George W. Bennett Bryson & Co., Ltd. v. Norton Lilly & Co., Inc.

• Decision Date: 23 October 1974
• Docket Number: No. 74-1357,74-1357
• Citation: 502 F.2d 1045,1975 AMC 1732
• Parties: GEORGE W. BENNETT BRYSON & COMPANY, LTD., Plaintiff-Appellee, v. NORTON LILLY & COMPANY, INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1045

502 F.2d 1045

GEORGE W. BENNETT BRYSON & COMPANY, LTD., Plaintiff-Appellee, v. NORTON LILLY & COMPANY, INC., Defendant-Appellant.

No. 74-1357.

United States Court of Appeals, Fifth Circuit.

Oct. 23, 1974.

Richard F. Ralph, Donald F. Geffner, Miami, Fla., Cicero C. Sessions, Robert E. Barkley, Jr., New Orleans, La., for defendant-appellant.

Douglas D. Batchelor, Samuel A. Brodnax, Jr., Rex B. Guthrie, Kermit G. Kindred, Timothy J. Armstrong, Miami, Fla., for plaintiff-appellee.

ON PETITION FOR REHEARING AND PETITION FOR REHEARING EN BANC

(Opinion August 2, 1974, 5 Cir., 1974, 498 F.2d 328)

Before BROWN, Chief Judge, and THORNBERRY and AINSWORTH, Circuit Judges.

AINSWORTH, Circuit Judge:

This Florida diversity suit, in which plaintiff was awarded judgment for $17,795.30, came to this Court in a fairly common posture-- the losing party contesting the district court's findings of fact after a bench trial. After a careful examination of adequate briefs filed in this case, and a close scrutiny of the relatively small record, we concluded that the district court's findings were not clearly erroneous under Fed.R.Civ.P. 52(a), and affirmed with a per curiam opinion. 498 F.2d 328. Appellant's counsel has now petitioned for an en banc rehearing, or, in the alternative, rehearing by the assigned panel. This, too, is not uncommon, but counsel's petition is remarkable for its intemperate and excessive averments that (1) our affirmance is 'inconceivable' because the record 'firmly and unequivocally establishes the correctness of Norton Lilly's position'; ¹ (2) our denial of oral argument impaired 'full and fair determination' of this matter; ² and (3) our decision necessarily indicates a 'patent' lack of careful consideration and scrutiny of this cause by the judges on the panel. ³ We are reluctant to dignify these assertions with a response, but we do so to reassure litigants of the solicitude with which we handle summary cases under Local Rule 18.

I. THE MERITS OF THE APPEAL

Prior to January 27, 1972, plaintiff Bryson had acted as an out-port agent for Sea Way Lines, Inc., a wholly-owned subsidiary of Trans-Caribbean Shipping, Ltd. Trans-Caribbean was also the sole stockholder of Sea Hawk, Inc., Sea Saga, Inc., and Sea Challenge, Inc., three Liberian corporations each owning a single vessel; Sea Way had operated the three vessels pursuant to an unwritten charter agreement. On January 27, 1972, Norton Lilly acquired all of the capital stock in Sea Way Lines, Inc., and the three Liberian corporations, thus gaining sole possession of Sea Way Lines and the ships it operated. On February 28, 1972, representatives of Norton Lilly met with representatives of Bryson in St. John's, Antigua, 'for the purpose of reviewing the present status of our business and establishing future procedures.' ⁴ After the conversations between the representatives but still on February 28, the discussions were 'confirmed' by a letter dated February 28, 1972, from Norton Lilly to Bryson. ⁵

Norton Lilly has contended throughout that it acted only as agent for a disclosed principal (Sea Way Lines, Inc.), and as such is not directly liable for Bryson's costs and expenditures for Sea Way's ships (which were actually ships owned by three Liberian corporations, each of whose stock was wholly owned by Norton Lilly). Norton Lilly's argument is that Sea Way is responsible for the debt in question, notwithstanding that Sea Way Lines, Inc., its whollyowned subsidiary, is inoperative and, presumably, financially embarrassed. The district court found as fact, however, that pursuant to the meeting held February 28, 1972, at plaintiff Bryson's office in St. John's, Antigua, Norton Lilly's representatives agreed to place Bryson 'in funds' if Bryson's disbursements on behalf of the vessels exceeded freight collections. ⁶ On Norton Lilly's request, Bryson began to defray such costs, and billed Norton Lilly directly. It is undisputed that Bryson financed the vessels' costs out of its own funds at Norton Lilly's request, that invoices for such expenses were billed directly to Norton Lilly, ⁷ and that Norton Lilly accepted both the disbursements and the statements of account for services rendered without objection or comment of any kind.

Under Florida law, which we are Erie-bound to apply, Norton Lilly's acceptance of Bryson's services together with its failure to object to the form or content of the statements billed directly to it, created a prima facie case against Norton Lilly itself, a presumption that it had acquiesced in the debt.

An account stated is prima facie evidence of the correctness of the items and the liability of a party therefor. This presumed correctness may be overcome by proof of fraud, mistake or error. However, the burden of establishing fraud, mistake or error is upon the party asserting it and unless he disposes of this burden, the presumptive correctness of the stated account becomes conclusive.

Gendzier v. Bielecki, fla., 97 So.2d 604, 608. ⁸ The district court properly recognized that the facts and circumstances in the case created a prima facie case for plaintiff Bryson, a case which defendant-appellant was obligated to overcome. ⁹

Thus, Norton Lilly entered the courtroom disadvantaged. How did it purport to meet this problem? By calling one-- and only one-- witness, Mr. Franco, Treasurer of Norton Lilly & Company. Franco stated that in the February 28, 1972 meeting, the Norton Lilly representatives explained 'very carefully' that Norton Lilly had acquired all of the stock of Sea Way Lines, Inc. and was acting as managing agent for the line. ¹⁰ He testified that 'very clear' instructions were given that Norton Lilly was to be billed as agent for Sea Way. ¹¹

Plaintiff Bryson, however, called three witnesses whose understanding of the meeting and the business relationship was quite different from that related by Mr. Franco of Norton Lilly. Mr. Rothstein, Managing Director of Bryson, was in attendance at the February 28 meeting. He testified, 'The clear understanding was that we were dealing with Norton Lilly . . ..' ¹² This impression was apparently bolstered by the fact that only representatives of Norton Lilly met with Bryson's people; no Sea Way officers or employees were in attendance at the meeting. ¹³ Mr. Hill, Manager of Bryson's Shipping Department, also attended the February 28 meeting. He stated that Mr. Carl, Norton Lilly's Miami Manager and Vice President of Sea Way, who was present at the February 28 meeting, indicated that Bryson would be dealing with Norton Lilly now that it had purchased Sea Way Lines. ¹⁴ Hill also testified that, according to the directions of Norton Lilly employees, the old account in Sea Way's name was closed out and a new account in the name of Norton Lilly was opened. ¹⁵ The final witness for plaintiff was Mr. Duarte, the President of Sea Way Lines, Inc., who testified that Sea Way's policies were made directly by Norton Lilly, that he had nothing to do with any funds of Sea Way Lines, and that he was Sea Way's sole employee. ¹⁶

In view of the initial assumption that Norton Lilly was directly liable, together with the foregoing testimony, was the district court clearly erroneous in concluding that Norton Lilly was itself liable? It must be remembered that a trial court's findings of fact are clearly erroneous only when 'the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.' United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 542, 92 L.Ed. 746 (1948). ¹⁷ As Judge Morgan, writing for the Court, recently stated in United States v. State of Florida, 5 Cir., 1973, 482 F.2d 205:

Rule 52(a) of the Federal Rules of Civil Procedure provides that the findings of fact by a district court in actions tried without a jury shall not be set aside unless 'clearly erroneous' . . .. Under this rule the determination of the factual content of ambiguous testimony is for a trial court, and such determination can be set aside on review if 'clearly erroneous' . . .. The rule is also applicable insofar as the district court's conclusion is based on inference drawn from documents or undisputed facts . . ..

Furthermore, since the jurisdiction of this court is appellate, we have no right to re-try the issues of fact de novo or substitute our judgment with respect to such issues . . .. The function of this court is to determine whether, as a matter of law, the findings sustained the judgment. If, however, the findings of the district court are unsupported by substantial evidence, then the lower court's decision may be set aside. Id. 482 F.2d at 207-208.

Moreover, the version of the February 28 meeting most credible and reasonable under the circumstances was for the district judge to decide. Cf. Dillon v. M. S. Oriental Inventor, 5 Cir., 1970, 426 F.2d 977, 978; Chaney v. City of Galveston, 5 Cir., 1966, 368 F.2d 774, 776. Given our limited scope of review, we could not say we had a 'definite and firm conviction' that the district court erred in deciding the case as it did. Reasonable minds could possibly differ with the court's conclusion, but the district court was not clearly wrong.

Norton Lilly makes much of the fact it addressed its mail and signed the February 28 letter 'as agents' for Sea Way. This of course ignores the Florida account stated presumption, but the argument is in any case superfluous. Even if Norton Lilly was Sea Way's agent, and only that, this does not of itself preclude a finding of direct liability. It is hornbook law that an agent can become personally liable for his principal's debt by express promise or agreement. It is also Florida law. Blount v. Tomlinson, 1909,57 Fla. 35, 48 So. 751, 754. As stated by the Restatement of Agency 2d, 302, comment c: 'The inference that the agent is not a party to a contract may be overcome by proving other facts connected with the transaction . ....