Chicago, R.I. & P. Ry. Co. v. Chickasha Nat. Bank

• Decision Date: 05 November 1909
• Docket Number: 3,023.
• Citation: 174 F. 923
• Parties: CHICAGO, R.I. & P. RY. CO. v. CHICKASHA NAT. BANK. [1]
• Court: U.S. Court of Appeals — Eighth Circuit

174 F. 923

CHICAGO, R.I. & P. RY. CO. v. CHICKASHA NAT. BANK. ^[1]

No. 3,023.

United States Court of Appeals, Eighth Circuit.

November 5, 1909

F. M Etheridge (Homer B. Low, Charles M. Fechheimer, and J. M McCormick, on the brief), for plaintiff in error.

Warren K. Snyder (F. E. Riddle, on the brief), for defendant in error.

Before VAN DEVANTER, Circuit Judge, and CARLAND and POLLOCK District judges.

POLLOCK District Judge.

This was an action in the nature of replevin brought by the Chickasha National Bank of Chickasha, in the Indian country now Oklahoma (hereinafter called the 'Bank'), against the Chicago, Rock Island & Pacific Railway Company (hereinafter called the 'Railway Company'), to recover possession of 1,041 bales of cotton, or, in lieu thereof, a judgment against defendant for the amount or value of the special interest therein claimed by the Bank.

The facts necessary to a decision of the questions presented in this record are these:

In the autumn of 1906 a copartnership, composed of A. L. Wolff, Maurice Stern, and Bertholf Stern, of St. Louis, Mo., doing a cotton merchant business in the firm name of A. L. Wolff & Co. (hereinafter called 'Wolff & Co.'), sent as their agents into the then Indian country in the neighborhood of Chickasha one E. G. Carter, one H. C. Ryan, and others to purchase cotton on behalf of the firm. From the manner of conducting this business, as employed by Wolff & Co., the agents were intrusted with the custody and expenditure of no money whatever except such small sums as were necessary to pay personal expenses. On the contrary, when a purchase of cotton was made by the agent from the owner, a bill of lading was procured by the owner from the railway company for the cotton so purchased, in which bill of lading was stated the number of bales purchased, on whose account, and the cotton was consigned to Wolff & Co., Chickasha, or on shipper's order, with directions to notify Wolff & Co. This was done in order that the cotton might be assembled at Chickasha for the purpose of being compressed; there being a compress plant at that place. A draft was then drawn by the agent on Wolff & Co. at St. Louis or the city of Oklahoma City, in favor of the vendor of the cotton, who attached to the draft the bill of lading, and this draft, with bill of lading, was forwarded through regular commercial channels to Wolff & Co. at the city of St. Louis or Oklahoma City, where the draft was presented, accepted, and paid by Wolff & Co. The bills of lading when received were detached from the drafts and returned to the agent at Chickasha for the purpose of procuring a delivery of the cotton from the Railway Company to the compress company, and, when compressed, was reconsigned as the owners might direct. As shown by the record, the sole authority conferred by Wolff & Co. on their agents in the purchase of cotton in their name and on their behalf was to conduct the business in the manner above stated.

However, Carter, as agent for Wolff & Co., in transacting the business of his principals, did not confine his operations to the method adopted by them, but, on the contrary, he agreed with the president of the Bank to open an account therein in the name of his principals; that drafts and checks drawn by him on his principals should be cashed by the Bank and charged to such account; that exchange should be paid the Bank by his principals and charged to this account; that his principals would pay interest on any overdraft created in such account at the rate of 10 per cent. per annum; and that collateral securities would be pledged the Bank for the repayment of any money advanced by way of overdraft on such account.

In pursuance of this arrangement with the Bank, an account was opened therein in the name of Wolff & Co., September 26, 1906. This account was thereafter debited and credited with many amounts until about December 7th thereafter. The agent, Carter, also opened an individual account with the Bank. Thereafter Carter proceeded with the prosecution of the business of buying cotton for his principals and assembling the same at Chickasha, executing and delivering to the vendors of the cotton drafts payable to their order, or in some cases to the Bank, drawn on his principals, which were attached to bills of lading issued by the Railway Company for the cotton purchased, stating the number of bales so purchased, in consecutive order, the weight, how marked, from whom purchased, signed to Chickasha, either to Wolff & Co. or to shipper's order, notify Wolff & Co. The drafts so issued and delivered with bills of lading attached were received by the Bank and charged on its books against the account of Wolff & Co. opened therein by Carter, and the drafts with bills of lading attached were forwarded through regular commercial channels, presented to and paid by Wolff & Co., either at their place of business in the city of St. Louis or Oklahoma City, Okl. When paid the proceeds were, through the regular commercial channels, remitted and paid to the owner of the draft, as such owner might appear. The bills of lading accompanying the drafts so received by Wolff & Co. upon the payment of the drafts were returned to the agent Carter that delivery of the cotton might be made to the compress company at Chickasha, and compress company receipts obtained therefor, that the cotton might, when compressed, be again reconsigned as the owners might direct.

In this manner the 1,041 bales of cotton in controversy in this action were purchased by agents Carter, Ryan, and others, and in this manner drafts covering the purchase price of each and every of such bales of cotton, with bills of lading attached, were forwarded to, accepted, and paid by Wolff & Co. and the bills of lading returned to the purchasing agent Carter. After the return of such bills of lading to Carter, he having for his own benefit and advantage by the issue of checks on the account of Wolff & Co. with the Bank overdrawn such account, 23 of such bills of lading were delivered by Carter to the Bank as collateral security for repayment to the Bank for any sums of money due the Bank on such account. Thereupon Carter left the country.

Thereafter, and on December 10, 1906, Wolff & Co., learning the situation at Chickasha, made demand in writing of the Bank, as follows:

'Oklahoma City, O.T. Dec. 10, 1906.

'Chickasha National Bank, Chickasha, I.T.-- Gentlemen: We demand that you forthwith deliver to Mr. Z. M. Lehman, as our agent, all our property in your possession, consisting of divers and sundry bills of lading for divers and sundry bales of cotton, aggregating some 1,769 bales, together with all our compress tickets or receipts therefor or pertaining thereto, and as part of this letter, we attach hereto as Exhibit A. detail statement of such bills of lading, as we now recall, with the actual invoiced price of the cotton, plus exchange, set opposite thereto, same aggregating $87,313.26.

The actual value therefor is largely in excess of that sum. 'We request a prompt and definite written response to this, our demand.'

This demand was refused by the Bank except on condition of payment by Wolff & Co. of the amount claimed by the Bank on the account opened in their name by Carter in amount $6,834.54. Thereupon Wolff & Co. made the following tender in writing:

'Oklahoma City, O.T. Dec. 10, 1906.

'Chickasha National Bank, Chickasha, I.T.-- Gentlemen: You illegally detain certain bales of cotton and certain documentary evidence of our ownership therefor, as more particularly set forth in our former letter to you of this date, and you refuse to comply with our demand that you surrender the custody thereof, to which we are entitled, and we therefor under protest and for the purpose of reclaiming the possession of said property, which you unlawfully withhold from us, and for the purpose of avoiding the great probability of further damages in the premises, herewith tender you the sum of $6,834.54 same being the amount, for which as we understand, you illegally detain our said property, conditioned of course, that you forthwith surrender said property, and all of said documents, specified in our former letter to you of this date.'

This tender was refused by the Bank on the ground it was not an unconditional offer to pay the amount claimed by the Bank and absolve the Bank from all further liability, and because not authorized by the agent of Wolff & Co., Carter, who had placed the collateral with the Bank.

Thereafter the Bank tendered the railway company the amount of its lawful freight and storage charges and demanded possession of the 1,041 bales of cotton in controversy in this action, which tender and demand was refused by the Railway Company, acting in that respect in behalf of Wolff & Co. Thereupon this action was brought. Although not admitted as a defendant in the litigation, Wolff & Co. assumed the defense for the Railway Company, and defended against the action of the Bank on the strength of their title to and ownership of the cotton involved. From a verdict and judgment in favor of the Bank the Railway Company brings error.

The principal claims of error presented and relied on to work a reversal of the judgment rendered are: (1) The trial court erred in permitting the Bank to prove, through its president Dwyer, the agreement of Carter that his principals, Wolff & Co., would open the account with the bank, would purchase and pay for exchange, would pay 10 per cent. interest on money borrowed on overdrafts, and would pledge collateral security to the Bank, in the absence of any proof tending to show Carter's authority to bind his principals by such agreement except the acts and declarations of the agent Carter himself. (2) The court erred...