Beatrice Creamery Co. v. Garner, 119 Ark. 558 (1915)

July 5, 1915 · Arkansas Supreme Court

119 Ark. 558

Beatrice Creamery Company v. Garner.

Opinion delivered July 5, 1915.

1. , PRINCIPAL AND AGENT — UNDISCLOSED PRINCIPAL — LIABILITY OP AGENT.— Where an agent makes a contract (for an undisclosed principal, 'both the principal and the agent may toe held liable at the election of the party who dealt with the agent.

2. Principal and agent — undisclosed principal — seller and purchaser. — A. sold butter to B., making daily consignments, and B, making remittances at stated intervals. B. then made a contract with iC. wheretoy it delivered all the butter received from A. .to C. at cost price, B., however, continued making remittances to A. and A., without any knowledge of C., continued to make shipments to B. Held, .that under the facts C. would not toe treated as B.’s. undisclosed principal, but that C. was merely a purchaser, írom B.

3. Actions — consolidation.—Actions depending upon the, same or substantially the same evidence, or arising out of the same transaction may he consolidated under Act 339, page 798, Acts of 1905.

Appeal from Pulaski Chancery Court; John E. Mar-tineau, Chancellor;

affirmed.

L. E. Hinton and Comer é-Clayton-, for appellant.

1. It was error to dismiss that part of the complaint of the appellant praying for a judgment over against G-arner for the sum of $1,951.02, and, to consolidate that, part of appellant’s suit seeking to recover the $1,707.75 from Hicks. The court had jurisdiction to. determine whether Hicks wa,s trustee, and if he held the latter sum for the plaintiff. Having rightfully acquired jurisdiction for one purpose, it had jurisdiction for the purpose of granting complete relief, either .legal or equitable, to which any of the parties were entitled. 70 Art. 189; 14 Ark. 50; 37 Ark. 164,187; Id. 286, 29275 Ark. '52, 55; 77. Ark. 570, 576. The twp .suits were-not’between the same parties at any time, and involved, in part, different issues. The court should not have consolidated them. 74 Ark. 54./

2. The contract between appellant and the Bunch-Commission Company was assignable. ' The evidence, clearly discloses an assignment of the contract. No particular words are necessary to constitute an assignments 17 How. 353; 1 Wall. 604; 2 Am. & Eng, Enc. of L. (2 ed.”)y* 1055; 2 Ruling Case Law, 614. After the assignment, the" Bunch Company can only be held as the agent of Cameras undisclosed principal, and upon discovering the agency appellant had the right to hold the principal for the debt-due it, certainly to the amount which Gamer then owed and 'had not paid to the Bunch Company. 87 Ark. 434; 87 Ark. 374; 50 Ark. 433; 37 Fed. 49, 2 L.R. A. 749.

H. M. Trieber, for appellee Maloney, trustee.

I. The chancellor properly-dismissed appellant’s suit on account against Garner.' No part of its complaint stated a cause of action cognizable in equity, as it did not allege that Hicks was holding the money at the time of the suit. There is, therefore, no room for argument on the part of appellant that the chancery court, having acquired jurisdiction for one purpose, will hold it for all purposes.

2. There was no abuse of discretion in consolidating the cases. Act 339, Acts 1905; 83 Ark. 288.

3. The chancellor’s findings on the merits are not against the preponderance of the evidence.

Hart, J.

On November 23, 1914, W. ÍL Gamer and the German National Bank of Little Bock, Arkansas, as trustee, filed a bill of interpleader in the Pulaski Chancery Court in which the Beatrice Creamery Company, a corporation organized and doing business under the laws of the State of Oklahoma, and J. S. Maloney, as receiver of the T. H. Bunch Commission Company, a domestic corporation, were asked to be made.parties defendant. The bill of interpleader alleges that during the months of September and October, 1914, the Beatrice 'Creamery Company shipped and consigned to the T. H. Bunch Commission Company, at Little Bock, Arkansas, butter of the value of $1,707.75; that upon the arrival of said butter at Little Bock, it was turned over by the Bunch Commission Company to W. H. Gamer; that Garner sold said butter of the value of $1,707.75 to retail merchants, and that the proceeds were in his possession until October 15, 1914, when the same was paid over by him to the German National Bank of Little Bock, Arkansas, as trustee, to be held by it pending settlement of the ownership of said money; that both the Bunch Commission Company and the Beatrice Creamery Company were claiming said fund and demanding payment from the defendant Garner. The plaintiffs paid said money into the registry of the court, and asked that the receiver of the Bunch Commission Company and the Beatrice Creamery Company ibe compelled to interplead for said fund. The receiver of the Bunch Commission Company entered his appearance to the suit, but no service of any kind was had upon the creamery company, and that company did not enter its appearance to the action.

The Beatrice 'Creamery Company filed an independent action in the chancery court against W. H. Garner and W. A. Hicks, cashier of the German National Bank. The plaintiff alleges that the T. H. Bunch Commission Company entered into a contract with it whereby the creamery company agreed to sell and deliver to said commission company its output of butter which was shipped and delivered at Little Rook, Arkansas, and that said commission company was to have the exclusive right to sell the butter of the creamery company in the city of Little Rook; that subsequently the commission company assigned its contract with the creamery company to W. H. Garner, and that thereafter Gamer continued to act as exclusive seller of the 'butter of the creamery company in Little Rock; that the creamery company since then has Shipped butter to Little Rock of the contract value of $3,658.77, and that the same was accepted and received by the said Gamer, but that he has failed and refused to pay for same. The complaint further alleges that Garner admitted liability for the purchase price of a part of said butter in the sum of $1,707.75, and that that amount had been paid by 'him to W. A. Hicks, as trustee, with the understanding that the latter should hold the same for the parties held to be entitled to it.

The prayer of the complaint is that Hicks be enjoined from paying said sum of money so held by him to any one until the final hearing of this cause, and that said amount then be paid to said creamery company to be applied as a credit on the amount alleged to be due it by said Garner, and that it have judgment against Gamer for the balance alleged to be due, namely, the sum of $1,951.02.

On motion of W. H. Garner, the court ordered that that portion of the action instituted by the Beatrice Creamery Company against W. H. Garner and W. A. Hicks for $1,707.75 deposited in the registry of the court, be consolidated with the interpleader suit.

The court sustained a demurrer to the complaint of the creamery company asking a judgment against Garner for the sum of $1,951.02 and dismissed his complaint in that respect without prejudice to his bringing an action at law.

At the hearing of the consolidated causes the testimony of W. H. Garner and T. H. Bunch was taken 'before the court orally, and their testimony reduced to writing and by order of the court filed as their depositions in the cause. It appears from their testimony that the T. H. Bunch Commission Company, before it became insolvent, did a large commission business in the city of Little Book; that a part of its business was' to sell butter, and that it had a contract with the Beatrice,.Creamery Company to take the entire .output which it shipped to the city of Little Book. .

The commission company had a standing order with the creamery company for its butter and payment was usually made once a week, though at times longer intervals between payments occurred. W. H. Gamer was in the employ, of the Bunch Commission 'Company, and had charge of the sales of butter made by it to the retail merchants of Little Bock.

Subsequently, the Bunch Commission Company made an agreement with Garner, whereby .the latter, wap to take off its hands the butter consigned to it by the creamery company at the price that it paid the latter therefor ; in other words, the commission company agreed with Garner to sell: him the butter it received from the creamery, company at the actual cost price, and Garner was thereafter to sell the butter to the retail trade of Little Bock at whatever price he desired.

The Bunch Commission 'Company had a rating with the créamery company, but Garner was unknown to it.

The commission' company continued to receive consignments of butter from the creamery company under its contract with that company and made its. remittances therefor about Anee a week as it had agreed to do. It turned the.butter over to Garner at hts'actuál cost, and Garner made settlements with the 'commission company once á week therefor.

Prior to the institution of this action the Bunch Commission Company became insolvent and a receiver was a pointed to take charge of its assets. ( -

The court found that the T. II. Bunch Commission Company was not the agent of Gamer in the purchase of the butter from the creamery company in the transaction involved in this suit and that the transaction was .one of sale on open account by the creamery company to the commission company and a resale on open account by the commission company-to Garner, and Garner having deposited the money in the registry of the court was discharged from all liability to either the Bunch 'Commission Company or the Beatrice Creamery, Company.. The clerk of the court, with whom the money had befen deposited, was directed to pay the same to the trustee in bankruptcy of the Bunch Commission Company. The Beatrice Company has appealed. , -

(1) It is the well settled law of this State that where an agent makes a contract for an undisclosed principal, both the principal and the agent may be'held liable- at the election of the party who dealt with the agént. Mississippi Valley Construction Co. v. Chas. T. Abeles & Co., 87 Ark. 374; Bryant Lumber Co. v. Crist, 87 Ark. 434.

(2) This is conceded to be the law by both parties, and it is the contention of counsel for appellees that where it is sought to hold one. as an undisclosed principal for goods bought, it is essential That "the íhteí mediate jbarty through whom the goods were secured shall have'been the agent of the principal sought to be held and not his vendor, and, that the court having found,that the Bunch Commission Company was the vendor of the butter to Garner and not the agent of the latter in purchasing the same, its finding of fact in that respect should not be disturbed.

It is the settled rule of this court that the findings of fact made by a chancellor will be upheld on appeal unless they are against the clear preponderance of the evidence. Tested by this rule, we think the findings of the chancellor should be upheld. The Bunch Commission -Compány was a corporation engaged in the general commission business. A part of its business was to sell butter and it made a contract with the creamery company for the exclusive sale of the butter which it shipped to Little Rock. It was in the habit of receiving daily consignments of butter from the creamery on open account. The commission company had a credit with the creamery company, and nothing was said or known by the creamery company of any other party to the transaction. Garner had no credit with the creamery company, and was not known by it. He made his payments direct to the Bunch Commission Company, and the commission company sent its own checks to the creamery company in payment for the butter. At the time the contract between the Bunch Commission Company and the Beatrice 'Creamery Company was made, Garner was an employee of the commission company. No other contract was made by any one with the creamery company. The butter was consigned by the creamery company to the commission company under the original contract. Garner could in no sense be deemed an undisclosed principal when the original contract was made between the commission company and the creamery company. The mere fact that he subsequently agreed with the commission company to take over all consignments of butter to it from the creamery company at actual cost did not have the effect of making him an undisclosed principal.

(3) The court did not err in the consolidation of the causes under the act of May 11,1905.^* The object of this act providing for the consolidation of causes was to save a repetition of evidence and unnecessary consumption of time and costs in actions depending upon the same or substantially the same evidence or arising out of the same transaction. St. Louis, I. M. & S. Ry. Co. v. Raines, 90 Ark. 482; Little Rock Gas & Fuel Co. et al. v. Coppedge, 116 Ark. 334, 172 S. W. 885.

In the case of St. Louis, I. M. & S. Ry. Co. v. Broomfield, 83 Ark. 288, the court said that the act leaves to the discretion of the trial court the consolidation of actions of like nature relative to the same questions pending before the court -without reference to the identify of the parties and without restriction as to the causes of action which may he joined in the same suit.

It follows that the decree will he affirmed.

* Act 339, page 798, Acts 1905.

McCulloch, C. J.,

(dissenting). The undisputed evidence in this case is to the effect that Bunch Commission Company concluded to go out of the -business of selling butter to retail men in Little Rock, and turned their contracts with the Beatrice Creamery Company over to Garner to receive the butter, to pay for it, and sell it. There is no conflict whatever in the evidence, and it is not sufficient to warrant the inference that there was a resale of the butter by Bunch Commission Company to Garner. Gamer testified that Bunch Commission Company decided to go out of the city business, and, as a matter of accommodation to 'him (Gamer), turned the contract with the Beatrice 'Creamery Company over to him, and that he “ran the business, merely using Bunch’s name for the purpose of getting the butter.” The testimony of T. H. Bunch was to the same effect. His statement is as follows: “It was simply a favor we were trying to extend Mr. Garner for past services; he had been faithful to us for many years. We turned the contract we had with the creamery company over to Mr. Garner, and continued to let him order the butter in our name simply as a matter of accommodation to him. ’ ’ They both testified that the sole reason for leaving the contract in the name- of the Bunch Commission 'Company was that they were afraid that if they undertook to get a new contract in -Garner’s-name, some other dealer might secure the contract with- the creamery company, and it was decided that the best way was to leave the contract in the, name of the Bunch Commission Company. There is no doubt about the inference which can be drawn from the statements of those two witnesses, who were the only ones who testified on the subject.

The effect of the transaction was to make it an assignment of the contract by Bunch Commission Company to Garner, and the commission company became the agent of Garner in performing the contract for. the purchase of the butter. The fact that no such relation existed at the time the original 'contract was made with the creamery company does not alter the law applicable to the facts of the case. Thé''ó'ontiact'was, executory, and the sales thereunder were consummated only when deliveries of butter were made in installments from time to time. No sale was complete until there was a delivery of the butter. Therefore, when the installments were delivered through Bunch Commission Company to Gamer, the latter was an undisclosed principal in the transaction. The transaction (between Bunch Commission 'Company and Garner contained none of the elements of a resale to the latter, for Bunch and Gamer both testified that the contract w;as turned over to Gamer, and that he was to receive the butter and pay for it in the name of Bunch Commission Company for his own benefit. Suppose that the contract had been, 'by formal written indorsement, transferred to Garner, and the subsequent delivery of butter made through Bunch Commission Company. Would not the commission company under those circumstances have been the agent of Garner? If that be true, it necessarily follows that under the facts of this case, the doétrine of liability of an undisclosed agency applies, for, as before stated, the effect of the transaction was to assign the contract. Bunch ■Commission Company, by permitting the continued use of its name in receiving deliveries of butter under the contract without disclosing Garner’s connection with the transaction, rendered itself liable to the creamery company for the price of the butter so received, but Garner is liable too, for, according to the true import of the transaction, he was the real purchaser of the butter, and the debt for the price was in fact his debt, and not that of the commission company. Gamer is willing to pay for the butter, and has in fact paid the amount into the registry of the court. Bunch Commission Company has no just claim to the amount so paid, and, according to settled principles of law, it should be recovered by the creamery company, and not toy the general creditors of the Bunch Commission Company.

The justice of that view is made plain-toy the statement in one of the textbooks on the law of agency,, giving a reason for the rule of liability of ah undisclosed principal: “Inasmuch as the principal,must ordinarily settle with some one — toeing liable to the agent, perhaps upon an express contract of indemnity or reimbursement, or upon an implied one wherever the nondisclosure of the principal and the pledging of the agent’s own credit do not constitute such a violation of duty as to disentitle, the agent to such relief — -it seems to be' a convenient ‘ shortcut, ’ if nothing more, to give the third part a direct claim upon the principal, instead of requiring him to pursue the agent who will then pursue the principal.. Where this is attempted before the principal has paid or settled with agent — and this seems to have been the typical case in the first instances — nothing but more or less technical rules of procedure would seem to stand in the way of it.” 2 Mechem on Agency (2 ed.), section 1729.

Mr. Justice Kirby concurs in the views here announced.