Kirven v. Virginia-Carolina Chemical Co.

• Decision Date: 04 May 1906
• Docket Number: 632.
• Citation: 145 F. 288
• Parties: KIRVEN v. VIRGINIA-CAROLINA CHEMICAL CO.
• Court: U.S. Court of Appeals — Fourth Circuit

145 F. 288

KIRVEN v. VIRGINIA-CAROLINA CHEMICAL CO.

No. 632.

United States Court of Appeals, Fourth Circuit.

May 4, 1906

A. T Smythe (Smythe, Lee & Frost, on the brief), for plaintiff in error.

P. A Wilcox (Mitchell & Smith, on the brief, for defendant in error.

Before PRITCHARD, Circuit Judge, and McDOWELL Judge, and McDOWELL and DAYTON, District judges.

DAYTON District Judge.

On April 11, 1903, the Virginia-Carolina Chemical Company filed its complaint in the Circuit Court of the United States for the District of South Carolina, against J. P. Kirven, in which it alleges itself to be a corporation under the laws of New Jersey and Kirven to be a resident and citizen of South Carolina; that on March 14, 1898, Kirven made his promissory note to the order of one S. M. McCall for $2,298, payable at any bank in Darlington, S.C.; that McCall, payee in said note, acted solely as agent for the plaintiff company and never had any beneficial interest in the note, but the same had always been and was the property of plaintiff; that the note had not been paid and had been lost since its execution. To this complaint Kirven for answer and defense set up First, that the note had been executed to McCall, a citizen of South Carolina, for fertilizer purchased of him alone, and that the company's interest in it accrued solely by assignment from him, and therefore the court below had no jurisdiction to try the cause; second, that on the date of the execution of said note the chemical company, as a nonresident corporation, had not complied with the status of South Carolina imposing certain conditions upon such corporations precedent to doing business in that state, and therefore both contract and note were void. By way of counterclaim he further charged the company to owe him for 70 bales of cotton of his attached and appropriated by the company. On the 16th and 17th days of March, 1905, the action was tried before a jury, resulting in a verdict for plaintiff company, a motion to set aside this verdict overruled, and judgment for $911.07, balance due after allowing credits admitted to have accrued since the institution of the suit. During the trial exceptions were taken to rulings of the court refusing to direct a nonsuit, refusing to direct a verdict for defendant, refusing to admit certain testimony tendered, giving a certain instruction and refusing to give a certain other instruction to the jury, and overruling a motion to set aside the verdict and award a new trial, but all these different exceptions relate solely to the two substantial questions involved; the one of jurisdiction, the other the right of the nonresident plaintiff corporation to enforce the contract without having complied with the state statute.

As to the question of jurisdiction: It is to be noted that it is solely a question of fact, turning upon the original ownership of the note. It is earnestly insisted by counsel for Kirven that the evidence shows that the note was executed to McCall, the lien in support of it was executed to McCall that the plaintiff in prior judicial proceedings claimed it as assignee of McCall; that McCall on the witness stand admitted having 'a beneficial interest' in it still, in the way of commission due him for making sale of the fertilizer for which it was executed; and that the officers of plaintiff company failed to testify touching the matter, whereby a strong presumption arose against it. On the other hand, it is just as earnestly insisted that the evidence shows that the fertilizer for which the note was given was furnished alone by the company; that McCall could not and did not make the contract himself, but only after having 'conferred with his house and by letter so notified Kirven; that it was shipped by the company direct to Kirven; that McCall's interest as commission was wholly an independent one existing by contract between the company and himself to be paid to him by it alone and to whom alone he could look for such payment; that Kirven in propria personam had made affidavit in a former proceeding that he had purchased this fertilizer from McCall, as agent for the Chemical Company, and had executed the note and lien to him as such agent and was resisting payment to the company on wholly different grounds, to wit, the worthlessness of the fertilizer itself. It is well settled that the original beneficial owner can sue in the federal courts upon a note, although an original but nominal payee, by reason of citizenship, could have no such right. Holmes v. Goldsmith, 147 U.S. 150, 12 Sup.Ct. 288, 37 L.Ed. 118; Superior City v. Ripley, 138 U.S. 93, 11 Sup.Ct. 288, 34 L.Ed. 914; Hoadley v. Day (C.C.) 128 F. 302.

This proposition of law is virtually conceded. It is therefore very clear, from the very diverse deductions drawn by opposing counsel in so drawing, that this cause is peculiarly one where the verdict of the jury, upheld by the judgment of the trial judge, ought not to be disturbed touching this determination of fact, unless in its determination the judge withheld from the jury pertinent and proper testimony, or, by instruction to the jury, misled it touching the application of the law to the facts. Both these things Kirven's counsel insist the court did. It seems the chemical company by its attorneys had in November, 1898, filed in the state court a complaint against Kirven, in which it was alleged the note in controversy had been executed by Kirven to McCall and by the latter indorsed to the company. This complaint was sworn to, on behalf of the plaintiff company, by Dargan, one of its attorneys, but, before any appearance of any kind was made by Kirven to it, it was by order withdrawn and dismissed and was immediately followed by a complaint based upon the lien given to secure the note in which an affidavit was filed making the exact admissions, if such they were, in almost the identical words, and which affidavit was made by Dargan, the attorney. In our judgment, the court was justified in admitting the second affidavit. It could be admitted only for the reason that it was relied on and not repudiated by the plaintiff in a case prosecuted by it. It was certainly not proper to admit, as an admission against interest, a complaint drawn and sworn to by its attorney, which likely its own officers had never seen, and which was immediately withdrawn and dismissed.

But it is insisted that the court instructed the jury that they should find for the plaintiff in case they believed 'the note was given and taken for the benefit of the Virginia-Carolina Chemical Company, and that McCall's commissions were payable by that company, and that he had to look to that company for the same and therefore had no right to hold the note or to sue on it,' for 'then the fact that he was entitled to commissions on the amount of the note would not deprive this court of its jurisdiction,' and that there was no evidence at all showing or tending to show that McCall's commissions were payable by the company, and he had to look to the company for the same. This contention is not sustained by the facts. On the contrary, it seems to us that the very opposite is true. McCall distinctly says that he had an agreement with the company in writing, by letter, which gave him an a commission on the sale, but did not provide that he should give his own note for the goods. Under such a statement, drawn out upon cross-examination, can we avoid the conclusion that the company ratified the sale made by McCall as its agent to Kirven, was not to hold him responsible, either as principal debtor or as guarantor, but was to take Kirven's note and, when it was paid, was to pay McCall a certain commission for making the sale based upon the amount involved? When it is remembered that, at the instance of defendant's counsel, the court gave a very strong instruction upon their theory to the converse of this proposition and with much less testimony in support of it, we cannot justify complaint on their part against the trial judge in giving this instruction for the plaintiff. While we, therefore, find no error in fact in the determination of this question of jurisdiction, we feel constrained to say that it is always error to submit an issue of fact as to jurisdiction, with other issues, to a jury and permit it to be determined with such other issues, by a general verdict for or against the plaintiff. Lack of jurisdiction is a defense in abatement of the prosecution of the action and not in bar of the right of action itself. In common-law pleading it must, at the earliest moment, be raised by plea in abatement, made in person and not by counsel, and, and, if to the writ, must give defendant the better writ, and, if to the court, must indicate the court having jurisdiction. The issue upon such plea, if the matter be of law, must be determined by the court, but, if of fact, may be submitted to a jury. In either case the trial of this issue must be an independent one, for the plain and obvious reason that the judgment upon it, if effective, cannot be a bar to the plaintiff's right, but simply one of dismissal without prejudice.

Prior to the Act of 1875, the common-law rules touching the necessity of a plea in abatement to the jurisdiction prevailed in the federal courts, and it was held that the filing of a plea to the merits was a waiver of such plea to the jurisdiction. Farmington v. Pillsbury, 114 U.S 138, 143, 5 Sup.Ct. 807, 29 L.Ed. 114. It has since been held that 'in its general scope this rule has not been altered by the act of 1875,' but that this act 'changed the rule so far as to allow the court at any time, without plea and without motion, to stop all further proceedings and dismiss the suit the moment a fraud on its jurisdiction was discovered. ' Hartog v....