Pulaski Stave Co. v. Miller's Creek Lumber Co.

• Decision Date: 11 May 1910
• Citation: 138 Ky. 372,128 S.W. 96
• Parties: PULASKI STAVE CO. et al. v. MILLER'S CREEK LUMBER CO. et al.
• Court: Kentucky Court of Appeals

128 S.W. 96

138 Ky. 372

PULASKI STAVE CO. et al. v. MILLER'S CREEK LUMBER CO. et al.

Court of Appeals of Kentucky.

May 11, 1910

Appeal from Circuit Court, Lee County.

"To be officially reported."

Action by the Pulaski Stave Company and others against the Miller's Creek Lumber Company and others. From a judgment dismissing the petition, plaintiffs appeal. Reversed, and remanded with directions, and for a new trial.

W. O Bradley, Hugh Riddell, and Gourley, Redwine & Gourley, for appellants.

Robt. H. Winn and Lewis Apperson, for appellees.

SETTLE J.

The appellants, Pulaski Stave Company, Incorporated, and Oscar Tate, G. W. Tate, W. A. Nunnelly, and J. C. Parker, partners doing business under the firm name, Pulaski Stave Company before that company became incorporated, brought this action in the court below for the benefit of the Pulaski Stave Company, Incorporated, against the appellees, Miller's Creek Lumber Company, Incorporated, and W. C. Taylor, Bruce C. Taylor, J. Will Clay, and M. C. Clay, to recover damages for the alleged violation by the latter of the following contract:

"Memoranda of agreement, made this 22d day of March, 1905, by and between the Miller's Creek Lumber Company, composed of W. C. Taylor and Bruce C. Taylor, of Menifee county, Kentucky, and J. W. Clay and M. C. Clay, of Montgomery county, Kentucky, parties of the first part, and G. W. Tate, of Somerset, Kentucky, party of the second part, witnesseth: That the said first party, for and in consideration of the covenants hereinafter expressed and the payments to be made as herein stated, sell and agree to deliver as hereinafter stated to the second party all of the sound, merchantable, white oak sawlogs 14 inches and up in diameter, to be cut from the timber now standing on the tract of land of said first party purchased by and through them from the Beattyville Mineral Timber Company, as per deed of the 15th of March, 1905, located on Big Sinking creek, in Lee county, and lying east of the Flahaven line, containing 2,243 acres, more or less. And it is understood that all of the sawlogs of the above description contained in the above-described boundary of land are to be cut and applied on this contract as hereinafter stated. The above logs to be cut from 9 to 16 feet as may be agreed on from time to time, excepting that all common and better white oak butt cut logs 22 inches and up in diameter are to be cut 12 feet, or 10 and 12 feet.

"Delivery.--The said first party hereby agrees to deliver the aforesaid logs to one of the two different mill sets, the location of which is to be agreed on hereafter; and the said first party to furnish the mill sites for the said two sets.

"Measurement.--All logs to be measured by Doyle's rule, from the small end and narrow way, for the sound timber and lumber they may contain, and, unless otherwise agreed hereafter, each party is to have its scaler to make measurement of all logs as they are to be delivered by the second party, which joint measurement and inspection is to be final.

"Prices.--The said second party agrees to pay the first party as full consideration therefor at the price of $9.00 per M ft.

"Terms.--Being cash payments to be made on or before the 15th day of each month for all logs taken up during the previous month.

"It is hereby agreed that the said party is to make a good and sufficient bond for the performance of this contract. It being further agreed between the parties of this contract that the second party will not operate, or in any manner interest himself, directly or indirectly, in a store on or near the lands of the first party, or upon the lands of the Simcoe Land Company, the said party to have the exclusive right and privilege. Executed in duplicate, this 22d day of March, 1905. Miller's Creek Lumber Company,

"By W. C. Taylor, Treas.

G. W. Tate.

"Witness: G. A. Roy.

"E. W. Watts."

The said guaranty is as follows:

"We, the undersigned, personally guarantee the faithful performance of the above contract, and further guarantee that the cutting and delivering of logs shall begin on or before June 1, 1905. W. C. Taylor.

"Bruce C. Taylor.

M. C. Clay.

J. Will Clay."

It appears from the averments of the petition that after the above contract was made G. W. Tate became a partner of W. A. Nunnelly in the firm of Tate & Nunnelly, and that for a valuable consideration Tate assigned the above contract and his rights thereunder to that firm; that in 1905 Oscar Tate and J. C. Parker became members of the firm of Tate & Nunnelly, the name of which was changed to that of the Pulaski Stave Company, following which G. W. Tate and the firm of Tate & Nunnelly assigned and transferred the contract in question, and the mill, machinery, and other property of the firm, to the Pulaski Stave Company. On January 1, 1906, the Pulaski Stave Company, by proper articles executed and recorded as required by law, became duly incorporated, and in so doing retained as its corporate name the name it had borne as a partnership. To the corporation thus created the contract made by G. W. Tate with the Miller's Creek Lumber Company, and all rights thereunder of the Pulaski Stave Company and the partners composing same, together with all property owned by the firm, was assigned and conveyed. It is averred in the petition that G. W. Tate executed a bond with approved security for the faithful performance of each duty and undertaking assumed by him in the contract with the appellee Miller's Creek Lumber Company, and that he and his several assignees did in fact comply with every such duty and obligation, the petition setting forth the several particulars in which this was done, and that Tate by appellee's direction located the "mill set" at Bald Rock fork of Miller's Creek, in Lee county, in which county the contract was to be performed; the site so selected being wholly of appellee's choosing, and the only one provided for by the contract.

The petition then proceeds to charge that the appellee Miller's Creek Lumber Company violated the contract in question in the following particulars: (1) That it delivered to appellants at their mill site only 600,000 feet of the 4,000,000 feet of logs on the land described in the contract that the logs so delivered were of a quantity and value inferior to those called for in the contract, and also to the other logs remaining on the land, and were not worth exceeding $7 per M feet, which was $2 per M less in value than allowed by the contract; but the logs thus received appellants paid for at $9 per M feet, expecting to be reimbursed, and being assured by appellee Miller's Creek Lumber Company that they would be reimbursed, for the loss of $2 per M feet, in settlements to be made for other logs of the size and quality required by the contract, and which by its terms appellee obligated itself to deliver, but did not in fact deliver; that by the alleged overpayment to appellee of $2 per M feet upon the inferior logs thus delivered them by it, and for which, it was further alleged, the latter agreed to account in settlements to be made for other and better logs to be thereafter delivered, but were never delivered, appellants claimed to have sustained a loss and been damaged in the sum of $1,200, for which judgment was prayed in the petition. (2) It was in substance further alleged in the petition that, when G. W. Tate made with the appellee Miller's Creek Lumber Company the contract in question, the latter and its guarantors, the appellees W. C. Taylor, Bruce C. Taylor, M. C. Clay, and J. Will Clay, knew that Tate was a manufacturer of staves, and that the timber they therein agreed to furnish him was to be made into staves, and also knew that his assignees, the Tate & Nunnelly Stave Company and the appellant Pulaski Stave Company, were engaged in the same business, and that they were to manufacture into staves the timber appellees were required by the contract to furnish, yet appellees in violation of their contract failed to deliver at the "mill site" of the appellant Pulaski Stave Company at least 3,400,000 feet of the logs they had contracted to deliver, informed it they would not do so, and in fact sold the logs to other parties; that the logs appellees thus failed and refused to deliver, the appellant Pulaski Stave Company, its assignors, Tate & Nunnelly Stave Company and G. W. Tate, had, at the time of the making of the contract between the latter and appellees, contracted to make into staves and deliver to other parties at the price of $54 per thousand; that appellants' assignors, Tate & Nunnelly and G. W. Tate, entered into these contracts, and were induced to do so, by reason of their contract with appellees, and that the latter, when they contracted with appellants' assignors to furnish them the logs mentioned, knew that they had contracted to make them into staves and deliver them to other persons. (3) It was also alleged that the 3,400,000 feet of logs appellees failed to deliver appellant, as they had contracted to do, would have made 1,500,000 staves, and upon these at $54 per thousand, the price at which appellant had contracted them to other parties, it would have made a profit of $16 per thousand, or $24,000, and that it lost and was damaged in that amount by the failure of appellees to comply with their contract, and for this amount ($24,000) appellants likewise prayed judgment. (4) It was also alleged that, owing to the failure of appellees to deliver to appellant the logs they undertook by their contract to furnish it, the latter was compelled to obtain, and did obtain, for the parties to whom it contracted the staves it expected to make from appellees' logs, other logs out of which to make the staves, and this after great trouble...