Opinion
No. 32231.
April 27, 1936. ON MOTION TO DISMISS.
1. CORPORATIONS.
Evidence, that corporation which allegedly sold inferior oil to buyer and corporation which sold oil used by buyer to blend with inferior oil to make oil salable occupied same offices, had largely same directors and officers, and that all stock of both corporations was owned by foreign corporation, held not to show that corporations were a single entity so as to permit buyer to recoup losses sustained by reason of purchase of inferior oil when sued by corporation selling oil used for blending.
2. CORPORATIONS.
In suit for purchase price of oil used by buyer to blend with allegedly inferior oil purchased by buyer from corporation occupying same offices and having largely same directors and officers as plaintiff, and alleged by buyer to be subsidiary of plaintiff, wherein buyer sought to recoup losses sustained by purchase of inferior oil, evidence held to justify judgment for plaintiff.
APPEAL from the circuit court of Hinds county. HON. J.P. ALEXANDER, Judge.
R.H. J.H. Thompson, of Jackson, for appellant.
It is elementary that separate corporations may have the same offices, the same stockholders, the same directors, or one or more of the same in either class, and yet be separate legal entities.
Louis Werner Sawmill Co. v. Northcutt, 161 Miss. 441.
The appellee has attempted to combine the Berry Asphalt Company and the James B. Berry Sons' Company, Inc., the appellant, in the person of C.E. Miller, or, at his option and to suit his convenience, in the person of R.S. Gibbs. It is perfectly clear that the two companies were and are entirely separate and distinct legal entities, in spite of the fact that Miller was an officer of one company and employee of the appellant.
The appellant's objection to the introduction of testimony with reference to the transaction with Berry Asphalt Company should have been sustained, and the appellant should have been granted a peremptory instruction by the trial court. However, granting for the purpose of argument that the trial court correctly overruled appellant's objection, it is equally clear, that with all of the testimony in the record, the appellee has made out no defense on the face of the record, and the peremptory instruction should have been given for the plaintiff at the conclusion of all of the testimony. Harold Cox and A.B. Fulton, both of Jackson, for appellee.
It appears that the actual basis of the appellant's complaint against the judgment of the court below is that the judgment is not supported by the overwhelming weight of the evidence. On the contrary it is respectfully submitted that there is little, if any, testimony whatever from the appellant to contradict the overwhelming proof from the appellee that appellee had all of his negotiations for both shipments of oil with and through the appellant alone. If appellant's contention on this point be sound, which it is not, the trial judge could not have granted the peremptory instruction requested by the appellant, but may have granted a new trial on this ground, if a motion for a new trial had been filed by the appellant. The appellant did not make a motion for a new trial in this case in the lower court.
Fore v. A. V. Ry., 39 So. 493, 87 Miss. 211; Newton v. Homochitto Lbr. Co., 138 So. 564, 162 Miss. 20; M. O.R.R. Co. v. Johnson, 141 So. 581, 165 Miss. 397; Justice v. State, 154 So. 265; State Highway Commission v. Chatham, 161 So. 674, 173 Miss. 427; 3 American Jurisprudence, sec. 385, page 121; Western Union v. Jones, 13 So. 471, 69 Miss. 658; Monk v. Horn, 38 Miss. 100.
A careful search of the appellant's brief has revealed that it is barren of any authority to support his contention. In fact, it may be well assumed that learned counsel for the appellant with all of his skill and industry has searched the entire field of the law in vain for one authority to support the contention which he urges here.
Johnson v. State, 122 So. 529, 154 Miss. 512; Ryal v. Thurman, 124 So. 432, 156 Miss. 1; Goodyear Yellow Pine Co. v. Lumpkin, 130 So. 745, 158 Miss. 578; E.L. Bruce Co. v. Brogan, 166 So. 350; Bridges v. State, 154 Miss. 489, 122 So. 533; Estes v. Bank of Walnut Grove, 159 So. 104, 172 Miss. 499.
There was abundant evidence in this case to support the verdict of the jury. The jury justly decided that the appellee purchased both shipments of oil from the appellant, and that by reason of the fact that the first shipment of oil was worthless, and that the appellee had sustained an actual damage by reason thereof in excess of the amount sued for, that the appellee owes the appellant nothing.
It is familiar learning that it did not lie within the province or power of either the Berry Asphalt Company to make a sale to the appellee on an order sent the appellant, and likewise it did not lie within the power of the appellant to effect a contractual relation between the Berry Asphalt Company and the appellee without his knowledge or consent. That is just exactly what the appellant has tried in this case so earnestly yet so unsuccessfully to do.
Manning v. Bienville Lbr. Co., 152 So. 885, 169 Miss. 643.
It makes no difference now that it is developed for the first time that the first shipment of oil was actually sold by another corporation. Appellee did not know this at the time, and did not intend at the time to effect a purchase of such oil in July, 1932, from any other than the appellant to whom he gave the order therefor.
A.L.I. on Contracts, sec. 54; 23 R.C.L. 1276, sec. 92; Felder v. Acme Mills, 73 So. 52, 112 Miss. 322.
In the instant case, the appellee is not being sued for any balance due on the first shipment, but he claims his right to set off against the appellant the full measure of damage sustained by him from the first defective shipment.
Parker v. Dantzler Foundry Machine Works, 79 So. 82, 118 Miss. 126; United States National Bank v. Leflore Grocery Co., 112 So. 700, 147 Miss. 43.
The appellant in this case is, at most, an undisclosed agent of an undisclosed principal, if the transaction had been handled as it intended. If the appellant handed this order of the appellee to the Berry Asphalt Company, without appellee's knowledge or consent, while appellee was undertaking to and thought he was contracting with the appellant alone as principal, then, the appellee would still have recourse for any loss which appellee sustained by reason of the merchandise shipped to him, appellee, in July, 1932, from the purported undisclosed principal.
Globe Realty Co. v. Hardy, 119 So. 192, 155 Miss. 12.
There was never any meeting of the minds of the appellant and the appellee wherein and whereby the appellee undertook to purchase the September, 1932, shipment of oil, except solely in the effort and for the exclusive purpose of improving the quality of the oil which appellee purchased from appellant in July, 1932.
Edwards Hotel Co. v. Chambers, 106 So. 763, 141 Miss. 487.
Argued orally by R.H. Thompson, Jr., for appellant, and by Harold Cox, for appellee.
ON MOTION.
The motion to dismiss this appeal will be sustained unless the appellant executes and files with the clerk of this court a new appeal bond, approved by the clerk of the court below, within thirty days hereafter.
The motion to strike the stenographer's notes from the record will be overruled.
The case will be continued until the next term of this court.
So ordered.
ON MERITS.
The appellant was plaintiff in the court below, and brought suit against the appellee for three hundred forty-four dollars and ninety-four cents with interest, the balance due upon a shipment of oil amounting to eight hundred forty-four dollars and ninety-four cents upon which account appellee had, at various times, paid the sum of five hundred dollars.
Appellee pleaded the general issue, giving notice thereunder that he would prove that on or about July 1, 1932, he ordered from appellant three thousand and fourteen gallons of lubricating oil, by sample of a serviceable quality and color, for which appellee was to pay the sum of three hundred thirty-four dollars and thirty-eight cents, and on which amount appellee did pay the sum of one hundred sixty-five dollars and ninety-eight cents together with freight charges amounting to fifty-three dollars and ninety cents; that appellant shipped said oil to appellee from the plant of its subsidiary, the Berry Asphalt Company of Waterloo, Ark., and that at the first opportunity for an inspection, appellee ascertained that the oil was not of the color and quality ordered, and was inferior and unsalable; that appellee notified appellant that he would not accept said shipment, called the first shipment, and appellant directed appellee to unload the shipment, which he did, and sell the oil for the best possible price; that appellee later learned that, and so notified appellant, said oil was not salable, and appellant voluntarily agreed to and did ship to appellee six thousand and thirty-five gallons of Sinclair Lubricating oil solely for the purpose of blending with said first shipment to make it marketable, said six thousand and thirty-five gallons being called the second shipment, it being the item sued on; that said oil would not blend with the first shipment, and appellee was not thereafter able to sell said first shipment and now has on hand, approximately, two hundred fifty gallons of said first shipment which is worthless, and that appellee paid appellant the sum of five hundred dollars cash for said second shipment of oil. It was further alleged that appellee would prove on a trial of the case that his oil trade in the territory was practically destroyed by reason of the inferior quality of the first shipment of oil sold to him by the appellant, and that appellee was forced to make many adjustments and settlements with customers damaged by the use of the inferior oil, and was damaged in the actual sum of four hundred sixty-five dollars and ninety-six cents, and should be entitled to recoup this loss from the appellant.
From the evidence it would seem that the first shipment of oil referred to was purchased from the Berry Asphalt Company by R.S. Gibbs, a broker for the appellee, and that prior to this purchase, Gibbs and Owens had contemplated forming a partnership for the sale of motor oil in Jackson, Miss., and that appellee went to Chicago, where the appellant, the James B. Berry Sons' Company, Inc., and the Berry Asphalt Company had offices, and discussed the purchase of oil with president of the Berry Asphalt Company, who was also western manager of the James B. Berry Sons' Company, Inc. After the partnership arrangement failed to materialize, Gibbs opened an office in New Orleans, La., and appellee applied to him to purchase the first shipment of oil referred to in the pleadings. This first shipment was billed out under an invoice and bill of lading from the Berry Asphalt Company consigned to the appellee at Jackson, Miss., was accepted by him, and one-half of the purchase price, plus freight thereon, was paid.
On July 16, 1932, Gibbs wrote upon stationery of the Berry Asphalt Company, from Little Rock, Ark., to appellee, the following letter:
"The carload of oil will not be shipped today or tomorrow. I will probably be at the refinery on Monday, and at that time will make every effort to see that the oil is properly blended and shipped to you promptly. There has been a delay in securing a small tank car, and if this is the only thing that is holding the shipment up now, I am going to ship you 1000 gals. by motor truck just as soon as the oil can be properly blended. I am very sorry this delay has occurred, but it seems inevitable in the production of a new product. Trusting you had a good week in your gasoline and kerosene sales, and with all best wishes, I am,
"Yours very truly, R.S. Gibbs"
It appears that the first shipment of oil not being satisfactory to appellee's trade, he complained to Miller in Chicago, president of the Berry Asphalt Company, and western sales manager of Berry Sons' Company, Inc., and the arrangements not being satisfactory, appellee applied to Gibbs to assist him, who suggested an order of a superior oil known as Pennsylvania oil for the purpose of blending it with the first shipment to make it salable; that Gibbs approached Miller about it, who declined to ship Pennsylvania oil on the ground that it was too expensive, and that Gibbs then suggested Sinclair oil, and that appellee placed an order with Gibbs to procure such oil from the James B. Berry Sons' Company, who made the shipment here sued on. Gibbs was not introduced as a witness. It also appears that both the James B. Berry Sons' Company and the Berry Asphalt Company had offices in the same building and used the same office facilities for the purpose of economy, but that they were separate corporations, doing a separate business, and that the entire stock of both corporations was owned by a Pennsylvania corporation. The Berry Asphalt Company, as stated, had a refinery at Waterloo, Ark., for the processing of oils, and from this company and this point the first shipment of oil referred to was made, being billed by the Berry Asphalt Company to Owens, the appellee, who paid one-half of the invoice, plus the freight, for such oil, and after the difficulty with reference thereto arose, he negotiated with the Berry Asphalt Company with reference thereto, and they adjusted the matter by charging it to profit and loss.
The evidence shows that the James B. Berry Sons' Company, Inc., shipped to Owens, the appellee, the second shipment of oil, he received same, and paid five hundred dollars on the account. This purchase was made through Gibbs, a broker, who had no connection with the James B. Berry Sons' Company, Inc., other than he was allowed a commission on shipments made by him for customers.
There is no direct testimony from which it can be inferred that there was any connection between the James B. Berry Sons' Company, Inc., and the Berry Asphalt Company, but the positive testimony for the appellant is that there was no such connection. We do not think it can be inferred that from the fact that the two corporations occupied the same offices, or had largely the same directors and officers, would make the two a single corporation, nor is there, in our judgment, anything to infer that the Berry Asphalt Company was or is a subsidiary of the James B. Berry Sons' Company, Inc. The positive proof is to the contrary, and though it is suggested in appellee's testimony that he understood he was dealing with the James B. Berry Sons' Company, Inc., in placing his order through his broker, Gibbs, and that Gibbs was an agent for James B. Berry Sons' Company, Inc., there is insufficient proof to establish such agency. Appellee's positive testimony is that he placed the order with Gibbs and did not direct him where to purchase the oil. There is nothing in the evidence to show that it was not permissible, under the Pennsylvania law, for a corporation to own the stock of two corporations; hence it was lawful for these corporations to be owned, one hundred per cent., by a Pennsylvania corporation. Therefore, in the absence of any showing to the contrary, we must presume that the two corporations in the case at bar were legal ones, each having a separate legal existence. See Werner Sawmill Co. v. Northcutt et al., 161 Miss. 441, 134 So. 156, where two corporations were discussed, and it was held that two corporations doing business, under the circumstances there disclosed, were separate entities.
Furthermore, we do not understand that the James B. Berry Sons' Company, Inc., in any manner procured the blending of the two oils, or was responsible for the unsuccessful blending. All that appears is that a representative was sent either by the Berry Asphalt Company, or the James B. Berry Sons' Company, Inc., to investigate the complaint, and that the Berry Asphalt Company abated its claim to the extent of one hundred sixty-seven dollars and fifteen cents, charging it to profit and loss.
We think the evidence of appellee, Owens, taken as a whole, fails to make any defense against the claim of the appellant, and that, consequently, the trial judge should have directed a verdict for the appellant.
It appears from counsel's briefs that the county court directed a verdict for the plaintiff there, and that this was reversed by the circuit court, and the case was tried de novo.
It follows from what we have said that the trial court should have directed a verdict for the appellant, and that, consequently, the judgment will be reversed and judgment rendered here for the appellant for the amount claimed.
Reversed and rendered.