Mortimore v. Atkins , 98 Ark. 183 ( 1911 )

Hart, J.,

(after stating the facts). It is conceded that under the appointment all questions of fact were referred to the master, and, the appointment having been made -by consent of the parties and on their motion, his findings and conclusions upon questions of fact are as conclusive and binding as the verdict of a jury; and where there is testimony legally sufficient to support such findings, they will not be disturbed. Such is the effect of the following decisions, cited by counsel in their briefs. Greenhaw v. Combs, 74 Ark. 336; Paepcke-Leicht Lbr. Co. v. Collins, 85 Ark. 414; Griffin v. Anderson-Tully Co., 91 Ark. 292; Carr v. Fair, 92 Ark. 359; McVeigh v. Chicago Mill & Lbr. Co., 96 Ark. 480.

The plaintiffs, W. C. and R. W. Mortimore, claim credit for .$3,082.10, designated in the proof as “covers” or “hedges.” The master disallowed the claim, finding “no legal liability of Mortimore & Company, of Van Burén, Arkansas, for said amount.”

The chancellor disallowed this claim of the plaintiffs on the ground that it was “a ruse and an attempted fraud upon their part upon the rights of defendants, J. E. Atkins and W. H. McMurray, in the partnership business of Mortimore & Company, of Van Burén, Arkansas.” The ground on which plaintiffs make this claim is that subsequently to the execution of the written contract they made another and different contract with the defendants in regard to the sale of cotton to the firm. It will be noted that the firm of Mortimore & Company, of Greenville, composed of W. C. and R. W. Mortimore, the plaintiffs, sold 2,486 bales of cotton for Mortimore & Company, of Van Burén. This cotton was shipped to foreign customers, and the money actually received on the sale as each lot was shipped was deposited to the credit of Mortimore & Company, of Van Burén, in the Citizens’ Bank of that place. In regard to the sale of this cotton, W. C. Mortimore testifies that, by a special or new 'agreement made subsequent to the original contract .o'f partnership, the firm of Mortimore & Company, of Greenville, -was to cover the daily cotton purchases of Mortimore & Company, of Van Burén, by applying same upon -contracts for the sale of spot cotton, which the firm of Mortimore & Company, of Greenville, had, to protect the Van Burén firm against possible loss, occasioned by- the fluctuation in the market value of cotton so purchased b}r the Van Burén firm. That by the terms of this new agreement all cotton bought by the Van Burén firm was reported by wire to the Greenville firm that it might -be covered, and the Greenville firm undertook to cover all Van Burén purchases daily. That as the quality bought was unknown until samples arrived (usually 14 days after the date of purchase was reported), and as the lots purchased were also too irregular in quantity to be sold separately, the Van Burén purchases, according to a general custom of the cotton business, were absorbed into the Greenville purchases, and the whole covered by a general sale. That, on arrival of the cotton samples and re-weights, the cotton was applied indiscriminately to any open -contract -on the Greenville firm’s books without reference to price or date or cover. That on this account Van Burén purchases were applied to sales made before and after the date its purchase was reported ° and covered as the quality happened to suit contracts open on the Greenville firm’s -books. That the cotton bought by Mortimore & Company, of Van Burén, was bought on the basis o-f January future quotations, and was sold that way. That, for the -sake of clearness and fairness, the “closing price of January in New York” was used as the basis in each and every case, both for purchase and sale. In short, according to his testimony, the new agreement was made for the purpose of protecting Mortimore & Company, of Van Burén, from loss in buying and selling cotton, and the Van Burén firm bought the cotton and sold -it to the Greenville firm on the basis of January future quotations; and that the Van Burén firm in consequence was no-t interested in the price for which the Greenville firm re-sold the cotton — whether such re-sale resulted in loss or gain. The cotton was shipped by the Greenville firm to .its customers, and the price received for it was deposited in the Citizens’ Bank at Van Burén to the credit of the Van Burén firm, leaving the differences in price at which the Greenville firm took it and at which it actually sold it to be later adjusted between the two firms. According to Mortimore’s testimony, the Greenville firm sold these 2,486 bales of cotton for $3,082.10 more than it agreed to allow the Van Burén firm for them. This is the item which the -master did not allow for the reason that he found that there was no legal liability of the Van Burén firm for this amount. The chancellor found that this method of dealing as testified to by W. C. Mortimore was an attempted fraud upon the rights of Atkins and McMurray, and disallowed the claim on that ground. As we view the matter, the question of fraud need not' be considered. Both McMurray and Atkins testified that they made no such agreement as testified to by W. C. Mortimore. It is urged by counsel for plaintiffs that their testimony in this respect is contradicted by their own letters to the plaintiffs in which they recognized that all cottons purchased by the Van Burén firm were being covered by plaintiffs, and that they preferred that all cotton be kept covered at all times. Both Atkins and McMurray testify that they understood that plaintiffs meant hedging or covering by -buying futures, and in this way protecting themselves from loss, and that this is what they referred to in their letters -to plaintiffs. Mortimore himself admits that -he bought no cotton futures on account of the Van Burén firm. Hence this leaves the question one of fact; and it is, did plaintiffs and defendants make the new agreement testified to by W. C. Mortimore? If they did not, then plaintiffs sold the cotton under the original contract of partnership, and defendants are entitled to their share of the proceeds of sale. The master found that no such agreement as testified to by W. C. Mortimore was made. This is the effect of his finding that there was no legal liability of Mortimore & Company, of Van Burén, for said amount. His finding in that respect has evidence legally sufficient to sustain it, and under the rule above announced the chancellor erred in setting it aside.

The master allowed the claims of plaintiffs set out in exhibits B, -C, D, E, F, G, H, I, J, K, L and M. It is not necessary to set them out in extenso. Most of them are for reclamations on account of loss of weights and undergrade of cotton sold by plaintiffs for Mortimore & Company, of Van Burén. The chancellor found that there was no legal -proof to sustain these claims for reclamation, but we think he erred in so holding.

W. C. Mortimore testified (and his testimony is not attempted to be contradicted) that all the cotton sold 'by plaintiffs for Mortimore & Company, of Van Burén, was to customers in foreign countries or to cotton manufacturers in the United States; that in either case the seller must guaranty the weights, the grade and the staple; that the shipments are subject to reclamation against the seller if the weights are deficient; that the seller must malee good the difference in staple and grade; that, according to the rule of the cotton trade, when a claim for reclamation is made by the buyer, the seller must pay it as made, or have the claims submitted to arbitration and then pay whatever award is made ; that the claims are based on awards made by- the board of arbitrators, and were paid by plaintiffs in good faith. It is contended that this evidence is incompetent. Counsel for plaintiffs insist that plaintiffs had no personal knowledge that there was a loss in weight or a deficiency in the grade or staple of the cotton, and contend that such .loss must be established by persons who have actual knowledge of those facts. We can not agree with this- contention. The cotton was sold by plaintiffs for the firm of Mortimore & Company, of Van Burén, and the adjustment of the claims for reclamation was a part of the transaction. The plaintiffs were members of the firm and were its agents. The adjustment was made in good faith and in accordance with the custom of the cotton business in such cases. The power of the plaintiffs as members of the firm to settle the partnership claims resulted from their agency “for the firm; and the testimony of W. C. Mortimore that he had settled or adjusted the claims >was competent. 30 Cyc. pp. 477 and 500; Bates on Partnership, § 384; George on Partnership, pp. 216-220. It follows that the finding of the master should not have been disturbed.

One of the items embraced in the exhibits was for telephone and telegraph charges in regard to business, of the firm. Mortimore testified that, while he kept no separate account of the amounts so expended by the Greenville and Van Burén firms, each firm had about the same amount expended for telegraph and telephone service, and that the expense should be shared equally. He gave a statement of the amount expended for both offices, and the master charged the Van Burén office with half of it. His finding should not be disturbed.

Hagedoon & Company of New York filed an intervention in the cause, and the amount claimed by it for insurance on cotton was by agreement of the parties allowed and paid. This amount was due on insurance on the firm’s cotton, and was properly allowed. A consideration of the whole case leads us to the conclusion that the findings of the master have evidence legally sufficient to support them; and, the submission to him having been made by consent of the parties, the chancellor erred in setting them aside.

It follows that the decree must be reversed and the cause remanded with directions to the chancellor to enter a decree in accordance with the findings of the master.