Missouri Broom Mfg. Co. v. Guymon

• Decision Date: 14 April 1902
• Docket Number: 1,609.
• Citation: 115 F. 112
• Parties: MISSOURI BROOM MFG. CO. et al. v. GUYMON.
• Court: U.S. Court of Appeals — Eighth Circuit

115 F. 112

MISSOURI BROOM MFG. CO. et al. v. GUYMON.

No. 1,609.

United States Court of Appeals, Eighth Circuit.

April 14, 1902

Edwin Silver (F. M. Brown on the brief), for appellants Exchange Bank, H. Clay Ewing, William A. Dallmeyer, William Q Dallmeyer, and Arthur M. Hough.

I. J Ringolsky, for appellant David Loewen.

Henry M. Beardsley (Alfred Gregory and Charles H. Kirshner, on the brief), for appellee.

E. T Guymon, the appellee, exhibited an amended bill of complaint, on which this case was eventually tried, against the Missouri Broom Manufacturing Company, David Loewen, the Exchange Bank of Jefferson City, William A. Dallmeyer, William Q. Dallmeyer, H. Clay Ewing, and Arthur M. Hough, the appellants, which contained, in substance, the following allegations: That in June, 1897, the complainant was induced, by certain false and fraudulent representations made by A. Loewen, who was the president of the Missouri Broom Manufacturing Company (hereafter termed the 'Broom Company'), to ship and sell to the latter company a large quantity of broom corn of the value of $3,812.21, which the company received not intending to pay for it; that by terms of the sale one-third of the purchase money was to be paid in cash and the balance in 60 days, but that the complainant, after the shipment and delivery of the broom corn, was induced, by certain other fraudulent representations, to accept the broom company's notes dated September 4, 1897, one due in 6 days, one in 16 days, and the other on October 2, 1897, for the entire purchase price; that on September 28, 1897, the broom company, which was engaged in the manufacture of brooms in the Missouri penitentiary at Jefferson City, Mo., executed a deed of trust to A. M. Hough, as trustee for the Exchange Bank of Jefferson City, and David Loewen, which deed of trust conveyed all of the broom company's property to every kind and description, and was made to secure the payment of alleged debts of the broom company, specified therein, to the amount of $9,212.25; that a part of the complainant's broom corn had been manufactured into brooms, and mingled with other brooms, prior to September 28, 1897, and that the residue thereof was at the time mingled with other broom corn belonging to the broom company, and was stored in warehouses in Jefferson City, Mo., when the deed of trust was executed, and was covered by that conveyance; that Hough, as trustee took possession of all of the property of the broom company on the execution of the deed of trust, including the broom corn which belonged to the complainant and was then in warehouses at Jefferson City, and that he did so with full knowledge of all the facts and circumstances under which it had been obtained by the broom company from the complainant. The bill further alleged, in substance, that in pursuance of the powers conferred by the aforesaid deed of trust, Hough, as trustee, on October 7, 1897, sold all of the property thereby conveyed to the defendants H. Clay Ewing, William Q. Dallmeyer, and William A. Dallmeyer, ostensibly for the sum of $3,000; that in said transaction the vendees last named acted merely as agents of the Exchange Bank of Jefferson City, paying nothing for the property which they acquired, and at the time of the purchase were well aware that the complainant had filed his original bill, praying for a restraining order and the appointment of a receiver; that said vendees, on October 9, 1897, sold all of said property to the defendant David Loewen, and agreed to assign to him the debts which were secured by the aforesaid deed of trust, on condition that he pay to the vendees the sum of $6,000, evidenced by six promissory notes, which were executed by David Loewen and I. J. Ringolsky; that in and by said contract of sale said vendees retained the title to the property which they pretended to sell until the purchase money evidenced by said notes had been fully paid; that at the time of said alleged sale to David Loewen and at the time of the execution of the deed of trust to Hough, and long prior thereto, said David Loewen was fully cognizant of the fraud that had been perpetrated on the complainant, and was well aware of his right to rescind the sale; that David Loewen and A. Loewen, the president of the broom company, were copartners in business, and transacted business at the city of St. Louis; Mo., under the name of David Loewen & Son; that that said firm had an account with the broom company on its books, the style of which account was, for some unexplained reason, changed about the date of the transactions aforesaid; that in August and September, 1897, the broom company shipped many brooms that had been made out of the material purchased from the complainant to David Loewen & Son at St. Louis, Mo., for the fraudulent purpose of selling them, and defrauding the creditors of the broom company, and that a large part of the receipts of the broom company during said months were turned over to David Loewen & Son by collusion with that firm, to defraud the complainant and other creditors of the broom company. The complainant further alleged in his bill that he discovered the fraud which had been practiced upon him, and that the aforesaid purchase was made with no intent on the part of the broom company of paying him for the commodity purchased, only a week prior to the filing of his original bill herein, which appears to have been exhibited on October 8, 1897; that on discovering the fraud he went immediately from the state of Kansas, where he resided, to Jefferson City, Mo., for the purpose of surrendering the notes which he had received and rescinding the fraudulent sale, but that he was unable to find any officer or agent of the broom company to whom he could make the tender; that he accordingly tendered the notes in court on the filing of his bill; and that by virtue of the facts aforesaid, the complainant was entitled to recover from the defendants the broom corn which he had sold, and the proceeds of such as had been manufactured into brooms, but that, in view of all the circumstances, he was without an adequate or sufficient remedy at law to fully redress the wrong. He accordingly prayed for the appointment of a receiver of the property which remained in specie; that the part thereof to which he was entitled might be determined; that David Loewen and A. Loewen might be compelled to account for the property, or the proceeds thereof, which they had received from the broom company; and for general relief.

When the original bill was exhibited, and the application for an injunction and the appointment of a receiver was heard, the lower court, in lieu of appointing a receiver, made an order, in substance, directing that the persons then in charge of the property in controversy should continue in charge thereof, with power to sell the same and manufacture it into brooms, rendering accounts to the court at intervals of all their doings in that behalf. Acting under this order, which practically constituted the defendants, or some of them, receivers, the property, as it seems, had been sold before a final decree was reached, and the proceeds were in the custody of the Exchange Bank at Jefferson City, and held by it for distribution, pursuant to the provisions of such decree as might be entered. By the provisions of the decree, from which the defendants below have appealed, the deed of trust of date September 28, 1897, the sale thereunder by Hough, and the sale by his vendees to David Loewen were each set aside and annulled in so far as they undertook to convey the broom corn that was sold by the complainant to the broom company, and the funds in the hands of the Exchange Bank were impressed with a trust in favor of the complainant in the sum of $3,000, that being the ascertained value of the 60 tons of broom corn which were sold by the complainant. The Exchange Bank was further directed to pay to the complainant, out of the funds remaining in its hands, the sum of $402.68, being that portion of the fund which David Loewen would be entitled to receive from it pursuant to the provisions of the aforesaid deed of trust.

Before CALDWELL, SANBORN, and THAYER, Circuit Judges.

THAYER Circuit Judge, after stating the...