Mount v. Neighbors Implement & Vehicle Co.

• Decision Date: 20 November 1916
• Docket Number: No. 1795.,1795.
• Court: Missouri Court of Appeals
• Parties: MOUNT v. NEIGHBORS IMPLEMENT & VEHICLE CO.

189 S.W. 614

195 Mo. A. 21

MOUNT v. NEIGHBORS IMPLEMENT & VEHICLE CO.

No. 1795.

Springfield Court of Appeals. Missouri.

November 20, 1916.

Appeal from Circuit Court, Wright County; C. H. Skinker, Judge.

Action by Finley P. Mount, receiver of M. Rumely Company, against the Neighbors Implement & Vehicle Company. From a judgment for plaintiff, defendant appeals. Judgment reversed, and cause remanded.

E. H. Farnsworth, of Mountain Grove, and Lamar & Lamar, of Houston, for appellant. Ellis, Cook & Barnett, of Kansas City, for respondent.

ROBERTSON, P. J.

Plaintiff obtained a directed verdict in an action on a promissory note executed by defendant to the Rumely Products Company, and by it indorsed before maturity to M. Rumely Company. The defendant has appealed.

The note was given for cream separators purchased by defendants from the Rumely Products Company, and it was contended by defendant in the trial court that the separators were not as warranted and were wholly worthless, and that the M. Rumely Company became the indorsee of said note with notice of these facts. It is also said that there is such a unity of stockholders and directors and mutuality of purposes for which the two corporations were organized as to lead to the conclusion that the Products Company was formed as a mere subterfuge to enable the other company to ostensibly appear as a purchaser in good faith of all of the notes taken by the Products Company in the transaction of the business which it is said that it did as a matter of fact for the M. Rumely Company. There was a contract entered into between the two companies, wherein the M. Rumely Company is referred to as the Rumely Company, and the Rumely Products Company is referred to as the Products Company. We deem it useless to go into details concerning the facts that it is charged are sufficient to disclose the said fraudulent purpose in the organizing of these two companies. It is sufficient to entitle the defendant to have its defense of want of partial or total failure of consideration submitted to the jury, if the relations of these two companies are such that the conclusion may be deduced therefrom that the Products Company was the agent of Rumely Company, or that the Rumely Company acquired the note with knowledge of the transaction upon which it was based and the warranties connected therewith alleged to have been breached. The order upon which the separators were delivered provided for payment in cash upon the dates therein specified, and further provided that if payments were not so made the defendant would execute and forward to the Products Company bankable notes for the purchase price. The order was made on January 14, 1913, and stated therein that it should extend to October 31, 1913. There is no express statement as to when payments were to be made, but according to the shipping instructions the last delivery was to be made May 1, 1913. The note is dated November 1, 1913. The order also contained a provision that the goods "are warranted to be made of good material, and to do good work when properly set up and adjusted." The order provided that it was made subject to the approval of the Products Company.

The contract between the Products Company and the Rumely Company contained, among many other provisions lending color to the contention that the Products Company was a mere selling agent of the Rumely Company, the following:

"2. (a) The Rumely Company warrants all goods which the Products Company may purchase hereunder to be made of good materials, and that with good care, proper use, and management the same will be capable of doing as good work under the same conditions as any other machinery of the same size and rated capacity, made for the same purpose; written notice shall be given the Rumely Company at its La Porte office by the Products Company within six days from the time of the first use of any such machinery, of any failure thereof to fully perform this warranty, particularly specifying wherein the same fails to fill the same.

"6. The Products Company agrees to sell or accept orders for goods it purchases of the Rumely Company only upon standard printed order forms and upon the usual terms and conditions of the trade in similar lines; that it will not permit any goods to be sold or any orders therefor accepted on credit until such orders shall have been submitted to the Products Company at its La Porte office and duly approved by it there; that it will sell all goods subject to the warranty set forth in paragraph 2 hereof and upon no other warranty, and the Rumely Company shall at all times have the right to examine into the financial responsibility and credit of the Products Company's customers before the latter accepts orders on credit, and may at any time refuse to fill any order or orders, if in its judgment such customer or customers is or are not entitled to the credit...