66 F. 265 | U.S. Circuit Court for the District of Washington | 1894
On the 7th day of February, 1880, George A. Meigs was the owner of a tract of land at Port Madison, Wash., and sawmill and plant, of a capacity of from one to two hundred thousand feet of lumber daily, situate thereon. Prior to that date, the Meigs Lumber & Shipbuilding Company, a corporation, was organized by Meigs and others, he being the owner of a great majority of the stock, and the president, general manager, and agent of the corporation. The corporation owned large tracts of
The questions for decision arise upon exceptions filed by the respective parties to the report of the referee herein. The principal question in the case is as to the liability of the defendant for moneys paid on account of liens upon the property referred to.- The referee finds that the defendant authorized Orawford & Harrington to advance such sums as might be necessary to discharge liens upon the property, and thus prevent its sale and the shutting down of the mill, and charge the same to his account. The defendant contends that this finding is not supported by evidence, and this presents the principal point of controversy in the case. If Harrington &; Smith had this authority from the defendant, it was contained in the writing claimed to have been given them, and destroyed in the Seattle fire. If there was a writing intended to authorize such advances, its terms are conclusive as to the defendant’s agreement respecting them. The plaintiffs, having alleged such a writing, must establish an agreement in the form and of the character alleged. I am of the opinion that there was a written authority of some character. The parties present when this writing was delivered were Orawford and Harrington, of the firm of that name, the defendant, Sayward, Meigs, Frank Hanford, bookkeeper of Orawford & Harrington, and Struve, the attorney of the firm of Orawford & Harrington. The time of the occurrence, according to plaintiffs’ witnesses, was in February ■or March, 1880.
“Then the conversation did. not go into all the details, hut the substance of it was that the mills should be able to carry those payments that were spoken of. Q. What payments? A. Those payments that had to be made on judgments according to a certain stipulation, — the Bourne judgment, the Horton judgment, and the h'ish judgment, and other judgments which had been-”
The witness was interrupted at this point by an objection, after which he continued as follows:
“And Mr. Crawford stated that those payments would be a large amount of money, and it was necessary to provide for them, and Mr. Sayward expressed full confidence that the mill would be able to take care of them as they became due, but in the meantime he became responsible for all these matters,”
In his cross-examination the witness says the order was very brief; that “it was to the effect that the firm of Crawford & Harrington were authorized by that writing to advance whatever might be required to the Port Madison Mills, and charge that account to Sayward”; that it was a general authorization to make advances to the Port Madison Mills. The witness further said that he did not remember that any judgment was specifically referred to.
Mr. Harrington testifies as follows:
“Q. Now, will you state what was said between Mr. Sayward and yourself and Mr. Crawford at that time? A. Well, he wished us to go on furnishing the supplies and advancing the money for whatever amount Mr. Meigs needed to pay off the bills against the mills, such as judgments, etc., and ho further sent a written order. But the order is now lost. I think it was lost during the fire. But it was a written order to Crawford & Harrington to supply them with what they required. Q. And how was it to be charged? A. To W. P. Sayward. The account was then and there charged to W. P. Sayward, and the bill sent every night, and at the end of the month a written statement was sent.”
It was argued with mucli force that, where a party is to be charged for advances made solely on his agreement to repay the same, the testimony to establish such agreement should be direct and explicit; that the terms of the agreement should be proved with such directness that nothing is left to inference; that in this case the terms of the writing and the language used by the parties at the time, as testified to by Harrington and Hanford, are general, and are fully answered by advances for the ordinary expenses of the mill; that it cannot be gathered from this testimony that advances
At the time the arrangement in question was entered -into between Crawford & Harrington and the defendant, the mill property was under mortgage to the aggregate amount of $300,000, and foreclosure suits were pending for the aggregate amount of above $200,000. There was also an attachment levied upon all the property in an action for $20,000, and two of the vessels of the concern were being navigated under legal custody. It was in such a state of the property that the defendant made the arrangement in question for advances of whatever amount Mr. Meigs needed to pay off the bills against the mill,- — of “whatever might be required by the Port Madison Mills,” It is not, in (he nature of things, possible that at such a juncture the meeting of parties testified to could have been had to provide for the requirements of the mills without, at least, considering these lien debts and proceedings. The business could not continue without prordding for liens as well as current expenses. There was equal necessity for provision for both requirements, and there was therefore equal reason why the defendant should assume responsibility for both. He could not safely assume large obligations for operating expenses unless the continued operation of the mill could be guarantied. On the other hand, Crawford & Harrington had as much reason to require a guaranty for advances of one kind as for another. True, they took assignments of such judgments as they provided for; but they also arranged for consignments to them of all product of the mills. If the security of the liens was sufficient to induce advances to discharge lien debts, the consignments provided for should have sufficed to secure advances for operating expenses. There was greater incentive to the owner
“It may be an inference, but, if you have a matter talked of in your presence and in your store for days and weeks at a time, it would make a strong impression. * * * If. was a good while ago, and the impressions of the conversation are very distinct, while perhaps the language may not he. I remember very distinctly the circumstances, however, and the policy that was adopted by the house from that time in consequence of it.”
It is not a valid objection to this testimony that the witness’ recollection of what was agreed upon is re-enforced by what was done in pursuance of the agreement. The conduct' of the parties in pursuance of an agreement, when good faith is conceded, may be; safely relied upon in determining what is otherwise doubtful in the agreement. In this case the advances made on account of liens were charged in the monthly statements of account with other advances of money and merchandise. These accounts were entered in the books of the mill company. There was 'no objection from Meigs or from the defendant, except as to certain items not material to be considered in this connection. The balances from each month were carried into the succeeding statement. These advances began shortly after the arrangement in question, and more than 10 years before this salt was began. The periodical statement of
It is suggested in the argument that these advances were made solely upon Meigs’ authority, and the testimony of Harrington is quoted to show that such advances were so made in the mistaken belief that Sayward had given Meigs full power to act for him in procuring .the advances to be made. If such is the fact, it is of doubtful advantage to the defendant. If the defendant did not
“And the conclusion was reached by us that we could do that, and thereupon I went up to the courthouse, and filed a praecipe, telling them simply to file or note the receipts on the appearance docket, and not to give them as a credit, so as not to cancel the judgment; and that is the reason for the memorandum here.”
The relation which the “something” that it became necessary for Judge Lewis to satisfy his mind about seems to bear to the foreclosure suits and to the written authority or direction given Toy the defendant to Crawford & Harrington, according to defendants own statement to Lewis, and which these bear to the consultation that followed and to the praecipe, is suggestive. There was no written authority or direction from defendant to Crawford & Harrington, according to defendants contention, other than the order for supplies (until such time as permanent arrangements could be made, known as the “temporary order”); and this writing has no such importance as answers the requirements of an “authority” that defendant would be likely to inform his attorney about, and as that attorney would find it necessary to examine with reference to dealing with judgments against the mills. These statements by Judge Lewis point to such an authority as plaintiffs say was given by defendant to Crawford & Harrington to advance money to provide for liens against the property. Judge Lewis says he was the attorney of the mill company, Meigs, and the defendant in the matter of the consolidated suit. Presumably, the communication made to him by defendant as to a written authority given by him to Crawford & Harrington in some way related to such suit. Lewis seems to have referred to it in that connection. The consultation as to having the. debts assigned so as to preserve the liens in favor of those advancing the money (Crawford & Harrington) followed the examination of the written authority mentioned. If not a consequence of that examination, it was an incident of an occurrence common to both. The fact that the witness fixes the date of his examination of the writing given by Sayward, the defendant, to Crawford & Harrington, by the date of the written directions he gave the clerk to file the receipts for money paid on the judgments, and not to cancel the judgments, shows pretty conclusively that the writing given by Sayward to Crawford & Harrington related to these judgments. All this goes to show that not only the assignment of judgments was intended as a security, but that there was
The defendant had an interest in preserving the liens of these judgments in friendly hands. Hanford explains as one of the considerations for what was done that by such, assignments Crawford & Harrington could use the judgments, so that no one else could “obtain any judgment and come in and close out the property.” The stipulation or agreement executed by Lewis as attorney for the defendant in January, 1883, by which the defendant promised and agreed to pay the Dexter Horton judgment of above |10,000, shows that Crawford & Harrington were not undertaking to provide for the lien claims by purchasing them on their own account. So, too, of the Pemberton mortgage, executed by Say-ward by his own hand, to provide some $30,000 with which to pay such claims. By the provisions of this mortgage, the defendant expressly obligated himself to pay the debt secured.
In the Judson suit, brought by Harrington & Smith to compel an assignment to them of the judgment held by Judson, plaintiffs alleged their agreement with defendant in effect as these plaintiffs allege it now. They allege advances at different dates of money to pay off liens and incumbrances, and that such advances were at Sayward’s special instance and request. Sayward was a party defendant therein. He made no answer. It is said, however, that in the Boyd-Stevens suit, brought by creditors of the mills to set aside the conveyances to the defendant, the defendant denied that he had assumed payment of the mill debts, or had become bound to pay them. It is not claimed that he assumed these debts. His arrangement with Crawford & Harrington for such advances of money as might be required to provide for liens bears no resemblance whatever to an assumption of an obligation to the creditors to pay such liens. Judge Lewis testified that he drew a check as attorney for defendant for §766.86, to pay interest on judgments represented by McNaught (what he did was to indorse an order for such payment upon a check drawn by Meigs, which is in effect as lie testifies); and, in explanation of the reasons for so doing, lie testifies that there was a general understanding that in case of an emergency he was to call on Crawford & Harrington br Harrington & Smith for any money that might be required, and that, when he drew the check in question, there was a great emergency; that it was a case of urgent necessity, “because Greene had his hands on us, and McNaught had his fins on us.”
The accommodation had by Smith & Harrington of the defendant on two or more occasions of their temporary embarrassment are urged as evidence that Sayward was not then a debtor of the firm. The argument has force; yet the fact is not a conclusive one. I conclude that the arrangement entered into was in the expectation of all the parties that the mill would pay all the obligations assumed, and that it would not be necessary for defendant to make payments out of other funds; that it was tacitly understood that he should stand, as to the advances to be made, as a surety, and that he would not be called upon until there was a failure of payment
It is argued that the bill of sale made on April 2,1880, by defendant to Crawford & Harrington, to secure about $4,000 for merchandise advanced and future advances, is inconsistent with the existence of any previous arrangement for such advances. It is not improbable that, as claimed by plaintiffs, the arrangement in question was not made in .February, 1880, as testified to by their witness in the opening of their case, but was subsequent to ¡he bill of sale. If the case was otherwise doubtful, the argument of defendant from this fact might be conclusive of the question. But it is abundantly established that there was a guaranty to Crawford & Harrington by the defendant early in the year 188Ó for advances, at least, of merchandise and current mill expenses, -whatever of doubt there may be as to advances on judgments; whereas the bill of sale, in the inference drawn from it, is against any guaranty whatever. I mean by this statement that such fact is testified to directly and with positiveness by Hanford, Struve, and Harrington, and a finding upon such testimony cannot be disturbed on this motion, but must be held as conclusive of the fact found.
The money advances for insurance upon the mill were not within the terms of the order relied upon. As already stated, ihe authority to Crawford & Harrington to malee advances was limited to such advances as Meigs, as the representa! :ve of defendant, should require. The insurance was effected without the consent of Meigs, and the charge therefor was against his protest. The question as to whether the insurance was to the defendant’s benefit is immaterial. It was to the interest of Harrington & Smith, who looked to the insured property as security for what they had advanced on the defendant’s account, that the property should be insured. Whatever the financial standing of the defendant may have been, the evidence warrants the conclusion that the property of the mills company was all the property he had within the United States, and therefore all the property to which they could have recourse under a process issued against him out of the courts of this country. The protection of this security was made more important bv'this fact, and was sufficient inducement for the advances of. insurance made on this account. If the fact was otherwise, it would make no difference. The defendant could not be made the debtor of Harrington & Smith without his authority, and against the protest of his agent.
It is claimed by plaintiffs that the discount charged in the account sued on means the interest which plaintiffs’ assignors were
The Cochrane & Day litigation grew out of a dispute as to the quantity of logs sold by Crawford & Harrington for Cochrane & Day to Meigs, as the agent of defendant. Meigs scaled the logs, and reported the measurement at 478,861. The price allowed was $4.50 per thousand, being a total of $2,154.87. This amount was charged to the defendant by Crawford & Harrington. Cochrane & Day disputed the measurement and price, and brought an action against Crawford & Harrington to recover the value of the logs.. They prevailed in the litigation, and recovered $3,627, instead of the $2,154.87 for which Crawford & Harrington had sold the logs to the defendant. The plaintiffs seek to charge the defendant with the difference between these amounts, and with all the costs and charges, including attorneys’ fees, paid by Crawford & Harrington in the litigation. Plaintiffs claim that Meigs practiced a fraud in measuring the logs. Assuming that such fact would be conclusive upon the defendant, how can it be determined here that the fact is as charged? The adjudication between Crawford & Harrington and Cochrane & Day does not bind the defendant. More than half the entire charge in dispute consists of expenses incurred by Crawford & Harrington in an unsuccessful endeavor to maintain the correctness of the measurement and price at which they sold the logs to the defendant. The Cochrane & Day judgment cuts no figure
What is known as the “Haller Judgment” presents an important question in the case. Crawford & Harrington were parties of the one part, with Meigs and the defendant, in a contract with Haller, made for the benefit of the lumber company and defendant, as the transferee of the property of the company. As found by the referee, the true position of Crawford & Harrington in the contract was that of sureties to Meigs and the defendant. Haller brought an action upon this contract, and recovered judgment against Crawford & Harrington and Meigs in the sum of $15,548, which sum Crawford & Harrington paid. The defendant was a party defendant, but was not served with process. This judgment is, at least, prima facie evidence of the defendant’s liability. Crawford & Harrington could have maintained an action upon it against the defendant to compel him to indemnify them for the recovery against them. Whether in such action the judgment would have been conclusive evidence of the defendant’s liability it is not necessary to determine. It is settled that a judgment against a surety is prima facie evidence against the principal, although the latter had no notice of the action. Such judgment is conclusive where the principal had notice of the action. The finding that the position of Crawford & Harrington was that of sureties in the Haller contract is excepted to by defendant. But the finding, except as to that part of it which finds that the logs delivered under the contract were sawed into lumber at defendant’s mill and for his benefit, is merely a conclusion from other findings not excepted to, and abundantly established by the evidence. These unchallenged and established findings show that the relations of Crawford & Harrington to the subject-matter of the contract were those of suretyship. Upon the case thus made, Crawford & Harrington could have maintained an action against the defendant for the amount recovered against them on the Haller judgment, and their successors in interest can maintain such action now. Such right is not defeated by the fact that Crawford & Harrington have paid such judgment. On the; contrary, payment is necessary to such right. Ñor does it make any 'difference that Harrington & Smith paid to the holder of the judgment the one-half for which Harrington, as between himself and his cosurety, was liable, and debited Harrington with it in his private account with the firm. Defendant says in his brief that this fact, with other facts, shows that there was no intention to look to the defendant for reimbursement for the amount paid. If the fact of the obligation of the defendant was open to dispute, anything that evidenced an intention not to look to the defendant would be pertinent. But there is no room to question defendant's liability upon the contract in question, and, of course, this liability is not discharged or waived by the fact that Crawford & Harrington paid their guaranty, or by the manner of payment, or by any intention there may have been on Harrington’s part at any time respecting it. Moreover, the procuring of the money with which to pay
The several exceptions of both parties to the findings of fact by the referee are overruled, and upon such findings it is ordered that plaintiffs have judgment against the defendant for the sum of 1153,128.89, with interest thereon from September 30,1891.