249 F. 315 | 3rd Cir. | 1918
In this action the use plaintiff, E. Kirby-Smith, sued the International Lumber & Development Company (whose receiver, John O. Sheatz, was afterward substituted as defendant), claiming to recover money due or to become due by the company to the legal plaintiffs, Markley & Miller.
He based his claim on Markley & Miller’s assignment to him on August 28, 1911. Several years before that date they had contracted with the company to cultivate and develop a ranch in Mexico, and had employed Kirby-Smith as manager; his duties requiring him to live on the ranch and to look after the work on the ground. In 1911 he gave up his employment, and on August 28 he met .Markley &l Miller in Chicago, where his claim against them was compromised, and the sum of $105,000 was agreed upon as due. Thereupon they executed an assignment of that amount out of such money as might then be due or might become due thereafter upon their contract with the company. They also signed notes aggregating $105,000, and drew drafts upon the company in the same amounts as the notes and falling due on the same dates. The plaintiff offered evidence to the effect that C. M. McMahon, the company’s secretary and treasurer, was present at the settlement and agreed to the' assignment on behalf of the company, and also offered evidence tending to show that Markley & Miller had performed the original contract. He asserted that during the year 1912 the company agreed with, Markley & Miller that about $364,000 was due to them under the contract, and proved the payment of the first draft, for $4,000, and the refusal of the others.
The assignment was only partial, and the use plaintiff undertook the burden of showing the company’s acceptance, as well as the fact that it owed to Markley & Miller, either on August 28 or thereafter, enough money to pay the amount assigned. In the effort to establish these facts, he offered evidence of McMahon’s presence in Chicago, and his declaration at the conference there that the company owed or would owe Markley & Miller $400,000 under the contract, and would pay the drafts covering their assignment. This raised the question of McMahon’s authority to bind the company, and to support his authority the plaintiff called the chief bookkeeper, who testified that McMahon conducted .the company’s correspondence, had full direction of its-funds, and was in general charge of the office. The bylaws were not offered, nor was any resolution of the board of directors referring to McMahon’s authority. It appeared that when he returned from Chicago he gave the bookkeeper a list of the drafts, so that a memorandum of their amounts and due dates might be made, and that he directed the payment of the first draft, and the dishonor of the others. The plaintiff also- offered evidence that Markley & Miller had agreed to pledge certain collateral security with their notes, and he attempted to show that the. company had taken part in carrying out this agreement. On this point' the facts were these: The company’s stock was to be paid for in installments; until all the installments were paid, the subscribers received, not the stock itself but a form of contract, and it was a definite amount of these stock contracts that Markley & Miller agreed in August to pledge as collateral.
On the other question — whether Markley & Miller had performed their contract with the company, and, if so, how much was due thereon — '-the plaintiff offered the following evidence: He attempted to prove the company’s declaration against interest, contained in an account with Markley '& Miller, kept in a book that was produced at the trial and called an “auxiliary ledger.” He called the bookkeeper to identify the volume as an official record of the company, but the witness testified that, although the book had been kept in the principal office, it was not one of the company’s official records, and did not contain all the entries that were found in other books concerning Markley & Miller’s debits and credits. This ledger, however, was admitted in evidence as a declaration against interest, and the account •therein showed that the company, at and after August 28, owed the contractors much more money than the amount assigned. The receiver attempted to cross-examine the witness, in order to show what books o E the company contained thé complete transactions with Markley & Miller, and attempted later, as a part of his own case, to offer other books of the company to show the true state of their account. But the trial judge declined to allow the cross-examination, and declined also to admit the other books as part of the receiver’s case, for the purpose of showing the account as a whole. The receiver then offered to prove that certain specific items, not contained in the “auxiliary ledger,” were proper charges against Markley & Miller; but the offer was excluded, on the ground that these items had been charged against one or other of the contractors individually. Appareutly neither Markley nor Miller had done any business with, the company, except under the contract of October, 1904.
The court asked the jury to find (1) whether McMahon had actual authority to bind the company by his acceptance of the assignment, or whether he had been previously held out as having such authority; and (2) whether the auxiliary ledger showed a sufficient indebtedness to Markley & Miller at and after August 28. As part of the charge, the jury was instructed that sufficient facts (if believed) were in the case to establish McMahon’s authority, but that the jury must determine from the evidence whether McMahon did accept the assignment for the company.
We need not take up the assignments of error in detail. We have said enough to indicate our opinion about the proper course of the trial, and enough, we hope, to be a sufficient guide when the controversy comes again before the District Court.
The judgment is reversed, and a new trial is awarded.