Lucas E. Moore Stave Co. v. Kennedy

• Decision Date: 24 April 1924
• Docket Number: 8 Div. 602.
• Citation: 101 So. 894,212 Ala. 193
• Parties: LUCAS E. MOORE STAVE CO. v. KENNEDY ET AL.
• Court: Alabama Supreme Court

101 So. 894

212 Ala. 193

LUCAS E. MOORE STAVE CO. v. KENNEDY ET AL.

8 Div. 602.

Supreme Court of Alabama

April 24, 1924

Rehearing Denied Nov. 27, 1924.

Appeal from Circuit Court, Franklin County; Charles P. Almon, Judge.

Bill in equity by C. M. and W. M. Kennedy against the Lucas E. Moore Stave Company. From the decree, respondent appeals. Reversed rendered, and remanded.

Tillman Bradley & Baldwin, Wm. M. Rogers, and W. W Kennedy, all of Birmingham, and Key & Key, of Russellville, for appellant.

Travis Williams, of Russellville, for appellees.

GARDNER J.

The Lucas E. Moore Stave Company is a corporation with headquarters in New Orleans, La., and a branch office in Columbus, Miss., engaged in the business of producing and purchasing staves for both export and domestic trade on a rather extensive scale. C. M. and W. M. Kennedy compose the partnership known as C. M. Kennedy & Bro., who were also engaged in the production of staves, but their operations were less extensive than that of the Lucas E. Moore Stave Company. For the sake of brevity these two concerns will be hereinafter referred to as the Stave Company on the one part and Kennedy Bros. on the other.

The Stave Company and Kennedy Bros., during the latter part of the year 1919, entered into negotiations relative to the production of split white oak staves by the Kennedys to be sold to the Stave Company, which negotiations resulted in a written contract in the form of a letter signed by the Stave Company and accepted by Kennedy Bros. In this contract the Stave Company agreed to buy from Kennedy Bros., and the latter agreed to sell to the former, all the split white oak staves of certain sizes therein specified, produced by Kennedy Bros. during the year 1920 at the prices therein stipulated. By the terms of this contract the Stave Company agreed to make necessary advances for the production of the staves, including the cost of stumpage, and further agreed to supply necessary machinery when needed, such as a bucker, engine, etc. In order that the parties would not compete with one another in the production of these staves it was agreed that the Kennedys should "work" certain territory therein designated, referred to in the evidence as the "Birmingham zone." This contract bears date December 2, 1919, and appears in the statement of the case.

Very little, if anything, seems to have been done under this contract in the way of production of staves by Kennedy Bros. until the summer of 1920, when approximately 5,000 staves were produced from timber owned by the Stave Company, upon what is known as the Gravlee tract near Cullman, Ala. About the time the Kennedys began to "work" this Gravlee tract, or some time in June, 1920, their attention was directed to a large tract of timber known as the Ezzell tract in Franklin county, and one of the members of the firm then entered into negotiations with the Stave Company by telephone and correspondence, with reference to the purchase of this timber. The Stave Company was interested, and the larger portion of the negotiations were carried on by Mr. Grace, the Stave Company's manager at the Mississippi office. An estimate of the timber was made by the Kennedys, and the Stave Company was notified that the Kennedys had made an offer of $30,000 cash for this timber. The result of the negotiations was a purchase of this large tract of timber for the sum of $30,000 cash, which was paid by the Stave Company. The deed was executed July 1, 1920, the Stave Company being the grantee named therein, and it was understood that the $30,000 was to be charged to the account of Kennedy Bros. as an advancement, as was stipulated in the contract of December 2, 1919.

In order to assist in financing the deal, Kennedy Bros. executed their notes to the Stave Company, aggregating the sum of $18,000, in order that such notes might be indorsed by the Stave Company, and money secured thereon. These were clearly accommodation notes, which, as we gather from the evidence, were in fact to be returned to Kennedy Bros. when the amounts thereof were paid.

It was agreed that Kennedy Bros. should abandon the further production of the staves on the Gravlee tract, and move their force to the Ezzell tract. The Kennedys began the production of staves upon the Ezzell tract in the summer of 1920. In the fall of that year, however, the market for split staves became uncertain and on the decline. Kennedy Bros. insist that in October they were advised to cease production of split staves contemplated by the contract of December 2d, and that in the winter of 1920 the Stave Company permitted them to make only what is referred to as Norfolk staves for a limited time. Norfolk staves were not included in the original contract. In the spring of 1921 the Stave Company stopped Kennedy Bros. from the manufacture of all kinds of staves from this timber, and the latter instituted suit for breach of the contract.

Upon petition of the Stave Company the cause was transferred to the equity side of the docket, upon the theory that the deed of July 1st to the Ezzell tract was in fact executed to the Stave Company as security for the $30,000 advanced, and was in fact a mortgage. Upon removal of the cause Kennedy Bros stated their case by way of original bill, which was answered by the Stave Company, and the answer made also a cross-bill, wherein the Stave Company prayed that said deed be declared a mortgage, and as such foreclosed by decree of the court. Following the transfer of the cause to the equity docket, under the situation here presented, the Stave Company rather than Kennedy Bros. should have filed the original bill. Cornelius v. Moore, 208 Ala. 237, 94 So. 57. The cross-bill, however, of the Stave Company, under the circumstances, serves all necessary purposes as if an original bill. The cause proceeded upon the equity side of the docket upon the pleadings thus framed, and no question was presented as to the pleading or procedure, but the case was submitted for final decree upon pleadings and proof as noted, and the final decree rendered. The chancellor found upon the proof that the Stave Company had breached its contract without fault on the part of Kennedy Bros., ascertained the amount of damages which the latter sustained, and deducted this sum from the amount found to be due by Kennedy Bros. to the Stave Company. The balance found to due by the Kennedy Bros. to the Stave Company was $8,874.93, and judgment for this amount was awarded against Kennedy Bros. The court further stated that the Stave Company had a lien upon the timber known as the Ezzell tract, as security for this sum, and stated that if the amount was not paid within 60 days foreclosure be had, with proper directions to the register in reference thereto. The Stave Company was directed to pay the costs, and from this decree it has prosecuted this appeal.

The court found that the appellees had sustained damages in the sum of $16,302, by reason of the refusal of appellant to allow them to continue the manufacture of timber on the Ezzell tract into split staves for the account of the appellant at the price stipulated in the contract of December 2d, and a further sum of $1,800 damages sustained, by failure on the part of...