First Nat. Bank v. Alton Mercantile Co.

• Decision Date: 17 February 1927
• Docket Number: No. 7467.,7467.
• Parties: FIRST NAT. BANK v. ALTON MERCANTILE CO. et al.
• Court: U.S. Court of Appeals — Eighth Circuit

18 F.2d 213 (1927)

FIRST NAT. BANK v. ALTON MERCANTILE CO. et al.

No. 7467.

Circuit Court of Appeals, Eighth Circuit.

February 17, 1927.

Harry O. Glasser, of Enid, Okl., for appellant.

B. A. Ames, of Oklahoma City, Okl. (C. B. Ames, of Oklahoma City, Okl., on the brief, and Ames, Lowe & Cochran, of Oklahoma City, Okl., of counsel), for appellees.

Before KENYON, Circuit Judge, and SYMES and MOLYNEAUX, District Judges.

SYMES, District Judge.

This is the second controversy to come before this court from the Western district of Oklahoma arising out of the sale and resale of a certain consignment of sugar in April, 1920. The parties to the series of transactions in question were the Collins-Dietz-Morris Company of Oklahoma City, referred to as Collins; the Meinrath Brokerage Company, merchandise brokers, with offices in Oklahoma City and elsewhere, a claimant below, appellee here; W. H. Edgar & Son, referred to as Edgar, of Detroit, Mich.; the Alton Mercantile Company of Enid, Okl., referred to as Alton, which afterwards, but before the institution of this suit, became bankrupt, and whose side of this controversy is presented by the First National Bank of Enid, Okl., an objecting creditor, in the bankruptcy proceedings, appellant.

The first of these suits is entitled Meinrath Brokerage Co. v. Collins-Dietz-Morris Company (C. C. A.) 298 F. 377. As the cases are in some respects interdependent, we will adopt verbatim the statement of facts from that case.

"It appears that Alton had purchased from certain refiners 1,500 bags of sugar (100 pounds each), with the intention, like the other parties concerned, of reselling. On April 23, 1920, Meinrath, acting as broker, sold this sugar for Alton to Collins at 26 cents, and on the 29th of April following Collins in turn, through Meinrath, as broker, sold it to Edgar at 27 cents. It is admitted by all that the details of these sales are ordinarily handled by the broker, and these particular transactions were no exception. Accordingly Edgar directed Meinrath to have the sugar shipped in three cars, of 500 bags each, consigned to three separate destinations. These instructions were transmitted by Meinrath to Alton, but not to Collins. In due course the sugar was shipped to Edgar by the refinery, but not in accordance with the latter's instructions. This, it is admitted, gave Edgar a legal excuse for nonperformance of his contract with Collins that he promptly took advantage of.

"Alton, as was customary, drew drafts on Collins, with bills of lading attached, sending copies of the invoices to Meinrath. These were presented to Collins through a bank on June 15th. Collins gave checks in payment, and took up the drafts and bills of lading, in ignorance of the mistake made in the shipping instructions. When Meinrath received copies of the invoices, they discovered that Alton had disregarded the shipping instructions. Mr. Gillespie, a representative and employee of Meinrath, immediately called up Collins and inquired as to the point of origin of the shipment. Collins asked why this information was desired, whereupon Gillespie stated that Alton had shipped the consignment in two cars, instead of three, and had also made a mistake in destinations. He admits that he did not call Collins to inform him of the mistake. Collins immediately returned the bills of lading and drafts to the bank and received back his checks. Thereafter Meinrath tried to persuade Collins to pay the Alton drafts, assuring them that Edgar would waive the mistake and accept the shipment. This Collins declined to do, unless Meinrath would first obtain assurances from Edgar to that effect, which were not forthcoming.

"The day following Gillespie, representing Meinrath, went into conference with the Collins firm and renewed his request that they take up the Alton drafts, and according to Collins' story orally promised that if Collins would recall and pay the Alton drafts, and draw drafts with bills of lading attached on Edgar, that Meinrath would pay Collins any loss or damage they might sustain thereby. Meinrath denies that any such promise was made. Collins further states that in reliance upon this promise he thereupon paid the Alton drafts and forwarded the bills of lading to Edgar with drafts attached. A day or so later Edgar informed Meinrath that he would not pay the drafts, and on June 21st the same were duly protested. Upon learning of this, Collins notified Meinrath that they would look to them for reimbursement in accordance with their oral guaranty.

"Meinrath immediately got in touch with Edgar, and stated there had been an error in the shipment, and asked them to help them (Meinrath) out. An arrangement was thereupon entered into between them, by which Edgar was allowed to take the bills of lading from the bank, divert the cars to new destinations, unload part of the same at Detroit, and attempt to dispose of the sugar. Collins, at Meinrath's request, instructed the bank accordingly, and, further, to reduce the draft $200 to cover Alton's expenses caused by this change. This is what is known as the trust receipt agreement.

"A short time after the Detroit bank again took up the matter of payment with Edgar, who claims that immediate payment was demanded, contrary to the new understanding. Edgar refused to pay and declined to have anything more to do with the transaction. This action was based upon a letter that the Detroit bank received from its correspondent bank in Chicago, through which the drafts and bills of lading went. The evidence shows that this communication was one of inquiry only as to the status of the matter, and all the Detroit bank did was to call in Edgar's representative, who read the letter. Edgar was not justified in construing it as a demand for immediate payment. In any...