Spencer v. Duplan Silk Co.

• Citation: 112 F. 638
• Decision Date: 15 January 1902
• Docket Number: 6.
• Parties: SPENCER v. DUPLAN SILK CO.
• Court: U.S. District Court — Eastern District of Pennsylvania

112 F. 638

SPENCER v. DUPLAN SILK CO.

No. 6.

United States Circuit Court, E.D. Pennsylvania.

January 15, 1902

R. E Wright and T. M. B. Hicks, for plaintiff.

Frank Jacobs and W. J. Turner, for defendant.

J. B McPHERSON, District Judge.

The facts in this case were not disputed, and may be briefly outlined as follows: Bennett & Rothrock, who were contractors and builders, had agreed to erect a silk mill for the defendant in Hazleton, Pa. The fifth article of the contract is in these words:

'Art V. Should the contractor at any time refuse or neglect to supply a sufficiency of skilled workmen, or of materials of the proper quality, or fail in any respect to prosecute the work with promptness and diligence, or fail in the performance of any of the agreements herein contained, such refusal, neglect, or failure being certified by the architects, the owner shall be at liberty, after . . . days' written notice to the contractor, to provide any such labor or materials, and to deduct the cost thereof from any money then due or thereafter to become due to the contractor under this contract; and if the architects shall certify that such refusal, neglect, or failure is sufficient ground for such action, the owner shall be at liberty to terminate the employment of the contractor for the said work, and to enter upon the premises and take possession, for the purpose of completing the work comprehended under this contract, of all materials, tools, and appliances thereon, and to employ any other person or persons to finish the work, and to provide the materials therefor; and, in case of such discontinuance of the employment of the contractor, he shall not be entitled to receive any further payment under this contract until the said work shall be wholly finished, at which time, if the unpaid balance of the amount to be paid under this contract shall exceed the expense incurred by the owner in finishing the work, such excess shall be paid by the owner to the contractor, but if such expense shall exceed such unpaid balance the contractor shall pay the difference to the owner. The expense incurred by the owner as herein provided, either for furnishing materials or for finishing the work, and any damage incurred through such default, shall be audited and certified by the architects, whose certificate thereof shall be conclusive upon the parties.'

The contract was not recorded, and there is no evidence that any of the creditors knew of its provisions. On January 13, 1901, a large quantity of building material was upon the ground in the neighborhood of the mill; having been brought to that point for the purpose of being built into the structure in accordance with the contract. This material was the absolute property of Bennett & Rothrock; having been bought with their money, or on their credit, and delivered to them without conditions. Upon January 13th, Bennett & Rothrock, having filed a voluntary petition, were duly adjudged bankrupts; and W. H. Spencer, the present plaintiff, was afterwards elected their trustee. He thereupon demanded delivery of the material from the defendant, by whom possession had been taken, but delivery was refused, and the material was converted to the defendant's use by being built into the mill. This action of trover was accordingly begun to recover the value of the property thus converted.

Two defenses are urged to the suit, of which the first is founded on the fifth article of the contract, and upon certain action taken thereunder. This action was as follows: E. J. Lipps is named in the contract as general manager of the defendant company, and William Steele & Son as architects; these three persons being empowered to act for the purposes of the contract as agents of the silk company. Early in January, owing to the increasing financial difficulties of Bennett & Rothrock, work on the building had nearly ceased; and on January 6th, or perhaps even earlier, the contractors practically abandoned the enterprise. On January 11th Mr. Lipps, whose office was in South Bethlehem, some miles distant from Hazleton, addressed the following letter to the defendant:

'South Bethlehem, January 11, 1900.

'Duplan Silk Company, New York City, N.Y.: I, the undersigned, acting as overseer and contractor for the architects of the Duplan Silk Company building, in course of construction at Hazleton, Pennsylvania, do hereby certify that the contractors, Bennett & Rothrock, of Williamsport, Pa., through their failure since January 8, 1900, to prosecute the work on said buildings in accordance with their contract with said Duplan Silk Company under date of August 30, 1899, have given just cause for the owners to terminate said contract as provided therein.

E. J. Lipps.'

This letter states that Mr. Lipps was acting as 'overseer and contractor for the architects for the Duplan Silk Company building in course of construction at Hazleton, Pa.,' but there is no evidence that he had any such authority to act for the architects. He himself did not so testify, nor were the architects called to corroborate the allegation contained in the letter; while the contract declares him to be, what in truth he was, the general manager of the defendant, and one of its agents for the purposes of the contract. The letter just quoted was delivered by Mr. Lipps to himself as the general manager of the defendant, and thereupon, acting now as the Duplan Silk Company, he wrote and mailed to Bennett & Rothrock, upon the same day, the following letter:

'South Bethlehem, January 11, 1900.

'Messrs. Bennett & Rothrock, Williamsport, Pa.-- Dear Sirs: Inclosed we send you a notification forwarded to us by Mr. E. J. Lipps, who acts as contractor and overseer for the architects in the construction of the mill at Hazelton.

'Yours, truly,

Duplan Silk Company.'

This letter was inclosed with a communication also written by Mr Lipps, the 'notification' referred to therein being the first of the letters...