Lucas v. Milliken

• Decision Date: 26 July 1905
• Citation: 139 F. 816
• Parties: LUCAS v. MILLIKEN et al.
• Court: U.S. Court of Appeals — Fourth Circuit

139 F. 816

LUCAS v. MILLIKEN et al.

United States Circuit Court, D. South Carolina.

July 26, 1905

Smythe Lee & Frost, George Johnstone, Cothran & Dean, C. C Featherstone, and W. R. Richey, for plaintiff.

Wm. G Sirrine, for Laurens Cotton Mills.

Augustine T. Smythe, for F. J. Pelzer, Wm. M. Bird, Thomas R. McGahan and W. W. Ball.

Simpson & Bomar, Ralph K. Carson, Adrian H. Joline, and Dial & Todd, for defendant.

BRAWLEY District Judge.

William E. Lucas was at the time of the commencement of this suit the president of the Laurens Cotton Mills. He was mainly instrumental in securing subscriptions to the capital stock, and since the organization, in 1895, has been its president, conducting its affairs with ability and success. The company began to pay dividends on its stock in January, 1900, and has continued to do so; its stock selling above par, and the stockholders testifying to their satisfaction with the management by successive unanimous re-elections of the plaintiff as president and treasurer. The firm of Deering, Milliken & Co. is a commission house, which since 1899 has been the selling agents of the mills in New York, selling its produce on commission; S. M. Milliken being the head of the firm. Friction arose between plaintiff and said firm, who, for convenience, will hereafter be designated as the defendants, some time in 1904. It is difficult to fix precisely the time or the cause of this friction. It appears from the letters and affidavits that during the years 1904 various reclamations were made upon the commission merchants on account of alleged defects in the quality of the goods, and a letter of Milliken to Lucas, of November, 1904, shows that some persons, who, presumably at Milliken's request, had examined the mill, reported that the 'machines showed lack of proper care, and some of the goods did not look very well. ' It also appears that Lucas had built some time about 1903 another mill, known as the 'Watts Mill,' of which he became president, somewhat against the opinion and advice of Milliken, and that he had taken some umbrage at Milliken's refusal to lend said mill what he called the umbrage at Milliken's refusal to lend said mill what he called the 'paltry sum of $100,000.' However that may be, it is apparent that the relations between Lucas and the Millikens had become strained during the year 1904, and early in 1905 Lucas was beginning to look for another commission house which would sell the product of his mills at a lower rate of commission than that which the Millikens demanded; Lucas claiming that the commissions were exorbitant, and the Millikens claiming that that was the usual rate which they charged to the other mills in this section of 16 of which they were the selling agents, and that they charged the same commission that other houses were charging for like services. It is not impossible that another cause of the inharmonious relation arose out of the condition of the Darlington Mill, of which Lucas was likewise the president, and the defendants the selling agents, to which mill they had advanced about $300,000, the settlement of which led to negotiations which culminated in the breach between the parties. On behalf of the plaintiff it is claimed that, as the result of these negotiations, he undertook to raise the money to pay off this indebtedness, all of which was not due, and that the defendants had agreed to allow a rebate of $25,000 on account of said indebtedness, and that S. M. Milliken at the same time, and as a part of the same negotiations, agreed to sell to the plaintiff 500 shares of stock of the Laurens Cotton Mills at $150 per share. On April 12, 1905, the plaintiff entered into an agreement with J. P. Stevens & Co. whereby they became commission agents of all the mills of which Lucas was president, upon terms which it is alleged were greatly more advantageous to the mills. The indebtedness of the Darlington Mills was discharged, and the connection of the defendants with these mills as selling agents was terminated. Correspondence then ensued between plaintiff and defendants; the plaintiff demanding that Milliken should turn over to him the shares of stock which he claims that the latter had offered to sell, and notifying him that he had made arrangements with a bank in Greenville to pay therefor upon the receipt of the stock; Milliken denying that he had made any binding agreement to sell the stock, and refusing to sell the same.

S. M Milliken for some years previous to April had been the owner and holder of 273 shares of stock in the Laurens Mill. G. H. Milliken was the holder of 24 shares, and S.D. Brewster of 92 shares. The parties named composed the firm of Deering, Milliken & Co., and S. M. Milliken, Sr., but not a partner in the firm, had for four or five years been the owner of 224 shares. After the breach with Lucas, S. M. Milliken began to purchase stock of the Laurens Mills obviously for the purpose of obtaining control in co-operation with other stockholders who were friendly to him, and it appears from the affidavit of the secretary of the company that by May 15th he had bought and had transferred to him something over 600 shares of stock, in addition to that previously held. The plaintiff, Lucas, thereupon commenced a suit in the court of common pleas for Laurens against S. M. Milliken, S. M. Milliken, Jr., G. H. Milliken, S.D. Brewster, and Laurens Cotton Mills, setting forth, among other things, that the Laurens Cotton Mills is a corporation under the laws of South Carolina, having a capital stock of $350,000, represented by 3,500 shares, of the par value of $100 each, and that the plaintiff is the president of said corporation; that the defendant S. M. Milliken is a leading copartner in the firm of Deering, Milliken & Co. of which firm G. H. Milliken and S.D. Brewster are partners, and that S. M. Milliken, Jr., is the son of the leading partner; that on the 28th of March, 1905, the Darlington Mills was indebted to the firm above-named in the sum of $300,000 and that in pursuance of negotiations between the plaintiff and said Seth M. Milliken, acting for the firm of Deering, Milliken & Co. the latter entered into a legal, lawful, and binding agreement with the plaintiff that in consideration of the payment in cash by the said Darlington Company, within 30 days, of the amount so owing, the said Seth M. Milliken would sell and deliver to the plaintiff 500 shares of the capital stock of the Laurens Cotton Mills at and for the price of $150 per share; that on the 12th of April said Lucas, acting as the president and the treasurer of the Darlington Company, did pay to the said firm the full amount due; that on the same day, to wit, the 12th of April, the plaintiff notified the defendant S. M. Milliken that he accepted the offer made by him for his shares of stock, and requested him to send the same to the City National Bank of Greenville, and he would remit promptly upon receipt of the same; that up to a recent period the said firm had been the agents of the Laurens Cotton Mills for the sale of its products, charging and receiving therefor a commission of 3 per cent. on the gross sales of print cloth, and 4 per cent. upon the gross sales of other products; that plaintiff, in discharging his duty as president of said mills, and in the interest of economy, and in the interest of all the stockholders, submitted to said firm that the commissions so charged were exorbitant, and could and should be reduced, and, upon their refusal to comply with this reasonable request, the plaintiff, in the discharge of his duty, and for the best interest of all the stockholders, entered into arrangements with another commission house to sell the product of said mills at a commission not exceeding 2 per cent. upon the gross sale; that this arrangement was obviously greatly to the advantage of all stockholders of said mills, but was to the personal disadvantage of the said defendants, who took umbrage thereat, and did all they could to prevent the consummation of so beneficial an agreement. He thereupon charged that the other defendants named, including the partners and son of S. M. Milliken, were conspiring and confederating with said S. M. Milliken and other parties to the plaintiff unknown to vote the stock standing in their names for the common purpose of canceling and avoiding the beneficial agreement made by the plaintiff, for and in behalf of the stockholders of the said cotton mills, and again subjecting said corporation and the stockholders thereof to the exorbitant charges made by said firm, and that said S. M. Milliken, for the purpose of carrying out said illegal agreement and conspiracy, had recently purchased a large number of shares of stock of the Laurens Mills, for the purpose of effecting a change in the management, and putting in charge of said mill a management entirely amenable to their wishes and instructions. He demands judgment (1) that S. M. Milliken be required to perform specifically the contract for the sale of 500 shares at and for the sum of $150 per share; (2) that the defendant S. M. Milliken be enjoined and restrained from transferring or in any way changing the possession of 500 shares of stock, and from voting the same at any meeting of the stockholders of the defendant Laurens Cotton Mills; (3) that the other defendants named, and each of them be enjoined from voting any and all shares of stock held by them, save under the direction of the court; (4) that the defendant Laurens Cotton Mills be enjoined from receiving and counting at any election the votes of any of said parties of any of the stock standing in their name; (5) for damages against S. M. Milliken by reason of his failure to specially perform his contract in the sum of $50,000; (6)...