Fay v. Hill

• Decision Date: 23 February 1918
• Docket Number: 4869.
• Citation: 249 F. 415
• Parties: FAY v. HILL et al.
• Court: U.S. Court of Appeals — Eighth Circuit

249 F. 415

FAY v. HILL et al.

No. 4869.

United States Court of Appeals, Eighth Circuit.

February 23, 1918

This is an appeal from a decree declaring two contracts between the parties to this action void, and enjoining the prosecution of an action at law based upon these contracts. The facts briefly stated, are that the appellant was a civil engineer residing in the city of St. Louis, without any commercial rating, and without any means, except a homestead, which was subject to a mortgage for nearly its full value; that in May 1910, one Eberson, a manufacturer of paints, decided to enter the business of manufacturing linoleum, using a pigment which he supposed would enable him to manufacture it successfully. He adopted the name of 'Western Linoleum Manufacturing Company,' intending to incorporate it thereafter, but which was never done. Appellant, a civil engineer, was to superintend the erection of the plant, for which he was to receive 10 per cent. of the total cost as compensation. He was not to receive any salary, nor any of the profits made in the operation of the plant, when operated. The plant was never erected; Eberson abandoning the enterprise. The appellant rented an office, placing on it a sign, bearing the name suggested by Eberson, 'Western Linoleum Manufacturing Company.' During the months of May, June, and August, 1910, he purchased some linseed oil, to be paid for in cash upon delivery, all of which, except one carload, was purchased and paid for by Eberson. In September, 1910, Eberson had given up the idea of building a linoleum plant, as he found the pigment which he had invented was not a success. No contracts for the purchase of linseed oil were made thereafter by appellant, except those in controversy. The Western Linoleum Manufacturing Company kept no bank account, its name was not listed in the telephone or city directories, and with the exception of one carload the purchases, as hereinbefore stated, were bought for and sold to Eberson, who borrowed the money to pay for the oil as it arrived. On November 30, 1910, he sent a telegram to appellee, a concern of means, in the oil business in the city of New York, asking for a quotation of prices on 150,000 gallons of linseed oil, equal monthly deliveries to be made from April to August, inclusive, f.o.b. cars New York, or other Atlantic ports; also St. Louis. Upon receipt of this telegram the appellees called up Mr. La Forge, of the American Linoleum Manufacturing Company, of which he was secretary and therefore acquainted with the linoleum trade of the country, for the purpose of inquiring about the standing of the Western Linoleum Manufacturing Company. Mr. La Forge informed them that he understood that this was a plant which had been taken over by Cook a short time ago. Cook was the owner of the Trenton Oil Cloth & Linoleum Manufacturing Company, a very wealthy concern engaged in manufacturing linoleum. At the same time they put in an inquiry for a report on the Western Company with Dun's Commercial Agency. An effort was made by the appellees to ascertain from the Trenton Company about appellant's company, but it could not be reached. Thereupon on the same day appellees sent to the Western Linoleum Manufacturing Company the following telegram: 'Eighty-four and one-half cents delivered St. Louis less one per cent. seaboard weights to govern, subject to prompt wire reply. ' On the same day it confirmed this telegram by letter. On the next day the appellees received a telegram from appellant, signed 'Western Linoleum Mfg. Co.,' accepting their offer. On December 2d appellees wrote to the Western Linoleum Manufacturing Company, acknowledging receipt of the telegram accepting their offer, and wrote as follows: 'We haven't had the pleasure of doing any business with you in the past, and as this is comparatively a large order, will you kindly furnish us with references? As to our ability to carry out the contract, we refer you to (naming a number of large and responsible firms dealing in oil). ' On the same day appellees received another telegram from the Western Linoleum Manufacturing Company asking for quotations on 125,000 additional gallons of linseed oil to be delivered between April and August in equal quantities monthly. On December 3d, appellees wired, quoting the same price for this last inquiry as for the previous order. The appellant wired back that the price was too high, and to wire if they can do better. On December 5th, appellees wired offering the oil 'at 79¢ seaboard.' This was accepted by appellant on the same day. On that day the purchasing agent of the Trenton Oil Cloth & Linoleum Manufacturing Company, the Cook concern, called appellees by telephone, asking about the Western Linoleum Manufacturing Company. When appellees informed them that they understood that was a plant which the Trenton Company had taken over, he answered that that was not so, that they only heard lately of such a company, and for the sake of their records were desirous of knowing who the company was.

Appellees not having received any reply from the plaintiff to their letter asking for references, wired on December 8, 1910, the Western Linoleum Manufacturing Company, to telegraph when it answered that letter. On the same day they received a reply, signed 'Western Linoleum Manufacturing Company,' saying, 'Letter mailed you yesterday.' Between December 5th and December 8th appellees again undertook to get reports from the Dun Commercial Agency. On December 9, 1910, appellees received the letter which appellant had wired them as having been mailed by it on December 7th, but no mention was made of any references, nor did it ever send any references. On December 7th, appellees sent another telegram of inquiry to the Dun Commercial Agency, at St. Louis, and on December 8th, received a reply to this telegram, and also a report by mail. The report by mail was as follows: 'Dec. 6, 1910. Efforts to locate the Western Linoleum Mfg. Co. have not been successful. Inquiry at 1416 Chemical Building, which is the office of Wm. Fay, who for many years has been consulting engineer, it is learned that he occasionally uses the above style. Various calls were made at his office, but were not successful in interviewing him. Inquiry in various other quarters elicits no information in regard to a business under this name in St. Louis or elsewhere. The name does not appear in the city or telephone directories, and several of those who have known Mr. Fay for years know nothing in regard to his connection with the linoleum business. ' The report by telegraph was as follows: 'Apparently nominal style adopted by William Fay, a civil engineer, who made advantageous purchase of considerable linseed and apparently trying to negotiate arrangements to work it into linoleum. Unable to meet him, no answer to requests for statement. No financial responsibility traced to him, not known to principal linoleum jobbers. ' Upon receipt of these reports appellees sent appellant the following telegram: 'Not hearing from you and in view of reports we get from agencies and St. Louis parties must consider sale made to you canceled. ' The total amount involved in these two contracts was about $225,000.

Appellant instituted suit against the appellees for breach of contract on the law side of the District Court, whereupon the appellees filed their bill on the equity side of the court praying for the cancellation of the...