Doolittle v. J. C. Murray & Co.

• Decision Date: 20 May 1907
• Citation: 111 N.W. 999,134 Iowa 536
• Court: Iowa Supreme Court
• Parties: DOOLITTLE v. J. C. MURRAY & CO. ET AL.

134 Iowa 536

111 N.W. 999

DOOLITTLE

v.J. C. MURRAY & CO. ET AL.

Supreme Court of Iowa.

May 20, 1907.

Appeal from District Court, Wapello County; F. W. Eichelberger, Judge.

The opinion states the material facts. Reversed.

Chester W. Whitmore, for appellant.

McNett & McNett, Tisdale & Heindel, and James G. Bull, for appellees.

WEAVER, C. J.

The somewhat peculiar complication of issues involved in this appeal can be most readily understood from a recitation of the facts, most of which are admitted, stated in narrative form and chronological order.

For some time prior to September 30, 1903, plaintiff, H. M. Doolittle, was engaged in the retail drug business at the town of Murray, Iowa. He had on hand a stock of goods which he estimated would invoice about $4,500. The business was unsatisfactory. He had suffered at least two or three losses by fire, his insurance had been canceled, his capital was all invested in the stock, and, as the sales were insufficient to enable him to meet his bills as they fell due, he was anxious to sell out the property and business. Among his creditors, and, so far as the record discloses, his principal creditors, were J. W. Edgerly & Co., wholesale druggists, at Ottumwa, Iowa, to whom he owed $591.37, and the Churchill Drug Company of Burlington, Iowa, to whom he owed $119.68. If there were any other creditors, this proceeding is not complicated by their appearance or claims. After some correspondence with Edgerly & Co. plaintiff appeared at their store in Ottumwa on September 20, 1903, and negotiations were begun for some satisfactory adjustment of their business. After some discussion E. F. Edgerly, the credit man of the firm, went with plaintiff to consult counsel. At first it was proposed that plaintiff execute a mortgage on his stock, but this plan was rejected as inadmissible; it being thought that plaintiff's title should be entirely divested in order that valid insurance might be procured. It was then agreed that a new firm or partnership should be organized under the name of J. C. Murray & Co., with or through which firm the deal with plaintiff was effected. This firm consisted of J. C. Murray, an employé of Edgerly & Co. and E. F. Edgerly, its credit man above mentioned. For obvious reasons Edgerly & Co., as wholesale druggists, looking to the retail dealers of their territory for patronage, did not wish to appear publicly as themselves owning or conducting a retail business, and to avoid this objection the device of an independent partnership was adopted. A written contract was then entered into between plaintiff and J. C. Murray & Co. in language as follows: “This contract made and entered into by and between H. M. Doolittle, of Murray, Iowa, and J. C. Murray & Co., of Ottumwa, Iowa, this 30th day of September, 1903, witnesseth: That the said Doolittle has this day sold and transferred to said Murray & Co. his certain drug store, located in Dr. J. F. Hasty's building, on the north side of the railroad track on Maple avenue, in Murray, Iowa. The said stock consists of drugs, chemicals, notions, paints, oils, wall paper, patent medicines, cigars, tobacco, and all furniture and fixtures in said building, including soda fountain, show cases, stove, prescription case, and includes all the fixtures not owned by the landlord, J. F. Hasty; and this is to be an absolute sale and transfer, and said Doolittle warrants the title to all of said stock, fixtures, etc., to said Murray & Co., in consideration of which the said Murray & Co. hereby undertakes and agrees to assume and pay a certain bill or claim of J. W. Edgerly & Co., of Ottumwa, Iowa, against the said Doolittle, for the sum of $591.37, also the claim of the Churchill Drug Co., of Burlington, Iowa, for the sum of $119.68; and they further agree that within a reasonable time, and as expeditiously as they can do so in a reasonable way, they will make sale of said entire stock for the best terms and price they can obtain, and that after deducting the amount of the aforesaid assumed bills and all expense they may have incurred in and about the said stock over and above its net proceeds they will pay as further consideration the said purchase price received by them from the sale of the said goods. That in said expense shall be included all bills made by them in further conducting said business, and said Doolittle hereby transfers his unexpired lease on the premises where his store is located to said Murray & Co., and said Murray & Co. hereby agrees to pay all rents to accrue on the unexpired term. Any rents paid are to be included in the bill of expense as well as any insurance paid by said Murray & Co. [Signed] H. M. Doolittle, J. C. Murray & Co.”

Immediately upon the execution of this instrument one Haslach was employed and authorized to go to the town of Murray, where the goods were, and to take charge and control of the Doolittle stock and business in the name and behalf of Murray & Co., and conduct the same until it could be closed out by sale or other satisfactory disposition of the matter. There was also some talk or understanding between plaintiff and Murray & Co., the terms and extent of which are the subject of dispute, looking to effort on part of plaintiff to find a purchaser or make a sale of the stock. Haslach went to Murray on the same or following day, and Doolittle turned the stock over to him. Haslach applied to local agents for insurance, representing that Murray & Co. were sole owners, and that Doolittle had no interest in the property. On October 3, 1903, Edgerly wrote plaintiff, advising him of the address of certain parties who he said had an equity in farm land which they desired to exchange for the drug stock. On October 5, 1903, plaintiff, purporting to act as agent for J. C. Murray & Co., entered into a written contract with S. E. Magner to exchange the stock for 160 acres of land in Union county, Iowa. The land was priced at $8,100, which was to be paid by delivery of the drug stock invoiced at cost, and to aggregate not exceeding $5,000, and by assuming a mortgage incumbrance on the land of $3,500. Any difference which the invoice might develop in favor of either party was to be paid by the other in cash. This writing was signed by Magner, and by “H. M. Doolittle, Agent for J. C. Murray & Co.,” and witnessed by Haslach. On the following day Doolittle wrote Edgerly that he had succeeded in making a trade of the stock for 162 acres of land at $50 per acre, and had made application to a loan company to get the money to straighten up with. He then added: “Will you have the deed made to you and taken land from you, or will you have the land deed to myself and deposit deed in bank subject to your order until the land is sold or money raised by mortgage? I believe there can be something more than the purchase price obtained from the land.” He swears that he inclosed a copy of the contract in this letter, but Edgerly is unable to recall having seen it until his visit to Murray hereinafter mentioned. To this letter Edgerly replied, saying: “We beg to acknowledge receipt of yours of the 6th advising us of your having made a trade of the J. C. Murray & Co. stock for a farm. We trust the matter may go through without complication. Inasmuch as J. C. Murray & Co. are acting in behalf of others, we think it would be more correct for them to receive the deed of the land, and then deed it back to you as matters are straightened up. We judge you will have to raise somewhere in the neighborhood of $4,500 in cash to enable you to pay the amount due the other party over and above the value of your stock, and enable you to take up your outstanding accounts.” Haslach having first notified Edgerly of the intention to do so, an invoice of the stock was taken by Haslach, Doolittle, and a party representing Magner. The value of the stock as thus fixed aggregated about $3,625. At the completion of the invoice Haslach, for some reason not explained, was dissatisfied with the situation of affairs, and sent for Edgerly. On the arrival of the latter in Murray, Haslach informed him of the invoice and its amount, to which Edgerly made no response or objection. Prior to this time Magner and wife had executed a deed for the land to J. C. Murray & Co., and deposited it in a bank at the town of Murray to be delivered on completion of the deal and payment of the cash difference between the agreed price of the land and the invoice of the goods. At this visit, if not before, Edgerly saw the written contract, called at the bank and learned of the deposit of the deed, and seems to have been fully advised of all the steps taken up to that date. He made inquiries as to the location, quality, and value of the land, and with plaintiff went over the figures to ascertain the amount of money required to carry out the deal. They estimated that the aggregate of the mortgage incumbrance with the cash difference and enough to cover the claims assumed for Doolittle would represent an investment of $30 to $32 per acre. The date of this visit was not clearly shown, but there is ground for belief that it was not earlier than October 11th nor later than October 15th. Under date of October 10, 1903, Doolittle had written Edgerly that Magner desired a bill of sale of the stock made to S. E. Magner and G. W. Logan at the conclusion of the invoice, and inclosed a blank form for that purpose. He closed by saying: “We have left the amount a blank which you can give me written authority to fill in, the land to be deeded to you as J. C. Murray & Co.” On the 12th the bill was acknowledged and signed by J. C. Murray & Co. and returned to Doolittle, with an inquiry whether he had succeeded in making the loan, and saying they would want time to get together on account of the expenses incurred. The invoice having been completed, Doolittle completed and delivered the bill of sale to Logan and Magner about October 15, 1903, and Haslach delivered to...