Scates v. Canvas Decoy Co.

5 Tenn. App. 695, 1927 Tenn. App. LEXIS 110
Court of Appeals of Tennessee·Decided November 26, 1927·Published

Opinion

OWEN, J.

The Canvas Decoy Company, a corporation, C. H. Cobb, C. E. Beck, A. J. Scates and J. P. Verhine have appealed -from a decree rendered against them in the chancery court of Obion county in favor of the complainant for $3758.77, and costs of suit. Complainant’s bill was filed to procure a decree upon a note. The Chancellor found that there was due $3417.07, principal and interest, and the note provided for ten per cent attorney’s fees, which amounted to $341, making the total heretofore stated, for which complainant procured a decree.

On June 2, 1921, the complainant, Mrs. W. H. Scates, a married woman, made a loan of $18,000 to the defendant corporation, Canvas Decoy Company of Union City, Tennessee, which note was signed by the company and the other defendants herein mentioned as sureties, or joint makers. The note was due six months after date and bore interest from date. Various payments were made by the defendant company prior to the filing of the complainant’s bill. The defendants answered and insisted: (1) That W. H. Scates, the husband of the complainant, was indebted to the defendant company and that Mrs. Scates had endorsed the note of $18,000 to her husband and it was his property and' debt, had the right to offset the amount W. H. Scates owed the company against the balance due on the note. The answer was amended after proof was taken and it was insisted that the defendant had advanced to Mrs. Scates, the complainant,' numerous sums of money and goods and that she received the same, which were necessaries; and while they had been charged to W. H. Scates’ account they were entitled to recover for these items against the complainant, and by making these advancements and furnishing goods that Mrs. Scates had received they were sufficient to liquidate the note. The Chancellor held against the defendants and rendered a decree for the amount complainant claimed.

The defendants excepted and perfected an appeal and have assigned, three errors in this court, viz:

“First: The Chance]lor erred in his finding o'f facts to the effect that ‘¥. H. Scates had authorized the defendant corporation to let his wife have what she wanted, in money and goods; and knew that she was drawing money and purchasing- articles of merchandise and knew that all was being charged to his account, we thus have an express promise to p.ay upon the part of W. H. Scates,’ there being no proof in the record to sustain such finding of facts. ’ ’
“Second: The Chancellor erred in refusing to allow; the Canvas Decoy Company to offset against the note in suit the sum of $1,102.-66 for money advanced by it to Mrs. W. H. Scates by way of checks drawn by her on its account and by cheeks drawn by it payable directly to her, these checks being marked Exhibits Nos. 1 to 49, inclusive.”
[697]*697“Third: The Chancellor erred in refusing to allow the Canvas Decoy Company to offset against the note in suit the sum of $1894.-38 advanced by it to Mrs. W. H. Scates or to others for her benefit by means of checks drawn by the Canvas Decoy Company to her or to others in payment of her obligations, these checks being Exhibits Nos. 57 to 101, inclusive.”

The original checks issued by the defendant company and charged to W. H. Scates have been sent up with the record. They begin February 7, 1921 and end December 9, 1922.

It appears that W. H. Scates, the husband of complainant, was a large stockholder of the defendant corporation; that he was an officer and employee of the defendant company during 1921 and 1922, and that he was a salesman on the road for this concern, which manufactures articles. When he was not on the road he had charge of the sewing room. Mr. Scates, the husband, testified that these items for which the defendant sought to charge Mrs. Scates were his debts; that he had not been able to get a settlement out of the defendant ; that he is ready to pay the defendant if he owed the money; that most of these checks which are exhibits sent up were payable to W. H. Scates and by him endorsed to his wife, or drafts that he drew from the company for expenses and salary. The testimony of Mr. Enloe Childs, secretary and treasurer of the defendant company, shows that W. H. Scates was aware of the fact that his wife, Mrs. W. IT. Scates was drawing money, buying merchandise, issuing checks and was having them charged to his account. These charges were made to W. II. Scates by Mr. Childs, the secretary and treasurer-, and he testified that Mr. Scates made no complaint as to the charges. We quote from Mr. Child’s testimony, as follows:

“Q. 18. As a matter of fact, everyone of these checks that you have referred to in your three batches, including those payable to W. H. Scates, were charged both on the journal and on the ledger against W. II. Scates, were they not ? A. ' They were.
“Q. 19. By you or your direction? A. Yes.
“Q. 21. As secretary and treasurer of the Canvas Decoy Company, at the time these charges, were made, you looked to and expected W. H. Scates to pay them, or take care of them, did you not ? A. Of course, we expected them, like we do any one else to pay their account.
“Q. 22. On November 20, 1920, or at any time since that time, the Canvas Decoy Company has not had any account against Mrs. W. H. Scates, has it? A. No, there is no account against Mrs. Scates on the ledger.
“Q. 23. On that date and on December 11, 1925, or any time since that time, the Canvas Decoy Company has not had any account against Mrs. W. II. Scates, has it? A. No, sir.
[698]*698“Q. 25. In Mr. Scates’ transactions, while employed by the Canvas Decoy Company be would make withdrawals, or get the company to issue checks, or advancements to him, and. on the other hand he would be credited with commissions, and salaries and dividends, or other methods of payment, if any, as set out on these ledger sheets — is that right? A. Yes, sir, it is.”

Mr. C. EL Cobb, the president of the defendant company, testified, in substance, the same as did Mr. Childs, and we are of opinion that the Chancellor was not in error in holding as a fact that W. H. Scates had authorized defendant corporation to let his wife have what she wanted in money and goods. Both Scates and his wife testified to this effect. The undisputed proof shows that all of these items were charged to "W. El. Scates.

As to the other two assignments of error, we will consider them together. Counsel for appellants have undertaken to segregate the drafts or checks issued by the defendant company to W. H. Scates, or drafts drawn by W. EL Scates on said company, payable to Mrs. W. EL Scates, or payable to other parties. In vouchers or Exhibits from one to forty-nine we find the following heading, viz: “The following is the list of checks not made payable to Mrs. W. EL Scates but bearing her endorsement. ’ ’ The first ten of these checks, amounting to $243.25 were drawn and charged to 'W. EL Scates prior to the execution of the note sued on herein. These forty-nine checks amounting to $1102.66 are almost all of the $25 denomination. It appears that W. EL Scates had a drawing 'expense account of $25 per week, and most of these checks were issued weekly. Mr. Scates testified that he turned over his salary and his expense checks to his wife and she endorsed the same after he had endorsed them, and she procured the amount of checks and used the same for household expenses.

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Scates v. Canvas Decoy Co., 5 Tenn. App. 695, 1927 Tenn. App. LEXIS 110 (Tenn. Ct. App. 1927).

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