City of Findlay v. Pertz

• Decision Date: 25 February 1895
• Docket Number: 195.
• Citation: 66 F. 427
• Parties: CITY OF FINDLAY v. PERTZ et al.
• Court: U.S. Court of Appeals — Sixth Circuit

66 F. 427

CITY OF FINDLAY v. PERTZ et al.

No. 195.

United States Court of Appeals, Sixth Circuit.

February 25, 1895

The facts necessary to be stated to an understanding of the legal questions to be decided are substantially these:

The plaintiff in error is a municipal corporation of the state of Ohio. It owned and operated a plant for the distribution of natural gas to consumers within the city. This plant was under the control of an arm of the city government called the 'board of gas trustees,' composed of five members elected annually by the qualified voters of the city. That board had authority to employ a superintendent, whose duty it was to maintain and operate the plant, make all necessary improvements and repairs, collect the dues from consumers and render all other necessary services, under direction and supervision of the board of gas trustees, as might be required for a successful operation of a natural gas system. The duties of the superintendent were such as to require an expert in the boring and management of gas wells and in the safe and economical distribution of the gas to consumers. The position was that of an employe of the city government, and was one involving expert knowledge and a considerable degree of trust and confidence. The defendants in error were partners, doing business under the firm name of Pertz &amp Stewart, at Kokomo, Ind., and as such were patentees and manufacturers of a machine called an 'automatic separator.' These machines were adapted to be attached to the orifice of a natural gas well, and purported to separate the oil or water which came to the surface intermingled with the gas, and were represented to operate automatically. This firm had in their service one Melvin M. Brooks, who acted as their agent in Indiana for the sale of their separators upon a commission. In the spring of 1890, this agent went into the Findlay, Ohio, oil field, for the purpose of selling separators for the said Pertz & Stewart. While in that field as the agent of defendants in error, he was chosen superintendent of the gas plant owned and operated as aforesaid by the city of Findlay. July 12, 1890, Brooks wrote to defendants in error a letter concerning separators for use in the city wells. That letter is not produced by them. Mr Stewart states that the letter was one of inquiry as to how the separators would work on oil wells. The answer to that letter was dated July 16, 1890, and was in these words:

'Pertz & Stewart, Manufacturers of Automatic Gas Separator and Drip.

'Kokomo, Ind., July 16, 1890.

'Mr. M. M. Brooks, Findlay, Ohio-- Dear Sir: Your favor of the 12th received. We will be glad to furnish you any number of separators you may desire. You may connect them to a well producing oil with the gas, and rest assured that they will separate the oil just as readily as the water; but, when you desire to connect to a well producing oil, please so state in your order, for the reason that we make the valve a little larger for oil than we do for water. We sell them with the same guaranty for separating oil as we do for water. Hoping to hear from you soon.

'Yours very truly, Pertz & Stewart.'

The board of gas trustees, upon representations of Brooks, authorized him to purchase for the city of Findlay three of these automatic separators. This was done by a letter dated July 22, 1890, in these words:

'Findlay, Ohio, July 22, 1890.

'Pertz & Stewart, Kokomo, Ind.-- Gentlemen: Please ship us at once to Stewartsville, Hancock County, Ohio, 3 separators for oil and gas, and 1 for water and gas. Stewartsville is on the Nickel Plate Railroad.

'Yours truly, The City Gas Works.'

This letter was written by Brooks, and defendants in error admit that, when received, they recognized it to have been written by him.

August 11, 1890, Brooks ordered 16 other separators, by letter in these words:

'Findlay, Ohio, August 11th, 1890.

'Messrs. Pertz & Stewart, Kokomo, Inc.-- Gentlemen: Please ship to Stewartsville Ohio, via Nickel Plate R.R., 10 automatic separators, and to Van Buren 6 of the same. The latter is a station on the Toledo, Columbus & Cincinnati R.R., a short distance north of Stewartsville. If you cannot ship the entire order at once, please ship to Stewartsville first. I think that oil is the * * * likely to come first in these wells. I examined the ones sent, but can't detect any difference in them.

'Truly yours, The City Gas Works,

'By M. M. Brooks, Supt.'

On September 7, 1890, Brooks again made an order for 13 additional machines, by the following letter:

'Findlay, Ohio.

'Pertz & Stewart, Kokomo, Ind.-- Gentlemen: Please ship separators as follows: 5 to Stewartsville; 8 to Findlay. I have discovered the error in your invoice of Aug. 22d, and had it corrected. Please send them forward as soon as possible.

'Truly yours, M. M. Brooks, Supt.'

The first three separators were billed at $105 each, and on September 12, 1890, a remittance in full of bill was made by the following letter:

'Findlay, Ohio, September 12, 1890.

'Pertz and Stewart, Kokomo, Ind.-- Gentlemen: Inclosed find New York Exchange No. 37,568, for three hundred and fifteen dollars, same being on account. Please acknowledge receipt of same.

'Respectfully yours, The City Gas Works,

'Per C. K. Beach, Sec'y.'

As these separators were delivered, they were attached to the gas wells operated by the gas trustees, by their superintendent, Melvin M. Brooks. November 1, 1890, defendants in error rendered an account for the 29 separators which had been ordered by the letters of August 11th, and September 7th. This account was in these words and figures:

'Kokomo, Ind., November 1, 1890.

'City Gas Works, Findlay, Ohio, In Account with Pertz & Stewart, Proprietors of John W. Pertz Automatic Separator.

Aug. 20. To Mdse ...	$315 00
" 22. " .......	630 00
" 23. " .......	105 00
Sept. 4. " .......	630 00
" 16. " .......	840 00
" 22. " .......	525 00
	---------
	$3,045 00

'Please remit. Unless otherwise advised, will draw for $1,050 on the 10th inst. Please honor draft, and oblige.'

To this the following reply was made:

'Findlay, Ohio, November 6, 1890.

'Messrs. Pertz & Stewart, Kokomo, Ind.-- Gentlemen: Please do not draw on us. We note you have billed the separators at the gross price. Please send credit memoranda of the discount by return mail. We understand the discount is ten per cent. on a sale of four. We presume a greater discount will be allowed on the number we have purchased. Your reply by return mail will oblige.

'Yours respectfully, The City Gas Works,

'Chas. K. Beach, Secy.'

The gas trustees denied that they had authorized the purchase of the 29 separators ordered by the letters of Brooks above cited, and, suspecting that the price charged was excessive, began to make inquiry. Brooks, when approached on the subject, said $105 was the net price, and that no commission or discount was allowed; upon being pressed about the matter, and confronted with evidence that a discount or commission had been allowed other purchasers, admitted that he was the agent of Pertz & Stewart, and that they had allowed him a commission of $10 on each of the separators purchased for the city of Findlay. He admitted that he had received $30 as commission on the three separators bought by direction of the trustees, and offered to turn it over to the city. He admitted that he would receive $290 on the other purchases, and proposed that these commissions should be credited on the account against the city. Upon these admissions he was immediately discharged from his position.

November 17, 1890, the defendants in error wrote the following letter, and inclosed a new account, crediting thereon the commissions due to Brooks:

'Kokomo, Ind., November 17, 1890.

'City Gas Works, Findlay, Ohio, in Account with Pertz & Steward, Proprietors of John W. Pertz Automatic Separator and Drip.

July 26. 3 separators, at $105 .. $315 00 Aug. 20. 3 " " " .... 315 00 " 22. 6 " " " .... 630 00 " 23. 1 " " " .... 105 00 Sept. 4. 6 " " " .... 630 00 " 16. 8 " " " .... 840 00 " 22. 5 " " " .... 525 00 $3,360 00 ------- Sept. 12. By N. Y. Exchange ......................... $315 00 Nov. 13. By M. M. Brooks ............................. 30 00 Nov. 13. By Com. on 29th Sept., each $10.00 ......... 290 00 635 00 ------- --------- Balance ................................................. $2,725 00

'Pertz & Stewart, 'Manufacturers of Automatic Gas Separator and Drip.' 'Kokomo, Ind., November 17, 1890.

'City Gas Works, Findlay, Ohio-- Gentlemen: Inclosed please find statement of your account to November 17, 1890. We received letter from Mr. Brooks the 15th, under date of November 13th, inclosing $30.00 commission, paid him on three separators that you had paid for September 12. Mr. Brooks requests us to place the same to the credit of the City Gas Works, and also the $10.00 commission on each of the twenty-nine separators not yet paid for, which request has been complied with, as you will notice in statement. There seems to have been some misunderstanding between Mr. Brooks and the company or gas works concerning the $10.00 commission on separators. Hoping the matter is satisfactorily adjusted, we are

'Yours very truly, Pertz & Stewart,

'By Stewart.'

To this the gas trustees replied, under date of November 18, 1890, as follows:

'Office of the City Gas Works. Superintendent.

'Findlay, Ohio, November 18, 1890.

'Messrs Pertz & Stewart, Kokomo, Ind.-- Gentlemen: Yours of November 17 received, saying you have a letter from Mr. Brooks on the 15th inst., dated 13th inst., returning to you $30.00 commission, paid by you to him on three separators that...