Pacific Can Co. v. Hewes, 8487.
| Decision Date | 02 March 1938 |
| Docket Number | No. 8487.,8487. |
| Citation | 95 F.2d 42 |
| Parties | PACIFIC CAN CO. v. HEWES. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Charles R. Denney, of Everett, Wash., and Frank P. Helsell, of Seattle, Wash. (Hulbert, Helsell & Bettens, of Seattle, Wash., of counsel), for appellant.
D. G. Eggerman and DeWitt Williams, both of Seattle, Wash. (Eggerman & Rosling, of Seattle, Wash., of counsel), for appellee.
Before GARRECHT, MATHEWS, and HANEY, Circuit Judges.
From a judgment for $21,523.73, rendered in favor of appellee, in an action brought by him to recover from appellant for fruit delivered by appellee to Cleary Packing Company, appellant has appealed.
The C. & H. Packing Company, Inc., a Washington corporation, engaged in a canning business, became financially involved in 1934, and it was doubtful whether or not it would be able to operate during the 1935 canning season. Appellant, a Nevada corporation, engaged in the business of manufacturing and sale of cans, wrote C. & H. Packing Company, Inc., on April 30, 1935 in part as follows:
Thereafter, Cleary Packing Company, Inc., hereinafter called the packing company, was organized under the laws of Washington. The first meeting of the board of directors thereof was held on August 14, 1935. At that time a resolution was adopted authorizing lease of the plant of C. & H. Packing Company, Inc. The minutes also state that appellant was "furnishing the necessary additional capital wherewith to operate during the coming season," and a resolution authorizing entry into an agreement with appellant was adopted.
The packing company leased the plant from C. & H. Packing Company, Inc. It also entered into an agreement with appellant wherein appellant agreed to lend to the packing company an additional 5 per cent. of the selling price of canned goods, after a bank had lent 65 per cent. of such selling price. Both loans were to be secured by warehouse receipts, the lien of the bank to be superior to appellant's lien. Among other provisions, it was provided that appellant should designate an office manager, and that all money received by the packing company could be paid out only by checks countersigned by such office manager. One Cleary, as third party to the agreement, agreed to pledge all stock, except qualifying shares, he owned in the packing company as additional security for the loans to be made by appellant. In another agreement between the packing company and appellant dated at the same time, it was recited that the packing company had agreed to purchase cans from appellant.
On August 30, 1935, a letter was written to the packing company signed with appellant's name and underneath that name was "Richard J. Gosse." The contents designated one Mony as office manager, and outlined his functions. One paragraph was as follows:
A copy of the letter was sent to the bank, one to appellant, and another copy was sent to appellee, with a letter signed in the same manner indicated above in which it was stated "you will see we are endeavoring to protect your interest as well as our own."
Appellee was engaged in a fresh fruit brokerage business and sold fruit to the packing company in 1935. His first shipment was made on August 23, 1935. Many subsequent shipments were made from that time during the following month. A ten-day sight draft was sent to the bank for each shipment. Some were paid, but a number of drafts totaling $21,523.73 were never paid.
On January 2, 1936, appellee commenced this action in a Washington state court, against appellant to recover the amount of the unpaid drafts. It was removed to the court below on appellant's petition. The complaint alleged that appellee shipped raw fruit upon ten day drafts and "upon appellant's oral agreement that appellant would cause such drafts to be promptly paid at maturity out of the funds advanced upon the warehouse receipts" and that appellant "would grant and accord plaintiff priority of payment from said advances, inferior only to the actual labor cost involved in the cannery operation." It was also alleged that the "oral contract and agreement of the said Gosse as resident Vice-President of appellant was under date of August 30, 1935 confirmed in writing." It was further alleged that Gosse acting in appellant's behalf, after some shipments had been made by appellee, represented that the agreed priority of payment would be complied with, but that appellant violated the agreement and had become unjustly enriched at the expense of appellee in the sum of $41,500, because it "required that the priority of payment * * * be ignored and that appellant be paid for the cans * * * in advance of payment" for "such fresh fruit" furnished by appellee.
The complainant also alleged that appellant caused the packing company "to be organized under its supervision" and that the packing company's plant was "operated under the supervision and control of appellant during the canning season of 1935"; that appellant "secured and now holds voting control of all the capital stock of the" packing company and "selected and dictated the personnel of the officers and directors" thereof "to conduct the business under the control and dictation of" appellant; that appellant "placed its own nominee in charge as Office Manager under an arrangement that no money could be disbursed from said operation except by such nominee under appellant's control and supervision"; and that therefore "the operation of canning fruit in" the packing company's plant "during the season of 1935 * * * has been and is the operation of appellant itself."
In its answer, appellant denied most of the allegations of the complaint, and asserted five affirmative defenses: (1) That the oral agreement was within the statute of frauds; (2) that if any such agreement was made by Gosse, he acted without the actual or apparent scope of his authority; (3) that there is a misjoinder of causes of action; (4) that prior to September 25, 1935, appellee discovered that the cans were being paid out of the proceeds of loans; that there were insufficient funds to pay for both the cans and the drafts; that appellee continued to deliver fruit anyway, and that he is estopped to claim damages; (5) that because of the knowledge of appellee set forth in the fourth affirmative defense, appellee waived any right to recover damages.
The jury returned a verdict for appellee, judgment was entered thereon, and appellant has appealed.
There was oral evidence tending to prove the agreement alleged, to the introduction of which appellant objected and excepted to the action of the court in overruling the objections. The objections were based on the contention that the agreement was within the statute of frauds.
Appellant contends that the agreement alleged in the complaint was a special promise to answer for the debt of the packing company and was void under the statute of frauds because it was not written. Remington Revised Statutes of Washington, § 5825. We believe that the statute has been construed to mean that if a defendant promises to pay a debtor's debt out of the debtor's funds, it is not within the statute. Guth v. First National Bank, 137 Wash. 280, 242 P. 42. Such is the case here, and the construction is controlling. The cases cited by appellant are ones where the promise was to pay out of defendant's funds, not the debtor's, and are not, we believe, in point.
The court instructed the jury with regard to the authority of Gosse, to which appellant excepted, on the ground that the evidence that Gosse acted within the scope of his authority was insufficient to warrant submission of the question to the jury.
The letter of April 30, 1935, stating that appellan...
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