Jonesboro, Lake City & Eastern Railroad Company v. Watts

• Decision Date: 19 November 1896
• Citation: 98 S.W. 358,80 Ark. 543
• Parties: JONESBORO, LAKE CITY & EASTERN RAILROAD COMPANY v. WATTS
• Court: Arkansas Supreme Court

98 S.W. 358

80 Ark. 543

JONESBORO, LAKE CITY & EASTERN RAILROAD COMPANY v. WATTS

Supreme Court of Arkansas

November 19, 1896

[Copyrighted Material Omitted]

Appeal from Craighead Chancery Court, Jonesboro District; Edward D Robertson, Chancellor; affirmed.

STATEMENT BY THE COURT.

On April 27, 1897, the plaintiff, F. C. Watts, and the defendant, Jonesboro, Lake City & Eastern Railroad Company entered into a written contract whereby it was agreed that the plaintiff should furnish to the defendant at a certain price all cross-ties needed in the construction of defendant's railroad from Nettleton to Lake City, Ark., $ 500 worth of said ties, according to the fixed price, to be furnished free of charge as a donation to the railroad company; that the defendant company should deliver to plaintiff enough of its twenty-year, interest-bearing bonds to equal the price of the ties furnished, and that after the railroad was put in operation defendant should transport for the plaintiff ties at two and a half cents each and piling at five dollars per car load and charge the same against the indebtedness due to the plaintiff for ties furnished until such indebtedness, with interest thereon, should be paid; and that for a period of ten years thereafter the plaintiff should have the exclusive privilege of shipping ties and piling over the railroad at the aforesaid rates. The contract further provided that when the freight charges should equal the indebtedness of defendant to plaintiff for ties furnished in construction of the railroad, the plaintiff should surrender the bonds delivered to him by defendant.

On April 16, 1898, the plaintiff and defendant entered into another contract for ties to be used in construction of the railroad from Lake City to Leachville, the contract being similar in terms to the former one, except as to price of ties, and it contained a similar provision with reference to exclusive privilege of shipping ties and piling over defendant's railroad for a period of ten years from that date.

Attached to each of these contracts there is an assignment in writing executed by the plaintiff to Sedgwick & Company of the exclusive privilege granted in the contract of shipping ties and piling, and also the written indorsement of the defendant consenting to such assignment. These written assignments are not dated, but are shown to have been executed about the time of the execution of the second contract or shortly thereafter.

On June 23, 1900, plaintiff and defendant entered into a third contract reciting the execution of the two preceding ones the delivery of the bonds provided for therein and the furnishing of ties by plaintiff thereunder, and that defendant was then indebted to plaintiff for ties furnished in the sum of $ 6,445.66 and "an additional amount due from said company to said F. C. Watts upon account for cross-ties to be hereinafter ascertained." After the recital of these conditions, the contract provided for the surrender of said bonds by plaintiff, and the defendant acknowledged itself to be indebted to plaintiff in the sum of $ 15,000, conditioned upon its faithful performance of said two contracts "with reference to freight-haul privilege, the payment of interest and other things as in said contracts set forth."

This contract concluded with the following clause: "But, should the railroad company fail to perform its said contracts heretofore executed with the said F. C. Watts in manner and form, conditions and privileges therein contained, then it is understood that he shall have an immediate right of action against said railroad company upon this bond, to the extent and for the amount, including damages, if any, to which the said F. C. Watts may be entitled to under said contracts and agreements heretofore referred to and now made a part of this obligation, except that it is mutually understood that this obligation shall in no way impair, alter or change in any particular the contracts and agreements heretofore executed by this company with the said F. C. Watts."

After the execution of the assignments of the shipping contracts by the plaintiff to Sedgwick & Company, the latter continued to ship ties under the contracts, and the freight charges were debited by the defendant against the plaintiff until its said indebtedness to plaintiff was reduced to $ 5,860.66, the amount claimed in this action, and until litigation arose between Sedgwick & Company and the plaintiff, and the latter made objection to any further debit against his account for shipments made by Sedgwick & Company.

On September 6, 1900, Sedgwick & Company instituted suit in the Craighead Chancery Court against Watts to recover the sum of $ 15,287.04 alleged indebtedness. Allegations were filed in that suit against the railroad company as garnishee to the effect that said garnishee was indebted to Watts, and had in its possession property belonging to him of the value of $ 7,500, and a writ of garnishment was duly issued and served on the company as such garnishee. No answer was made by the garnishee in that suit, and on April 22, 1903, the court rendered a decree in favor of the plaintiff therein, Sedgwick & Company, against Watts for recovery of the sum of three hundred dollars. This part of the decree was entered by consent of parties, but the court further found from the evidence, and decreed, that the said shipping contracts had been assigned absolutely by Watts to Sedgwick & Company, and not as collateral security, as claimed by the former, and that said contracts were the property of Sedgwick & Company.

On December 13, 1900, the plaintiff herein first made objection to the debiting against his account with the railroad company pending said litigation of the freight charges on shipments by Sedgwick & Company, and he so notified both Sedgwick & Company and the railroad company by letters on that date. He asserted in those letters, which were written by his attorneys, that the contracts had been assigned to Sedgwick & Company as security for a debt which had been paid, and that neither party had the right to use the shipping contracts until the court should finally adjudge in said suit who was the real owner. The same objection was renewed in a letter dated September 16, 1900, written by Watts's attorney to the railroad company, but on November 14, 1901, Watts wrote a letter to the railroad company demanding that the freight charges for shipments made by Sedgwick & Company be debited against his account with the railroad company. There is also testimony tending to prove that about the date of the last mentioned letter Watts called upon the general manager of the railroad company and made the same demand contained in this letter, and upon the refusal thereof asked permission to ship ties over the railroad under the contract and have the freight charges debited against his account for ties previously furnished. This request was also refused by the company, and the pendency of the litigation between Watts and Sedgwick & Company was given as a reason for the refusal of both requests.

On February 27, 1902, Sedgwick & Company addressed to the general manager of the railroad company a written communication as follows:

"Dear Sir:--Mr. F. C. Watts still owes us about $ 600, and we are nearing a settlement of our matters. Can we hold back freight charges and, instead of paying it to your company, give Mr. Watts credit for it on his account, providing Mr. Watts is willing to permit such arrangement to be made?"

To this communication the railroad company, through its general manager, made reply as follows:

"Gentlemen:--Replying to your favor of the 27th ult. with reference to accepting $ 600 on Watts, will say we can not do this, as it would be in violation of our contract. In order for Watts to get the benefit of the freight money, it would be necessary for him to hold the franchise, but, after selling or transferring same, it gives him no right whatever to collect, and, so long as you hold the franchise, we will expect the freight paid to us or our agents in cash."

S. K. Lenoir, a witness introduced by the defendant, testified that he was auditor of the defendant railroad company in June, 1903, and called upon the plaintiff Watts at his place of business in Jonesboro for the purpose of paying him the annual interest on the indebtedness of the company to him, and that while in conversation with plaintiff concerning the shipment of ties, informed him that the general manager had consented for him to ship ties over the road. He testified that plaintiff replied that he had nothing to ship then--that Sedgwick & Company had "taken all his stuff away from him."

The plaintiff Watts instituted this suit in equity on November 29, 1904, against the defendant railroad company to recover the said balance of $ 5,880.66 due for cross-ties furnished by him in construction of the railroad, and interest thereon. He alleged in his complaint that he had fully complied with all the terms and conditions in said contracts, but that the defendant had violated the same by refusing to apply on said indebtedness the freight charges earned on shipments made by Sedgwick & Company and by refusing to permit the plaintiff to ship ties over the road and apply the freight charges therefor on said indebtedness. He also alleged that at the time of the assignment of the two contracts by him to Sedgwick it was agreed between the parties hereto that from that time forward all sums becoming due to appellant for transporting ties and piling over its road for Sedgwick should be applied to the indebtedness from appellant to appellee, and that since that time Sedgwick had shipped both ties and piling, the freights upon which amounted to several thousand dollars, the amount not...