Continental Turpentine & Rosin Co. v. Gulf Naval Stores Co., 42319

• Decision Date: 11 June 1962
• Docket Number: No. 42319,42319
• Citation: 142 So.2d 200,244 Miss. 465
• Parties: CONTINENTAL TURPENTINE AND ROSIN CO. et al. v. GULF NAVAL STORES COMPANY.
• Court: Mississippi Supreme Court

Page 200

142 So.2d 200

244 Miss. 465

CONTINENTAL TURPENTINE AND ROSIN CO. et al. v. GULF NAVAL STORES COMPANY.

No. 42319.

Supreme Court of Mississippi.

June 11, 1962.

Mize, Thompson & Mize, Gulfport, Chas. Kohlmeyer, Jr., Lemle & Killeher, New Orleans, La., for appellants.

Morse & Morse, Gulfport, for appellee.

RODGERS, Justice.

This cause of action acrose under the following facts and circumstances: On the 15th day of May 1947, Alabama Naval Stores Company, a corporation, organized under the laws of the State of Alabama; Continental Turpentine and Rosin Corporation, a corporation organized under the laws of the State of Mississippi; Delta Pine Products Corporation, a corporation organized under the laws of the State of Louisiana; Dixie Pine Products Company, a corporation organized under the laws of the State of Mississippi; Southern Naval Stores Division of Leach Brothers, Inc., a corporation organized under the laws of the State of Wisconsin, and the defendant Gulf Naval Stores Company, a partnership of Gulfport, Mississippi, entered into a contract for the purpose of forming an export association, under the procedure set out in an Act of Congress, commonly called the 'Webb-Pomerene Act', and is Title 15 U.S.C.A. Secs. 61-65.

The association opened an office in Gulfport, Mississippi. A managing board of directors was created, an executive secretary was employed, and the business of exporting naval stores was begun under the association name of 'Wood Naval Stores Export Association.'

One of the provisions set out in the Articles of Association required each member to maintain a deposit of $5,000 with the association to insure the faithful performance of the contract by its members. Under Article 8 of the contract, it was agreed by the members that the board of directors could impose a fine, in its discretion, upon any member of the Association who exported any naval stores produced by it, other than through the Association. It was agreed under Sec. 8 of the contract that the fine should not exceed $5 per drum for wood rosin, and $.25 per gallon for wood turpentine or pine oil or dispentene.

After having begun business, the Association entered into a contract with Newport Industries, Inc. of New York, appointing the New York corporation exclusive agent for the sale of products of the Association. It was understood, however, that the New York corporation reserved the right to sell naval stores obtained through other sources, in addition to the naval stores sold for the Association. In accordance with the contract made with the Newport Industries, it began placing orders with the Association, which were in turn allocated to the members of the Association, including the Gulf Naval Stores Company.

On May 31, 1950, the assets of the partnership of Gulf Naval Stores Company, were conveyed to John T. Latimer and Mrs. Julia Latimer, who continued business under the trade name of the original partnership. A new partnership was organized on January 1, 1951, and assets of the partnership (including the $5,000 on deposit with Wood Naval Stores Association) were conveyed defendants, John T. Latimer, Mrs. Julia Latimer, Louis L. Latimer, J. Alton Latimer, Walter F. Latimer, Ray A. Latimer and Mrs. Julia Priscilla Latimer Poole. The new partnership continued business under the old trade name, 'Gulf Naval Stores Company', and the partnership continued to participate in the administration of the affairs of the Association.

On July 3, 1952, the partners filed suit in the Circuit Court of Harrison County, Mississippi. They alleged that the partnership was no longer a member of the Wood Naval Stores Export Association, and sought a judgment against the Association for the $5,000 deposit, held by it, belonging to the partnership, and for the sum of $3,668.13 alleged to be due to the partnership by the Association as a result of the sale of FF wood rosin by the Gulf Naval Stores Company through the Association. The suit was removed to the U. S. District Court, and later remanded to the Circuit Court of Harrison County, Mississippi. The Association filed its answer to the declaration denying that the partnership had withdrawn from the Association and asserted a claim to the funds held by it belonging to the partnership. The Association charged that the partnership had violated the Articles of Association, by shipping in export naval stores through agents other than the Association and Newport Industries, Inc. A judgment was entered in the Circuit Court of Harrison County in favor of the partnership; whereupon defendant, Wood Naval Stores Export Association appealed to this Court. The case is reported in 220 Miss. 652, 71 So.2d 425. This Court reversed the trial court and pointed out that the testimony for defendant showed that the Gulf Naval Stores Company had exported 460 drums of FF wood rosin in violation of the Articles of the Association; that the board of directors had imposed a fine of $5 per drum for FF wood rosin exported 460 drums of FF wood rosin in vio-Article 8 of the contract amounting to a total of $2,300. We held that the partnership was still a member of the Association, and under the testimony introduced in that case, the Court held that the fine of $5 per drum for FF wood rosin shipped in export in violation of the contract was 'liquidated damages.' We dismissed without prejudice the partnership suit as to the $5,000, holding that the Association was entitled to retain the deposit until it was released under the terms of the agreement. The balance held by the Association was then paid to the partnership and the case settled.

Thereafter, on January 7, 1955, suit (the present suit) was filed by the Wood Naval Stores Export Association, against the partners of the Gulf Naval Stores Company, in the Chancery Court of Harrison County, Mississippi. The original bill of complaint alleged that sometime after the defendant Gulf Naval Stores Company became a member of the Association, the partnership set about deliberately violating the Articles of the Association by shipping in export trade, other than through the Association and its agent, Newport Industries, Inc., naval stores, namely, FF wood rosin. The bill of complaint alleged that the violation of the contract had caused irreparable damages to the members of the Association, that the number of drums shipped, the names of the purchasers, and the dates of shipment, were unknown to the complainant and that such information was wholly within the knowledge of the partners of the Gulf Naval Stores Company. The bill of complaint charged that request had been made upon the defendant partnership for the information and for an inspection of the books of the partnership, but that the Gulf Naval Stores Company had failed to comply with the request of the complainant and had refused to permit inspection of its books. The complainant further charged that the defendant partnership would continue to violate the Association agreement unless prevented from so doing by an injunction from the chancery court. It alleged that notice was given of a special meeting of the Board of Directors of Wood Naval Stores Export Association for the purpose of taking action on the report that a member had violated the Articles of Association, and notice was sent by registered mail to Louis A. Latimer, Director and representative of the Gulf Naval Stores Company; that a similar notice was sent to the partnership, Gulf Naval Stores Company. It is also alleged that at the meeting of the board of directors, evidence was produced and considered with reference to the alleged violation of the Articles of Association by the Gulf Naval Stores Company, and liquidated damages of $5 per drum of FF wood rosin was assessed against the Gulf Naval Stores Company in accordance with Sec. 8 of the Articles of Association. It is further charged that the Secretary of the Association demanded that the partnership advise the Association of the number of drums of FF wood rosin shipped in export in violation of the contract, but the partnership failed and refused to produce the desired information.

It was alleged that the continued and deliberate violation on the part of the Gulf Naval Stores Company damaged the complainant in the sum of $5 per drum of FF wood rosin shipped in violation of the contract, and that this violation already amounted to more than $100,000, but the exact amount, dates of shipments, to whom shipped, etc. were not within the possession of the complainant or any of its members except the defendants. It also alleged that the violation would continue so that the defendant would be unable to respond in damages unless the defendant was enjoined by the court.

The complainant attached interrogatories to be propounded to the defendant, asking information as to the number of barrels shipped in export in violation of the agreement and other information with reference to entering into an exclusive agency contract with Whitney Oettler of Savannah, Georgia. The bill of complaint prayed that the court require the defendant to faithfully account for each and every drum of FF wood rosin produced and exported, or caused to be produced and exported, from May 15, 1947, to the date of the filing of the bill of complaint. The complainant prayed that the court ascertain the amount produced, sold and exported, or caused to be produced, sold and exported, in violation of the Articles of the Association, and prayed for a writ of injunction restraining defendant from further violation of the Articles of the Association.

A special demurrer was filed to the bill of complaint and later overruled by the trial court. The defendants filed an answer denying that the partners of the new partnership were parties to the Articles of Association, and stated they had done no business with Wood Naval Stores Export Association since they had withdrawn from it on January 1, 1951. They admitted that they were...