Opinion
14837
March 10, 1939.
Before DENNIS, J., Marlboro, June, 1938. Affirmed.
Action by the Josey Fertilizer Corporation against P.C. Costner and another based on a combined note and chattel mortgage, wherein the plaintiff asked that the defendants be restrained and enjoined from disposing of any of the chattels or crops mortgaged by terms of the instrument. From an adverse decree, the defendants appeal.
Decree of Judge Dennis follows:
In this action the plaintiff seeks an adjudication that the defendants are indebted to it for the amount set forth in an instrument hereinafter described, consisting of a combined note and chattel mortgage, and that the said instrument is valid, binding and effectual according to its terms. The plaintiff further asks that the defendants be restrained and enjoined from disposing of any of the chattels or crops mortgaged to the plaintiff by the terms of the said instrument.
As described in the complaint, the instrument in this case evidences an indebtedness of the defendants to the plaintiff in the sum of four hundred forty-two and 20/100 ($442.20) dollars, under date of March 25, 1938, as the purchase price of one hundred (100) bags of soda ordered by the defendants from the plaintiff, and as security for the payment of said indebtedness, the instrument mortgages certain chattels and crops therein described. The instrument is expressed to be payable September 1, 1938, and provides for the payment of attorney's fees in the amount of fifteen (15%) per cent., and of all costs of collection, if payment is not made as agreed therein. It was duly recorded in the office of the Clerk of Court for Marlboro County.
After setting forth the aforementioned instrument, including the fact of its ownership and possession by the plaintiff, the complaint then sets forth that the credit evidenced thereby had been extended by an agent of the plaintiff without authority but that since the instrument had been made and delivered, plaintiff had accepted the same: that after such acceptance, it desired to verify the paper in all particulars, and that the defendants did verify it to the plaintiff by stating that the signatures thereon were genuine, that the indebtedness evidenced thereby was in fact owed by them, and that they would pay the obligation according to its terms; that, however, after thus confirming the debt and lien to the plaintiff, the defendant, P.C. Costner, later caused to be delivered to the plaintiff a letter, set out in the complaint, in which he denied that he had ever received the soda in question, and demanding the return to him of the note and mortgage; that the said defendant explained the letter to the plaintiff with the claim that he had not in fact received the soda, but that he had made a secret arrangement with the plaintiff's agent, who was no longer in the plaintiff's employ, whereby said agent was to obtain the soda for the defendants on their aforementioned instrument, sell the same for the defendants, and let the defendants have the proceeds to use in the operation of their farm. It is further alleged that the defendants claim that this agreement with the former representative of the plaintiff had been carried out to "a small extent," but that said representative had failed to carry it out in full; and further that the defendants informed the plaintiff that they repudiate the aforementioned instrument and they will not pay the debt evidenced thereby or recognize the lien created thereby.
The complaint further alleges that in accordance with the foregoing the defendants, unless restrained by the Court, will deal with and dispose of the crops and chattels described in the mortgage without regard to the plaintiff's claim and lien; that they are execution proof; and that unless they are required by this Court to comply with and in all respects recognize the validity of the aforementioned lien, the plaintiff will be wholly without remedy, and will suffer irreparable injury and damage. It is further alleged that plaintiff's aforementioned agent is insolvent; that he had no authority, actual or implied, to make the aforementioned agreement with the defendants; and that until the receipt by the plaintiff of the aforementioned letter, the plaintiff had no knowledge of the secret agreement upon which the defendants rely.
Upon this complaint I granted an order nisi requiring the defendants to show cause before me why an order should not be made for their examination before trial, and why they should not be restrained and enjoined pending the further order of the Court, from disposing of any of the chattels described in the mortgage.
By way of answer, and of a return to the order nisi, the defendants admit the execution of the instrument in question, but deny receiving the soda and allege that the chattel mortgage is without consideration and of no force or effect; they further allege that the soda was shipped and billed to the plaintiff's representative in question, who is named in the answer as G.H. Scarborough, and that no part of it was delivered to the defendants; that the plaintiff is holding the said Scarborough liable for this indebtedness and has actually made demand on him for payment: that Scarborough recognizes this obligation as his own, and that he has an account against the plaintiff against which the same should be credited; the defendants further allege that the plaintiff is bound by Scarborough's transactions; that Scarborough and the defendants have had various personal transactions that have nothing to do with the plaintiff's business, as the result of which Scarborough let the defendants have "small sums of money, but these defendants allege that this is less than one hundred fifty ($150.00) dollars"; that never having received the soda, the defendants are entitled to the return of their note and mortgage. The prayer of the answer is that the complaint and rule be dismissed and that the plaintiff be required to return the note and mortgage to the defendants.
Counsel for the plaintiff and the defendants agreed upon an order for the examination of the defendants before trial with leave to the plaintiff to examine other witnesses under a stipulation that the matter of a temporary restraining order be deferred until after the examination is held. Thereafter, under the order made for that purpose, the examination was held, and at such examination the defendant, P.C. Costner, testified at length. Plaintiff's former agent, Scarborough, and certain of the agents and officials of the plaintiff corporation were also examined.
Following the holding of the examination, and after the testimony had been transcribed, counsel for the plaintiff and defendants appeared before me to argue the question of the right of the plaintiff to a temporary restraining order. After some argument, the point was made that both sides had presented all of the testimony that was available, with an exception hereinafter noted, and that nothing could be gained by arguing the case piecemeal; that the efficient thing to do was to submit the whole matter to the Court on the record for final adjudication. Counsel on both sides then concurred in the suggestion. The matter was so submitted to me.
The testimony discloses an extraordinary situation. Whatever legal or moral blame attaches to the defendants for the irregular transaction here involved, it is only fair to point out that the defendant, P.C. Costner, made a full disclosure of the facts and circumstances surrounding the transaction. It is more likely that he is the victim of a fraud perpetrated by Scarborough, than that he intended to defraud the plaintiff, but of course the question whether the defendants are bound by the instrument executed by them, under the circumstances in this case, must be determined according to applicable legal principles.
The testimony, when taken as a whole, after giving full consideration to everything stated by Scarborough and Costner, is susceptible of no other possible interpretation than that the transaction described in the complaint was actually entered into between the defendants and Scarborough, the latter being at the time an agent of the plaintiff. The defendants are husband and wife. In the language of P.C. Costner himself, here is how the transaction occurred, and how the amount stated in the instrument in question was arrived at:
"He drove in there one day — into my home, that was when I run a filling station at that time — he drove in under the driveway, and I had been trying to get some money. I needed it terribly bad. I said to Mr. Scarborough — `Can't you tell me where I can get three or four hundred dollars?' I told him that I would like to have $400.00 if possible to run my crop — that I was short of money and I didn't see how I could pull through without this money. I don't know whether he had gotten out of the car — possibly I told him I want to see him. As he came around the back of the car that's it — I told him just what I just stated and he said `Why bless your dear life, why sure I can get you the money — I do it for my friends often.' I just remarked to him that I had all this stuff around here, and I was broke. I had nearly $2,000.00 worth of stuff and haven't been able to get a thing on it. He just stood around and began to write out this stuff — what all I had. He said we could get this in a few days — that I would get the soda in a few days.
"Q. You haven't mentioned the soda yet. A. He said —
"Q. Tell how he told it to you? A. `My dear life,' he said, `I can get the money for you. I'll just take this mortgage on your stuff, and get you ten tons of soda, and it will be here in a few days. When it comes, I know where I can sell it and get the money for it.' I signed the paper, I didn't even look at it. I know it was a bad way to do, but I was so glad that he was letting me have the money, I didn't even look at the paper.
"Q. If we have you correct here, you asked him to lend you some money or tell you where you could get it, and he proposed to you that he would order ten tons of soda, sell it, and get the money for it and lend that money to you? A. Yes, he said he would bring it down here to me.
"Q. At that time he was representing Josey Fertilizer Corporation? A. Yes. I just bought some fertilizer not long before that from him. I bought some from him last year, and he was so nice to me —
"Q. You knew that he was representing the company, of course? A. Yes. I bought it through the same company last year.
"Q. And he was to order this ten tons of soda from the Josey Fertilizer Corporation? A. That was my understanding.
"Q. Did he tell you to whom he would sell it? A. No, sir.
"Q. You understand that the face amount of the chattel mortgage is $442.20. Was that the amount of money he was to lend you? A. No, he was to add the interest in that. He was to lend me a sum of money of three hundred and thirty some odd dollars. That is terrible interest —
"Q. You were to get $330.00? A. I am not positive. $330 and some odd dollars.
"Q. You were to get $330.00 and some odd dollars in cash — You understood that you were giving this paper for the soda at time prices? A. Yes, sir — at time price.
"Q. $330.00 would have been the cash price, and $442.00 the credit price? A. That was my understanding.
* * * * *"Q. You knew, Mr. Costner, that you were not borrowing money from the Josey Fertilizer Corporation, you knew that? A. I knew that he was representing Josey Fertilizer Corporation.
"Q. Did you ever hear of the Josey Fertilizer Corporation lending money — have you ever heard of them lending money? A. I have never heard of the Company lending money — no, sir.
"Q. You then never have heard of the Josey Fertilizer Company lending any money? A. No, sir.
"Q. What reason did you have for believing that Mr. Scarborough could lend money for the Josey Fertilizer Company? A. I didn't give that a thought.
"Q. Well, now as a matter of fact what Mr. Scarborough did was not to lend money but to get the fertilizer, sell it, and use the money as his own — now that was what he proposed to do — wasn't it, get the fertilizer — soda — sell it and give you the money. That was his proposition? A. Yes — he was to get the fertilizer, sell it and give me the money. * * *"
As hereinbefore stated the instrument in question is dated March 25, 1938. The record discloses that on the same day Scarborough telephoned to the office of the plaintiff in Wilmington an order for ten tons of soda, stating that he had sold the same for cash; delivery of the soda was immediately made to Scarborough on this order; he did not inform the plaintiff at the time the name of the purchaser, and under examination by the plaintiff's attorney admitted that he had ordered it on the date above stated and received it, but he refused to tell what disposition he made of it except to say that he had sold it on credit.
A few days after this transaction was made, Scarborough submitted the chattel mortgage involved herein to the plaintiff to cover the ten tons of soda. The plaintiff refused to accept the chattel mortgage, stating that the sale was to have been made for cash; Scarborough then offered to pay for the soda himself, and it was agreed that the mortgage should be assigned to him. The instrument was so assigned, but Scarborough never paid for the soda, so that the assignment never became effective.
About this time the plaintiff had become suspicious of the business conducted for it by the said Scarborough, and instituted an investigation as to the status of the transactions made by him on the plaintiff's behalf. The plaintiff's agent Gainey called on the defendant, P.C. Costner, in this connection, inquiring of him as to the genuineness of the instrument in question. This call was made some weeks after March 25, 1938, and Mr. Costner admits that he told Mr. Gainey that the instrument was genuine in all respects, except that he had not planted the six acres of tobacco described in the paper. He also stated to Mr. Gainey, and so admits in his testimony, that he had received the soda for which the mortgage was given as security. Subsequently the president of the plaintiff corporation called on Costner, and the latter made no complaint about the soda or the debt.
However, on or about June 10, 1938, Scarborough brought to the defendant, P.C. Costner, a letter dated June 10, 1938, addressed to the plaintiff, in which it is set forth that the soda was never received by the defendants, and demanding the return of the mortgage. Scarborough asked Costner to sign this paper and forward it to the plaintiff. Costner did this, and when the plaintiff received this letter, it obtained the first information that had come to it that there was any question about the receipt of the soda by Costner, or the genuineness of the obligation of the defendants.
Mr. Costner testified at length relative to the promises of Scarborough, after the delivery of the soda, to give him the proceeds of sale of the ten tons of soda in accordance with the agreement between Scarborough and Costner. Scarborough explained to Costner his failure to give him the money by telling him that the persons to whom he had sold the soda had not carried out their agreements to pay for the same in cash. He did however give Costner sums of money from time to time, and made certain purchases from Costner. As the result of the transactions between Costner and Scarborough, the latter paid to the former at least thirty ($30.00) dollars more than the amount owed Costner for goods purchased from him. Scarborough testified that this money represents personal transactions between him and Costner, and not payment of any part of the proceeds of the soda under the agreement above set forth.
A circumstance that may have no direct bearing on the material issues in the case, but is nevertheless illuminating on the broad question as to what credence should be placed on some of the testimony in this case is a transaction that occurred in the office of Henry A. Rogers, Esq., Clerk of Court for Marlboro County, who held the examination of the witnesses in this case. According to Mr. Costner, some time after June 10th, Mr. Scarborough left at the office of Mr. Rogers an instrument expressing the fact that Scarborough did not owe Costner any money. Mr. Costner then had a message from Scarborough to go by Mr. Rogers' office to sign the paper, Mr. Costner did sign it, and it was then delivered to Mr. Scarborough. Mr. Costner admits that the statement contained in this paper was absolutely false because as he stated, Scarborough did owe him the proceeds of the soda. He later concluded that he should get the instrument out of Scarborough's hands, and succeeded in doing so by a ruse which is fully described in the testimony and need not be detailed here.
The testimony of Mr. Scarborough consisted largely of evasions, irrelevant statements and refusals to answer questions. His testimony, under the circumstances disclosed by this record, can receive little consideration in any aspect of the case. Viewed as a whole it contains no definite or satisfactory explanation of any of the transactions or incidents in question, and no effective denial of any of the essential matters which must furnish the foundation for rulings in this case.
Defendants' counsel takes the position that the plaintiff has lost nothing through the admitted agreement between the defendants and Scarborough, because the soda is charged against Scarborough, and was never actually received by the defendants. I cannot accept this view of the case. If the defendants did not receive the soda, it is still a fact that they signed a solemn instrument acknowledging their liability for the purchase price, and admitted the receipt of the soda long after the making of the transaction here involved, and it was upon the strength of the agreement they made with Scarborough as above related that the latter undertook to procure the delivery of the soda to himself. Unquestionably, under the facts here disclosed, Scarborough and the defendants are equally liable to the plaintiff. The plaintiff is entitled to sue the Costners and Scarborough separately at the same time, or at different times, or to sue them jointly. Until it obtains satisfaction of its claim, it is free to pursue every remedy available against any of the parties of the conspiracy charged.
A further position taken by the defendants is that the transaction should be considered as a credit sale by the plaintiff to the defendants, and that the instrument should be annulled for failure of consideration. In this light, it was brought to the attention of the Court at the argument that the defendants had obtained other fertilizer, including soda, from the plaintiff and that the same was purchased on credit during the present year, and that the credit is still outstanding.
I am unable to perceive the relevancy of this viewpoint. In the first place, the credit thus referred to was not obtained by the defendants on their own responsibility. The documents upon which it is founded were exhibited to me. What really happened was that the defendants purchased some of plaintiff's goods, from one of its agents named D.P. Byrd. This agent was operating under an agreement whereby he unconditionally guaranteed payment to the plaintiff of every credit extended by him. In the present case this agent took a crop and chattel mortgage from the defendants, and re-affirmed his guaranty by a separate guaranty of the credit written on the back of the mortgage itself. Hence it cannot be seriously suggested that there were any arrangements between the plaintiff and the defendants whereby the defendants could obtain credit from the plaintiff, if that were material in the present case.
But aside from this, the plaintiff did not intend to deal with the defendants in the matter here in question. Through the connivance of Scarborough and the defendants the transaction was forced upon it. It is no more bound by the acts of Scarborough in such a case, than by the acts of a stranger.
I find the following facts:
The instrument described in the complaint was executed by the defendants with full knowledge of its purport and contents; it was executed by them under a scheme entered into between Scarborough and the defendant, P.C. Costner, whereby Scarborough was to procure ten tons of soda from the plaintiff, sell the same, and lend the proceeds to the defendants. As the result of this scheme, and especially by reason of the participation in it by the defendants through their execution of the instrument in question, Scarborough ordered ten tons of soda from the plaintiff, received the same, disposed of it, and has failed to pay for the said soda or any part of it. He did pay thirty ($30.00) dollars or more to the defendant, P.C. Costner, as a part of the arrangement above referred to. The plaintiff has thus lost the price of ten tons of soda through the connivance of the defendants and Scarborough under an arrangement which Costner himself modestly describes when he says "I know it was a bad way to do."
I further find that at time prices, which would govern the disposition of the present matter, the price of the said soda is four hundred forty-two and 20/100 ($442.20) dollars, as set forth in the instrument described in the complaint.
Scarborough had no authority, actual or apparent, to make such a transaction as that above referred to, and the defendants had no reason to believe that he had such authority, but they dealt with Scarborough in what amounts to a conspiracy to obtain ten tons of soda from the plaintiff under circumstances and upon terms which both parties knew would not be acceptable to or countenanced by the plaintiff.
It is not necessary for me to find as a fact that the defendants did or did not receive the soda. They may be victims of a fraud practiced upon them by Scarborough, but in all events it is an inescapable conclusion that a fraud was practiced upon the plaintiff and that the execution of the instruments of this fraud arose out of a combination between the defendants and Scarborough, acting with a common purpose.
No question is made in the case about the claim of the plaintiff that unless the plaintiff can enforce the chattel mortgage in question, it will have no redress., because of the financial condition of the Costners, and the insolvency of Scarborough.
My views being as above expressed, it is ordered, adjudged and decreed: That the instrument described in the complaint, consisting of a combined note and chattel mortgage made by the defendants, dated March 25, 1938, evidencing and securing four hundred forty-two and 20/100 ($442.20) dollars and duly recorded in the office of the Clerk of Court for Marlboro County in Book 124, at page No. 1, is valid and enforceable in accordance with its terms.
Further ordered, adjudged and decreed, that the defendants be and they hereby are restrained and enjoined from selling or otherwise disposing of the crops and chattels described in the aforementioned chattel mortgage, except for the purpose of discharging the lien of the said chattel mortgage by payment to the plaintiff, together with the additional lien on the said crops and chattels held by the plaintiff in connection with the transaction made through D.P. Byrd.
Mr. J.K. Owens, for appellants, cites: Reversible error: 11 S.C. 56; 17 S.C. 289; 18 S.C. 282. Mr. Samuel Want, for respondent, cites: Conspiracy: 11 A.J., 584; 87 S.C. 42; 68 S.E., 824. Review of findings of fact supported by evidence: 114 S.C. 494; 104 S.E., 194; 162 S.C. 177; 160 S.E., 436; 156 S.C. 480; 153 S.E., 462; 122 S.C. 461; 113 S.E., 791.
March 10, 1939. The opinion of the Court was delivered by
The decree of Judge Dennis sets forth fully the facts in this remarkable case. His disposition of the case is satisfactory to this Court. Let it be reported.
The appellants and their fellow conspirator, Scarborough, have learned by sad experience that Sir Walter Scott spoke truth when he wrote: "Oh, what a tangled webb we weave, When first we practice to deceive."
Judgment affirmed.
MR. CHIEF JUSTICE STABLER and MESSRS. JUSTICES BAKER and FISHBURNE concur.
MR. JUSTICE CARTER did not participate on account of illness.