Chicago Mill & Lumber Co. v. Boatmen's Bank

• Decision Date: 27 April 1916
• Docket Number: 4570.
• Parties: CHICAGO MILL & LUMBER CO. v. BOATMEN'S BANK.
• Court: U.S. Court of Appeals — Eighth Circuit

234 F. 41

CHICAGO MILL & LUMBER CO. v. BOATMEN'S BANK.

No. 4570.

United States Court of Appeals, Eighth Circuit.

April 27, 1916

George F. Haid and James C. Jones, both of St. Louis, Mo. (Jones Hocker, Sullivan & Angert, of St. Louis, Mo., on the brief) for plaintiff in error.

Sears Lehmann, of St. Louis, Mo. (Lehmann & Lehmann, of St. Louis Mo., on the brief), for defendant in error.

Before HOOK and ADAMS, Circuit Judges, and ELLIOTT, District Judge.

ADAMS Circuit Judge.

The Boatmen's Bank, plaintiff below, sued the Chicago Mill &amp Lumber Company, a business corporation organized under the laws of Illinois, on a promissory note of $25,000.

The defendant, for its answer, admitted liability on the note, but pleaded a counterclaim against the plaintiff of this kind: It alleged that the bank was a creditor in a large amount of a corporation known as the Tiger Tail Mill & Land Company, and also an owner of a large part of its capital stock, and as such had the control and management of its business and property, for its own use and benefit; that the Paepcke-Leicht Lumber Company, another corporation, was the agent of the defendant; that, as such agent, it made certain loans and advances to the bank, under the name of Tiger Tail Mill & Land Company, and agreed to make certain purchases of lumber from it, the value and agreed price of which to be applied in reduction of the advances made and to be made; that afterwards the Paepcke Company, acting as such agent, entered into certain contracts with the bank, under the name of the Tiger Tail Mill & Land Company, by the provisions of which the bank agreed to deliver to the Paepcke Company, as agent for the defendant, all the output of its mill located at Tiger Tail, Tenn., during the period from September 8, 1910, to October 1, 1912; that the defendant, acting by and through its said agent, agreed to make certain advances of money as the lumber output of the Tiger Tail Company should be loaded on barges for shipment to the defendant, and did from time to time make such advances, and from time to time loaned to the plaintiff other sums of money in addition to such advances; that the defendant from time to time received from plaintiff, under its name of Tiger Tail Mill & Land Company, various shipments of lumber, the value and contract price of which were credited to the plaintiff; that the difference between the amount so advanced to plaintiff and the value of the lumber received from plaintiff was $32,387.57, which (less the credit of $4,445.18, which it concedes) it avers the plaintiff agreed and promised to pay to the defendant, but has failed to do so.

Plaintiff, for its replication, denied each and every allegation of the counterclaim, and alleged that any such contract or agreement as defendant claims to have been made with it was beyond its power as a banking corporation.

The case was tried to a jury, the defendant taking the burden of proof, and at the close of defendant's evidence the trial court, at the request of plaintiff's counsel, instructed the jury to find a verdict for the plaintiff for the full amount of the note sued on, and to find a verdict against the defendant and in favor of the plaintiff on defendant's counterclaim. On a verdict returned accordingly, judgment was entered for the plaintiff, and the defendant Lumber Company prosecutes this writ of error, not complaining of the judgment against it on plaintiff's cause of action, but complaining of the action of the court in directing a verdict against it on its counterclaim.

The proof showed that the Tiger Tail Company was organized in 1892 with a capital of $25,000, divided into 250 shares of $100 each, practically all of which was taken by Henry C. Bagby and Joanna L. Bagby; that some time after its organization Luther H. Conn became the owner of one-half of its capital stock, or 125 shares, the remaining 125 shares being owned by the original incorporators-- Henry C. Bagby and his wife, Joanna L. Bagby. Mr. Bagby became the president of the company, and as such its chief executive officer, and continued so until 1906, during which time he secured for and on behalf of his company financial assistance from time to time from the Boatmen's Bank. During that time, and prior to July 25, 1906, the Tiger Tail Company became indebted to the bank in the total sum of $115,000, represented by its several promissory notes for various sums given from time to time as the exigencies of business required, upon which Luther H. Conn and Mrs. Bagby were indorsers; and Mrs. Bagby was also then personally indebted to the bank in the sum of $14,000, represented by notes, upon which both Conn and McRee were indorsers.

At about this time the St. Louis Clearing House began to criticize the loans of the bank to the Tiger Tail Company, and the amount of the loan not being reduced gradually, or at all, the indorsers became uneasy about the matter, and the bank itself became dissatisfied with the management of the company under Bagby, as its chief officer. As a result, a new deal was arranged by the parties interested, which was formally expressed in a contract of which the following is a copy:

'For and in consideration of the sum of two thousand dollars ($2,000.00) to us this day in hand paid by Luther H. Conn, of the city of St. Louis, we, H. C. Bagby and Joanna L. Bagby, of the city of St. Louis, do by these presents jointly and severally bargain and sell, transfer, assign, and set over unto the said Luther H. Conn, and unto his heirs and assigns, forever, all and every of our right, title, and interest in and to the stock of the Tiger Tail Mill & Land Company, a corporation, organized under the laws of the state of Missouri, with its principal office at the city of St. Louis; it being our intention, for the consideration above named, that all right, title, and interest of whatever kind and description of either of us in or to our stock holdings in said company shall pass absolutely to said Luther H. Conn, free from any rights or claims on our behalf. And we do by these presents deliver to the said Luther H. Conn all and every of the certificates of stock as they appear of record in the record books of said corporation, issued to or in the name of either of us, or in the name of any other person or persons, and do authorize the said Luther H. Conn to cause necessary transfers to be made on the record books of said company. The undersigned do further transfer, assign, and set over unto the said Luther H. Conn any and all claims of whatever kind and description which we may have against the Tiger Tail Mill & Land Company.

'Said Luther H. Conn by these presents undertakes and agrees that the indorsement of Joanna L. Bagby on notes of the Tiger Tail Mill & Land Company, held by Boatmen's Bank, aggregating approximately one hundred and five thousand five hundred dollars ($105,500.00), shall be canceled, so that the said Joanna L. Bagby shall be released from any

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