Geddes v. Reeves Coal & Dock Co.

• Decision Date: 06 June 1927
• Docket Number: No. 7626.,7626.
• Citation: 20 F.2d 48,54 ALR 282
• Parties: GEDDES v. REEVES COAL & DOCK CO.
• Court: U.S. Court of Appeals — Eighth Circuit

54 ALR 282, 20 F.2d 48 (1927)

GEDDES v. REEVES COAL & DOCK CO.

No. 7626.

Circuit Court of Appeals, Eighth Circuit.

June 6, 1927.

Harold G. Simpson, of Minneapolis, Minn., for appellant.

M. H. Boutelle, of Minneapolis, Minn., and A. E. Boyesen, of St. Paul, Minn., for appellee.

Before SANBORN and BOOTH, Circuit Judges, and DAVIS, District Judge.

SANBORN, Circuit Judge.

This appeal presents the question whether orders of the court below sitting in equity were just and equitable, whereby the appellant Geddes was denied any part of the sum of $5,430.78, which the receivers of the Reeves Coal & Dock Company were paid in 1925 by the Minneapolis, St. Paul & Sault Ste. Marie Railway Company in settlement of the Dock Company's claims for refunds for overcharges on freight bills which the Dock Company delivered to Mr. Geddes for auditing under this written contract between them made on March 11, 1919: "We agree to pay George E. Geddes fifty (50) per cent. of any refunds received by us from overcharges on freight bills delivered to him for auditing; this to be his only compensation. Reeves Coal & Dock Company. George E. Geddes."

The facts which condition the answer to this question are these. It is common knowledge that the auditing of such freight bills and overcharges is a tedious, laborious and difficult task and the contract reads that they were to be delivered to Mr. Geddes for auditing, not for collection, and he made no contract to collect them. The contract was that the Dock Company should pay to him 50 per cent. of any refunds received by it, not 50 per cent. commission on them or a sum equal to 50 per cent. of them, but 50 per cent., one-half, of the very refunds the Dock Company received from the overcharges on the freight bills. Pursuant to the contract the Dock Company delivered to Mr. Geddes a large number of freight bills. He audited all of them. This practice continued from the date of the contract until on September 4, 1924, the court below sitting in equity appointed receivers of all the property of Dock Company to liquidate its obligations. During this time from March 11, 1919, until September 4, 1924, Mr. Geddes had faithfully endeavored to audit and collect these refunds. He had prepared and filed with the railroad company written claims for them. He had prior to December 6, 1924, filed informal complaints based on them with the Interstate Commerce Commission. If such complaints had not been so filed before December 6, 1924, these refunds could not have been collected. He had proceeded so far and with such success that he had negotiated a tentative settlement of the claims with the railroad company.

It was in this state of the case that on or about September 19, 1924, the receivers presented to the court below a petition to permit them to continue Mr. Geddes' employment under his written contract with the Dock Company and to pay him his share of the refunds specified in that contract. The court below denied the petition. Thereupon the receivers of the Dock Company employed Mr. Houck to prosecute these claims for these refunds. Mr. Houck filed a formal complaint on them with the Interstate Commerce Commission and then compromised the claims on the payment by the railroad company of $5,430.78. Thereupon Mr. Geddes by a petition which set forth his contract with the Dock Company and other pertinent facts prayed the court below for compensation for his services and the court denied his petition and granted him no relief.

The result is that, although Mr. Geddes had a valid contract for one-half of the refunds that should be received by the Dock Company, or its representative or successor in interest, although he spent five years and much time and labor in the honest performance of his part of this contract and rendered services without which neither the receivers nor the general creditors of the Dock Company could ever have recovered this $5,430.78, or any part of it, that entire amount goes to the general creditors of the Dock Company and Mr. Geddes gets no compensation.

That this result is unjust to Mr. Geddes and inequitable is clear. All the proceedings in this case were in equity. The receivers were appointed by a court of equity. Neither the insolvency of the Dock Company nor the appointment of the receivers annulled or avoided Mr. Geddes' written contract with the Dock Company for he had performed his part as far as time and circumstances permitted and the receivers took the claims of the Dock Company he was prosecuting subject to his contract. They took no higher or better right or equity in them than the Dock Company had and they took its interest in the claims and in their proceeds subject to his contract and his equities and rights thereunder.

Conceding that there might have been facts and circumstances, none of which exist in this case, such as the failure of Mr. Geddes to perform his part of his contract as fairly and diligently as was reasonable, under which the court below in accord with the principles, rules and practice in equity might have taken the further performance of this contract and all the fruits of it from Mr. Geddes, granted them to another and authorized him to complete the performance of the contract without making any provision for the payment to Mr. Geddes for his services either out of the proceeds of the contract or otherwise, his counsel persuasively and earnestly argue that there were no such facts and circumstances in this case and that the action of the court in taking the performance of the contract and the proceeds from him and denying him compensation for the services he had rendered was not in accord but in disregard of the established principles, rules and practice in equity in such a case.

The general principles, rules and practice in equity applicable to this case have been stated by Pomeroy and his statement of them has been adopted and confirmed by repeated decisions of the Supreme Court and of other courts. He wrote: "Every express executory agreement in writing, whereby the contracting party sufficiently indicates an intention to make some particular property, real or personal, or fund, therein described or identified, a security for a debt or other obligation, or whereby the party promises to convey or assign or transfer the property as security, creates an equitable lien upon the property so indicated, which is enforcible against the property in the hands not only of the original contractor, but of his heirs, administrators, executors, voluntary assignees, and purchasers or encumbrancers with notice." 3 Pomeroy's Equity Jurisprudence, § 1235.

"It is well settled that an agreement to charge, or to assign, or to give security upon, or to affect property not yet in existence * * * or property to be acquired by him in the future, * * * does constitute an equitable lien upon the property so existing or acquired at a subsequent time, which is enforced in the same manner and against the same parties as a lien upon specific things existing and owned by the contracting party at the date of the contract." 3 Pomeroy's Equity Jurisprudence, § 1236.

And these are some of the cases that affirm, apply and illustrate these principles and rules and this practice: Wylie v. Coxe (1853) 56 U. S. (15 How.) 415, 418, 419, 420, 14 L. Ed. 753; Ingersoll v. Coram, 211 U. S. 335, 338, 339, 356, 357, 366, 367, 29 S. Ct. 92, 53 L. Ed. 208; Barnes v. Alexander, 232 U. S. 117, 121, 122, 34 S. Ct. 276, 58 L. Ed. 530; Valdes v. Larrinaga, 233 U. S. 705, 706, 707, 34 S. Ct. 750, 58 L. Ed. 1163; Kellogg v. Winchell, 51 App. D. C. 17, 273 F. 745, 746, 747, 16 A. L. R. 1159; American Surety Co. v. Finletter (C. C. A.) 274 F. 152, 154, 156; Pratt Lumber Co. v. T. H. Gill Co. (D. C.) 278 F. 783, 789, 790. These authorities seem to us to demonstrate the fact that the decisive issues in this case are not new, that they have been adjudged repeatedly by the Supreme Court of the United States and the other federal courts. In Wylie v. Coxe, 56 U. S. (15 How.) 415, 419, 420, 14 L. Ed. 753; Samuel Baldwin in the year 1842 had a claim against the republic of Mexico on account of personal outrages and loss of property he had suffered. John Baldwin, the brother of Samuel Baldwin, was the latter's agent and in that year he employed Coxe to prosecute this claim under an agreement that the latter should receive for his services a contingent fee of 5 per cent. out of the fund awarded, whether money or scrip, and that if nothing was obtained he should have no compensation. John Baldwin placed in the hands of Coxe the documents and papers connected with the claim and the latter brought it to the attention of the government of the United States urging an indemnity. He spent time and labor with the Secretaries of State and in written communications with them. War was declared against Mexico and in 1848 peace was declared. An act of Congress was passed and a board of commissioners was appointed to examine the cases and determine the amounts that ought to be allowed upon this and other like claims. He presented the papers pertaining to the claim to this board. Up to April, 1849, he had done everything that was done to induce the government to get an indemnity or to prove the claim before the board. Samuel Baldwin, the owner of the claim, was a resident of Mexico. He died after making a will devising all his property to his wife and children and appointing her executrix. One Goix, the agent of the widow, dismissed Coxe as attorney in the case against Mexico. Wylie was appointed administrator of the estate of Samuel Baldwin, but he did not employ Coxe to continue his services in the case against Mexico, but prepared an independent memorial and presented it and other papers to the board which ultimately allowed in payment of the claim $75,000. Thereupon Coxe brought a bill in equity against the administrator who had taken charge of the property of Samuel Baldwin in the United States for his 5 per...