St. Louis Brewing Ass'n v. Hayes

• Decision Date: 19 March 1901
• Docket Number: 935.
• Citation: 107 F. 395
• Parties: ST. LOUIS BREWING ASS'N v. HAYES et al.
• Court: U.S. Court of Appeals — Fifth Circuit

107 F. 395

ST. LOUIS BREWING ASS'N v. HAYES et al.

No. 935.

United States Court of Appeals, Fifth Circuit.

March 19, 1901

This is a suit brought to recover from the principal and sureties on a certain bond, which is in the words and figures following to wit 'The State of Texas, County of Galveston. Know all men by these presents, that we, the undersigned, George Hayes, as principal, and other subscribers hereto, Nicholas Bohn and H C. Kerst and George Schwoebel, as sureties, acknowledge ourselves bound to pay unto the St. Louis Brewing Association, Klaussman Brewery Branch, the sum of twenty-five hundred dollars ($2,500.00). The condition of this obligation is such that whereas, the said George Hayes has been appointed agent of said St. Louis Brewing Association Klaussman Brewery Branch, in and for the city of Galveston Texas, and the said St. Louis Brewing Association, Klaussman Brewery Branch, has agreed to ship beer to said Hayes, from time to time, for the period of one year, beginning on November 18th, 1893, and ending on November 18th, 1894: Now, if the said Hayes shall pay, or cause to be paid, to the said St. Louis Brewing Association, Klaussman Brewery Branch, by said Hayes on account of such shipments of beer made to him or to his order during said time,-- that is to say, from November 18th, 1893, to November 18th, 1894,-- all of said payments by said Hayes to be made promptly in the ordinary course of business and within said dates last mentioned, then this obligation to be and become null and void; otherwise, to remain in full force and effect.

'Witness our hands at Galveston, Texas, this 20th day of November, 1893.

'(Signed)

N. Bohn.

'Geo. Schwoebel.

'H. C. Kerst.'

The appointment of Hayes as agent, referred to in the bond, contained, among others, a provision that the said Hayes was to pay cash on receipt of bill of lading for all beer delivered.

The record shows the following plea setting up the issue as to the release of the sureties: 'And these defendants further say that the said Hayes failed in business and became insolvent on or about July, 1894; that prior thereto, in April, May, or June, 1894, these defendants, mindful of the fact that they were sureties on his bond, determined to make some inquiry into the manner in which he had been conducting business with plaintiff and of the state of the account existing between him and the plaintiff, and with such end in view, did institute an inquiry to the plaintiff, or its duly-authorized agents, to wit, one Waterman, who was then and there the agent of plaintiff, and one H. J. Panzer, who was then and there the auditor of plaintiff, and these defendants were informed by said agents of plaintiff, upon the inquiry aforesaid, that the said Hayes was in all things keeping and complying with and fulfilling the terms of his contract with the plaintiff; that thereupon these defendants, relying entirely upon the statement so made to them by plaintiff's said agents, exercised no further diligence in looking after the affairs of said Hayes and plaintiff, arising from said contract, and believed that said Hayes was in no wise indebted to the plaintiff, and rested under said belief until long after said Hayes had failed in business and became insolvent, until on, to wit, the 4th day of October, 1894, when the suit was filed against them; that plaintiff had never made any demand upon these defendants for the payment to them of the obligations of said bond, and had never in any wise notified these defendants that said Hayes was indebted to them and defendants were in entire ignorance thereof until the filing of this suit; that had it not been for the false and deceitful statements made to these defendants by plaintiff, through its agents, as aforesaid, that these defendants could and would at that time have protected themselves to the extent of said bond; that said Hayes at that time was well worth the amount of said bond, and was then a man of some credit and resources, and could have and would have protected these defendants; that by reason of the false and fraudulent statements aforesaid, and the willful misleading of these defendants by plaintiff, through its said agents, and the failure to notify these defendants of any liability under said bond prior to suit and within a reasonable time after the default of the said Hayes, which these defendants say it was the duty of the plaintiff so to do upon the first default of said Hayes,-- that is to say, upon his failure to pay for the first shipment of goods upon receipt thereof of the bill of lading,-- they are discharged from all liability on said bond, and the plaintiff is and ought to be estopped from prosecuting any other and further action against them thereunder.'

The bill of exceptions shows, with other evidences bearing on the same issue, the following:

'Nicholas Bohn, one of the defendants, being duly sworn, testified in his own behalf as follows: 'I am Nicholaus Bohn, one of the defendants in this case. I signed the bond for George Hayes as a surety on the 20th of November, '93. I know a gentleman by the name of Waterman. He was a traveling salesman, collected for the Klaussman Brewery Branch, and collected for the Klaussman Branch,-- the Klaussman Brewery Branch of the St. Louis Brewing Association. I met Mr. Waterman in the year 1894. I made it my business to hunt him up. I went out to the beach to see Mr. Waterman in Galveston, Texas. I believe it was about April, 1894. I saw him (Mr. Waterman) at a couple of places. The first time I made it my special business to hunt him up. Then I met him in the city and asked him about it. I made it my special business to see Mr. Waterman to find out how George Hayes stood up to his contract,-- how he was paying up. (Plaintiff objects to any testimony from Mr. Bohn as to any conversation which he had with Mr. Waterman or any other agent of the plaintiff in April, '94, or at any other time prior to the maturity of this contract, for this reason: the contract which Mr. Bohn, Mr. Schwoebel, and Mr. Kerst have signed expressly provides that they hold themselves liable to the plaintiff to the extent of $2,500 for any and all indebtedness which may accrue to the plaintiff, to the extent of $2,500, between the 18th day of November, 1893, and the 18th day of November, 1894, and therefore what any agent of the plaintiff may have said to Mr. Bohn as to the condition of accounts between Hayes and the plaintiff, or as to what may have transpired between the plaintiff itself and any of these parties that signed the bond, is wholly immaterial, because their liability was not fixed until the termination of this contract, when it was then to be ascertained and determined. Plaintiff makes this general objection so as not to interrupt counsel in his examination of witness, so that plaintiff can have its bill of exceptions.) Mr. Waterman was the traveling agent of the Klaussman Branch of the St. Louis Brewing Association. He attended to the sales, collected money, and attended to their business. He was sent out here. He went around collecting money for the different agencies, and settled up the accounts of the brewery with the agents, and also sold beer,-- generally looked after the business. Looked after the business of the Klaussman Branch of the St. Louis Brewing Association as traveling salesman of the St. Louis Brewing Association, Klaussman Brewery Branch. Q. Now, I will ask you the same question that the gentleman objected to. You called on him, then, to find out how Hayes was paying up the company? A. Yes, sir. I called to see Mr. Waterman, and asked him how Mr. Hayes was paying the company,-- how he was paying up. He told me he was one of the best agents-- The court' I will admit the evidence, subject to hearing whatever authorities may be used in the argument,-- according to what opinion I may have then about it. The Witness: He said George Hayes was one of the best agents they had. He was prompt, and he was only behind about $100, and 'you are all right.' I said, 'I wish you would notify me to that effect if anything goes wrong, or any other way. ' That was in April, 1894. Mr. H. J. Panzer was auditor for that company, St. Louis Brewing Association, Klaussman Branch. Q. What did he do? A. I saw him go into the office of George Hayes and look over the books. I have been in the office. His business was to go over the accounts and look at the books of agents, and settle up the accounts. I thought that was the proper party to find the particulars from. He looked over the books. I had a conversation with Mr. Panzer. He told me the same think that Waterman did. I first saw Mr. Panzer in the beginning of June, 1894, on Twentieth and Mechanic streets in the city of Galveston. Mr. Panzer said Hayes was all right. All he was behind was $100 or $125. Waterman said only about $100, but he went up to $125. That was in June, '94, Mr. Panzer told me that Hayes was all right; if he was behind at all, it did not exceed $100 or $125.

Q. Now Mr. Bohn, if Mr. Waterman and Mr. Panzer had told you at that time that George Hayes was $3,000 or more in debt, what action would you have taken? (Counsel for plaintiff objects to this on the ground it asks for his conclusions,-- what he would have done under certain state of facts. If the evidence is admissible at all, counsel for plaintiff thinks the only proper evidence that the defendant may introduce in that connection would be that he could follow up what Mr. Bohn has stated already with reference to the condition of Mr. Hayes at that time, and let the jury draw their conclusions, and not let Mr. Bohn supply those conclusions for the jury. The ordinary practice would be to let the jury conclude from the evidence what would or could...