Bacon v. P. Brockman Commission Co.
Bacon v. P. Brockman Commission Co.
Opinion of the Court
Tbis action was begun April 28, 1892, in tbe district court of Gage county by tbe partnership firm of E. P. Bacon & Go. Subsequently, by intervention, tbe Citizens State Bank of Council Bluffs, Iowa, became a party plaintiff. Tbe Brown Bros. Grain Company, a corporation organized under tbe laws of tbe state of Nebraska, was made a defendant because it was largely indebted to each of tbe plaintiffs. Between tbe parties already named there was in tbis case no controversy. Between tbe original plaintiff and tbe intervenor, on tbe one band, and tbe P. Brockman Commission Company, a Missouri corporation doing business at St. Louis, on tbe other band, there-was a real closely contested dispute. Each petition was in tbe nature of a creditor’s bill containing averments necessary to show tbe existence of an indebt
The Brown Bros. Grain Company was incorporated in the year 1890 and continued in the business of buying,, selling, and shipping grain until the latter part of the year 1891. This firm owned eleven elevators in Nebraska and two in Kansas, and had a five years’ lease of the Union Elevator at Council Bluffs, Iowa.' The elevators in Nebraska and Kansas were built and stood on the right of way of the Union- Pacific railway, or of its branches. About July 20, 1891, the Brown Bros. Grain Company made a shipment of grain to the P. Brockman Commission Company at St. Louis, and against said shipment drew a draft of $300. This was paid and thereafter there Avere other consignments and other drafts, until in September, 1891, the Brown Bros. Grain Company was indebted to the P. Brockman Commission Company in the sum of $67,580.85, and, after having been increased to over $84,000 in the meantime, this indebtedness, in November of the same year, was reduced to $68,-479.11. On the 14th day of the month last named P. Brockman, the president of the P. Brockman Commission Company, made an arrangement with the Brown Bros. Grain Company whereby was procured to be executed a chattel mortgage. Mr. Brockman in making this ar
“A.”
“This memoranda witnesseth, that whereas, Brown Bros. Elevator Company have this day turned over to P. Brockman Commission Company, of St. Louis, by mortgage indenture of this date, their lease of elevator in Council Bluffs, and all their elevators on the line of the Union Pacific and its branches in Nebraska and Kansas, being elevators at Raymond, Lincoln, Beatrice, Prince
“Now, therefore, it is understood and agreed by the P. Brockman Commission Company, of St. Louis, Missouri, that they will continue to operate all of such elevators now operated until the same can be disposed of, by lease or sale, to the advantage of said grain company, accounting to said Brown Bros. Grain Company for whatever profits there may be over and above all costs and expenses, interest, and indebtedness for running the same.
“Hated this 14th day of November, 1891.
“Brockman Commission Company,
“Per P. Brockman.”
“B.”
“Whereas, Brown Bros. Grain Company has heretofore caused certain grain to be shipped on the line of the Union Pacific Railway Company, on its bills of lading duly issued therefor, consigned to the care of the Union Elevator of Council Bluffs, Iowa, which said Union Elevator has been in the possession of and operated by the said Brown Bros. Grain Company; and
“Whereas, the said Brown Bros. Grain Company has secured the delivery of large shipments of said grain to said elevator so operated by it, without producing or surrendering to the said Union Pacific Railway Company the bills of lading therefor, by reason of which fact there are now outstanding a large number of bills of lading as against the said railway company, for grain which has actually been delivered to said elevator company; and
“Whereas, the undersigned is a large creditor of the Brown Bros. Grain Company, and it is important that the undersigned should secure possession of the said Union Elevator at Council Bluffs, Iowa, and should secure a transfer, assignment of sale of the grain, and other properties now in possession of Brown Bros. Grain Company at the said elevator, and in certain other elevators now operated by it in the state of Nebraska; and,
“Now, therefore, in consideration of the premises, the undersigned hereby promises and agrees to and with the said Union Pacific Railway Company, that all of the grain received from the said Brown Bros. Grain Company and now stored in the Union Elevator at Council Bluffs, Iowa, so far as the same can lawfully be applied for such purpose, shall be applied to the cancellation and satisfaction of all outstanding bills of lading of the Union Pacific’ Railway Company for grain delivered at such elevator in ■Council Bluffs, it being expressly understood that those bills of lading now in the hands of the undersigned shall be first satisfied, and that thereafter other bills of lading so outstanding shall be satisfied in the order of their presentation, it being the purpose of this agreement to guaranty and protect the said railway company from all loss arising from any outstanding bills of lading therefor, so far as the said grain now in said elevator will suffice for that purpose.
“P. Brockman Commission Company,
“Per P. Brockman, Pt.”
“C.”
“It is agreed by P. Brockman Commission Company that it will protect all drafts against grain en route for the elevator now drawn, not exceeding $16,800.
“P. Brockman Commission Company,
“Per P. Brockman, Prest.”
Appellant insists that the above described mortgage, and the written contracts made contemporaneously therewith, constitute the sole admissible evidence of the transactions therein referred to. As between the parties to these written instruments this doubtless would have been the general rule, but this action was not one predicated upon the memoranda nor between the parties. It was
On Sunday, the 8th day of November, 1891, P. Brock-man, representing the P. Brockman Commission Company, made an examination of the books of the Brown Bros. Grain Company, and with expressions of approval of the showing thereby made, offered to furnish whatever money was necessary for carrying on the business, provided security was given for what was already owing, and for further advances. During the remainder of the week preceding Saturday there were renewed efforts to reach an agreement as to how matters should be arranged, between the commission company and the grain company. As indicated by memorandum “B,” above copied, the Union Pacific Railway Company had previously delivered from its cars large amounts of grain to the grain company at the Union Elevator at Council Bluffs, without requiring' the production or surrender of the bills of lading. There were outstanding on November 14, 1891, 129 bills of lading of this character. The grain represented by these bills of lading had either been shipped to some eastern market and sold, or was still in the possession of the Brown Bros. Grain Company. It was to hold harmless the railroad company with reference to this grain that the provisions in the memorandum “B” were made.
Memorandum “G” was made necessary by the following condition of affairs: There had been purchased in the regular course of business, by the agents of the Brown Bros. Grain Company running the elevators of that company in Kansas and Nebraska, a large amount of grain. It was the custom of these agents, as they purchased
It was in relation to the provisions of memorandum “A” that very much of the conflicting oral testimony was introduced. Briefly summarized, these conditions were that the P. Brockman Commission Company undertook to operate all the elevators which theretofore had been operated by the grain company, until such elevators should be disposed of by lease or sale to the advantage of the grain company, accounting meanwhile to said grain company for all profits “over and above all costs and expenses, interest, and all indebtedness for running the same.” How from one standpoint this should be construed and supplemented was illustrated by the testimony of C. T. Brown, George K. Brown, and W. E. Kirker. Of these, C. T. Brown was the president of the Brown Bros. Grain Company. He testified that on the date of the mortgage he, with others, met Mr. Hall, the attorney for the P. Brock-man Commission Company, and P. Brockman himself, at Mr. HalFs office in Omaha. As to what transpired at this office before the mortgage was executed this witness testified as follows: “The question of filing the mortgage was talked over and I said if the mortgage was filed it would probably ruin our business and our credit, and we did not want anything of that kind done, and Hall said, ‘Either place the mortgage on file or take possession in order to make the mortgage good;’ and I said that taking
Mr. Kirker, tbe treasurer of tbe Brown Bros. Grain Company, testified tbat be was present just before tbe mortgage was signed and asked Mr. Brockman about filing it, and was answered tbat it was not to be filed; tbat Brockman was to take formal possession, and, as Mr. Kirker said, “we were to run tbe business tbe same as it bad been.” Tbis witness also testified tbat Mr. Brockman said be would, furnish all tbe money necessary to run tbe business, and upon being asked to put tbat in writing be said, “Do you tbink I am a damned rascal?” and refused to comply.
In regard to tbe matters above referred to Mr. Brock-man testified tbat after be came to Ornaba in November, 1891, be investigated tbe matter, and as tbe Brown Bros. Grain Company owed bim a great deal, be asked for security, either in tbe nature of a bill of sale or of a mortgage. In answer to an inquiry as to whether be made an. agreement with tbe grain company for continuing its business when tbe mortgage was made, Mr. Brockman said in bis testimony, “I tbink I agreed for them to carry on tbe business; tbat was before I knew bow their financial standing was. They made all kinds of statements to me, which I found afterwards to be false; tbat they misrepresented everything to me, as I found out when I came to tbe various elevators.” In answer to an interrogatory as to what understanding outside tbe written agreements be bad with tbe Brown brothers, Mr. Brockman said: “I don’t know tbat I bad any particular agreement.” Having admitted tbat be did not carry out bis agreement with tbe grain company, Mr. Brockman responded to tbe question why tbis was, as follows: “After I took possession of tbe property of the various elevators, including tbe Council Bluffs elevator, and ascertained bow much grain there was, I found tbat there was hardly any, perhaps a few car loads in tbe Council Bluffs elevator. I held at tbat time forty-three bills of lading for which there was
Q. At the time you took possession of those elevators and other property, was there any understanding between you. and tbe Brown Bros. Grain Company that they would still be tbe property of tbe Brown Bros. Grain Company?
A. No, sir.
Q. Or was there also any understanding that they should keep possession also with you?
On cross-examination, being asked if he meant to say that he had carried ont his agreement (memorandum marked “A”) to continue operating the elevators until they were disposed of, and as to continuing business with the Brown Bros. Grain Company, Mr. Brockman said: “I did intend to carry ont that agreement at the time I signed it, and would have carried it out if I had found matters the way they were represented to me by the Browns.”
Mr. Hall, who, as attorney, conducted the operations for Mr. Brockman at the time the mortgage was given, testified as follows:
“At the time the mortgage was given, at that interview or at the one leading up to it, the Brown Bros. Grain Company did not desire us to put our mortgage on record, and I think in the first interview, or one of the first, I told them, or it was said on our side, that it would not be necessary to put these mortgages on record at once; they were desirous of that afterward. At the time the mortgage was given I spoke of taking possession and they, the Brown Bros., whoever it was that conducted the conver-, sation, I think it was Charley Brown, but it may have been one of the others, asked if we were going to take possession. I said, ‘Yes, if we didn’t record the mortgage, we would have to take possession;’ and they then said that if we had to take possession, it didn’t make much difference whether we recorded the mortgage or not; that was about the size of the talk, the substance of it.”
Q. What, if anything, Mr. Hall, was said or done in these negotiations with regard to the control or running of the property?
A. Well, there was nothing in regard to control, except that he went into possession.
A. Well, they were, the Brown Bros. Grain Company, very much afraid, and so expressed themselves; said they were afraid that when we got this mortgage for the P. Brockman Commission Company, that we would immediately go to work and sell the elevator out and destroy the business. They said that they had an immense amount of grain coming in, and, to do that, would ruin the business. We said to them that if they had the grain coming in they said they had, it would not be to Brockman’s advantage to destroy the business, nor to destroy or sell the elevators out at a sacrifice. They said, “Yes, but after yon get this mortgage you may forget about that.” Substantially the talk, and they wanted a writing that we would not sell it out at a sacrifice immediately, and, in fact, after that talk there was a writing given that told them that we did not propose unnecessarily to sacrifice the property. It was to our advantage to get as much for it as we could, and we intended to do that.
' Prom the above quotations it is not left open to doubt that there was sufficient evidence from which it could properly be found that at the time the mortgage was made there was an understanding between the mortgagor and the mortgagee that the latter should take formal possession of the mortgaged property, and that it should, under the name of the latter, be run for the benefit of, and practically under the direction of, the mortgagor. By the terms of the mortgage itself it was provided that the mortgagee’s right to take possession should be exercised upon the failure of the mortgagor to make payments of all or some portion of the amounts secured when it fell due. The property mortgaged was all the property of the mortgagor, and at the time the mortgage was given the mortgagor was insolvent. It is, however, insisted by the appellant that by the terms of memoranda “B” and “C” the mortgagee assumed, and has in fact assumed, certain obligations in consideration
AFFIRMED.
Reference
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