Case Manufacturing Co. v. Soxman - 138 U.S. 431 (1891)
U.S. Supreme Court
Case Manufacturing Co. v. Soxman, 138 U.S. 431 (1891)
Case Manufacturing Company v. Soxman
Argued January 16, 19, 1891
Decided March 2, 1891
138 U.S. 431
In this case, the plaintiff having accepted notes of a limited liability company in settlement, set up that the acceptance was made through a misunderstanding. Held that evidence tending to show knowledge that the plaintiff at the time of the acceptance was a limited liability company was admissible.
When in a case in which the facts are found by the court instead of a jury, there is any evidence tending to support the finding, this Court will not review it.
It appearing from the evidence of one of the plaintiff's witnesses that during the dates of these transactions he was acting as its financial manager, his acts in that capacity cannot be repudiated.
The case, as stated by the court, was as follows:
The Case Manufacturing Company, plaintiff in error, is a corporation located at the City of Columbus, State of Ohio, and engaged in the manufacture and sale of flour milling machinery. On the 8th of December, 1883, an order was sent to its home office, received and approved on the 11th of December, which order, omitting immaterial matters, was, with the acceptance, as follows:
"(Form No. 2)"
"This form to be used where machines are ordered for changing over a mill, but where the millwright work is not done by the Case Manufacturing Co. Fill up three of these blanks; one for the purchaser, one for the Case Manufacturing Co., and one for the salesman. Fill up blanks carefully. This contract to be binding only when signed by the Case Manufacturing Company at its home office at Columbus, Ohio."
"Latrobe, Dec. 8th, 1883"
"The Case Manufacturing Co., Columbus, O."
"Please ship the undersigned, as near the first day of February, 1883, as possible, the following machinery at and for the price of eight thousand dollars. . . . We agree to receive and pay freight on the same and place them in our mill according to your directions; to supply the necessary power and appliances and other machinery required to obtain the best results, using proper diligence in placing and starting the same. After starting them, we are to have thirty days' running time in which to test them, when, if found up to your guarantee, we will settle for the same by paying 2,000 dollars cash, 2,000 dollars by note due 12 months after accepting of the machinery, and 4,000 dollars by note due 18 months at 6 percent interest."
"You to guarantee that, with necessary power and proper management, the machines shall have capacity for from 100 to 110 barrels of flour in twenty-four hours; that they shall perform the work they are intended to do as well as any machines now in use for the same purpose, and the results to be equal to those obtained from any of the roller or other modern systems of milling now in use in this country using the same grades of wheat and an equivalent line of machinery. We agree to be responsible for any damage or loss by fire or otherwise to said machines after they reach us, and agree to make no claims for damages on account of delays incident to starting up said mill. The title to said machines shall remain in, and not pass from, you until the same are paid for, and until all the notes
given therefor are fully paid; and, in default of payment as above agreed, you or your agent may take possession of and remove said machines without legal process."
"LATROBE MILLING Co."
"P. H. SOXMAN, Pres."
"H. C. BEST, Sec'y"
"D. J. SOXMAN, Treas. "
"P. O. address, Latrobe, County of Westmoreland, State of Pennsylvania."
"Shipping address, Latrobe, County of Westmoreland, State of Pennsylvania."
"We accept the above order upon the conditions named, and hereby make the guarantee above set forth this 11th day of December, 1883 at Columbus, Ohio."
"CASE MANUFACTURING Co."
"By O. WATSON, P't"
"All settlements must be made with and all notes given and moneys paid direct to the Case Manufacturing Co."
On the 20th of October, 1884, the machinery having all been furnished and the mill started, a settlement was made by the purchasers with the same agent of plaintiff, Davis, who had negotiated the sale in the first instance. Having already paid $1,000, a check was given for $1,000 more, which was paid, and two notes, one for $2,000, due in one year, and one for $4,000, due in eighteen months. These notes were not signed with the name of the Latrobe Milling Company, but were signed, "P. H. Soxman, Pres't; H. C. Best, Sec'y," with the seal bearing the name, "Latrobe Milling Company, Limited," impressed upon it. The agent brought these notes and money back to Columbus and turned them over to Mr. Shough, then acting manager, Mr. Watson, the president, being ill. The contract was made when Mr. Watson was both president and the active manager of the affairs of the company. On receiving these notes, Mr. Shough, dissatisfied with their form, wrote this letter:
"Columbus, Ohio, October 29, 1884"
"Latrobe Milling Company, Latrobe, Pa."
"Dear Sirs: Mr. Davis has handed us your settlement, which is all satisfactory, with the exception that the notes are not properly signed. They are only signed by the president and secretary. They should be signed, 'The Latrobe Milling Company, Limited,' by P. H. Soxman, president, and H. C. Best, secretary, and your seal attached. If you are willing to put them in proper shape, we will send you the notes with new ones filled out for you to sign and return; otherwise, your settlement is very satisfactory, and we are glad to place you among our long list of friends. We are obliged to you for your good letter, as well as your settlement, and we shall endeavor to use it when it will do us all good. According to the laws of your state, a corporation is only liable to the extent of the property they hold, there being no individual responsibility outside of the property, and, believing that you are willing to do what is just and right, we will ask you to assign your insurance policies to us. The notes run for a long time, and, there being no other security on them, we ask you to do this for us. Should your mill burn, as it is liable to do, then it would be optional with you whether you pay us or not. You will recognize that this is business, and while we have all the confidence in you, and have very flattering reports about you, at the same time you will understand that it is the business way of doing, and we have no doubt but what you will be willing to grant our request."
"Awaiting your early reply, and with best wishes, we are &c., yours truly,"
"THE CASE MANUFACTURING Co."
Subsequently the milling company sent the following letter:
"Latrobe, Pa. December 2, 1884"
"Case Manufacturing Company"
"Dear Sir: Enclosed find note corrected as requested; also the insurance policy for $6,000, which you will return to me. Will please pardon, as secretary has been on the road, and is
not at home yet, and I thought it my duty, after getting his signature, to send to you. The mill is running right along, only we have a hard time to compete with Mr. Chambers, across the way, as he has reduced the price to nothing, viz., $4.25 per barrel of flour, but the race belongs to the one that has the most sand to stand up to it."
"LATROBE MILLING Co."
To which letter the plaintiff returned this reply:
"Columbus, Ohio, December 4, 1884"
"Latrobe Milling Company, Latrobe, Pa."
"Dear Sirs: We are in receipt of the notes, which are all 'O.K.;' also the insurance policies, which we will have the transfer made on and returned to you to be signed, and have your agent there endorse the transfer. At the price Chambers is selling flour, there surely is a loss in it, and we hope it won't take him long to see his folly and restore the price, so that you can both make some money."
"THE CASE MANUFACTURING Co."
"P.S. Accept thanks for fixing our matters up in proper shape."
At the time the original order was signed, no corporation defendant existed. The parties were contemplating the formation of a corporation or association, and on May 5, 1884, they did form, under authority of the general law of the State of Pennsylvania, an association known under the name, "Latrobe Milling Company, Limited," by which the liability of the parties interested in the new association was limited to the amount of the capital stock, and the notes given in the settlement were the notes of this limited liability company. Mr. Watson, the president of the plaintiff corporation, died in the winter of 1884-85. Thereafter, John F. Oglevee became its secretary and treasurer and general manager of its affairs. The first note not being paid when due, in the fall of 1885, Oglevee visited Latrobe to look after its payment. Subsequently,
examining the records in the county seat of Westmoreland County, in which Latrobe lies, he found judgments against the milling company, and mortgages upon its property. Shortly after this discovery, he returned to Columbus and thereupon the plaintiff company returned the two notes which it had received, alleging that they did not conform to the contract, and demanded payment of the first note, $2,000, and interest, and, in lieu of the second, a new note executed by the Latrobe Milling Company, and not by the limited liability company. The defendants refused to comply with this demand, and returned the notes to the plaintiff. Thereafter this suit was brought. To this suit the defendants pleaded that it was understood at the time of the original contract that they were to organize a corporation with limited liability, and that its notes were to be the notes to be given for deferred payments; secondly, that after the organization, and after the delivery of the machinery, the plaintiff, with knowledge of the facts, accepted the notes in full payment and satisfaction of the debt. When the case came on for trial, a jury was waived. Findings of fact were made and a judgment entered thereon in favor of defendants, to review which these proceedings in error have been brought to this Court.