Gage v. J.F. Smyth Mercantile Co.

• Citation: 160 F. 425
• Decision Date: 17 February 1908
• Docket Number: 2,627.
• Parties: GAGE et al. v. J. F. SMYTH MERCANTILE CO. et al.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

160 F. 425

GAGE et al. v. J. F. SMYTH MERCANTILE CO. et al.

No. 2,627.

United States Court of Appeals, Eighth Circuit.

February 17, 1908

On April 28, 1905, appellees brought a suit in equity against appellants in the circuit court of Pemiscot county, Mo., for the purpose of obtaining an accounting between the J. F Smyth Mercantile Company and appellants, in regard to a certain loan made by appellants to said company on March 18 1902. The prayer of the petition also asked that a certain deed of trust executed by J. F. Smyth and Katie Smyth and two promissory notes executed by J. F. Smyth and Katie Smyth and the J. F. Smyth Mercantile Company given to secure said loan be canceled and for naught held, and that certain insurance policies assigned to secure said loan be delivered by appellants to appellees, and that a money judgment should be rendered in favor of appellees for any balance found due said mercantile company on said accounting. In due time appellants properly removed said suit into the United States Circuit Court for the Southeastern Division Judicial District of Missouri. In the last-named court the appellants answered the bill of appellees, and also filed a cross-bill, asking for the foreclosure of the trust deed heretofore mentioned. Such proceedings were thereafter had in said suit that on the 2d day of March, 1907, on a hearing had upon pleadings and proofs, the trial court rendered a final decree, wherein the appellees were granted all the relief asked for in their bill, so far as the deed of trust, promissory notes, and insurance policies were concerned, and also a money judgment of $132.81. From this decree appellants appealed to this court. The record certified to this court, pursuant to said appeal, shows the following material facts:

On and prior to March 18, 1902, appellants were engaged in the cotton commission business at Memphis, Tenn., and the J. F Smyth Mercantile Company was a corporation organized under the laws of Missouri and was doing a general merchandise business at Caruthersville, in said state. J. F. Smyth was the general manager of said business. On March 18, 1902, the J. F. Smyth Mercantile Company, was indebted to appellants in the sum of $2,500, growing out of a loan made by appellants to it on February 28, 1901.

The mercantile company could not pay this indebtedness, and was being pressed by numerous other creditors for payment of their demands, all of which was known to appellants. In this condition of affairs, in consideration of the execution and delivery of a deed of trust by J. F. Smyth and Katie Smyth on certain lands in Missouri to appellants dated March 18, 1902, and referred to in the bill herein; in consideration of the execution and delivery of two promissory notes dated March 18, 1902, by J. F. Smyth, Katie Smyth, and J. F. Smyth Mercantile Company for the sum of $3,000 each, due November 15, 1902, and February 1, 1903, respectively, with interest at 8 per cent. per annum; in consideration of the assignment of an insurance policy on the life of said J. F. Smyth for $2,000, and a fire insurance policy for $3,000 on the property belonging to the J. F. Smyth Mercantile Company; and, further, in consideration of the execution and delivery of a contract in words and figures as follows:

'Agreement.

'W. A. Gage.

W. A. Gage.

'Caruthersville, Mo., Mch. 18, 1902.

'Whereas, we are indebted to W. A. Gage & Co., of Memphis, Tenn., in the sum of six thousand dollars, as evidenced by 2 promissory notes of this date for $3,000 each due Nov. 15 and Feby. 1, next respectively. And whereas, said advance was obtained on the faith of the representations made by us that we could deliver, or cause to be delivered, to the said W. A. Gage & Co., by the first day of January, 1903, 600 bales of cotton for storage and sale on commissions, which said representation we hereby expressly warrant to be true. Now, in consideration of the premises, and the agreements made by said W. A. Gage & Co., as hereinafter stated, we do hereby agree to deliver, or cause to be delivered to the said W. A. gage & Co., at their warehouse in the city of Memphis on or before the first day of January, next, 600 bales of cotton, to be sold by them as such commission merchants, and from the proceeds of the first cotton shipped, or from the first payments made, said W. A. Gage & Co., shall, first, pay all charges on said cotton as storage and commission for selling; shall, secondly, pay any additional sum that may be advanced us by the said W. A. Gage & Co., which may not be secured by note; shall, thirdly, pay any storage and commission on cotton which we fail to ship as above agreed, at the rate of one dollar and twenty-five cents a bale; and shall, fourthly, apply the proceeds of the remainder of the proceeds of said cotton, or other payments, to the promissory notes above mentioned, or to any other debits with which we may stand charged. W. A. Gage & Co., having the right, at their option, to apply or change application of payments or make re-application of payments.

'And the said W. A. Gage & Co., agree, by their acceptance of this writing, to provide storage for said cotton until the same is sold, and to sell the same for the usual commission charged. And in consideration thereof, in order to compensate W. A. Gage & Co. for their trouble and expense in providing safe storage and necessary and proper means and facilities for selling said cotton, we agree in default of the delivery of said cotton, or any part thereof, to pay said W. A. Gage & Co. on January 1st next one dollar and twenty-five cents per bale as liquidated damages on the number of bales so in default. Should W. A. Gage & Co. advance us a greater sum than six thousand dollars, which additional advance shall be optional with W. A. Gage & Co., and shall be due and payable as soon as created we hereby agree and bind ourselves to ship them one bale of cotton for each ten dollars charged to us by September 1, 1902, over and above the amount originally intended to be advanced. Should we owe the said W. A. Gage & Co. anything because of our failure to comply with this agreement, then said indebtedness for deficit commission is to be regarded as a part of the indebtedness herein acknowledged, and shall be collectible hereunder. It is hereby further agreed that we are to pay interest on notes and on open account at the rate of eight per cent. per annum. To secure the payment of any balance which may be due, as shown by the books of W. A. gage & Co., we waive exemptions as to personal property, and agree to pay a reasonable attorney's fee, should a lawyer be employed to collect the same.

'Given under our hands, this 18th day of March, 1902.

'J. F. Smyth,

'J. F. Smyth Merc. Co.

'By J. F. Smyth, Pres.'

Appellants advanced for the use and benefit of the creditors of the J. F. Smyth Mercantile Company $3,500, which added to $2,500, which the J. F. Smyth Mercantile Company was owing on old account, made up the amount of $6,000, for which the two promissory notes were given, and to secure payment of which the deed of trust was executed and delivered, and the insurance policies were assigned. Not $1 of the new money so advanced was given to J. F. Smyth or the J. F. Smyth Mercantile Company, except as paid out to the creditors of the J. F. Smyth Mercantile Company through the representative of the appellants and the representative of the creditors of said company. The J. F. Smyth Mercantile Company shipped under said cotton contract of March 18, 1902, one bale, and appellants charged to the general account of said company $748.75, being the amount of shortage on 599 bales at $1.25 per bale. No money was advanced by appellants under this cotton contract other than the $3,500. On March 26, 1903, the mercantile company or J. F. Smyth having paid but little on said notes, without the advancement of any new money by appellants, executed and delivered to appellants a new cotton contract similar in substance and form to the one hereinbefore set out, except it called for 500 bales to be delivered on or before January 1, 1904, and contained the following recital:

'Whereas, we are indebted to W. A. Gage & Co., of Memphis, Tenn., in the sum of six thousand dollars, as evidenced by promissory notes of date Mch. 18, 1902, $3,000 due Nov. 15, '02, $3,000 due Feb. 1, '03, which indebtedness W. A. Gage & Co. have agreed to extend until the coming fall at our request. And whereas, said extension was obtained on the faith of the representations made by us that we could deliver or cause to be delivered, to the said W. A. Gage & Co., by the first day of January, 1904, 500 bales of cotton for storage and sale on commissions, which said representation we hereby expressly warrant to be true.'

Under this second contract there was shipped by the Smyth Mercantile Company about seven or eight bales, and the number of bales short at $1.25 per bale was charged to the general account of said J....