Lewis v. Goldsborough
| Decision Date | 16 October 1964 |
| Docket Number | No. LR 63 C 94.,LR 63 C 94. |
| Parties | Major LEWIS, d/b/a Major Lewis Livestock Auction Sales Company of Conway, Arkansas, Plaintiff, v. O. H. GOLDSBOROUGH, Merchants Clearing, Incorporated, W. L. Hammock, and National Surety Corporation, Defendants. |
| Court | U.S. District Court — Eastern District of Arkansas |
George F. Hartje, Jr., Conway, Ark., for plaintiff.
J. S. Daily, Fort Smith, Ark., for defendants.
Jurisdiction in this action by Major Lewis, d/b/a Major Lewis Livestock Auction Sales Company of Conway, Arkansas, the plaintiff, against O. H. Goldsborough, Merchants Clearing, Incorporated, W. L. Hammock, and National Surety Corporation, defendants, is based upon a bond required under the "Packers and Stockyards Act," 7 U.S.C.A. § 204. Hartford Accident and Indemnity Company v. Baldwin, 262 F.2d 202 (8th Cir. 1958).
2. O. H. Goldsborough, Spiro, Oklahoma, was, at all times material herein, a dealer registered under the Act with the Secretary of Agriculture to buy and sell livestock in commerce for his own account. He was added as a registrant to the above bond by a rider dated February 27, 1957.
3. The plaintiff Major Lewis, d/b/a Major Lewis Livestock Auction Sales, Conway, Arkansas, was, at all times material herein, an individual registered under the Packers and Stockyards Act with the Secretary of Agriculture as a market agency selling livestock in commerce on a commission basis, and as a dealer buying and selling livestock in commerce for his own account.
4. The defendant Merchants Clearing, Incorporated, Fort Smith, Arkansas, a corporation, is a market agency which at all times material herein was registered with the Secretary of Agriculture to furnish clearing services. As part of its registration it filed with the Packers and Stockyards Division of the United States Department of Agriculture the bond above set out.
5. The defendant National Surety Corporation is the corporate surety on the bond executed by Merchants Clearing, Incorporated.
6. The defendant W. L. Hammock is the trustee listed in the bond executed by Merchants Clearing, Incorporated.
7. O. H. Goldsborough, who was known as a bonded buyer to Major Lewis, d/b/a Major Lewis Livestock Auction Sales, Conway, Arkansas, had been purchasing cattle from Major Lewis at his stockyards prior to October 30, 1961, and in each instance issued his personal check therefor. Goldsborough was also listed as a bonded buyer on the publication issued by the Department of Agriculture from time to time.
8. On October 30, 1961, O. H. Goldsborough purchased eighty head of cattle from Major Lewis Livestock Auction Sales and paid for the same by a draft drawn on Merchants Clearing, Incorporated.
9. On October 31, 1961, O. H. Goldsborough purchased eighty-one head of cattle at the Major Lewis Livestock Auction Sales stockyard, a posted stockyard under the Packers and Stockyards Act. The total purchase price was $9,352.16. In purported payment of such cattle, Goldsborough gave his personal check (No. 7145) dated October 31, 1961, drawn on the First State Bank, Wister, Oklahoma. The check was dishonored by the bank and returned to Major Lewis on or about November 7, 1961, whereupon it was once more deposited for collection. The check was again returned unpaid on November 15, 1961.
10. On November 1, 1961, Goldsborough presented to Merchants Clearing, Incorporated, a purchase invoice from Major Lewis, d/b/a Major Lewis Livestock Auction Sales, for eighty-one head of cattle, marked "Paid #7145" and a check was issued to Goldsborough by Merchants Clearing, Incorporated, in the amount of $9,352.16. Thereafter Goldsborough resold the cattle. The proceeds of the resale were received by Merchants Clearing, Inc., and credited to Goldsborough's account. Merchants Clearing, Incorporated, collected a thirty cent per head clearing charge for its service as clearor in connection with the purchase and resale as provided by the tariff filed with the Packers and Stockyards Division of the Department of Agriculture.
11. In a letter dated November 17, 1961, addressed to the trustee, W. L. Hammock, under the bond, plaintiff demanded payment for the cattle. On January 8, 1962, J. Fred Green, Sallisaw, Oklahoma, attorney for Merchants Clearing, Incorporated, answered, denying liability under the terms of the bond on the basis of the fact that the purchase was made at a place other than the Fort Smith Stockyards.
12. On January 10, 1962, plaintiff filed a reparation proceeding1 with the Secretary of Agriculture pursuant to 7 U.S. C.A. §§ 209 and 210.
13. On March 13, 1962, Merchants Clearing, Incorporated, served a written notice upon plaintiff Major Lewis, demanding that, in accordance with Ark. Stats. §§ 34-333 and 34-334, suit be instituted against Goldsborough within thirty days and informing Major Lewis that upon his failure to do so Merchants Clearing, Incorporated, would consider itself discharged as a surety on the bond.
14. On July 6, 1962, an oral hearing on the reparation proceeding was held in Fort Smith, Arkansas, resulting in a decision and order of the Judicial Officer of the Department of Agriculture under date of March 20, 1963, directing the defendants to pay to plaintiff the sum of $9,352.16, together with interest at the rate of 5% from December 1, 1961.
15. The complaint in this action, filed August 2, 1963, asks for judgment on the bond for $9,352.16, plus interest at 5%, and for a reasonable attorney's fee. By their answer Merchants Clearing, Incorporated, and National Surety Corporation seek judgment over against Goldsborough.
16. By stipulation between Major Lewis and Merchants Clearing, Incorporated, National Surety Corporation, and W. L. Hammock — O. H. Goldsborough filed no answer and did not appear — the case was presented to this Court upon the record made at Fort Smith before the referee in the reparation proceedings.
1. The defendants contend that the facts alleged in the complaint, as well as those stated in the plaintiff's reparation complaint heretofore filed with the Department of Agriculture and the Secretary thereof, do not constitute a violation, either by act or omission on the part of any one of these defendants, of Title 7 U.S.Code, §§ 205, 206, 207, or 208, or of any order of the Secretary of Agriculture made under that Title.2
2. The defendants contend that Merchants Clearing, Incorporated, did not act in the capacity of "broker or clearing agency" with respect to the particular transaction of O. H. Goldsborough and therefore deny liability therefor.
3. Merchants Clearing, Incorporated, National Surety Corporation, and W. L. Hammock plead the provisions of Ark. Stat.Ann. §§ 34-333 and 34-334 (Repl. 1962), and contend that the defendants are discharged because of the failure of the plaintiff to institute suit within thirty days from March 13, 1962, the date of the written demand by Merchants Clearing, Incorporated.
4. Merchants Clearing, Incorporated, National Surety Corporation, and W. L. Hammock also plead estoppel and laches in that the plaintiff was guilty of unreasonable delay in notifying them of the dishonor of Goldsborough's check.
No cause of action has been shown against W. L. Hammock. He, evidently, was made a nominal party defendant because of his status as trustee in the bond.
The defendants' contention with respect to issue No. 1 above, that no violation, either by act or omission on their part, of Title 7 U.S.C.A. §§ 205, 206, 207, or 208, has been shown, arises as a result of the fact that the plaintiff has introduced into evidence the reparation order issued by the Secretary of Agriculture, and because of the peculiar wording of 7 U.S.C.A. § 209, which provides as follows:
Title 7 U.S.C.A. § 210 provides as follows:
"(a) Any person complaining of anything done or omitted to be done by any stockyard owner, market agency, or dealer (hereinafter in this section referred to as the "defendant") in violation of the provisions of sections 205-207 or 208 of this title, or of an order of the Secretary made under sections 201-203 and 205-217a of this title, may, at any time within ninety days after the cause of action accrues, apply to the Secretary by...
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