Lowndes v. McCabe Fertilizer Co.
| Decision Date | 29 August 1930 |
| Docket Number | 12969. |
| Citation | 154 S.E. 641,157 S.C. 371 |
| Parties | LOWNDES v. McCABE FERTILIZER CO. et al. |
| Court | South Carolina Supreme Court |
Appeal from Common Pleas Circuit Court of Charleston County; John S Wilson, Judge.
Action by Edward F. Lowndes against the McCabe Fertilizer Company and another. From a judgment for plaintiff, defendants appeal.
Affirmed in part, and reversed and remanded in part, with direction.
H. L Erckmann, of Charleston, for appellants.
Barnwell & Black and Edward B. Guerry, all of Charleston, for respondent.
This action is nominally against the two defendants named, but by reason of the insolvency of the corporation it has become a controversy between the plaintiff Lowndes and the personal defendant McCabe.
The action is upon an alleged guaranty by McCabe, dated June 15 1923, of an account for salary and advances amounting to $4,377.68 due by the McCabe Fertilizer Company to Lowndes, upon which there has been paid by McCabe the full amount of the principal, in two notes of $2,000 each, which were paid in April and June, 1927, and a check for $377.68 paid July 27, 1927.
The plaintiff's claim is composed entirely of interest and is made up as follows:
| June 15, 1923, amount | $4,377.68 |
| Interest 7% to April 14, 1927 | 1,173.59 |
| ---------- | |
| $5,551.27 | |
| Payment | 2,000.00 |
| ---------- | |
| $3,551.27 | |
| Interest to June 1, 1927 | 31.76 |
| ---------- | |
| $3,583.03 | |
| Payment | 2,000.00 |
| ---------- | |
| $1,583.03 | |
| Interest to July 27, 1927 | 17.52 |
| ---------- | |
| $1,600.55 | |
| Payment | 377.68 |
| ---------- | |
| Bal | $1,222.87 |
There is an error in the calculation of interest amounting to $26, which makes the true balance $1,190.87.
If the plaintiff is entitled to interest, the foregoing statement is correct, and is not amenable to the objection that interest upon interest will be charged; the calculation having been made under the well-known rule of partial payments. The verdict was $1,371.97, an error of $111.35, the correct amount being $1,260.62, a correction which it is now too late to make.
The appeal turns upon the inquiry whether the plaintiff is entitled to the interest as claimed.
There appears to be little controversy as to the facts, which are as follows:
Prior to January 1, 1916, Lowndes had been working with the V. C. C. Co. at a salary of $3,500 per annum; on January 1, 1916, he was employed by McCabe, who was trading individually under the name of McCabe Chemical Company, for a definite period of five years, at a salary of $5,000 per annum, ending December 31, 1920; up to November, 1918, McCabe was operating plants at Charleston, Charlotte, and Macon, manufacturing chemicals for war purposes; the Armistice of November 11, 1918, caused an immediate cessation of war activities, and the plants at Macon and Charlotte were shut down, leaving the plant at Charleston alone to superintend; it appears that it, too, abandoned the manufacture of chemicals, confining its operation to fertilizers; there does not appear to be any question as to the payment of the plaintiff's salary by McCabe as long as the contract of January 1, 1916, expiring December 31, 1920, was of force; upon the expiration of this contract Lowndes went to work with the McCabe Fertilizer Company, a corporation of which McCabe was president and practically the sole stockholder; there was no agreement, written or otherwise, with reference to the salary which Lowndes was to receive from the McCabe Fertilizer Company, no mention of the subject; it appears, however, that Lowndes was paid at the rate of his former salary, $5,000, from January 1, 1921, to July 1, 1921; at that time the McCabe Fertilizer Company was in financial straits and made no payments to Lowndes; he continued to work for the McCabe Fertilizer Company until July 1, 1922, and his claim is based upon that service at the salary rate that McCabe had individually promised him under the 1916-1920 contract; nothing was paid to him upon his claim from 1922 to some time in 1923, except $1,000 paid to him by McCabe, Lowndes in the meantime having advanced $377.68 for the pay roll of the McCabe Fertilizer Company.
In the spring of 1923, Lowndes presented to McCabe a statement of his claim against the McCabe Fertilizer Company, as follows:
| Salary unpaid from July 1, 1921 to July 1, 1922 | $5,000.00 |
| Cash advanced for pay roll | 377.68 |
| --------- | |
| $5,377.68 | |
| Cash from McCabe | 1,000.00 |
| --------- | |
| $4,377.68 |
McCabe held the statement for some days, and on June 15, 1923, wrote Lowndes:
On January 14, 1927, the McCabe Fertilizer Company transmitted to Lowndes two notes to be applied when paid to the balance of $4,377.68, one due April 14, 1927, and the other June 1, 1927. These notes were paid at or about maturity. Later the corporation transmitted a check to Lowndes dated July 27, 1927, for $377.68 with a memorandum on its face: "Balance due on Salary a/c." This memorandum Lowndes canceled and collected the check.
The case was tried by his honor, Judge Wilson, and a jury. The defendants moved for a nonsuit and for a directed verdict upon the following grounds:
The motions were refused. The jury returned a verdict in favor of the plaintiff for $1,371.97, and from the judgment entered thereon the defendants have appealed.
A short time before June 15, 1923, the plaintiff furnished to McCabe, the president of the McCabe Fertilizer Company, a statement of his account against the company amounting to a balance of $4,377.68; the president was the proper person to whom the statement should be furnished. His reply of June 15, 1923, is to the effect: "I have your memorandum which shows that the McCabe Fertilizer Company is indebted to you for $4,377.68." It clearly was such an acknowledgment as constituted the statement an account stated; it would have been an account stated if McCabe, the president to whom it was rendered, had made no reply; and as such it bore interest from the date of the acknowledgment, June 15, 1923, so far certainly as the corporation was concerned. It becomes unnecessary therefore to consider the constitutionality of section 4273 of the Code 1922, volume 3.
The troublesome question, however, is whether there is sufficient consideration shown to sustain the guaranty of McCabe personally.
There is no question but that the debt was that of the corporation; the plaintiff sues upon the guaranty of McCabe admitting that this is true, and alleges that the debt was that of the company.
The plaintiff recognizes the necessity of establishing a consideration for the guaranty, for he alleges in paragraph 3 of the complaint:
"That thereupon, (that is after the contracting of the debt by the corporation), the defendant W. Gordon McCabe, for and in consideration of the continued indulgence and forbearance of the plaintiff to require immediate payment or to seek his legal remedy against the defendant McCabe...
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