A New York corporation contracted with a partnership consisting
of citizens of West Virginia to furnish a specified quantity of
coal within a fixed time at an agreed rate. After delivery of a
portion of the coal, the partnership refused to receive more,
whereupon the corporation sued the partners in a state court of
West Virginia to recover damages for a breach of the contract. On
the motion of the defendants, this action was removed from the
state court to the circuit court of the United states on the ground
that the parties were citizens of different states. The partners
then, in conformity with the provisions of a statute of West
Virginia which authorizes a creditor, before obtaining judgment, to
institute any suit to avoid a conveyance of the estate of his
debtor which he might institute after obtaining judgment, and to
have the relief in respect to said estate which he would be
entitled to after judgment, filed a bill in equity in the circuit
court of the United States to set aside an assignment of the
property of the corporation as fraudulent and to subject that
property in the hands of the assignee to the payment of their debt.
It was objected to this bill that the court was without
jurisdiction, as the assignee, who was one of the respondents, was
a citizen of West Virginia, of which the complainants also were
citizens.
Held that the objection was not well taken, the
equity suit being an exercise of jurisdiction in the circuit court
ancillary to that which it had already acquired in the action at
law, and which it might entertain according to the rule in
Krippendorf v. Hyde, 110 U. S. 276, and
Pacific Railroad Co. v. Missouri Pacific Railway Co.,
111 U. S. 505.
From a careful examination of all the evidence in this case, the
Court is satisfied with the action of the circuit court dismissing
the bill and the cross-bill as dependent upon the bill.
In equity to set aside an assignment by an insolvent debtor as
fraudulent, and to subject the assigned property to the payment of
the complainants' debt. The respondents filed a cross-bill.
Page 123 U. S. 330
The decree dismissed the bill for want of equity and the
cross-bill as dependent upon it. The case is stated in the
opinion.
MR. JUSTICE MATTHEWS delivered the opinion of the Court.
In October, 1872, a contract was entered into between the firm
of Dewey, Vance & Co. and the West Fairmont Gas Coal Company,
the terms of which are stated in a letter from the former to the
president of the coal company, dated October 7, 1872, as
follows:
Page 123 U. S. 331
"We beg to ratify our verbal agreement of October 4th, by which
you are to deliver us until July, in 1873, an average of three cars
of coke per day at six cents per bushel of 41 pounds, we to settle
for same by our note of 90 days from the first of each month for
the previous month's delivery."
This was acknowledged as an acceptance of a previous offer in
identical terms by a letter from the president of the coal company
to Dewey, Vance & Co. Under this contract, the coal company
were bound to deliver 681 car loads as ordered, equivalent to
424,944 bushels, which at the contract price would amount to
$25,496.64. From the date of the contract to November 30, 1873, the
coal company delivered in all 246 carloads, which had been ordered,
and were received and paid for according to the terms of the
contract, the period during which deliveries were to have taken
place having been extended by mutual consent. Dewey, Vance &
Co. refusing to order or receive any more, the coal company, on
January 17, 1877, brought an action at law against them in the
Circuit Court of Ohio County, West Virginia, for damages for the
breach of the contract. The defendants in that action caused it to
be removed from the state court to the Circuit Court of the United
States for the District of West Virginia, on June 7, 1877, on the
ground that the parties were citizens of different states, the West
Fairmont Gas Coal Company, the plaintiff, being a corporation of
the State of New York, and the defendants citizens of West Virginia
and Ohio. Thereupon, on October 3, 1877, the surviving partners of
the firm of Dewey, Vance & Co. filed the
Page 123 U. S. 332
present bill in equity against the West Fairmont Gas Coal
Company, the plaintiff in the action at law, and the West Fairmont
and Marion Consolidated Gas Coal Company, a corporation organized
under the laws of West Virginia, alleging that under the contract
of October 4, 1872, the sale of coke was by sample, the quality of
which was to be equal to that of a certain trial lot previously
tested, accompanied by an implied warranty that the coke to be
delivered under the contract should also be fit and suitable for
the purpose of being used in the furnace of Dewey, Vance & Co.
for making pig iron; that in point of fact, the coke actually
delivered under the contract was not equal to the quality of the
sample, and was not fit for the purposes for which it was to be
used; that in consequence thereof, the complainants had ceased and
refused to order or receive any more than that delivered and paid
for, and that by reason of the bad quality of the coke actually
received and used, they had suffered a large amount of damages;
that the West Fairmont Gas Coal Company in the meantime had become
and was insolvent, and that they had made a fraudulent assignment
of their property to their codefendant, the West Fairmont and
Marion Consolidated Gas Coal Company. The prayer of the bill was
that the amount of damages sustained by the complainant might be
ascertained, that the assets of the West Fairmont Gas Coal Company,
so fraudulently assigned, be subjected to the payment thereof, and
that in the meantime all proceedings in the action at law brought
by the West Fairmont Gas Coal Company should be stayed.
The right to maintain such a creditor's bill is based upon the
Code of West Virginia, c. 133, ยง 2, which provides that
"A creditor, before obtaining a judgment or decree for his
claim, may institute any suit to avoid a gift, conveyance,
assignment, or transfer of, or charge upon the estate of his
debtor, which he might institute after obtaining such judgment or
decree, and he may, in such suit, have all the relief in respect to
said estate which he would be entitled to after obtaining a
judgment or decree for the claim which he may be entitled to
recover."
To this bill the defendants in the first instance objected,
by
Page 123 U. S. 333
way of plea and demurrer, for want of jurisdiction in the court,
on the ground that one of the defendants, the West Fairmont and
Marion Consolidated Gas Coal Company, was a citizen of the State of
West Virginia, of which also a portion of the complainants were
citizens. This objection, however, is not well taken. The suit in
equity was an exercise of jurisdiction on the part of the circuit
court ancillary to that which it had already acquired in the action
at law, which it might well entertain according to the rule
adjudged in
Krippendorf v. Hyde, 110 U.
S. 276, and
Pacific Railroad Co. v. Missouri Pacific
Railway Co., 111 U. S.
506.
The defendants having answered, denying the equity of the bill,
set up their right to recover damages for the alleged breach of the
contract on the part of Dewey, Vance & Co. in refusing to
receive the remainder of the coke deliverable under the contract,
by way of cross-bill, in which they sought a decree for the amount
thereof. Issues having been made upon the bill and cross-bill, the
cause was heard upon its merits, when the circuit court rendered a
decree dismissing the bill for want of equity, and the cross-bill,
with costs, to the original defendants as dependent thereon. From
this decree an appeal is prosecuted by the original complainants,
and also by the defendants, by way of cross-appeal, from so much as
dismisses their cross-bill.
From a careful examination of all the evidence in the cause, we
are satisfied with the conclusions of the circuit court. We find as
matter of fact that the sale of coke was not by sample. A trial lot
of 34 carloads, prior to the making of the contract, was furnished
and used, the complainants being satisfied with it, but there was
no agreement, either express or implied, that all deliveries under
the contract should be equal to it in quality. The object of the
test evidently was to determine, on the part of the complainants
for themselves, whether they were willing to run the risk of using
coke to be manufactured by the coal company from the slack of their
mines at the price offered. The coke which was subsequently
furnished under the contract was used by the complainants, and paid
for according to the contract, without objection, except as to a
lot
Page 123 U. S. 334
furnished in December, 1872, which was complained of as being
inferior. On investigation, it turned out to have been made from
material taken from a slack pile outside of the mines which had
been for some time exposed, and had become unfit for the purpose.
Thereafter no material was used except the fresh slack taken from
the inside of the mines, and deliveries continued to be made as
ordered until the last, which took place in November, 1873. There
was no warranty expressed, nor can any be reasonably implied from
the circumstances, that the coke under the contract should be
suitable for use in the furnace for making pig iron. On the
contrary, it was expressly understood that it would not be suitable
for that purpose by itself. The only question to be determined was
whether it could be used in combination with Connellsville coke,
which was the standard for that purpose, and if so, in what
proportions; to determine this was the object of testing the trial
lot. The complainants continued to use it, as already stated, from
time to time without objection or complaint, paying for what they
received according to the terms of the contract, and not at any
time giving notice of any intention to refuse the further
performance of the contract, although ceasing to give any orders
after November, 1873. On November 28, 1873, the coal company, in a
letter from its president to Dewey, Vance & Co., asked for the
reason for the order to discontinue shipping, in reply to which, on
December 4, 1873, Dewey, Vance & Co., wrote:
"Yours of the 28th inst. was duly received. We were accumulating
stock, and stopped shipments from Fairmont, and curtailed from
Connellsville; have no definite idea at what time we shall again
need."
No further communications appear to have taken place between the
parties until the beginning of the action at law.
We think the circuit court did not err upon the merits in
dismissing the complainant's bill, and, as the cross-bill was
dependent upon it, and sought no relief purely equitable, it was
also properly dismissed, with costs to the complainant therein,
thereby remitting it to its remedy in the pending action at
law.
The decree of the circuit court is accordingly
affirmed.