Proctor-Gamble Co. v. Warren Cotton Oil Co.

• Decision Date: 13 May 1910
• Docket Number: 5,509.
• Citation: 180 F. 543
• Parties: PROCTOR-GAMBLE CO. v. WARREN COTTON OIL CO. et al.
• Court: U.S. District Court — Eastern District of Arkansas

180 F. 543

PROCTOR-GAMBLE CO. v. WARREN COTTON OIL CO. et al.

No. 5,509.

United States Circuit Court, E.D. Arkansas, Western Division.

May 13, 1910

[Copyrighted Material Omitted]

J. W. &amp M. House, for plaintiff.

Davis &amp Pace and B. L. Herring, for defendants.

TRIEBER District Judge (after stating the facts as above).

The contention of counsel for defendants is that the word 'debt' used in this statute must be given a strict construction and limited to 'a sum of money due by certain and express agreement,' and, as this is an action to recover unliquidated damages for a breach of contract under a statute penal in its nature and in derogation of the common law, it is not a 'debt' within the meaning of the statute.

While there is an irreconcilable conflict among the authorities as to whether a statute of this nature is penal or remedial, and consequently whether it should be liberally or strictly construed, the Supreme Court of Arkansas, in Nebraska National Bank v. Walsh, 68 Ark. 433, 59 S.W. 952, 82 Am.St.Rep. 301, held this identical statute to be remedial and not penal. Counsel for defendants insist that that decision must be limited to the application of the statute of limitations and nothing else. But the opinion of the court does not sustain this contention. Mr. Justice Wood, who delivered the unanimous opinion of the court, after a very careful review of the many conflicting authorities cited by counsel, said:

'We conclude, from these considerations, that the statute is not penal, but highly remedial, even when construed independent of the statute of limitations.'

And in another part of the opinion he said:

'With due deference to all authorities which hold that statutes similar to ours are penal, we are constrained to believe that such views are erroneous, and we fully agree with Mr. Morawetz that 'it is not quite clear what the courts mean to express by saying that statutes of this character are penal, and that they impose upon the directors a penal liability.' 2 Mor.Corp. § 908. The better view, as Judge Thompson says, is that expressed by the Supreme Court of Georgia, in the early case of Neal v. Moultrie, 12 Ga. 116. This opinion is unusually clear and strong.'

This construction of the statute by the highest court of the state is conclusive, not only on this court, but all national courts, including the Supreme Court. Chase v. Curtis, 113 U.S. 452, 5 Sup.Ct. 554, 28 L.Ed. 1038; Huntington v. Attrill, 146 U.S. 657, 13 Sup.Ct. 224, 36 L.Ed. 1123; Continental National Bank v. Buford, 114 F. 290, 53 C.C.A. 14.

In determining the question involved, it is important to ascertain whether the word 'debt' was used by the lawmaking body in that restricted sense as claimed by counsel for defendants, or in the broader sense, to cover all demands arising from contracts express or implied. In Am. & Eng. Enc. of Law (2d Ed.) 983, the general definition of the word is stated to be: 'In common parlance the word 'debt' is sometimes used to denote any kind of a just demand, and has been differently defined owing to the subject-matter of the statutes in which it has been used; and while ordinarily it imports a sum of money arising upon a contract express or implied, in its most general sense it means that which one person is bound to pay or perform to another.'

The notes cited by the author give the various definitions found in the law dictionaries, and need not be repeated here.

The Standard Dictionary gives as one of the definitions:

'The obligation resting upon one person to pay or perform something that is due to another; the state or condition of being indebted to another.'

The courts which have defined the word 'debt' have been influenced to a great extent by the context of the statute in which it was used, its objects, and the existing mischief sought to be remedied. A reference to these decisions, the language used in the statute under consideration, and the object sought to be attained by its enactment remove all doubt as to the construction to be placed upon this statute.

In Fisher v. Consequa, 2 Wash.C.C. 385, Fed. Cas. No. 4,816, Mr. Justice Washington, in speaking of an action for damages arising from a breach of contract said:

'The uncertainty of the sum does not, in the common understanding of mankind, render it less a debt. A promise, whether express or implied, to pay as much as certain goods or labor are worth, or as much as the same kind of goods may sell for on a certain day on a certain market, or to pay the difference between the value of one kind of goods and another, creates in common parlance a debt.'

In New Jersey Insurance Co. v. Meeker, 37 N.J.Law, 282, 301, the court, in a very learned opinion delivered by Chief Justice Beasley, defined it as a word 'of large import, including not only debts of record and judgment, and debts by specialty, but also obligations arising on an implied contract to a very wide extent, and in its popular sense includes all that is due to a man in any form of obligation or promise.'

This definition was followed with approval by the Supreme Court of Massachusetts in Gray v. Bennett, 3 Metc. 522, 526.

In New Haven Steam Sawmill Co. v. Fowler, 28 Conn. 103, 108, it was held that damages due for a breach of contract was a debt within the attachment statute of that state. The same conclusion was reached in Stiff v. Fisher, 2 Tex.Civ.App. 346, 21 S.W. 291.

In Dunsmoor v. Furstenfeldt, 88 Cal. 522, 26 P. 518, 12 L.R.A. 508, 22 Am.St.Rep. 331, the court held:

'Any kind of obligation of one man to pay money to another is a debt.'

And quoted with approval from Rodman v. Munson, 13 Barb. (N.Y.) 197:

'A debt signifies what one owes. There is always some obligation that it shall be paid; but the manner in which it is to be paid, or the means of coercing payment do not enter into the definition.'

In Equitable Life Insurance Co. v. Board of Equalization, 74 Iowa, 178, 181, 37 N.W. 141, it was held that, under a statute authorizing the deduction of 'debts' from the credits list for taxes, the profits held for the stockholders are debts which should be deducted. Mr. Justice Beck, who , said:

'Here is a claim by the stockholders for which the corporation is liable. It is not now matured, but will become payable in the future. The amount which the stockholder will receive may not now be certainly determined. The corporation being bound to pay the stockholders its obligations, any credit creates a debt according to the definition above given.'

In Cheney v. Straube, 35 Neb. 521, 53 N.W. 479, a liability arising from a breach of a covenant of warranty was held to be a debt within the attachment statute, and in Dryden v. Kellogg, 2 Mo.App. 87, it was held that a liability upon a breach of warranty is a debt within the meaning of the statute similar to this providing for the liability of stockholders of corporations.

In Barber v. City of East Dallas, 83 Tex. 147, 18 S.W. 438, it was held:

'In common parlance the word 'debt' is sometimes used to denote any kind of just demand, and has been differently defined, owing to the subject-matter of the statute in which it was been used, and while ordinarily it imports a sum of money arising upon a contract express or implied, in the more general sense it means that which one person is bound to pay or perform for another.'

In Green v. Easton, 74 Hun, 329, 26 N.Y.Supp. 553, officers of a corporation who had failed to comply with the requirements of the statute of that state were held liable for a debt arising from a breach of contract, although in that state it is the settled rule of law that such a statute is penal in its nature and must be strictly construed.

In Felker v. Standard Yarn Co., 148 Mass. 226, 19 N.E. 220 a tax assessed against the...