Sturm v. Boker/Opinion of the Court

[Syllabus from pages 312-313 intentionally omitted]

This suit, as originally instituted, was an action at law by the appellant, in the superior court of Marion county, Ind., against the defendants, to recover the sum of $238,000, with interest thereon, for which sum, the plaintiff alleged, they were indebted to him. The defendants, being citizens of New York, removed the cause to the circuit court of the United States; and, as the claim involved various matters of account, running through a period of several years, the court, on motion of the defendants, transferred the cause to the equity docket, and required the plaintiff to reform his pleadings. In compliance with this order, the plaintiff filed his bill of complaint, setting forth various transactions involving matters of account between himself and the defendants, commencing in September, 1867, and continuing down to September, 1876. The answer of the defendants admitted many of the facts charged, and either denied others, or set up new matter in avoidance thereof.

The several items of account presented by the pleadings need not be specially mentioned, or separately considered, not is it deemed necessary, in the view we entertain of the case, to review the immense volume of testimony taken in the course of the litigation,-covering about 4,000 printed pages,-involving irreconcilable conflicts, and including much that is wholly irrelevant. The material facts are clearly established by the written agreement of the parties, and by the admissions made in the pleadings; and the controlling question of law arising thereon, and upon which the correctness of the decree dismissing the bill must be determined, is whether the court below placed the proper construction upon the original contract enterted into between the parties, under which the defendants consigned certain arms and munitions of war to the complainant, to be by him shipped to, and sold in, Mexico. That contract, after some previous verbal negotiations, was embraced in the following correspondence:

'Office of Hermann Boker Co., No. 50 Cliff Street.

'New York, September 18th, 1867.

'General H. Sturm, present.

'Dear Sir: Inclosed please find our bill of sundry arms,     etc., amounting to $39,887.60, for which amount please give      us credit on consignment account.

'As mutually agreed, we consign these arms to your care, to     be shipped to Mexico, and to be sold there by you to the best      advantage. Should these arms not be disposed of at the whole     amount charged, we have to bear the loss. Should there be any     profit realized over the above amount of bill, such profit      shall be equally divided between yourself and us.

'Also, it is understood that all these goods are shipped by     you free of any expenses to us, and that, in case all or any      of them should not be sold, they shall be returned to us free      of all charges.

'As you have insured these goods, as well as other     merchandise, we should be pleased to have the amount of      $40,000 transferred to us. Please acknowledge the receipt of     this, expressing your acquiescence in above, and oblige,

'Yours, truly,

Hermann Boker & Co.'

Accompanying this letter was an invoice, in form as follows:

'No deduction allowed for errors or damages unless claim is     made within five days after the goods are received.

'Herman Funke. Folio _____.

'R. A. Boker.

'50 Cliff Street, New York,

'F. Schumacher. Sept. 18th, 1867.

'Mr. H. Sturm in joint acc't with Hermann Boker & Co.:

'Payable in gold.

'Terms, net cash.

'Forwarded for your account and risk, per

'Forwarded for your account and risk, per _____:

1  12-pounder battery, brass, complete    $ 9,

1  3-rifled battery, iron, complete      8,

---    $17,

73 cases of 20 ea. )1,470 Springfield R.

1  "  10      "   ) muskets, 8.00    $11,

-  12,

1,000 r'ds fixed ammunition,  13 p., 2.00   $ 2,

504  r'ds fixed ammunition,  24 pd., 2.00     1,

100,000 Enfield cartridges,   12.00    1,

--      8,

670 perc. shell, 3 Hotchkiss, 1.25    $ 837

680 time fuse, 3 Hotchkiss,   1.25    850

27  "    not painted,1.30     35

--  2,560

$10,175"

While it is clearly established that both of these consignments were made upon the same terms and conditions, the invoices which accompanied them differed in some respects. The bill accompanying the October consignment was entirely in writing, while the invoice accompanying the September consignment was written under a printed billhead of the defendants. The printed heading was not changed, except by erasing the words, 'bought of,' and inserting in their place the words, 'Mr. H. Sturm in joint acc't with.' The words, 'Payable in gold,' appear to have been stamped on the bill, but whether this was done at the time of its delivery to the complainant, or subsequently, when the defendants regained possession of the bill, is a question of dispute between the parties; and under the testimony it is a matter of grave doubt whether they formed a part of the invoice bill, as originally rendered, but it is not deemed necessary to determine this controverted question of fact.

The October consignment, which was insured by the defendants themselves, and was shipped by the steamer Wilmington, reached Mexico safely, and causes no controversy between the parties except as to a portion of the proceeds arising from the sale thereof, which was received by the defendants.

The September consignment, together with similar goods of the value of $169,516, belonging to the complainant, were shipped on the schooner Keese and brig Blonde. The Blonde carried of the consigned goods, $10,560.60, and of the complainant's goods, $17,250, while the Keese carried of the consigned goods, $29,327, and of complainant's goods, $152,266.

The goods shipped on both vessels were insured in 14 separate policies. These policies were made out in the name of Sturm, 'for account of whom it might concern.' The whole amount of insurance on the goods carried by the Blonde was $30,000, while the total insurance on the goods, individual and consigned, carried by the Keese, was $163,000. This insurance was effected through an insurance broker, who was informed that the defendants had an interest of about $40,000 in the goods to be covered by the policies, and who was directed to consult Mr. Funke, the member of defendants' firm with whom the complainant had chiefly conducted the transaction in controversy, as to how those policies should be made. This he did, and with the consent, and by the direction, of Mr. Funke, he took the whole lot of insurance together, in the name of complainant, 'for account of whom it might concern,' and appropriated for the benefit of the defendants, and handed over to them, by the instruction of the complainant and of Funke, four policies on the cargo of the Keese amounting to $55,000, issued, respectively, by the Sun, the New York, the Orient, and the Mercantile Insurance Companies, and one policy for $15,000 issued by the United States Lloyds Insurance Company on the cargo of the Blonde. These four policies on the Keese, together with the one on the Blonde, the insurance broker selected for the defendants at their request, as being issued by good companies, and they were delivered to the defendants about the date of their issuance.

The policies thus delivered to them, as understood by the broker who selected and turned them over to the defendants, were intended to cover their interest in the insured cargo of the Keese and Blonde. The amount of the policies so delivered to defendants was in excess of the invoice prices of the consigned goods, for the reason, as alleged, that policies covering the exact amount could not be selected, but with the understanding that the excess was to be held for account of the complainant.

The vessels carrying the cargo sailed for Mexico in September, 1867,-a few days after the insurance was effected. On the voyage the Blonde was caught in a storm, and part of her cargo was thrown overboard to save the vessel. The insured goods had to contribute to the general average the sum of $1,463.84, which was paid by the complainant, who also paid out the further sum of $672.78 for repairing part of the consigned goods, which reached Mexico in a damaged condition. Half of the amount paid on general average, and the amount paid for repairs upon the consigned goods, are the only items of account in controversy, so far as concerns the shipment made upon the Blonde, nothing having been recovered, either by complainant or defendants, upon the insurance policies taken out on the cargo which she carried. That shipment, except in respect to the items paid on general average and for repairs, may therefore be dropped out of further consideration.

The Keese, carrying $29,327 of the consigned goods, and $152,266 of complainant's individual goods, and covered by 12 policies of insurance, amounting to $163,000, was wrecked on her voyage, without fault or negligence on the part of complainant, and her cargo was totally lost.

The complainant had reached Havana, on his way to Mexico, when he learned of the loss of the Keese and her cargo, and promptly notified the defendants, by telegram, of the fact. The defendants thereupon called for and received from the complainant's agent in New York city the invoice which accompanied the consignment of September 18, 1867, for the purpose of preparing and making proof of the loss. The insurance companies refused to pay the policies, on various grounds, which need not be noticed here.

The complainant returned to New York in March, 1868, and, learning that the insurance companies contested their liability for the loss, arranged with the defendants to institute suits against the companies to recover on the policies held by them, respectively. The defendants employed Mr. Da Costa to sue upon the policies held by them, while the complainant employed Mr. Parsons to sue upon his, and the lawyers were to co-operate and assist each other in the prosecution of all the suits.

About the time this arrangement was made, the complainant opened a bank account with the defendants, and thereafter made deposits with and drew checks and drafts upon them, as his bankers, down to the latter part of 1875.

The litigation against the insurance companies continued until September 13, 1876, when the last collection upon the policies was made. During the progress of the litigation, the complainant turned over, or assigned, to the defendants such judgments as he had obtained, and such policies standing in his name as had not been reduced to judgment, as alleged, for the purpose of convenience in collection and settlement, and with the view of having the amounts collected thereon placed to his credit. The funds collected upon all the policies, amounting to about $109,000, went into the hands of the defendants. The complainant claims that his interest and that of defendants in the amounts recovered is in the ratio of $152,266 to $29,327,-that being their relative proportion in the total amount of insurance,-and that the defendants ought to account to him according to that proportion, and pay their just share of the expenses incident to the collection thereof, as well as compensate him for his services in connection with the suits. These, and other smaller items of account, constitute the matters in controversy.

While admitting the general facts in respect to the transaction, the defendants set up in their answer that by the terms of the contract the complainant became the insurer of the goods, and was bound thereby to either sell them in Mexico, and account for the proceeds, or to return them to New York free of all expense to the defendants, and that, recognizing such liability, the complainant insured all the goods, making no distinction in the manner of such insurance between his individual goods and the consigned goods, and that the policies transferred to the defendants by the complainant were transferred as collateral security for the performance of the contract, which was upon a gold valuation, and that no part of the policies was held in trust for the complainant.

On this theory, the defendants kept their account of the transaction in the name of the 'Mexican Arms Account,' in which the goods consigned were charged at the price of $39,887.60, and to this was added the premium upon gold at 45 per cent., amounting to $17,949.42; and, on the aggregate of these two sums, interest was computed from September, 1867, to May 1, 1882, amounting to $53,801.28. This account was also charged with the expenses connected with the suits on the policies turned over to them, amounting, with interest, to $16,710.72. These expenses consisted of attorneys' fees and sundry outlays for witnesses in connection with the suits. These various items were not charged or entered as debits against Sturm until 1876, when they were transferred from the Mexican arms account to his account.

The defendants' construction of the contract, and method of keeping the account, was not communicated to the complainant until some time in 1876, when he promptly denied its correctness. The court below adopted the defendants' interpretation of the contract, holding that the consigned goods were at the risk of complainant; that he was responsible for thir loss, although arising from inevitable accident, because he had undertaken to return them if not sold; and that, being so responsible, the defendants had a right to charge him with the value thereof, and treat the policies turned over to them as collateral security for this liability, and were, furthermore, entitled to charge him with the expenses of collecting such policies, so that the complainant was entitled to credit only for the net amounts collected thereon. For this, and the further reason, as the court assumed, that the complainant had given testimony in the insurance cases, and made admissions under oath, which were inconsistent with his present claim, and which should repel him from a court of equity, his bill was dismissed.

If, by the terms of the contract, as embodied in the letters of September 18 and October 24, 1867, the title to the goods vested in the complainant, or they were to be at his risk during their transit to Mexico, then it is conceded that upon an adjustment of the accounts between the parties on that basis, with the allowance to the defendants of a premium of 45 per cent. for gold, there is little or nothing due to the complainat, and no substantial error in the decree dismissing his bill. On the other hand, if the title to the goods delivered did not vest in the complainant under the terms of the consignment, or he was not responsible for the loss of the same by inevitable accident, then the court below was in error in dismissing his bill, and denying the account sought.

Solomon Claypool and Hohn M. Butler, for appellant.

Albert Baker, Wm. D. Guthrie, and C. A. Seward, for appellees.

[Argument of Counsel from pages 323-326 intentionally omitted]

Mr. Justice JACKSON delivered the opinion of the court.

It is too clear for discussion, or the citation of authorities, that the contract was not a sale of the goods by the defendants to Sturm. The terms and conditions under which the goods were delivered to him import only a consignment. The words 'consign' and 'consigned,' employed in the letters, were used in their commercial sense, which meant that the property was committed or intrusted to Sturm for care or sale, and did not, by any express or fair implication, mean the sale by the one, or purchase by the other. The words, 'Mr. H. Sturm in joint account with Hermann Boker & Co.,' or 'Bought of Hermann Boker & Co., in joint account,' in the billhead, cannot be allowed to control the express written terms contained in the contract, as set forth in the letters. A printed billhead can have little or no influence in changing the clear and explicit language of the letters, and it in no way controls, modifies, or alters the terms of the contract. The purpose and object of the bill were to give a description and valuation of the articles to which the contract, as embraced in the letters, had reference; their description being important, if the articles had to be returned, and their price or valuation necessary, if they were sold, and profits were made for division. The contract being clearly expressed in writing, the printed billhead of the invoice can, upon no well-settled rule, control, modify, or alter it. That the invoice was not intended to have that effect is shown by the fact that the invoice of the consignment of October 24th differed in several respects from the invoice of September 18th, although the terms and conditions in respect to each consignment were the same.

In Schenck v. Saunders, 13 Gray, 37, there was a written agreement in these terms:

'The said Schenck, Wood & Pond, of the first part, agree to furnish the stock, consisting of upper and sole leather and linings and bindings, of sufficient amount to make at least eight, and not to exceed twenty, cases per week. And the said Charles Howe, of the second part, is to take the stock, and make it up, to the best of his abilities, into women's boots, and further agrees to consign all the goods he makes to the said Schenck, Wood & Pond, of the first part, to be sold by them on commission of five per cent.; the goods to be sold for cash, and the returns made to the said Charles Howe as fast as made. And the said Charles Howe, of the second part, agrees to put up and ship to the said Schenck, Wood & Pond, at their store in New York, at least eight cases of boots per week, each case containing sixty pairs, commencing the first week in May, 1856.'

With each shipment of leather to Howe, Schenck, Wood & Pond sent him unsigned bills, like those in the present case, in this form:

'New York, May 15, 1856.

'Mr. Charles Howe,

'No. 25 Beekman Street,

'Terms 6 months.

"52 sides, sole leather B. A., 644, 26 1/2. $170

"Inspection and cartage................