National Refining Co. v. McDowell

• Decision Date: 10 March 1947
• Docket Number: 39766
• Citation: 201 S.W.2d 342
• Parties: The National Refining Company, A Corporation, Respondent, v. R. Newton McDowell, Appellant
• Court: Missouri Supreme Court

201 S.W.2d 342

The National Refining Company, A Corporation, Respondent, v. R. Newton McDowell, Appellant

No. 39766

Supreme Court of Missouri, First Division

March 10, 1947

From the Circuit Court of Jackson County, Civil Appeal, Judge Brown Harris

Affirmed

OPINION

Dalton C.

Respondent obtained a judgment against appellant on one count of its petition for $17,924.26, being the undisputed amount of an account due respondent from R. Newton McDowell, Inc. now a defunct corporation. Recovery was had upon the alleged ground that appellant had agreed to pay the account. On another count of respondent's petition the court found that appellant had made an equitable assignment to respondent of $17,924.36 of certain funds due appellant. One count of the petition was at law and the other in equity. Both counts were tried to the court in one hearing and will be reviewed as in equity. Laws 1943, p. 338, Sec. 114(d).

Appellant was president and owner substantially all of the stock of R. Newton McDowell, Inc., hereinafter referred to as the corporation. The corporation was engaged in the manufacture and sale of agricultural limestone under some program which was being financed through the R.F.C. It also sold crushed rock for highway construction. In carrying on its business, large quantities of gasoline and other products were purchased from respondent. The corporation had a line of credit with the R.F.C. up to $75,000, secured by a mortgage on all of corporation's equipment, and corporation had arranged so that all checks in payment of agricultural limestone should be sent to the R.F.C., where certain deductions were made to apply on corporation's indebtedness. The balances remaining, after these deductions were made, proved to be insufficient to pay the corporation's operating expenses. On September 24, 1940, corporation was indebted to respondent in the sum of $14,693.93. It further had some 200 creditors to whom it woned in excess of $100,000, in addition to sums due respondent and the R.F.C. These creditors were furnishing the merchandise, service and equipment that enabled corporation to carry on its operations. The corporation could not pay its debts, it had no money for operating expenses and no free assets upon which to obtain credit. It is apparent, however, from the correspondence and the testimony of appellant that appellant wanted respondent to extend the corporation time for the payment of its indebtedness and to continue supplying merchandise.

The matter of corporation's account was referred to T. O. Haggard, respondent's district manager at Kansas City, in the latter part of September, 1940, and he promptly contacted appellant, verified the account, heard appellant's statement that the corporation was "short of money" and learned that appellant was contemplating some personal deals. Haggard "investigated Mr. McDowell personally, investigated his company," found the facts as hereinstated and told appellant that he (Haggard) could not recommend that respondent extend any further credit to the corporation, that the facts "did not justify any further extension of credit." Appellant asked Haggard to return in a few days and said he though he would have something that would be of interest and justify credit. Appellant denied that Haggard ever told him the corporation's credit was to be shut off, that further sales would be refused, or that, it arrangements for payment were not made, no further credit would be extended. Appellant said Haggard came to see "when he was going to get some money." Appellant, however, fully understood that Haggard's purpose was "either to get the money or get an arrangement whereby he would feel sure he was going to get it or he would stop shipping."

Whether or not respondent actually stopped the sale of gasoline and other products to the corporation at this time is in dispute. The account, as filed by respondent, shows no charges between September 24, and October 19, 1940, while appellant's evidence shows invoices covering the delivery of some merchandise at Moberly, Missouri, apparently in respondent's St. Louis district, between said dates. In any event, respondent was entitled to stop sales and was demanding payment, as appellant admits.

In October, 1940, appellant wired respondent from Washington, D. C., as follows: "Have concluded deal here that will permit in six weeks full liquidation our total obligation your company. You should read about this in press any day now. In meantime our major shipments now going to State Highway Dept. who are not paying for six weeks or more after shipment which has made our already slim cash position more acute so see if you can not extend your patience further. I personally assure you you will not regret our account. Regards. R. Newton McDowell."

Appellant had been awarded a contract to acquire for the War Department several thousand acres of land at Weldon Springs, near St. Charles, Missouri, Appellant was to be paid a 5% commission, payment to be made out of the purchase price when the options were exercised and payments made to the owners.

On October 26, 1940, appellant wrote respondent, in part, as follows: "* * * We have moved practically all of our office force to St. Charles leaving Mrs. Mills to tell anyone who comes in that she has no money, it has all been taken to St. Charles. Seriously speaking, and this is no come-on, in a few weeks we can pay everyone, and this is a real thrill to me, particularly in your case as you have been most considerate and cooperative. Right at the moment we are in desperate circumstances as I told you most of our material is going to the State. But I assure you this is only temporary as this is a firm contract with the War Department, in my name personally and cannot be upset, calls for acquiring approximately two and a half million dollars of land, this must be done rapidly as we are allowed only forty-five days, and as I said this is only one of several. I trust it will not be necessary for me to write you any more letters on this score. * * *." (Italics ours).

On account of certain litigation that subsequently arose, appellant was not able to collect his commissions promptly, but he kept respondent fully advised by a series of letters appearing in the record, Similar messages apparently went to a few other creditors. One letter expressed thanks "for waiting on my account."

The contract with the War Department was signed by appellant on October 23, 1940. Concerning the contract, telegram and letter, appellant testified: "Q. Well, was this contract yours personally or did it belong to the R. Newton McDowell, Inc.? A. Well, the contract was signed in my name personally. Q. Well, who did it belong to, you or the company? A. I don't know that I stopped to differentiate. Q. You didn't expect the National Refining Company to differentiate when you sent this telegram? A. Not in the slightest. Q. What you meant was that if this contract panned out, you would have $150,000 in six weeks, and so much of that as is necessary would be credited to the National Refining Company? A. Exactly. Q. That is what you meant for them to understand? A. That is right. * * * Q. Why were you emphasizing that this contract was in your name personally? A. Because of the fact that there wasn't anybody that could upset that contract. I didn't owe anybody anything. Q. Of what interest would it be to the National Refining Company that the contract was in your name? A. Because it assured them it would go through to a conclusion. * * * Q. Did you tell the National Refining Company that they would be paid out of this money? A. Yes." Concerning the letter, appellant further testified (deposition): "Q. And you meant for them to understand that when that deal was consummated down at Weldon Springs and you collected your money that that money would be available to pay this indebtedness? A. That is correct. Q. And when the $50,000 was collected, did you apply any part of that to pay this debt? A. Yes. * * * Q. The general purpose of your letter, Exhibit 1, was to reassure them that they would get their money? A. That is correct. Q. And to point to a source that they might expect the money to come from within a reasonably short time? A. That's right."

Respondent's district manager Haggard saw appellant before and after appellant was awarded the five per cent contract for obtaining options to purchase land. Haggard testified: "* * * he told me all about this five per cent deal that he had on purchasing this land, and he says, 'If you will only carry me through on this, I will guarantee you personally I will never let you down.' * * * And after seeing that he was awarded this contract, him giving me copies of the contract and I studied them over, after my investigations of his business connections in Kansas City, I went back to my company and recommended that we open up R. Newton McDowell's credit and extend him more merchandise because he had personally guaranteed to pay that himself. * * * Q. Now, are these conversations that you have just related, did they take place in that period of time between the last of September and during the month of October, 1940? A. Yes, sir."

On the strength of what appellant said to him, Haggard recommended to respondent that it extend further time on the old balance and open the account and allow the purchase of merchandise on credit. Respondent did reopen the account after Haggard made his report. It sold all of the merchandise asked for and did not crowd on the payment of the old balance, or threaten any suits.

It further appears that, after the receipt of the first telegram from appellant, the respondent sold corporation $8,730.76 worth of additional gas, oil and supplies, before the close of 1940. This suit was...