Moors v. Bird

• Decision Date: 01 March 1906
• Citation: 190 Mass. 400,77 N.E. 643
• Parties: MOORS et al. v. BIRD.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

190 Mass. 400

77 N.E. 643

MOORS et al. v. BIRD.

Supreme Judicial Court of Massachusetts, Suffolk.

March 1, 1906

The case was heard on the following agreed statement of facts:

'The plaintiffs, J. B. Moors & Co., are bankers doing business in the city of Boston. The defendant, doing business as F W. Bird & Son, is a paper manufacture doing business in Walpole, Mass. The firm of Dutton & Co., at the time of the transactions hereafter described, were importers of paper stock, doing business in Boston. Since about 1888 Dutton & Co. have been carrying on business with Bird & Son, selling to the latter paper stock, bought in Europe and imported into this country. At some time prior to November 1, 1897 it was agreed between Bird & Son and Dutton & Co. that the price to be paid by Bird & Son for all imported merchandise sold to them by Dutton & Co. should be the sum of the following items: Actual cost of the merchandise to Dutton & Co.; cost of cables and office expenses, agreed to be 4 per cent. of purchase; bankers' commission, agreed to be 1 1/4 per cent; insurance and wharfage; the sum of $1 per ton of 2,000 pounds. Dutton & Co. had a house in London and a house in Boston. Purchases of merchandise were made by the London house in France--terms, delivered in Boston, freight prepaid--and such merchandise, when delivered to Bird & Son, was invoiced to them at a price determined by adding the expenses and other items above set forth to the amount at which said merchandise was invoiced to Dutton & Co. by the seller in France. Bird & Son made all payments for such invoices in ignorance of the facts set forth in the next paragraph. Without the knowledge of Bird & Son or Moors & Co., Dutton & Co. made an arrangement with the seller of such merchandise in France, whereby the latter secretly allowed Dutton & Co., for the freight to Boston, the sum of 16 shillings per ton, to be deducted from the purchase price as shown by the invoice. Dutton & Co. then arranged with the carriers for a rate which varied from 10 to 13 shillings per ton. It is agreed, for the purposes of this case, that the difference between said 16 shillings per ton, allowed by the seller in France for freight as aforesaid, and the amount actually paid for freight amounted, from November 1, 1897 to August 1, 1900, to the sum of $7,000. The amount of said difference on the bills remaining unpaid on August 1, 1900, is hereinafter set forth. To enable them to carry on the business of importing and selling paper stock to Bird & Son, and to their other customers, Dutton & Co. requested and obtained from time to time the issue to them by Moors & Co., of mercantile or commercial letters of credit, so-called, all in similar form, a copy of one of which is hereto annexed, marked 'A.' Under these letters of credit, drafts were drawn by Dutton & Co. upon the London correspondent bankers of Moors & Co. and accepted by the correspondent bankers. These drafts were discounted by Dutton & Co. and the proceeds used to pay for said merchandise, and said drafts were duly paid by said correspondent bankers out of funds provided for that purpose by Moors & Co. Accompanying the drafts were invoices made by the seller in France and sworn to before the United States consul, and bills of lading made out to the order of Moors & Co., covering the merchandise purchased, and such invoices and bills of lading were forwarded by mail to Moors & Co. and held by them until the arrival of the merchandise in Boston. After such arrival Moors & Co. indorsed said bills of lading and delivered them and the consular invoices to Dutton & Co., and at the same time took in exchange therefor trust receipts, so called, all in similar form, a copy of one of which is hereto annexed, marked 'B.' Dutton & Co. then shipped the merchandise to Bird & Son and, in accordance with the terms of the trust receipts, handed to Moors & Co. invoices to Bird & Son of the merchandise so shipped, and Moors & Co. sent these invoices to Bird & Son, inclosed in letters, all in similar form, a copy of one of which is hereto annexed, marked 'C.' The price named in said invoices was a price fixed by Dutton & Co. believed by Bird & Son to have been fixed in the manner aforesaid, and a form of such invoice is hereto annexed, marked 'D.' In pursuance of the foregoing method, payments for the merchandise imported by Dutton & Co. and sold to Bird & Son were, in all cases, made directly to Moors & Co. On or about August 1, 1900, Bird & Son discovered that Dutton & Co. were making a profit on the freight charges, in the manner aforesaid, and immediately notified Dutton & Co. and Moors & Co. that they should decline to pay for merchandise delivered any more than the amount contracted to be paid by them, and that they should reserve from the amount then due for merchandise already delivered a sufficient sum to cover the overcharges on invoices paid and unpaid. At this time there were outstanding and unpaid the following bills for paper stock sold by Dutton & Co., or Moors & Co., if they are to be regarded as sellers, to Bird & Son under the method of doing business hereinbefore described:

1900 March 29 To Mdse	$ 388.63
April 2	361.24
April 2	417.36
April 9	711.33
April 9	3,501.75
April 9	357.04
April 16	289.32
April 28	634.74
April 28	319.09
April 30	487.55
April 30	3,732.48
May 7	420.41
May 14	319.83
May 19	4,049.02
May 19	178.89
May 26	157.84
May 31	3,520.46
	----------
	$19,846.98

'The amount of the difference between 16 shillings per ton and the amount of freight actually paid by Horace Dutton & Co. on the above bills is $264.07. All bills for merchandise prior to the above had been paid in full by Bird & Son to Moors & Co. and had been duly credited to Dutton & Co. on their account with Moors & Co. On August 20, 1900, Bird & Son paid, on account of the bills given in detail above, $5,000, and on September 14, 1900, the further sum of $7,846.98, retaining, and stating that they would retain, the sum of $7,000, which they claimed they were entitled to retain by reason of the facts hereinbefore set forth, and which sum has always since been retained and now is retained by Bird & Son. Until the notice given by Bird & Son in August, 1900, as aforesaid, Moors & Co. had no knowledge of said agreement between Bird & Son and Dutton & Co., as to the price to be paid by the former for imported merchandise sold by the latter as aforesaid. The allowance of 16 shillings per ton above mentioned for freight, and the deduction thereof from the invoice price to Dutton & Co., did not appear in any of the papers, accounts or dealings of which Moors & Co. or Bird & Son had knowledge. Dutton & Co. imported, under letters of credit issued by Moors & Co....