Case Manufacturing Company v. Soxman/Opinion of the Court

by David Josiah Brewer

United States Supreme Court

138 U.S. 431

Case Manufacturing Company  v.  Soxman

The first question is as to the admission of the testimony of H. C. Best, a witness for and one of the defendants, as to conversations between them and the plaintiff's agent Davis at the time the original contract was signed. The scope of this testimony was substantially that they proposed to organize a corporation with limited liability, that the purchase was to be made in the interest of such corporation, and that its obligations were to be given for the deferred payments. The contention is that this testimony varied the original contract, and was therefore inadmissible. The first and obvious reply is that it makes against the contention of plaintiff that its acceptance of the notes of the limited liability company was through a misunderstanding. Whatever obligations may have been assumed by the original contract, the fact that the plaintiff knew that the contemplation of the purchasing parties was a limited liability company, and that on the delivery of the machinery it accepted the notes of such company, is evidence strong, if not convincing, that its acceptance of such notes was not through a mistake, but from a recognition of the understanding between the parties at the time of the original contract. How can the plaintiff, knowing that the expressed understanding of the purchasers at the time of the original contract was the creation of a limited liability company, and the giving of its notes in satisfaction of the deferred paymnts , now be permitted to say that the written contract spoke of no such limited liability company, and that it took the notes of such a company through misunderstanding and mistake? Whatever other significance and value such testimony may have, it is certainly significant and competent upon the question whether the acceptance of the notes of this limited liability company was intentional or through mistake. Further than that, the original contract upon its face suggested corporate, rather than personal, liability. The signatures were: 'Latrobe Milling Company. P. H. Soxman, Pres't. H. C. Best, Sec'y. D. J. Soxman, Treas.' While, if there were no corporation, such signatures might impose personal liability, yet the purport and notice of such signatures was corporate, and not individual, liability. When to that is added the knowledge of the plaintiff as to the character of the proposed corporation, and its acceptance of the notes of the corporation in fact organized, can it be doubted that the plaintiff knew the significance of these signatures, or that it was knowingly dealing with a contemplated corporation, and knowingly accepted the notes of such corporation as a fulfillment of all the contract obligations assumed by this instrument? The idea that the plaintiff supposed it was dealing with individuals, and contemplated personal liability, is also negatived by the letter of October 29, 1884, which shows that it understood that it was dealing with a corporation, and that, by the laws of Pennsylvania, corporate liability extended not beyond the assets of the corporation, and cast no burden upon the individual stockholders. The parol testimony thus admitted was not to contradict the language of the written contract, but to explain any doubt as to its meaning, and to fortify the claim of the defendants that the subsequent acceptance of the notes of the limited liability company was no departure from the thought of the original contract, but a well-understood and intentional recognition of its real meaning. We see no error in the admission of this testimony.

The second and third assignments of error may be considered together. They present the proposition that the court erred in finding that the notes of the limited liability company of October 20, 1884, were accepted as payment and satisfaction of the original liability under the contract. Here we face the proposition that we are not triers of fact; and, if there were evidence upon which such a finding might properly rest, we should accept the finding as conclusive, and inquire no further into the testimony than we should into its sufficiency to sustain the verdict of a jury. Surely the facts that we have already referred to, the correspondence between the parties, is some, if not satisfactory and conclusive, evidence that these notes were accepted as closing out the original contract. The conduct of the plaintiff tends to support this view. It took the check of the limited liability company of $1,000, and received from it certain notes; and then, stating that it was aware that no liability attached beyond the amount of the property of the corporation, it requested and received a change of notes into the supposed proper form of obligations of the limited liability company, and also insurance policies on the property, and then, using one of these notes by way of discount, treated the matter as closed for more than a year. Supposing this first note discounted by the plaintiff had been paid by the milling company, could the plaintiff then be heard to say that these notes were not received in payment? While, in fact, it was not paid, yet the plaintiff treated it as its property, and negotiated it. Can it now be heard to say that such note was simply evidence of the amount due, when it received and used it as its property? It is unnecessary to affirm that these matters show conclusively that the obligations assumed by the original contract were satisfied and discharged by the settlement and notes of October, 1884. It is enough t af firm that there is in these matters testimony from which such a conclusion might be drawn; and therefore the findings of the trial court in this respect cannot by this court be ignored.

The fourth allegation of error is that, notwithstanding the acts of Mr. Shough may have apparently been such as to bind the company plaintiff, he had, in fact, no authority to bind the company by such acts. It is sufficient to say, in respect to this matter, that his own testimony, corroborated by that of other members of the company, is that during the dates of these transactions he was acting as its financial manager, and therefore it cannot now repudiate its liability for his actions. These are the only errors alleged, and in them we see nothing to justify us in disturbing the rulings of the trial court. The judgment is therefore affirmed.

Notes