Pratt v. York

• Citation: 248 S.W. 492,197 Ky. 846
• Parties: PRATT v. YORK.
• Decision Date: 23 February 1923
• Court: Court of Appeals of Kentucky

248 S.W. 492

197 Ky. 846

PRATT v. YORK.

Court of Appeals of Kentucky.

February 23, 1923

Appeal from Circuit Court, Greenup County.

Action by W. I. Pratt against J. F. York. Judgment for defendant and plaintiff appeals. Motion for appeal sustained, and judgment reversed, with directions.

J. S Fullerton, of Ashland, for appellant.

S. S Willis, of Ashland, for appellee.

THOMAS J.

Appellant and plaintiff below, W. I. Pratt, filed this ordinary action against the partnership of Gilly Bros. & Co., a firm of which appellee and defendant below, J. F. York, was a member seeking to recover a judgment against the members of the firm on four promissory notes, which defendants as a partnership executed to the Brennard Manufacturing Company on December 11, 1916, and aggregating $430. The notes were executed by appellee, York, in the name of his firm. The other members of the firm were not summoned, and in his separate answer he denied they were firm obligations, and also denied that the obligee in them, the Brennard Manufacturing Company, had ever indorsed them to plaintiff. In another paragraph his answer alleged "that the said writings and each of them was obtained from this defendant by fraud, covin, and misrepresentation of the said Brennard Manufacturing Company, its agents, and servants," and that plaintiff had notice thereof "long before they came into his hands." Another paragraph pleaded that the Brennard Manufacturing Company was a partnership and that, before entering into the contract with the firm of Gilly Bros. & Co., forming the consideration for the notes sued on, it had not filed in the office of the clerk of the Greenup county court the statement required by section 199b1 of the Kentucky Statutes, and such failure was relied on as a defense to a recovery. The reply denied the defense of fraud, covin, and misrepresentation, and in avoidance of the failure to comply with the section of the statute, alleged that the transaction out of which the indebtedness was incurred was an interstate one and that the provisions of the statute did not apply to it. The rejoinder put in issue that avoidance, and, upon trial before the court, a jury having been waived, the petition was dismissed. Plaintiff's motion for a new trial was overruled, and he has filed the transcript in this court with a motion for an appeal. A number of alleged errors are urged in brief for appellant, but we deem it necessary to discuss only those referred to below.

The Brennard Manufacturing Company is a partnership composed of T. O. Loveland and J. L. Records, which is located at Iowa City, Iowa, and its business is to sell to merchants plans and premiums for popularity contests similar to that involved in the case of Commercial Security Co. v. Archer, 179 Ky. 842, 201 S.W. 479, and the same as was involved in the case of Pratt v. Rounds, 160 Ky. 358, 169 S.W. 848. Through the solicitations of an agent, the firm of Gilly Bros. & Co., engaged in business in Russell, Ky. gave an order to the Brennard Manufacturing Company for a list of premiums, including a piano, some watches, silverware, and other articles, as well as advertising matter, all of which were set out in detail as a part of the contract, and the firm agreed to and did execute its promissory notes in consideration therefor, aggregating $640, two of which, aggregating $210, were paid. The Brennard Manufacturing Company agreed to send an organizer to assist the firm in putting into operation the contest and in conducting it, at least until its members became familiar with the method, and who was to remain with the firm "for such a period as Brennard Manufacturing Company may deem necessary." The company further agreed in the contract to conduct all the correspondence "with contestants and clubs in conducting and managing the entire trade extension campaign." It furthermore agreed that if, during the year in which the contest was conducted, one-half of one per cent of the gross sales of the firm of Gilly Bros. & Co. did not amount to $640, it would pay the deficiency, but, in order for it to be so obligated, Gilly Bros. & Co. agreed to do certain things with reference to conducting the contest, and to promptly pay their notes as they fell due.

That contract was subject to the approval of the Brennard Manufacturing Company, which was done, and the goods were to be shipped f. o. b. cars at the point of shipment. That was done, and in due time they were received at Russell, Ky. Before their arrival, however, a change was made in the firm of Gilly Bros. & Co., whereby it was converted into a corporation, and some of its old members passed out while others became interested as stockholders, but defendant, York, remained with the firm and to some extent actively participated in managing and conducting its affairs. An active member, who became interested in the business for the first time after the corporation was formed, was W. M. Jones, who seems to have been the chief manager of the business from the time he became interested in it. The corporation received the goods and adopted the contract made by its predecessor, and, within the time stipulated, as we construe the contract, an organizer was sent to perform the duties agreed upon therein and remained there about one week, during which time Jones wrote a letter to the Brennard Manufacturing Company in which he said:

"I consider that she (the organizer) has done remarkably well in getting our clubs organized. She has been the most faithful worker I have ever seen. She never tires and maintains her good nature wonderfully. If the system is not a success it will be certainly no fault of hers, and if you work your end as well as she worked hers here at this end, we will undoubtedly win."

The premiums were distributed to those who, under the plan, won them, and the business of the firm that year was increased by about $9,500, although the defendant firm stated that they expected it to increase to $138,000, from $115,000 the year previous.

The only fact, as we view the evidence, upon which any violation of the contract by Brennard Manufacturing Company could possibly be based, is the one made by counsel for defendant that it obligated itself in the contract that the gross receipts of the firm of Gilly Bros. & Co. should be not less than $138,000 during...