Nelson v. Chicago Mill & Lumber Corporation

• Citation: 100 ALR 87,76 F.2d 17
• Decision Date: 06 March 1935
• Docket Number: No. 9920.,9920.
• Parties: NELSON et al. v. CHICAGO MILL & LUMBER CORPORATION.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

100 ALR 87, 76 F.2d 17 (1935)

NELSON et al. v. CHICAGO MILL & LUMBER CORPORATION.

No. 9920.

Circuit Court of Appeals, Eighth Circuit.

March 6, 1935.

COPYRIGHT MATERIAL OMITTED

Ozero C. Brewer and George K. Cracraft, both of Helena, Ark., for appellants.

John I. Moore, of Helena, Ark., J. B. Daggett and C. E. Daggett, both of Marianna, Ark., and J. G. Burke and John I. Moore, Jr., both of Helena, Ark., for appellee.

Before BOOTH, Circuit Judge, and MUNGER and BELL, District Judges.

BELL, District Judge.

This is an action for damages for breach of a contract. At the close of appellants' testimony the court directed a verdict for the appellee. As in the court below, the appellants will be referred to as plaintiffs and the appellee as the defendant.

The plaintiffs owned a tract of land bearing merchantable timber in Lee county, Ark.; and on August 25, 1926, entered into a contract with the Chicago Mill & Lumber Company to sell all the timber on the land estimated at approximately 20,000,000 feet to the company at a schedule of prices designated in the contract. They were required under the contract to deliver to the company, at places selected by it, 1,000,000 feet of timber per month subject to adverse logging conditions, over which the plaintiffs had no control.

At the time the contract was made plaintiffs were indebted to the company in the sum of $43,760 and to a bank at Helena, Ark., in the sum of $9,000. It was agreed that as the timber was delivered the proceeds should be applied to the liquidation of these debts, including 6 per cent. interest on the indebtedness due the company. The contract contained a provision that balances due the plaintiffs likewise should bear interest. This provision referred to as the reciprocal interest clause is as follows: "All retentions in your hands shall bear a reciprocal rate of interest after the next succeeding settlement date until the same are applied as actual credits upon our indebtedness to you, or paid to us, as the case may be."

The plaintiffs in September, 1926, commenced cutting and delivering timber to the company and continued operations until May, 1931, during which time they delivered a total of approximately 11,200,000 feet. Obviously, they did not deliver 1,000,000 feet per month as provided by the contract. According to the testimony this was due to adverse logging conditions over which the plaintiffs had no control, and because the defendant at no time objected to the quantity that was being delivered.

In October, 1928, defendant was incorporated and it acquired the assets, liabilities, and business of the Chicago Mill & Lumber Company including the contract involved. The defendant denies that it became liable on the contract, but it took over the business of the contracting company, received the timber as delivered by the plaintiffs over a period of about three years, made payments thereon; and there was substantial evidence to support a finding that it did become liable on the contract.

In March, 1927, the St. Francis Levee Board commenced a suit against the plaintiffs challenging their ownership of the timber and their title to the land. This suit was terminated in August, 1932, in favor of the plaintiffs in this case. Notwithstanding that suit, the plaintiffs continued to cut and deliver timber to the defendant until May, 1931, and the defendant applied the proceeds therefrom on the above-mentioned indebtedness until in 1929 when it was liquidated. Thereafter the defendant held the proceeds of the timber on the ground that title thereto was involved in the suit.

In September, 1931, the defendant notified plaintiffs that it would not continue to receive timber except at a lower price. The plaintiffs accepted this notice as final, and thereafter made no effort to induce the defendant to take the timber, although they were able, ready, and willing to deliver it in accordance with the terms of the contract.

In September, 1931, the defendant furnished plaintiffs a statement showing the sum then due them; and again in 1932, after the levee board suit was terminated, the defendant at the request of the plaintiffs furnished them a statement showing the proceeds of the operations that had accumulated in the hands of the defendant from October, 1929, when the above-mentioned debts were paid in full, to that time, amounting to $9,364.72, which sum on October 10, 1932, was paid to the plaintiffs, or to others at their direction. No credits for interest were included in the statements. Nothing was said at the time these statements were rendered either by plaintiffs or defendant about interest or a claim for damages for defendant's refusal to receive the balance of the timber on the land. One of the plaintiffs testified that he had been informed that the defendant was in financial difficulties; that he purposely said nothing about interest, or a breach of the contract; and that he desired to avoid a controversy about disputed claims because he first wanted to collect the sum the defendant admitted owing the plaintiffs.

On October 12, 1932, counsel for plaintiffs wrote defendant a letter calling its attention to the interest provision of the contract and requesting check in payment. On October 22, 1932, counsel for plaintiffs again wrote defendant relative to the interest item; and again on March 30, 1933, when it was also stated that a claim for damages would be made for refusal to take the balance of the timber. A suit was commenced in April, 1933, to recover on both claims.

The defendant denied owing the plaintiffs the interest item on the ground that it legally retained balances due plaintiffs because of the levee board suit against them, and it denied liability for refusal to receive the balance of the timber on the ground that the plaintiffs had breached the contract by not delivering the timber in accordance therewith. The defendant further alleged that after the suit was commenced by the levee board and after the Chicago Mill & Lumber Company had been made a party defendant and charged with liability for the timber received from the land, a new agreement was made in November, 1927, providing that the plaintiffs were to continue to cut and deliver timber, that the proceeds therefrom were to be applied on the indebtedness until it was paid; that, after a decision in said suit, if favorable to the plaintiffs, a final accounting and settlement would be made; that after said suit was terminated, the final accounting and settlement was made and the defendant on October 10, 1932, paid the plaintiffs the sum of $9,364.72 in full settlement of all obligations under the contract; and further that the sum of $2,779.61 was paid to the plaintiffs from February to July, 1932, with the definite understanding that the contract had been abrogated, was no longer in effect, and that final settlement was being held in abeyance pending the termination of the levee board suit.

The evidence shows that if the plaintiffs are entitled to recover, they should have interest in the sum of $1,666.24 and damages for refusal to receive the balance of the timber in the sum of $19,883.00, or a total of $21,549.24. The plaintiffs made a prima facie case on both claims, consequently we must consider whether the evidence also showed a clear defense.

At the close of the plaintiffs' case the court directed a verdict for the defendant. In ruling on the motion the court said: "Let the record show that the motion is granted upon the ground that when the plaintiffs made the settlement and accepted the money, without notifying the defendant that they intended to claim a breach of the contract and interest upon the money, that they estopped themselves from later claiming these damages for breach of the contract and interest on the money."

The defendant contends: (1) That the plaintiffs are estopped, the ground on which the court sustained the motion for a directed verdict; (2) that there was an account stated and the agreed balance paid; (3) that the interest clause was not applicable; and, if it were, defendant was justified in holding balances without interest because of the suit involving the plaintiffs' title; and (4) that it is not liable for refusal to receive the balance of the timber because the contract was canceled by failure of the plaintiffs to deliver the timber in accordance with the original contract and by the execution of subsequent agreements.

Estoppel.

The essential elements of estoppel, as applicable in this case, are: (1) Ignorance of the party claiming estoppel of the matter asserted; (2) silence concerning matter where there is a duty to speak amounting to misrepresentation or concealment of a material fact; (3) action by the party relying on the misrepresentation or concealment; and (4) damages resulting if the estoppel is denied. Grouf v. State National Bank (C. C. A.) 40 F.(2d) 2; Hirning v. Federal Reserve Bank of Minneapolis (C. C. A.) 52 F.(2d) 382, 82 A. L. R. 297; California Prune & Apricot Growers, Inc., v. El Reno Wholesale Grocery Company (C. C. A.) 15 F.(2d) 839; McCullough v. Satterthwait (C. C. A.) 11 F.(2d) 111; Detroit T. & I. R. Co. v. Detroit & T. S. L. R. Co. (C. C. A.) 6 F.(2d) 845; Central Improvement Company v. Cambria Steel Company (C. C. A.) 210 F. 696; Pettit-Galloway Company v. Womack, 167 Ark. 356, 357, 268 S. W. 353; Indiana Lumbermen's Mut. Insurance Co. v. Meyers Stave & Manufacturing Co., 164 Ark. 359, 261 S. W. 917.

These elements are definitely lacking in this case. (1) The situation was as fully known to the defendants as to the plaintiffs. The contract for the payment of interest on balances due the plaintiffs and for the sale of all the timber on the land was in writing. The measurements and inspections were made and the books kept by the defendant. There was no dispute as to the quantity and variety of timber delivered. The final payment was made on a statement furnished by the defendant. The evidence disclosed no...