Wood Naval Stores Export Ass'n v. Latimer (State Report Title: Wood Naval Stores Export Assn. v. Gulf Naval Stores Company)

• Decision Date: 05 April 1954
• Docket Number: No. 38977,38977
• Citation: 71 So.2d 425,220 Miss. 652
• Parties: WOOD NAVAL STORES EXPORT ASS'N v. LATIMER et al. *
• Court: Mississippi Supreme Court

Page 425

71 So.2d 425

220 Miss. 652

WOOD NAVAL STORES EXPORT ASS'N v. LATIMER et al. ^*

No. 38977.

Supreme Court of Mississippi.

April 5, 1954.

T. J. Wills, Hattiesburg, Charles Kohlmeyer, Jr., New Orleans, La., Mize, Thompson & Mize, Gulfport, for appellant.

Morse & Morse, Gilfport, Powell, Albritton & Albritton, Andalusia, Ala., for appellees.

KYLE, Justice.

This case is before us on appeal by Wood Naval Stores Export Association, defendant in the court below, from a judgment of the Circuit Court of Harrison County rendered in favor of John T. Latimer, Mrs. Julia Latimer, Louis L. Latimer, J. Alton Latimer, Ray A. Latimer, Walter F. Latimer and Mrs. Julia Priscilla Latimer Poole, doing business as Gulf Naval Stores Company, plaintiffs in the court below, for the principal sum of $8,668.13, with interest thereon from April 23, 1952.

The record shows that the Wood Naval Stores Export Association is an association formed under Sections 61-65, Title 15, U.S.Code Annotated, commonly known as 'The Webb-Pomerene Act,' and that its offices are located in the City of Gulfport. The association was formed during the year 1947, for the sole purpose of engaging in export trade. The association was originally composed of the following members: Alabama Naval Stores Company, a corporation domiciled in Mobile, Alabama; Continental Turpentine and Rosin Corporation, domiciled in Laurel, Mississippi; Delta Pine Products Corporation domiciled in Covington, Louisiana; Dixie Pine Products Company, a corporation domiciled in Hattiesburg, Mississippi, Southern Naval Stores Division of Leach Brothers, Inc., a Wisconsin corporation having its principal place of business in Columbia, Mississippi; and Gulf Naval Stores Company, of Gulfport, Mississippi, a partnership composed of John T. Latimer, Mrs. Julia Latimer, Ray F. Anderson, Mrs. Phala Anderson, V. A. Anderson and Mrs. Lula W. Anderson. All of the parties to the agreement were producers of wood naval stores.

The formal Articles of Association executed by the members of the association were dated May 15, 1947. The term 'wood naval stores,' as used in the articles, was deemed to include only wood rosin, wood turpentine, pine oil and dipentene. The powers and purposes of the association were limited to the exportation of wood naval stores from the United States to foreign countries. Article 5 expressly provided that: 'Unless terminated by mutual consent of the parties hereto, this Agreement shall continue in force until the expiration of ten (10) years from the date of signing hereof.'

In Article 6 the members bound themselves as follows: 'Each member of the Association will not engage in any form of export activity of wood naval stores other than through the Association, and will turn over to the Association all inquiries and communications which he may receive relative to such export business.'

In Article 7, provision was made for the pledging by each member for export by the association during each quarter year of a stated number of drums of wood rosin, a stated number of gallons of wood turpentine, a stated number of gallons of pine oil, and a stated number of gallons of dipentene, 'the amounts pledged not to be less than twenty-five per cent (25%) or to exceed sixty per cent (60%) of his capacity computed as herein before provided.' Pledges thus made were to be binding upon the members. The association was authorized to establish standards of quality for wood naval stores to be exported; and the association was obligated to make every effort to dispose of the total amount of wood naval stores pledged for export; and if the association was unable to dispose of the entire pledge quotas for export, the members were to be advised of that fact. Payment for the wood naval stores exported during each calendar quarter was to be made to each member on the basis of the association export sales price of each grade of each product sold for export during the quarter.

Article 8 provided that if any member should violate the terms of the agreement and export wood naval stores products directly, 'the Board of Directors of the Association may, in its discretion, impose a fine upon the member whose goods are thus exported. Such fine may be in an amount not to exceed five dollars ($5.00) per drum of wood rosin and 25cents per gallon of wood turpentine or pine oil or dipentene thus exported.'

The general management of the business of the association was vested in a board of directors. Each member of the association was entitled to one representative on the board. In Article 14 it was expressly provided that the agreement might be amended by two-thirds majority vote of the members; and under Article 15 any member of the association might withdraw from the association, if such withdrawal were approved by a majority of the board of directors. Article 16 provided that: 'Each member shall maintain a five thousand dollar ($5,000.00) deposit with the association to insure his faithful performance of all the provisions of this Agreement, and shall, within fifteen (15) days after written notice from the Association, make additional deposits to cover any deficiency resulting from fines or assessments.'

The expenses of the association were to be borne by the members in proportion to the computed plant capacity, of each of the members.

The plaintiffs in their declaration alleged that the partnership doing business as Gulf Naval Stores Company at the time the above mentioned association was organized was dissolved by mutual consent of the partners on May 31, 1950, and that the assets of the partnership were conveyed to John T. Latimer and Mrs. Julia Latimer, who thereafter carried on the business as partners under the name of Gulf Naval Stores Company until January 1, 1951, when a new partnership agreement was entered into by the plaintiffs; and that John T. Latimer and Mrs. Julia Latimer then conveyed to each of the plaintiffs, who composed the new partnership, an undivided one-seventh interest in the land and personal property owned by the partnership, including a deposit of $5,000 made by the former partnership with the Wood Naval Stores Export Association in 1947 in compliance with the provisions of the above mentioned Articles of Association.

The plaintiffs alleged that they were not members of the Wood Naval Stores Export Association, and that the $5,000 deposited by the former partnership with the association in 1947 was the property of the plaintiffs, and that demand had been made upon the association for the payment of said $5,000 to the plaintiffs, but the association had refused to pay the same to the plaintiffs. The plaintiffs also alleged that a shipment of naval stores products had been made by the plaintiffs through the facilities of the association during the month of April 1952, for convenience, and that the association had received the proceeds of the shipment amounting to $3,668.13, and had refused to pay over to the plaintiffs the amount thus received. The plaintiffs therefore demanded judgment against the association for the amount of $8,668.13.

The defendant in its answer denied that the plaintiff partnership was not a member of the association; and the defendant denied that the plaintiff partnership was entitled to recover the $5,000 deposit mentioned above, or the additional sum of $3,668.13, which represented the proceeds of the shipment of naval stores products made by the plaintiff through the facilities of the association in April 1952. The defendant in its answer averred that the plaintiff partnership was still a member of the association, and would continue to be a member until May 15, 1957, and that the changes in the membership of the Gulf Naval Stores Company partnership in no way affected the terms or conditions of the membership of the Gulf Naval Stores Company in the association. The defendant also averred in its answer that the plaintiffs, after the changes in the membership of the partnership had taken place, had continued to participate in the administration of the affairs of the association, and had accepted the benefits of the association, and that the plaintiffs were estopped from claiming that they were not bound by the articles of agreement. The defendant admitted that the shipment of naval stores products referred to in the plaintiffs' declaration had been made by the plaintiffs, through the association, and that the money received on account of said shipment amounting to $3,668.13 had not been paid to the plaintiffs. But the defendants denied that the plaintiffs were entitled to recover the same because of penalties incurred on account of the plaintiffs' violation of the articles of association.

The case was tried at the January 1953 term of the court. The plaintiffs introduced in evidence the articles of association of the Wood Naval Stores Export Association; also the articles of partnership of the Gulf Naval Stores Company dated June 4, 1947, and the agreement for the dissolution of the partnership dated May 31, 1950, and the deed of conveyance of real property and the bill of sale of personal property executed by the members of the late partnership to John T. Latimer and Mrs. Julia Latimer on June 27, 1950, conveying to them the real and personal property of the late partnership, including the raw materials and merchandise on hand and accounts receivable; also the articles of partnership entered into between John T. Latimer and Mrs. Julia Latimer, under the partnership name of Gulf Naval Stores Company, dated June 21, 1950; and the articles of partnership entered into by the plaintiffs, under the name of Gulf Naval Stores Company, on January 1, 1951, and amendments thereto dated March 22, 1952, and the instruments of conveyance executed by John T. Latimer and Mrs. Julia Latimer to the members of the present partnership, conveying to each of them an undivided one-seventh interest in the partnership assets. The plaintiffs also...