Kellogg-Mackay Co. v. Havre Hotel Co.

• Decision Date: 07 October 1912
• Docket Number: 2,048.
• Citation: 199 F. 727
• Parties: KELLOGG-MACKAY CO. v. HAVRE HOTEL CO. et al. [1]
• Court: U.S. Court of Appeals — Ninth Circuit

199 F. 727

KELLOGG-MACKAY CO. v. HAVRE HOTEL CO. et al. ^[1]

No. 2,048.

United States Court of Appeals, Ninth Circuit.

October 7, 1912

The complaint contains the usual allegations of the incorporation of the Havre Hotel Company, of the Broadwater-Pepin Company and of the copartnership of Simon Pepin and E. T. Broadwater the defendants E. T. Broadwater and E. C. Carruth being sued in their individual capacity. It is further alleged that prior to November 7, 1904, the Havre Hotel Company entered into a contract with one P. H. Brader, whereby Brader agreed to furnish the labor and materials for the installment of a heating plant and necessary plumbing and other pipe fitting in a certain building then in course of construction, known as the Havre Hotel; that shortly afterwards Brader placed an order with the plaintiff, at Minneapolis, Minn., for the necessary materials, supplies, and fixtures to be used by him in carrying out his contract with the Hotel Company; that on the 7th day of November, 1904, the defendants, Havre Hotel Company, a corporation, Broadwater-Pepin Company, a corporation, Broadwater-Pepin Company, a copartnership, E. T Broadwater, and E. C. Carruth, for a valuable consideration made, executed, and delivered to the plaintiff a certain writing offering or proposing to guarantee the payment by Brader for the materials so ordered when furnished, as follows:

'Havre, Montana, Nov. 7th, 1904.

'Kellogg-Mackay-Cameron Co., Minneapolis, Minn.-- Gentlemen: Mr. P. H. Brader, of this place, was awarded the contract for plumbing and heating the new Hotel Havre, which is under construction here now, and informs us that he has placed the order for material for this work with your firm, on terms that he is to pay you 60% of your bills when material is on the ground here (less freight) and balance in 60 days. We are prepared to meet these terms with Mr. Brader, so that you will be perfectly safe in shipping him this material.'

It is then further alleged that on the 9th of November, 1904, the plaintiff duly accepted said offer in writing, as follows: 'Your communication of the 7th instant guaranteeing the account of P. H. Brader for the material which we are to ship him for the new Hotel Havre, and stating terms of payment on same, received. The same is satisfactory to us'-- said acceptance being delivered to the defendants at Havre, Mont., about November 11th; that after the receipt of such acceptance by the defendants, they, and each of them, remained silent, and intentionally refused to notify plaintiff of the receipt of such acceptance; that, by such silence and failure to notify the plaintiff, defendants, and each of them, are estopped to deny that the proposal of November 7, 1904, and the acceptance thereof of November 9, 1904, did not create between the said defendants and plaintiff a contract of guaranty of the account of the said Brader; that the plaintiff, being deceived and misled by the silence of the defendants, furnished the material to Brader; and that the defendants by their silence and failure to notify, misled and deceived plaintiff into providing said materials, and are thereby estopped to now deny that the said proposal of guaranty and the said acceptance thereof did not create between them, the defendants and the plaintiff, a contract of guaranty. Other matter is shown, but is not material here.

The answer states, in effect, that on or about the 7th day of November, 1904, E. T. Broadwater, as president, and E. C. Carruth, as secretary and treasurer, wrote and signed the letter to plaintiff, as set forth in the complaint; that said Broadwater and Carruth were president and secretary and treasurer, respectively, of the Havre Hotel Company, but that they had no authority from the board of trustees or stockholders of the Havre Hotel Company in any way or manner to bind the said Hotel Company as guarantor of the account of P. H. Brader, by proposing to guarantee the same, or otherwise; that none of the defendants signed said letter, or ratified it, in any way or manner, or made any proposal or guaranty of said account of said Brader, or guaranteed the same.

By an amended reply the plaintiff alleges that the supposed guaranty of November 7, 1904, was written upon the letter head of Broadwater-Pepin Company and in the handwriting of E. T. Broadwater, one of the signers of the letter; that E. T. Broadwater was then, and for a long time prior thereto had been, the manager for said Broadwater-Pepin Company, and one of its officers; that the plaintiff believed in good faith that the letter was that of the Broadwater-Pepin Company, and acting upon that belief wrote the letter of November 9th, as set forth in the third amended complaint, and then reiterates the allegation that the defendant Broadwater-Pepin Company remained silent after the receipt of the letter of November 7th, for which reason it became estopped from denying that the guaranty was binding upon it.

It was shown at the trial that the plaintiff, Kellogg-Mackay Company, is the successor to the Kellogg-Mackay-Cameron Company. John H. Finnegan, the traveling agent of Kellogg-Mackay-Cameron Company, solicited from Brader the order for the materials in question. He says, among other things, that Broadwater had the care of the business of the Broadwater-Pepin Company, that he (Finnegan) had business dealings with both Mr. Broadwater and Mr. Carruth in connection with the order placed for the materials for the hotel, and that he received a letter in an envelope from Carruth, which he took to be a guaranty for the payment of the goods. This letter he forwarded to Kellogg-Mackay-Cameron Company at Minneapolis, together with the order for the material. The letter is as follows:

'Broadwater-Pepin Co., General Merchants.

'Havre, Montana, Nov. 7th, 1904.

'Kellogg, Mackay-Cameron Co., Minneapolis, Minn.-- Gentlemen: Mr. P. H. Brader, of this place, was awarded the contract for plumbing and heating the new Hotel Havre, which is under construction here now, and informs us that he has placed the order for material for this work with your firm, on terms that he is to pay you 60% of your bills when material is on the ground here (less freight) and balance in 60 days. We are prepared to meet these terms with Mr. Brader, so that you will be perfectly safe in shipping him this material.

'Respty.,

E. T. Broadwater, Pres.

'E. C. Carruth, Secty. & Treas.'

He later states that he believed the financial standing of Brader was not good, but that the Broadwater-Pepin Company was responsible.

Dan Donovan, the manager of the business at Minneapolis, testified that he received the order for the material in question, together with the supposed guaranty, and that he wrote Broadwater-Pepin Company, Havre, Mont., on November 9, 1904, as follows:

'Gentlemen: Your communication of the 7th inst., guaranteeing the account of P. H. Brader for the material which we are to ship him for the new Hotel Havre, and stating terms of payment on same received. The same is satisfactory to us. We would also state to you that we have already shipped to Mr. Brader on open account material to even considerable more value than this. We appreciate the guaranty, but would not have insisted upon it from Mr. Brader, as we know that Brader is honest, although poor. Hoping that the material which we delivered to Mr. Brader for you will be satisfactory, and that he will do you a first-class job, we are,

'Yours truly,

Kellogg-Mackay-Cameron Co.,

'Dan Donovan. Mgr.'

He also testified, among other things, that he knew of Broadwater-Pepin Company through mercantile reports, and also knew they were the owners of the Hotel Havre, in which the material was to be installed by Brader; that the material consigned to Brader was all used in the hotel; and that no payments had been made upon the account. Other correspondence between the parties is also shown by this witness, to wit:

A letter written by Kellogg-Mackay-Cameron Company to Broadwater-Pepin Company on March 30, 1905, which reads as follows:

'Gentlemen: On November 7th, 1904, you wrote us giving us the terms of payment you had made with P. H. Brader for heating and plumbing your hotel, and guaranteeing payment to us for all the material we were to deliver to Mr. Brader for that hotel according to the terms mentioned in your letter of the 7th. Although we have repeatedly requested Mr. Brader to forward us the 60% of the amount of our invoices, and have recently asked him to pay the bill in full, as it is all past due according to our arrangement with you and Mr. Brader previous to the time of delivery of the material, still up to the present writing we have not received one cent from Mr. Brader on account of all that material. We would therefore ask that you make your guaranty good and send us your check for the amount Mr. Brader owes us for our material used in your hotel.

'Yours truly,

Kellogg-Mackay-Cameron Co.,

'Dan Donovan, Mgr.'

And a letter in reply, of date April 3, 1905, reading as follows:

'Carnal & Carruth, Real Estate, Loans, Collections.

'Havre, Montana, April 3rd, 1905.

'Kellogg-Mackay-Cameron Co., Minneapolis, Minn.-- Gentlemen: Your favor of the 30th ult. to hand. In reply will say that we are very much surprised that Mr. Brader has not paid you for material which he ordered from you last fall and which you wrote our firm about on Nov. 9th. We notice you write as though you had received a guaranty from us for Brader's goods, which is an error. We wrote you on Nov. 7th, stating that Mr. Brader had received the contract for plumbing and steam fixtures for the new Hotel Havre, and that he had informed us that he placed the order with your house on terms that he was to pay 60% of the bills...