Clement, Bane & Co. v. Michigan Clothing Co.

• Decision Date: 28 July 1896
• Citation: 110 Mich. 458,68 N.W. 224
• Parties: CLEMENT, BANE & CO. v. MICHIGAN CLOTHING CO.
• Court: Michigan Supreme Court

68 N.W. 224

110 Mich. 458

CLEMENT, BANE & CO. v. MICHIGAN CLOTHING CO.

Supreme Court of Michigan

July 28, 1896

Error to circuit court, Ionia county; Frank D. M. Davis, Judge.

Action by Clement, Bane & Co., a corporation, against the Michigan Clothing Company, on a contract of sale. There was a judgment for defendant, and plaintiff brings error. Reversed.

William O. Webster (Henry J. Horrigan, of counsel), for appellant.

Vernon H. Smith, for appellee.

MOORE J.

The case was tried before the court without a jury. In brief, the facts are: The plaintiff is a corporation under the laws of Illinois, and defendant is a corporation under the laws of Michigan. The plaintiff recovered a judgment against Thomas Bates in Muskegon circuit court, on or about May 12, 1893 for $2,528.17, and costs were taxed at $20. The purpose of defendant's organization as a corporation is the manufacture and sale of clothing. The business of defendant corporation is under the control of a board of directors consisting of nine persons. Thad B. Preston was and is the secretary, treasurer, and general manager of the defendant corporation. On May 16, 1893, Thomas Bates was indebted to defendant in the sum of $432. Thad B. Preston, May 16, 1893 began a correspondence with plaintiff about the purchase of its judgment against Bates, the letter reading: "May 16 1893. Gentlemen: Referring to claim v. Thos. Bates, Muskegon Mich., we had given up getting anything out of this matter until, some little time since, from a 'pointer' we received, we put detectives at work, and, from reports received today, think we have a small amount of property where we are justified in proceeding against it. Our claim is $432.00. Our expenses will be as yet uncertain; but we think we can get you out 35 per cent. on your claim if the amount is about $2,600.00. We will not agree to do this, but will take an option on it at that figure for sixty days (though we will probably know definitely in fifteen days), on the understanding that yours shall have preference next to ours. We have made this offer to no one else, and will not until we hear from you, and ask you to treat this in strict confidence. Please wire, 'Yes,' or 'No.' Yours, Thad B. Preston,"-and received the following reply: "Michigan Clothing Co., Ionia, Mich.: Yes. Clement, Bane & Co." Plaintiff, on same day, sent this letter: "Michigan Clothing Co., Ionia, Mich., Thad B. Preston, Secretary-Dear Sir: We have your favor of 16th, requesting the option for sixty days on our claim against Thos. Bates at thirty-five cents on the dollar. We have wired you as instructed, 'yes.' We will give you the option as above stated, and, although it will prove quite a loss to us, we hope you will make some money out of it. The claim is now in judgment, dated May 12, $2,528.17, drawing interest at 6 per cent. You say you will probably know within fifteen days, and, as soon as you do, we will be pleased to hear from you. Yours, very truly, Clement, Bane & Co." The following was sent: "Gentlemen: Referring to the matter v. Thomas Bates, you do not state to us in what court you have obtained judgment against Mr. Bates. We wish that you would have your attorneys execute to us such an instrument as will allow us to proceed to your claim in our name, in case we find it necessary. Of course, this will be on the understanding that, if we use the same, we shall pay you for the claim. We make this request, that we may have all of our papers in proper shape, in case we desire to proceed in the matter. Yours, truly, Thad B. Preston." The reply was as follows: "Michigan Clothing Co., Ionia, Mich.-Gentlemen: Replying to your favor of the 20th. Our judgment against Thos. Bates is recorded May 12, in the circuit court of Muskegon county. We suppose the proper way to transfer this to you, in case you decide to buy it, will be to make an assignment of the judgment to you. We will instruct our attorneys to prepare this. Yours, very truly, Clement, Bane & Co." They were instructed to have assignment made at once. This reply was sent: "Michigan Clothing Company, Ionia, Mich.-Gentlemen: Replying to your favor of the 24th. We hand you herewith an assignment of our judgment vs. Thomas Bates, as requested. This is to be held by you in trust until you decide whether you will buy it of us at thirty-five cents on the dollar, according to our previous correspondence. Please acknowledge receipt. Yours, very truly, Clement, Bane & Co." This reply was sent: "Gentlemen: Yours of 25th. We are in receipt of assignment of judgment vs. Thomas Bates, that you sent us, and accept same on the conditions that you specify. We think now there is but little doubt but what we shall use same, and will advise you promptly regarding it. Yours, truly, Thad B. Preston." The following was sent: "Gents: Our attorneys have drawn within assignment of judgment which please execute in lieu of one sent us, and return. Yours, truly, T. B. Preston." All the letters sent by Preston were on the letter heads of defendant, and Preston testified that he always signed defendant's business correspondence, "Thad B. Preston." May 31, 1893, plaintiff made a formal assignment of the claim to defendant, and inclosed it in a letter of the same date, reading: "Michigan Clothing Co., Ionia, Mich.-Gentlemen: Relying to your favor of 30 inst. We have executed and inclosed herewith the assignment of our judgment against Thomas Bates as prepared by your attorney. This is sent you on the same conditions as the previous assignment, and is to take the place of that. You will please return the other one. Yours, very truly, Clement, Bane & Co." Afterwards Preston caused a suit to be begun against Bates, by attachment, in Muskegon circuit, in name of defendant, he swearing he was its agent, and authorized to make the affidavit in its behalf, and recovered judgment against Bates, including in same the claim of the Michigan Clothing Company of $432, and the judgment recovered by plaintiff against Bates, and assigned to defendant. The defendant corporation never authorized Preston to purchase the judgment, never ratified its purchase, never authorized or ratified its...