Evans v. Kister

• Citation: 92 F. 828
• Decision Date: 07 March 1899
• Docket Number: 651.
• Parties: EVANS v. KISTER et al.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

92 F. 828

EVANS v. KISTER et al.

No. 651.

United States Court of Appeals, Sixth Circuit.

March 7, 1899

This was an action at law upon a promissory note executed for the purchase price of certain machinery.

The maker of the note was a street-railway corporation, called the Park City Railway Company, and F. L. Kister, Jr., was an accommodation security. The suit was against the street-railway company and its surety, Kister. The latter after pleading jointly with his principal, obtained leave to plead separately, and in his defense pleaded among other defenses not now important: (1) That the obligation, though signed by him, was never accepted by the payee, and no credit was given on the faith of his undertaking; (2) that, if the note was accepted, and if he ever became bound as surety, he was released by the negligence of the payee in failing to defend a replevin suit brought by the street-railway company obtained possession of the machinery for which the note was improperly and illegally given; (3) that, if he was ever bound as surety, he was released by the negligence of the payee in consenting to the attachment of the machinery, for which the note was given, to the realty of the railway company, before recording said note, whereby the machinery became a fixture, and subject to a previously existing mortgage and other existing liens in favor of mechanics and contractors; (4) that there had been a variation in the contract, to which he had not consented, and by which a material part of the machinery had been returned to the vendor, 'he having the right to look to such property as indemnity. ' By stipulation a jury was waived, and the case submitted upon the law and the facts to the court. The findings of fact and law were as follows:

Findings of Fact.

(1) That on June 22, 1895, the Commercial Electric Company, of Indianapolis, entered into the following contract with the Park City Railway Company:

'We the Commercial Electric Company, of Indianapolis, Ind., agree to furnish you two of our standard 100 K.W. generators, with switch board, instruments, and equipments complete, for the sum of $3,400) thirty-four hundred dollars, delivery to be made f.o.b. cars, Bowling Green, Ky., on or before August 25th, and payment of the said thirty-four hundred dollars to be made on or before October 1, 1895, or thirty days after date of delivery, if delivery is delayed beyond August 25th, provided they fulfill the following specifications: The generators shall be capable of generating 100 K.W. capacity for sixteen consecutive hours, with a rise in temperature not to exceed 70 Fah. above the surrounding air, and shall carry full rating without sparking, and, fulfill all our claims as set forth in the accompanying catalogue. We moreover guaranty the apparatus to be free from all electrical and mechanical defects, and agree to repair any such defects, free of charge, as may develop through normal usage within two years from date of acceptance.

'Accepted, June 22, 1895.

Commercial Electric Company, 'Per M. . Southworth. 'Park City Railway Company, 'Per M. H. Crump, Managing Director and Secty.'

(2) That there were some delays in delivering this machinery, and some correspondence in regard thereto, which caused the railway company to send to the electric company a note for the amount agreed upon, which note is in the following words and figures:

$3,400.

Dated . . ., 18-- .

'On or before the first day of November, 1895, for value received, in two one-hundred Killowatts street-railway power generators, I promise to pay to the order of the Commercial Electric Company of Indianapolis, Ind., three thousand four hundred and no-100 dollars, negotiable and payable at Potter Bank, Bowling Green, Ky., without any relief whatever from valuation or appraisement laws until paid, and 5 per cent. attorney's fees. The drawers and indorsers severally waive presentment for payment, protest, and notice of protest and nonpayment of this note. The express condition of the sale and purchase of the said machinery above named is such that the title and ownership of said machinery does not pass from the said Commercial Electric Company until this note and interest, and all other notes and interest given in pursuance of such sale and purchase, are paid in full; and it is further agreed that the above property shall not be attached to, so as to become a part of, any real estate, but shall remain personal property until paid for.

'P.O. Address:

Park City Railway Company, 'By I. B. Wilford, Prest. 'M. H. Crump, Secty. 'F. L. Kister, Jr.'

Subsequently indorsed: 'Pay to the order of J. R. Evans, without recourse on us. Commercial Electric Co., by S. L. Hadley, Secy.'

(3) That on the 17th of September, 1895, the electric company sent a letter, which it wrote, but did not sign, to the railway company, declining to accept said note with the single surety, and also stating that it returned the note; that the note was not returned in said letter, nor at all. Thereafter the railway company, on September 19th, after its receipt of said letter, telegraphed the electric company to ship the generators immediately, with bill of lading attached, and to return note indorsed without recourse, which telegram the electric company received, and on the next day telegraphed the railway company that the generators were being loaded, and would be forwarded same night, with bill of lading and note attached.

(4) On the same day, September 20th, the electric company sent said note to J. L. Potter & Co., at Bowling Green, Ky., together with the following letter:

'Gentlemen: We inclose note of the Park City Railway Company, indorsed by F. L. Kister, attached to which you will find bill of lading for the apparatus, for which the note is given. The railway company wire us that they will discount the note without recourse. We have indorsed the note, leaving blank for the name of the party who will discount it, and we request that you deliver the bill of lading to them at such time as they pay you the $3,400, less 7 per cent, interest per annum, until November 1st. Upon the mailing of the amount to us, kindly wire us at our expense, so that we may send tracer after the goods, and oblige.

'P.S. Deliver bill of lading only at such time as note is paid.'

Potter & Co. notified the railway company, on September 22d, of the receipt of the note, and that it could be discounted.

(5) Subsequently, under the authority of a letter from the electric company, dated October 8th, Theodore Varney, an employee of the electric company, filled the blank indorsement on the note with the name of J. R. Evans, the plaintiff herein.

(6) The defendant Kister was notified by Vaughn, the vice president of the railway company,-- but when, the record does not disclose,-- that said note had been 'rejected' by the electric company; but Kister took no action in the matter, and gave notice to no one that he regarded himself as not bound on the note, until the January following the bringing of this suit, when, in the following letter to the plaintiff, he seemed to recognize his liability:

'The railway company owe me (Kister) nearly as much as the note you hold, which I have brought suit on, and as our court is now in session, and as the parties who bought Vaughn's interest are responsible men, I don't expect any costs on account of the note, but expect they will settle with me, and release me from loss on your note before my case against them is reached.'

(7) The plaintiff and the electric company both had knowledge that Kister was only a surety on the note sued on at the time the same was executed.

(8) On the 30th of September the railway company sued out a writ of delivery against the electric company, and a large part of the machinery, which had been shipped to Bowling Green, was seized by the sheriff of Warren county, and, after being retained for the statutory two days by the sheriff, was, on October 5, 1895, delivered by the sheriff to the railway company. This action thus brought in the Warren circuit court was dismissed in the following May, without prejudice, and a judgment for costs entered in favor of the defendant.

(9) That the electric company thereafter directed Varney, its agent, to have the note sued on recorded, for the purpose of saving, by this constructive notice, its rights retained on the face of the note; that Varney was told that said note could not be recorded, except it were acknowledged by the railway company, so as to entitle it to be recorded; that said note was not recorded as required by the Kentucky Statutes. Said notes had no acknowledgment upon it, nor was any application made by the electric company to have such acknowledgment.

(10) That, when the machinery came to Bowling Green, it was placed upon and fastened to stone foundations, which had been prepared for it in the railway company's power house; that it was absolutely necessary that this machinery should be fastened to such foundations in order to use it for the purpose for which it was intended; that defendant Kister knew, at the time he signed the note, of this necessity; that he knew, at the time it was being put into the building and fastened to the foundations, that it was being so put in and fastened; that the electric company aided and assisted in thus attaching the machinery to the realty; that it was so attached before the maturity of the note; and that at said time there was upon the property of the railway company a mortgage for some $50,000.

(11) That the machinery thus delivered and attached to the freehold was the entire consideration for which the note was given, and was of equal value to the note.

(12) That the action of the electric company in thus aiding assisting,...