr., and by Mr. Patterson, representing the Patterson Construction Company, in Kona in the latter part of July, 1948. There, a memorandum of agreement was signed by them on July 22, 1948, providing for the formation of a joint venture for the acquisition, disposition and sale of scrap. The purpose of the memorandum was “to reduce to writing the fact that a joint venture is now in effect and a complete and formal contract will supplement this memorandum agreement based upon the intent and purposes as herein expressed.” (Emphasis added.)

The actual operation of salvaging scrap under this joint sponsorship began the Monday following, upon Mr. Patterson's return to Honolulu. The Patterson Construction Company was already in the scrap–salvaging business prior to the meeting between Mr. Patterson and Mr. Meagher and, according to the agreement, the scrap already owned by the Patterson Construction Company became subject to the joint–venture operations. At this time there was nothing in writing evidencing the existence of a joint venture between the Patterson Construction Company and the Industrial Development Company, salvage operations being carried on under the oral understanding (the memorandum referred to having been signed by Mr. Meagher as president of the Independent Iron Works.)

On Oahu scrap from various locations was hauled to a central base yard at Puuloa, the yard being in the name of the Patterson Construction Company but being used by Patterson and the Industrial Development Company for the joint venture between the Patterson Construction Company and Industrial Development, which was called Patterson–Industrial. The persons supervising the joint operations were Mr. Patterson, Mr. Peters and Mr. Raymond Parks. Mr. Parks had formerly been an employee of Patterson Construction Company but became an employee as field superintendent of the joint venture from the time it commenced to operate. Mr. Peters, who had been with the Industrial Development Company, became manager of the Patterson–Industrial Company.

Plaintiff–appellee, Chang's Express, had been hauling for Patterson Construction Company prior to the formation of the Patterson–Industrial and it continued hauling throughout the months of July, August and September, 1948, and apparently the plaintiffs–appellees knew nothing of the joint arrangement between the Patterson Construction and Industrial Development. The Patterson Construction Company's office was also the office of Patterson–Industrial and charges for the hauling, including rental by appellees of their equipment to Patterson–Industrial, continued to be entered in plaintiffs–appellees' books under the name of the Patterson Construction Company and invoices for the same were billed to Patterson Construction.

It was not until September, 1948, that Mr. Chang, a partner and general manager of Chang's Express, plaintiffs–appellees, found out about Patterson–Industrial when he was directed by a Mr. Loyola, who did the ordering for jobs to be done for the Industrial Development, and Mr. Peters, to rebill certain invoices dated in August to Patterson–Industrial, not Patterson Construction Company. It was at another conference in October that Mr. Chang presented to Mr. Peters and Mr. Parks invoices rebilled to Patterson–Industrial, as directed. At this second conference certain adjustments as to charges were made as the result of Mr. Parks' objection, and after the conference appellees again rebilled the charges as adjusted, adding one extra charge in September, as requested by Mr. Peters of Industrial Development.

In October, about the 23d or 26th, 1948, a written agreement between Industrial Development Company and Patterson Construction Company was signed, confirming existence of the joint venture known as Patterson–Industrial Development Company, such agreement purporting to take effect as of August 1, 1948.

On October 25, 1948, plaintiffs–appellees brought suit against Patterson Construction Company for hauling charges, but not those involved in the instant action. At that time they did not file suit against Patterson–Industrial as they had been assured by Mr. Peters of Patterson–Industrial that they would be paid the charges as rebilled.

Thereafter Patterson Construction Company went into bankruptcy and plaintiffs–appellees, not having received payment on account of the corrected bill charged to the joint venture, filed suit against defendants–appellants as undisclosed principals for the hauling that had been done.

Liability for the work performed was disputed on the ground that some of the invoices did not represent services performed for the joint venture.

The trial court, jury waived, found for the plaintiffs–appellees and gave judgment against appellants Industrial Development.

Appellants set forth as error the ruling of the court in the application of the adverse–witness statute, section 9847.02(1), Act 183, Session Laws of 1945, the admission into evidence of the preliminary negotiations of the contract between those parties to the joint venture, the admission of evidence of the oral agreement made prior to the signing of the written contract by the parties to the joint venture, of the invoices as corrected, and that the decision and judgment are contrary to the law and the evidence.

Act 183, Session Laws of Hawaii 1945, provides that: “A party to the record in any civil action or proceeding or a person for whose immediate benefit such action or proceeding is prosecuted or defended, or the directors, officers, superintendent or managing agent of any corporation which is a party to the record, may be examined by the adverse party as if under cross–examination * * *. The party calling such adverse witness shall not be bound by his testimony * * *.”

Under this statute the court permitted the examination of William G. Meagher, Sr., as an adverse witness, for which the appellants claim reversible error. Meagher was the attorney in fact and territorial representative of Industrial Development Company, a California copartnership, and conducted all the negotiations in the formation of the joint enterprise on behalf of such partnership. Obviously Mr. Meagher was not a party to the record nor was he a person for whose benefit the action was brought, nor would he come within the language relative to corporation officers, superintendent or managing agent, which is a party to the record. If, therefore, he comes within the Act, it must be in spite of the fact that there is no express provision including him.

In the interpretation of a statute the cause that induced the legislature to enact it, and the reason and spirit of the law, must be considered. (Revised Laws of Hawaii 1945, § 12.)

The purpose of the particular statute before us was, ...