Davis v. Read

• Decision Date: 22 January 1889
• Citation: 37 F. 418
• Parties: DAVIS et al. v. READ et al.
• Court: U.S. District Court — Western District of Michigan

37 F. 418

DAVIS et al. v. READ et al.

United States Circuit Court, W.D. Michigan, Southern Division.

January 22, 1889

Taggart Walcott & Ganson, for complainants.

H. D Smith and M. L. Howell, for defendants.

SEVERENS J.

This cause was heard upon pleadings and proofs, and was quite fully and elaborately argued. The bill alleges substantially, that Davis and Rankin, the complainants having for some time prior to the transaction in question been engaged as a firm, under the style of Davis & Rankin, in the business of furnishing creamery supplies and erecting creamery buildings in various parts of the country, and having their head-quarters at Chicago, entered into a written contract, on or about the 17th day of December, 1885, with the defendants, who were farmers, or were to some extent engaged in that business, at and near Cassopolis, in Michigan, whereby the complainants agreed that upon the terms stated therein they would construct a creamery building, at Cassopolis, for the other parties to the contract, to be completed by the 1st day of April following, and to conform to the specifications which are set out in the contract with particularity. They were also to furnish the same parties with certain creamery supplies, some of which were patented, and including an engine and other machinery and tools adapted to operating the creamery. The complainants also stipulated that they would hire at the defendants' expense a competent butter-maker, and would superintend the business of the creamery for one year, and would aid the second parties in the development of routes and territory, etc. They further agreed that the territory of the Cassopolis creamery should extend to limits equidistant between it and other creameries already established,-- presumably having reference mainly to the use of their patented cans, in which the milk is stored and delivered by the patrons of the creameries,-- and that no other creamery should be established in Cass county. It was also provided that the second parties might become a corporation, taking stock according to the amount of their several subscriptions.

The parties of the second part consisted of a large number of subscribers, whose names are appended to the contract in a list, with the number of shares at $25 each set opposite their names, as if subscribing for corporate stock. It was stipulated in the contract that the complainants were to be paid the sum of $5,000 when the creamery should be completed, and this is the total amount of the sums set opposite the names of the parties of the second part. The first name upon the list of the parties of the second part was that of the 'Chicago Creamery Association, 40 shares, $1,000;' and this association, it is alleged in the bill, was identical with Davis & Rankin, and was a mere trade name or title which they had appropriated to themselves. The other subscribers were the present defendants. The complainants executed the contract in their firm name of Davis & Rankin. The bill alleges that complainants completed the building within the stipulated time, and prays for a specific performance of their part of the agreement by the defendants. The defendants answered, and filed a cross-bill, in which they alleged that they were induced to enter into the contract by misrepresentation of certain matters essential to it by the agent of the complainants, conducting this business for the firm. Several misrepresentations are complained of, the principal being the statement of the agent that the Chicago Creamery Association was a distinct corporation organized under the laws of Illinois, and having an intimate business relation with a great number of creameries in the north-west, for whom it operated at Chicago in providing a market for their products, furnishing special facilities for handling the product to the very best advantage to the different creameries, whereby the latter realized several cents per pound for their butter more than could be got without the aid of such association, and the further statement by him that all the territory equidistant from Cassopolis to the other creameries established by the complainants, and using their patented utensils, was unoccupied and unsold, so that the Cassopolis creamery could have tributary to it, and within which it could gather custom, the whole field half way to the other creameries. Respecting the first of the above points, the defendants say that the Chicago Creamery Association was a myth, put forward as a lure, and was in fact nothing else than Davis & Rankin in disguise, and that the defendants did not know this. Respecting the second, they allege that nearly the whole territory contiguous to Cassopolis had been appropriated and sold by Davis & Rankin to a creamery at South Bend, before the making of the contract in question. Other matters are set up as misrepresentations, but many of them are merely in the nature of exalted coloring about the advantages of such creameries, too effusive to deceive men of reasonable prudence and the measure of discernment which the defendants must have possessed; and as those matters are not material to the grounds of the decision, they will not be further attended to. The cross-bill prays for cancellation of the contract. The defendants' answer denies that the complainants have completed the building, and they point out many particulars in which it is incomplete, and is insufficient to meet the contract. The complainants answer and deny the affirmative allegations of the cross-bill.

The record is voluminous, and the testimony fills an immense space; but there are certain quite prominent features upon the facts which make it unnecessary to go into detail, and which, in the opinion of the court, must be regarded as controlling. The question whether the bill states a case for equity jurisdiction is one upon which I should have had great doubt if it had been presented; but as no objection has been made upon that ground, and both parties desire a determination here, and as there is a possibility that on account of the circumstance that complainants are parties of both parts in the contract they might be embarrassed in an action at law, I have, with some misgiving, concluded to allow that ground to be waived. The conclusion of fact which I have reached upon the evidence is that the complainants' agent did induce the defendants to believe that the Chicago Creamery Association was a distinct concern having an interest in the business of creameries, and special facilities for marketing butter which would be of material advantage to the defendants. In the printed caption to the contract Davis & Rankin describe themselves as 'General Managers' of the 'Chicago Creamery Association,'-- a description well calculated to produce the belief and understanding that it was a separate concern, whose interest they were in duty bound to observe and promote, and that interest was by the express terms of the contract made identical with that of the defendants. The complainants now say, in effect, that as Davis & Rankin were themselves the creamery association, they would have an equal motive in promoting the objects of the Cassopolis creamery to that which they could have as managers of the creamery association, and that thus the device was harmless to the defendants. But it also appears as a fact that Davis & Rankin did not handle the products of creameries at all, but that their business was the erection of creamery buildings, and the furnishing of machinery and supplies therefor. They took stock in some of the creameries they established, but it is evident that they did this only when they found it expedient in inducing the establishment of creameries which would furnish a local market for the sale of their utensils. It is thus manifest that the facts in regard to the character of the 'Chicago Creamery Association' and its facilities and business were not as represented, and that this representation was quite...