Lyons Milling Co. v. Goffe & Carkener
| Decision Date | 12 February 1931 |
| Docket Number | No. 287.,287. |
| Parties | LYONS MILLING CO. v. GOFFE & CARKENER, Inc. |
| Court | U.S. Court of Appeals — Tenth Circuit |
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Roy B. Thomson, of Kansas City, Mo. (I. P. Ryland and Arthur Mag, both of Kansas City, Mo., on the brief), for appellant.
Justin D. Bowersock, of Kansas City, Mo. (Bowersock, Fizzell & Rhodes, of Kansas City, Mo., on the brief), for appellee.
Before LEWIS and PHILLIPS, Circuit Judges, and POLLOCK, District Judge.
Goffe & Carkener, Inc., hereinafter called plaintiff, is a Missouri corporation engaged in business as a grain broker at Kansas City, Missouri. The Lyons Milling Company, hereinafter called defendant, is a Kansas corporation engaged in the manufacture of flour at Lyons, Kansas.
Plaintiff brought this action against defendant for money alleged to be due on account of purchases and sales of wheat and corn on the Boards of Trade at Kansas City, Missouri, and Chicago, Illinois, made by plaintiff, as broker for defendant, in the name of M. B. McNair.
The bill alleged that the account involved many transactions, that it was complicated and complex, and that plaintiff had no adequate remedy at law. The bill prayed for an accounting in equity.
Defendant filed a motion to dismiss the bill for want of equity. The trial court overruled this motion without prejudice to the right of defendant to move to transfer the cause to the law docket.
Thereupon, defendant filed an answer in which it alleged that, for the purpose of offsetting contracts for the sale of flour to be ground by its mill, it purchased, through plaintiff as broker, in November, 1924, 85,000 bushels of wheat for future delivery; that on February 4, 1925, defendant sold, through plaintiff as broker, 30,000 bushels of such wheat; that plaintiff wrongfully sold the remaining 55,000 bushels of such wheat on April 4, 1925; that the balance of the trades, set up in such account, were made by McNair for his personal account, and that plaintiff was charged with knowledge of such fact; that the only authority granted McNair by defendant was contained in a resolution adopted by its board of directors on June 15, 1922; that plaintiff was a member and defendant a non-member of the Board of Trade of Kansas City; that plaintiff failed to comply with the rule of such Board of Trade adopted May 2, 1922, and effective June 1, 1922; and that no actual delivery of grain was made or was intended to be made under the contracts for purchases and sales set out in such account.
The answer also set up a counter-claim against plaintiff based upon the alleged wrongful sale of such 55,000 bushels of wheat.
When the case came on for trial, defendant, through its counsel, admitted the correctness of plaintiff's account and requested the court to try the cause.
On May 2, 1922, the Board of Trade of Kansas City adopted the following rule:
On June 15, 1922, defendant adopted the following resolution:
—
and transmitted a copy thereof by mail to plaintiff.
On the same day, it amended Section 8 of its By-laws to read as follows:
Plaintiff had no notice or knowledge of such amended by-law.
In May, 1922, defendant authorized McNair, as its president, to employ plaintiff as broker to purchase and sell wheat and corn for future delivery for defendant in the name of McNair, and advised plaintiff of such authorization. Defendant's credit balance with plaintiff was thereupon transferred to the name of McNair on plaintiff's books, and subsequent purchases and sales of grain for future delivery were made in behalf of defendant in the name of McNair, and the account was carried on the books of both plaintiff and defendant in the name of McNair.
The account was settled May 18, 1924. In July, 1924, McNair, in behalf of defendant, again began to buy and sell wheat and corn for future delivery through the plaintiff as broker, and continued to do so until April 7, 1925. During this latter period, both plaintiff and defendant continued to carry such account on their books in the name of McNair. Defendant had knowledge that McNair was conducting such trading in his own name and made no objection thereto. It relied upon him for reports of the purchases and sales of wheat for future delivery made by him on its behalf on the Kansas City and Chicago Boards of Trade. Plaintiff forwarded confirmations of such transactions to McNair and the latter delivered such confirmations to defendant up to January 1, 1925. Plaintiff's and defendant's books were in agreement on December 31, 1924. After January 1, 1925, McNair did not deliver such confirmations to defendant, but plaintiff had no notice or knowledge of such omission.
The records of defendant showed that on December 31, 1924, plaintiff had 85,000 bushels of wheat purchased on the Kansas City Board of Trade for future delivery; and that on February 7, 1925, it sold 30,000 bushels of such wheat.
Defendant owned and operated a 500 barrel flour mill with a daily capacity of 2,300 bushels of wheat at Lyons, Kansas. During the years 1924 and 1925, such mill operated approximately one-half of the time. During that period defendant also dealt in corn.
While the purchases and sales of wheat for future delivery, made by plaintiff for defendant at the direction of McNair, aggregated more than a million bushels, the net amount purchased, after deducting the amount sold, never exceeded 155,000 bushels, which was approximately a sixty day supply for defendant's mill.
On July 21, 1923, defendant, through its treasurer, W. H. Boyce, addressed a letter to plaintiff, reading as follows:
"We shall be glad to have a statement of our account with you in the name of M. B. McNair."
Defendant drew drafts against plaintiff for prospective profits on its account with plaintiff in the name of McNair, as follows:
August 30, 1924 ............... $ 5,000
October 6, 1924 ............... 10,000
December 26, 1924 ............. 10,000
January 21, 1925 .............. 10,000
February 6, 1925 .............. 5,000
February 9, 1925 .............. 5,000
These drafts were paid by plaintiff and the proceeds received by defendant.
On March 14, 1925, plaintiff drew a draft on McNair at Lyons, Kansas, for additional margins in the sum of $20,000. This draft was paid by defendant.
On the foregoing facts, the court denied defendant relief on its counter-claim and gave judgment for plaintiff in the sum of $29,967.49. From this judgment, defendant has appealed.
Counsel for defendant contend that the court erred in overruling their motion to dismiss. They assert that in order to maintain a bill in equity for an accounting, it must appear from specific allegations that there is a fiduciary relation between the parties or that the suit involves mutual accounts or that the account is so complicated that the remedy at law is inadequate.
The fact that plaintiff has an adequate remedy at law is no longer grounds for dismissing a bill in equity. Such objection must now be taken by motion to transfer the cause to the law side under Equity Rule 22 (28 USCA § 723) and section 274a of the Judicial Code (28 USCA § 397); Pierce v. National Bank of Commerce (C. C. A. 8) 268 F. 487; Brown v. Kossove (C. C. A. 8) 255 F. 806; Louisiana Agr. Corp. v. Pelican Oil Ref. Co. (C. C. A. 5) 256 F. 822; Twist v. Prairie Oil & Gas Co., 274 U. S. 684, 689, 47 S. Ct. 755, 71 L. Ed. 1297.
Where the district court has jurisdiction of the subject-matter and the parties are before it, the objection that plaintiff has an adequate remedy at law may be waived by defendant. Chicago Bonding & Surety Co. v. United States (C. C. A. 7) 261 F. 266; Fay v. Hill (C. C. A. 8) 249 F. 415; Alliance Ins. Co. v....
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