34 F. 233 | U.S. Circuit Court for the District of Eastern Missouri | 1888
This is a bill for an accounting, brought by complainants against defendant Lawton, who at one time acted as their agent in selling lumber, and also against defendant Kellogg, who assumed the liability of a guarantor for the performance by Lawton of his duties as agent. The agreement under which Lawton acted as agent was entered into December 8, 1880. By the terms of the agreement Evans & Sheppard appointed Lawton their agent at Memphis, Mo., to conduct a lumber-yard. They aggreed to supply the yard with lumber, laths, shingles, doors, etc., which Lawton was to sell for account of Evans and Sheppard on the following terms, to-wit, sales were to be made for cash in all cases. Lawton was to render full and true accounts of all sales made, and of all moneys received, and on the 15th and 30th days of each month he was to remit to Evans & Sheppard whatever moneys were in his hands received from the sale of lumber, etc. Lawton was to account to his principals for the wholesale price of the lumber shipped to him, and for his services, and for all expenses of running the lumber-yard, including freight, he was to receive whatever the lumber sold for in excess of the wholesale price at which it was billed to him. On the back of the agency contract was indorsed the following guaranty:
“In consideration of Evans & Sheppard now entering into the above contract, and in further consideration of one dollar to me paid by said Evans & Sheppard, the receipt whereof is hereby acknowledged, I do hereby guaranty*235 the due performance on the part of said George II. Lawton, Senior, of his obligations in the above contract, and particularly that he shall duly account for and pay over to said Evans & Sheppard all moneys which shall be received by or paid to said George H. Lawton, Senior, for lumber and other merchandise hereafter furnished by Evans & Sheppard and sold and disposed of by said Lawton, Senior. Signed at the same time as the above contract, to which this guaranty refers, as witness my hand.
' [Signed] “A. A. Kellogg.
[Signed] • “L. Mott.”
The principal question for determination is whether Kellogg has boon discharged from all liability by reason of a change in the terms of the agreement between Evans & Sheppard and the their agent, made without his (Kellogg’s) consent. The agreement required sales to he made for “cash in all cases.” Defendant Kellogg insists that the agreement was subsequently modified without his knowledge or consent, so as to permit Lawton to sell on credit, and that he did so sell to a large extent. On this ground he founds his claim to be discharged from all liability.
Preliminary to a discussion of the main issue it is necessary to dispose of some incidental questions. It is suggested by complainants’ counsel that Kellogg has not pleaded his right to a discharge on the ground above stated. This point, I think, is not well taken. All the facts on which the defense depend are clearly stated, and in view of such facts, and other matters also alleged, defendant- Kellogg asks to be discharged without day. This is sufficient to render the defense available. Furthermore, it is said that “the guaranty was twofold,” and that Kellogg “absolutely hound himself to pay all money received by Law-ton,” and the case of Benjamin v. Hilliard, 28 How. 149, is cited in support of the position. This statement is rather mystifying, and is not elaborated. The case cited does not explain what is meant. In that caso a guaranty was given which counsel insisted should bo read in the alternative as requiring the guarantor to stand responsible for the doing of one of two things. The court, however, construed it, not in the alternative, but as requiring the performance of both obligations. 1 fail to see that the case referred to has any application to the case at bar. The guaranty involved in this case is one by which Kellogg agrees generally that Lawton will duly perform all the obligations imposed upon him by the contract creating the agency, and particularly that he will account for and pay over all money received for lumber, etc. The last clause with reference to accounting for and paying over money did not impose any obligation in addition to that imposed by the first clause of the guaranty. As the agency contract made it the duty of Lawton to pay over whatever money was received from the sale of lumber, (or rather to pay over the wholesale price,) the first clause of the guaranty was as effectual as the last to secure the performance of that duty. The last clause of the guaranty was really unnecessary, and was probably inserted, not as imposing an additional obligation, but merely out of abundant caution. It will be observed from the form of the guaranty that the guarantor did not bind himself with Lawton to discharge all or ary of the duties imposed by the agency contract. He guarantied that Law-
, This brings me to the main controversy, — whether the agency contract was modified by the parties thereto without the guarantor’s consent. It appears from the testimony, without contradiction, that a large quantity of lumber was sold by Lawton on credit. Such sales began shortly after the agency was established, and continued for a period of several years, and until the agency was terminated. During almost the entire period complainants had knowledge that he was selling lumber on credit. That they had such information appears from their correspondence at an early period of the agency, and the fact is otherwise expressly admitted by them. There is a further admission by the complainants that in some few instances they expressly authorized sales to be made on credit. It is also admitted by one of the complainants that in conversation with Lawton he told him that “he must be cautious in the manner in which he gave credit,” and that “he must watch his book-acco'unts, and keep them closely collected.” Complainant’s counsel contends, however, that mere knowledge of the fact that sales were being made on credit is something entirely different from a formal consent given that sales might be so made, and does not prove an alteration of the contract. In this he is right. The obligation to sell for “cash in all cases” was an obligation assumed by Lawton. If he violated that undertaking in some instances, and complainants were aware of the fact, they were not bound to terminate the agency on that account, or to sue him for a breach of the contract. They had a right to overlook occasional violations of the contract of that nature, and to continue further business relations under the contract, and by so doing the contract was not altered, or the guarantor discharged. So much may be conceded. Kirby v. Studebaker, 15 Ind. 45. But in this case the evidence shows something more than knowledge on the part of complainants that their agent was selling lumber on credit. In the light of the testimony it will not do to say that they were merely passive observers of occasional or repeated violations of the contract, which they were privileged to overlook without impairing their right to hold the guarantor. Lawton, as before stated, made a practice for several years of selling on credit; and such practice was not only known to the complainants, but on certain occasions they warned him “to be cautious in giving credit,” and “to watch his book-accounts, and keep them closely collected.” Only one inference, as it appears to me, can be drawn from such a course of dealing, and from such language, and that is that they
A final decree may be drawn in accordance with these views, and submitted for approval; or, if the parties fail to agree in stating the account, a reference will be ordered to a master to state the same as herein indicated.