160 S.W.2d 39 | Ark. | 1942
Two questions are presented: (1) Is the bond of a corporation engaged in manufacturing wood products void for want of consideration, such bond having been executed to guarantee the railroad company against loss by reason of the corporation's failure to fully perform under a contract whereby the shipper as billed at reduced rates on inbound rough materials upon its agreement to utilize the carrier in transporting finished products? (2) Did bankruptcy of the corporation and its consequent inability to ship in refined form relieve sureties on the bond? *1037
The carrier's suit was heard on an agreed statement, a jury having been waived. The sureties have appealed from a judgment for $919.09.
The agreed statement is that prior to 1935 Fort Smith Body Company manufactured automobile body parts and other commodities. Lumber and supplies were purchased at distant places and brought to the company's plant in appellee's freight cars. The carrier's tariffs were on file with interstate commerce commission.
April 13, 1935, the shipper contracted with the carrier in respect to the carrier's freight tariffs 5023-AG and 5683-AB. The shipper's engagement was to fulfill all requirements of a so-called rough material tariff: (a) By utilizing the carrier's rail facilities in transporting to destination beyond the switching limits of Fort Smith such outbound tonnage as should meet requirements of the rough material tariff. (b) By keeping records of rough materials received and outbound tonnage and furnish to carrier the information so compiled. (c) By "[paying] to the carrier, within thirty days following presentation of bill, freight at full local rate or rates on any portion of rough material shipped into said plant . . . for which the percentage of tonnage required to be shipped outbound by rough material tariff shall not, within the time limit prescribed thereby, have been shipped as aforesaid." (d) ". . . execute for benefit of carrier . . . a written bond of indemnity, in the penal sum of $2,000, and having as sureties thereon two individuals acceptable to carrier, conditioned for performing of shipper's undertakings herein."
The bond was delivered the day contract was executed, with I. H. Nakdimen and Ben B. Johnson as sureties. Johnson was president of the body company. Nakdimen had no connection with it. The shipper received, from time to time, rough lumber on which the special imbound rates permitted by the tariffs were charged. It is conceded that the carrier did not receive the reshipment of finished products on inbound shipments as provided by tariff. Difference between rates paid on inbound lumber "and the regular rates account not reshipped aggregates $919.09." *1038
March 6, 1939, the body company was adjudicated a bankrupt. It then had on hand 300,000 pounds of unprocessed processed lumber and an equal amount of finished materials. All of these commodities and supplies were disposed of by the trustee. A stipulation was: "The amount of the credits, if allowed on said materials on hand, would be $500."
The railroad company's claim was allowed by the referee, but nothing has been paid on it.
Appellants say it is elementary that a contract, to be binding, must be based upon some consideration, and cite Lane v. Levillian,
The arrangement is a permissive one through which the carrier, by reducing its inbound charges, is assured of additional traffic that might, but for the contract, go to a competitor. At the same time the shipper benefits to the extent of the lower rate on its rough materials.
The bond is an incident, it of the contract, and clearly each is supported by a valuable consideration. It is true a surety's promise, like any other contract, must rest upon consideration; but the surety need not be benefited. The surety's promise may repose upon the consideration received by the principal, or it may rest upon a disadvantage resulting to a creditor. Kissire v. Plunkett-Jarrell Grocer Co.,
The second contention is that bankruptcy was an intervening cause preventing manufacture of merchandise from 300,000 pounds of rough lumber, and shipment of 300,000 pounds of processed stocks. Williams v. Manners,
Title 11, USCA, 34, provides that liability of a person who is a co-debtor with, or guarantor, or in any manner a surety for, a bankrupt, shall not be altered by the discharge of such bankrupt.
In Polk v. Stephens,
It is finally insisted by appellants that in any event they should be allowed $500 as a credit on the materials not shipped.
This is not a suit for damages for failure to perform outbound obligations of the contract. It is an action against the sureties to collect the difference between tariff on inbound shipments and the rate actually paid under the contract induced by the promise to ship manufactured products. Expressed differently, the body company paid $919.09 less than regular rates on the inbound *1040 lumber. The complaint says: "By reason of said failure [to reship] the plaintiff is entitled to local rates instead of the rough material tariff rate because of the failure [of the body company] to ship said finished products in the quantity required by said rough material tariff."
With discharge of the judgment, appellants will be entitled to subrogation in respect of the railroad company's claim to the extent of any payments made by the trustee in bankruptcy.
Affirmed.