Thomas R. Riley Lumber Co. v. MeHarg

47 App. D.C. 389, 1918 U.S. App. LEXIS 2429

• Court: Court of Appeals for the D.C. Circuit
• Decided: March 4, 1918
• Docket: No. 3072
• Status: Published

Opinions

Mr. Chief Justice Smyth

delivered the opinion of the Court:

The one question presented is whether the court erred in refusing to give the peremptory instruction. It did not unless the evidence, construed most favorably to the plaintiff, had no tendency to disclose a cause of action in his favor. In determining this we must give him the advantage of every inference fairly deduciblo from all the testimony, but if, when this is done, there is not .enough to sustain the verdict, the casi; must be reversed, but not otherwise. McDermott v. Severe, 202 U. S. 601, 50 L. ed. 1162, 26 Sup. Ct. Rep. 709; Shinn v. Evans, 37 App. D. C. 304; Glaria, v. Washington Southern R. Co. 30 App. D. C. 559; District of Columbia v. Moulton, 182 U. S. 576-582, 45 L. ed. 1237-1241, 21 Sup. Ct. Rep. 840; Randall v. Baltimore & O. R. Co. 109 U. S. 478, 27 L. ed. 1003, 3 Sup. Ct. Rep. 322; Baltimore & O. R. Co. v. Miller, 37 App. D. C. 218; Metropolitan R. Co. v. Moore, 121 U. S. 558, 30 L. ed. 1022, 7 Sup. Ct. Rep. 1334; Delaware, L. & W. R. Co. v. Converse, 139 U. S. 469, 35 L. ed. 213, 11 Sup. Ct. Rep. 569; Elliott v. Chicago, M. & St. P. R. Co. 150 U. S. 245, 37 L. ed. 1068, 14 Sup. Ct. Rep. 85; Union P. R. Co. v. McDonald, 152 U. S. 262, 38 L. ed. 434, 14 Sup. Ct. Rep. 619; McGuire v. Blount, 199 U. S. 142, 50 L. ed. 125, 26 Sup. Ct. Rep. 1; North Pennsylvania R. Co. v. Commercial Nat. Bank, 123 , 8 Sup. Ct. Rep. 266; Rodier v. Life Ins. Co. 32 App. D. C. 159. In the Converse Case, Mr. Justice Harlan said, with respect to the power of a court to take a case from the jury: “But it is well settl'd that the court may withdraw a case from them altogether and direct a verdict for the plaintiff or the defendant, as the one or the other may be proper, where the evidence is undisputed or is of such conclusive character that the court, in the exercise of a sound judicial discretion, would be compelled to set aside a verdict returned in opposition to it.” And in the Commercial BantJv (’ase, the court ruled: “It "would be an idle proceeding to submit the evidence to the jury when they could justly find only in one way.” Mr. J native Robb, in the Eodier Case, said: “At the close of plaintiff’s case, the evidence showing that the deceased had made statements which constituted a breach of warranty was undisputed, and there was no evidence tending to show a waiver by defendant of such breach. The action of the court in directing a verdict was therefore obviously correct.” Of course it follows from the doctrine of these cases that, where the cause is submitted to the jury and it finds against the uncontradicted evidence, the verdict should be set aside.

Studying the record in the light of this doctrine, did the plaintiff produce any evidence tending to show that he had performed his contract? To answer this we must first ascertain what the contract was. He testified that Riley, representing 1h(' defendants, and his agent Rankin, in February, 1913, submitted to him a “paper” outlining what the defendants wauled; that they desired a loan of $030,000, some of it to be used to erect a mill which would cut 130,000 feet of lumber a day; that he explained to Riley “why that was not feasible and that it would be useless for witness to undertake the proposition unless left free to handle features of the financing, as the bonding house would not lend enough of money to erect a mill- of that capacity, inasmuch as Riley also undertook to erect planing mills, etc., because $(>30,000 would not do those things and provide a working capital; that Riley and Rankin then agreed that witness “should be free to discuss that with the .bonding house, and that they would consent to any figure agreed upon by witness and the bonding house to be the most economical plant, and to work the thing out and lie [Riley] would consent to it. The defendant agreed in the paper presented to personally guarantee the loan. If it is not in the paper, it was later done.” It is not “in the paper” produced by him; on the contrary that paper says, “There are no personal guarantors on the loan. ” lie further testified: “The defendant agreed to pay the plaintiff $25,000, the payments to be made in the form specified in the complaint.” Towards the close of plaintiff’s testimony this appears:

“The court then asked the following question:

“ ‘Q. Do you claim that at the time you wore having conferences in Washington, he [Riley] agreed if you could not get more than $500,000 that would be satisfactory as to the amount of the loan?

“ ‘A. Yes, and the letter will show, which seems to settle that point.

“ ‘Q. The Court: Let Mr. Mcliarg point to the letter to which he refers and in which he says Mr. Riley said he would be satisfied with the $500,000 as the amount of the loan.’

“Whereupon the witness referred to letters of March 31th and 15th, from Rankin to him.” There were two letters on the first date; one is known as the “shorter letter” and that is the one, the record discloses, to which Mcliarg referred. In these letters, then, according to Mcliarg, is whore we are to find the contract.

The shorter letter written to Mcliarg by Rankin, who conducted all the correspondence in behalf of the defendants, says: “In order that you may be definitely and fully informed as to Mr. Riley’s attitude in this matter, 1 beg to report that he authorizes me to say that he will accept a loan of $500,000 (if it is impossible for you to do any better), provided the lenders will agree to have the bonds secured by the timber and plant only, and not by the land. This is on the basis of 200,000,000 feet of timber 10 inches and better at the cutting point, and his further condition is that if the new cruise shows more than 200,000,000 feet then the lenders must let him have an amount above $500,000 as would be represented by the excess above 200,000,000 feet at $2 per thousand. The final condition being that the bonds are to be secured by the standing timber, the plant, and the land, if the new cruise shows enough timber in excess of 200,000,000 feet to bring the loan up to $650,000 when the excess is counted in at $2 per thousand.” The material parts of the letter of the 15th are: “If you can secure a bond issue of $500,000 or $525,000, Mr. Riley will pay you individually $5,000 cash when the bonds are issued: and he will give you two notes for $10,000 each, payable respectively in one and two years. If yon can secure a loan of $650,000, he will pay you individually $5,000 cash when the bonds are issued; and lie will give you two notes of $10,000 each payable, respectively, in one and two years, and also a further note for $25,000 payable in three years. * * * The foregoing supersedes and takes the place of all previous verbal or written propositions concerning compensation to you; and is to constitute your entire fee or commission in the matter so ffer as either the company, Mr. Riley, or myself is concerned. * * I therefore very much hope that- we are going to he able to consummate this deal; and that you will he able to persuade the lenders to accept the proposition contained in my shorter letter of the 11th instant, which seems to me to be entirely fair.” Thus he makes the “shorter letter” a part of this letter. Put in brief terms, the contract disclosed by these letters is that McTIarg was employed to secure a loan of $500,000, or more if possible; that if it did not exceed $500,000 it should bo secured by the timber and plant only, and not by the land; that if he secured $500,000 or $525,000 his compensation was to he $25,000; that if he obtained $650,000 his compensation was to he $50,000.

McLIarg endeavored to obtain a loan in New York, and failing there, went to Chicago. Considerable correspondence between him and Rankin was held besides what we have set out; but for the present we put it out of sight as immaterial so far as the contract is concerned. Soon it developed that Riley did not have title to the land or the timber and was unable to procure it. This, of course, ended Mcllarg’s endeavors to get the loan. It is significant that up to this time McITarg had not notified Rankin, Riley, or anybody for them, that he had found a person able and ready to make the loan; but, upon learning of Riley’s lack of title and inability to procure it, he wrote: “As a result of my work tlie transaction could be and would be financed by this house had it not suddenly developed Unit neither Mr. Riley nor the timber company has title to the property, in spite of the representations which I have just quoted.” This, it will be observed, docs not state the amount of the loan which lie had secured, if any, whether it was for $500,000, $525,000, or $650,000, nor does it say whether the loan was to be “secured by the timber and plant ouly, and not hv the land.” It simply declares that he had procured a bonding house “amply able to finance the undertaking,” and that “it would be financed by this house.”

The only other testimony on this question is that given by Frederick R. Hill, who said that he.was located in Chicago and engaged in the business of placing bonds and mortgages, especially bonds secured by timber in the southern states; that McIIarg had “presented to him the outlines of a timber bond issue” and made certain representations with respect to the lands owned by Riley; that they discussed the matter in detail; told McITarg he would negotiate the bond issue if the representations made by Riley were true, namely, if tlie defendants had good title to 30,000 acres more or less of virgin timber which contained, as disclosed by reliable cruises, “more or loss, 220,000,000 feet of merchantable timber,” and if defendants “would enter into a proper binding agreement to devote the said proceeds of said timber bonds for the purpose of constructing and equipping a * * * sawmill, planing mill, and dry kilns * * * to adequately cut, manufacture, and market said timber.” He further said that he told McIIarg that at that time “he was prepared, ready, and able, to negotiate, said $500,000 issue of bonds on the above conditions, and requested McIIarg to have the questions answered.” The questions referred to were forty-one in number and were accompanied by a letter from Hill to McIIarg, which said.: “T am inclosing herewith a list of questions in regard to the proposed limber bond deal on North Carolina limber. * * *” Among the questions were these :

"LT. State how many miles of logging railroad will have1 to be built to reach the timber, and how many miles of road tvill be built into the timber from the proceeds of this issue, and how many years’ cut the amount of road built will take, care or. Will the logging railroad be a separate corporation from the lumber company V’

"18. Send us statement showing what the. lumber tvill cost í. o. b. at the mill. * *

“22. AVill the borrowers guarantee the bonds ?”

“2-‘>. State the financial condition of the borrowers who will give guaranty, giving their-names and addresses.”

“2(5. * * * On this point we would like to get a frank statement of how much they [the ’liilevs] think they can take care of on the first maturity and the maturities that follow.

“40. Will the logging road have any permanent value after this timber is cut? * 'x' *”

“41. * * * Give a general summary of the value of the security behind the bonds, somewhat as follows: * * *”

-Many of these 41 questions were outside of any representation made by Riley. Riley, in his representations, made no reference to the building of a logging railroad; expressly stated, in the paper banded to Alcllarg detailing what he wanted and was willing to do to secure it, that there were to be “no personal guarantors on the loan ;” said nothing about taking care of the maturities, except the interest coming due for the first three interest periods (six, twelve, and eighteen months), or about the cost of lumber f. o. b. at the mill. None of (lie questions was answered before negotiations were broken oil. They dealt with important matters, dearly they were asked for the purpose of enabling Mr. Hill and his clients to determine whether or not they would make the loan. Rntil they were answered satisfactorily, it could not he said that Mcliarg had found persons ready and willing to take the bonds and advance the money. And this being so, be had not then performed his contract.

But perhaps we should put these questions out of view and consider only Mr. Hill’s statement as to the conditions upon which he was willing to “negotiate the loan,” because that would be more favorable to the plaintiff’s theory; and wo are bound, as before observed, to take the view which will advantage McHarg most.

Mr. Hill, as we have seen, said that he was able and willing to negotiate a bond issue for $500,000 upon condition: (a) That Eiley owned in fee 30,000 acres of timber land more or less; (b)'that he could secure leases of several thousand acres more; (c) that a cruise made in 1912 showed 220,000,000 feet more or less of merchantable timber standing on the land; and (d) that Eiley would bind himself to devote the proceeds of the loan for certain purposes.

It will bo noticed that he did not say specifically that the land was to be a part of the necessary security, but neither did he specify that the timber or any of the other property was to be; yet it is clear that both were to be. About this reasonable minds could not differ. Now bearing these conditions in mind, let us compare them with the terms upon which McHarg was authorized to act for Eiley, as those terms appear in the letters of the 11th and 15th of March, which, according to McTTarg, are to be taken as conclusive evidence of the contract he had with Eiley. In the letter of the 11th he was authorized to “accept a loan of $500,000 if it is impossible for you [him] to do any better, providing the lenders will agree to have the bonds secured by the timber and the plant only, and not by the land.” But Hill was not willing to negotiate the loan except upon the theory that the security would cover not only the timber and plant, but also the land. The letter of the 11th further provided that, “if the new cruise shows more1 than 200,000,000 feet, then the lenders must let him | Eiley] have an amount above $500,000 as would be represented by the excess of 200 million feet at $2 per thousand.” Hill’s proposition required “more or less 220,000,000 feet” for the loan of $500,000. The letter concludes thus: ‘“The final condition beiug that the bonds are to be secured bv the standing timben-,' the plant, and the land, if the new cruise shows enough timber ill excess of 200,000,C>00 feet to bring' tbo loan up to ‘$6,10,000 when the excess is counted in at $2 per thousand.” Hill, however, required, as we have just observed, that the land should bo included in the security for the $500,000 loan. Other material differences might be pointed out, but these are enough to show that .Mr. Mcllarg had not secured a person ready to make a loan upon the conditions embraced in his contract.

At the bar and in the briefs, a great deal of importance ■was given by both sides to a letter written to Rankin by Mcllarg from Chicago on the 13th of March, and a telegram received from the former by the latter in response thereto. The letter, it is said, contained an offer from Mcllarg to secure the loan upon certain conditions therein named, and the telegram an accept anee of the offer. We cannot assent to this. The letter gives an account of interviews which Mcllarg had “with people here who handle timber lands,” says they “would like to have a guaranty outside of the security” furnished by the property, that the loan would be paid; it enumerates several other pieces of information desired, and follows with this statement: “I feel encouraged to say to you that if these things can be worked down in a business form along the lines indicated, the people with whom I have been talking will take a bond issue not to exceed from $500,000 to $525,000 on this property.” And then concludes with the assertion that if Riley could not “see his way clear to let us work the matter out on substantially the lines above set out, it- will be necessary for me to drop out of the transaction.” In tlie telegram Rankin said: “Riley accepts proposition yonr letter 13th with one or two immaterial modifications. Writing yon fully New York.” McHarg had made no offer. He related interviews and asked for information. And said that if the latter was furnished he would “feel encouraged.” Rut this was not such an offer as, if accepted, would constitute a contract. Rankin v. Collins, 40 App. D. C. 211. The word “accept” in the telegram was inapt. Obviously one cannot accept unless something is offered. And Mcllarg had offered nothing except some intelligence and an expression of hope. The telegram, interpreted in view of the letter, as it should bo, 'meant that "Riley would do the things and supply the information referred to in the letter, and that was all.

Even if the letter should be construed as an offer, the acceptance was not sufficient to constitute a contract. Such an acceptance must be absolute, not conditional. Eliason v. Henshaw, 4 Wheat. 225, 4 L. ed. 556; First Nat. Bank v. Hall, 101 U. S. 43, 25 L. ed. 822; Minneapolis & St. L. R. Co. v. Columbus Rolling Mill, 119 U. S. 149, 30 L. ed. 376, 7 Sup. Ct. Rep. 168; Martin v. Northwestern Fuel Co. 22 Fed. 596; Clark v. Burr, 85 Wis. 649, 55 N. W. 401. In the Minneapolis £ Sf. L. B. Co. Case, it was said: “A proposal to accept, or an acceptance, upon terms varying from those offered, is a rejection of the offer, and puts a.n end to the negotiation, unless the party who made the original offer renews it, or assents to the modification suggested.”

■ In addition to this, it must be remembered that McTIarg was Riley’s agent, and therefore bound to the exercise of the strictest fidelity towards him in performing ■ his contract of brokerage. Mannix v. Hildreth, 2 App. D. C. 259; Rawlings v. Collins, 36 App. D. C. 72; Forrest v. Wardman, 40 App. D. C. 520; 4 R. C. L. 270; and 9 C. J. 536. In this view, was he not bound to await the letter referred to in the telegram ?' In fact this is what he did, as wTe show later.

Appellee, in his brief, says that it w'as agreed at the first conference between himself and Riley that, if lie could not get more than $500,000, that would be satisfactory as to the amount of the loan, and he refers for proof of this to his statement-in answer to the questions of the court referred to above, but in those answers he said that the letters of March 11th and 15th would show what the agreement was; that they would “settle that point.” The letters then supply the test because he -made them such, and they show conclusively, as we have disclosed, that if the loan was to be no greater than $500,000 the security should not include the land. The statement in the brief, just quoted, omits this very necessary element, namely, the extent of the security, and, hence, is not correct. The testimony of Riley is referred to by appellee, but we are not concerned at all about it, since it has no tendency to aid the appellee*. In passing we. may remark that the theory now advanced by appellee as to what the agreement was, is in direct conflict with his letter of .March 13th, already referred to, in which, after relating an interview which ho liad with people “who handled timber bonds,” ho said that they took his view of the matter, namely, that the property would not carry $650,000; that his “conclusion upon the whole matter was that they would handle the transaction if the bond issue did not exceed * * * from $500,000 to $525,000;” and that if Rilev did not see his -way clear to agree to this “it will he necessary for me to drop out of the transaction.” If Mcllarg liad, as now asserted, a contract to the effect tliat Riley would be satisfied with $500,000 secured by the timber and land, if he could not get more, why say that, if Riley would not consent to a loan of from $500,000 to $525,000, it would be necessary for him, Mcllarg, “to drop out of the transaction.” Brokers, or business men of any class, do not ordinarily show a willingness to yield their rights so easily. Prior to this, February 28, he wrote that “the figure — $650,000—would have, to be materially scaled down,” which harmonizes with the subsequent letter of March 13. We mention these statements, not for the purpose; of settling a conflict in the testimony, for with that we have nothing to do, but as tending to show Mcllarg was right when he answered, in response to the court’s questions, tliat the letters of March lltli and 15th expressed correctly the contract between himself and Riley.

It is further asserted in appellee’s brief that, after receiving flic telegram of March 15, to which we have referred, Mcllarg went to the Chicago bankers, “closed the deal, and returned to New York.” lie did not say so in his testimony. What ho did say ivas this, that lie told the bankers that the proposition which liiley had authorized him to make “liad be'en accepted, and showed them his telegram.” This is not equivalent to saying that “be closed the deal” with them. Nor does his subsequent conduct indicate that he thought he had. When he reached New York he found awaiting him the letters referred to in the telegram. Answering these, March 20, he wrote: “I also note what you say about the bonds being secured by the timber plant only, and not by tbo land. This cannot be done.” Other criticisms and suggestions were made by him. And in the concluding paragraph he says: “Please arrange for a conference with Mr. Riley as soon as possible. If Mr. Riley is going to be in a position to talk definitely on the points which I have brought out in this letter by Sunday, I will go down to Washington Saturday afternoon, and can see you both at the Willard Hotel.” This makes it clear that ho did not believe that he had “closed the deal” on the 15th. But as we have repeatedly stated, the question as to what the contract was is not open for discussion.. Mr. McHarg closed it, so far as this review is concerned, when he said that the letters of the 11th and 15th would settle the point.

Having firmly in mind that this court will not set aside the finding of a jury on a question of fact except where it is clearly our duty to do so, we have searched the record with care for sufficient evidence to sustain- the verdict in the present action, but have failed to find it. Mr. McHarg may be entitled to recover any damages he has suffered by reason of Mr. Riley’s misrepresentations, but he has failed utterly to establish a performance of his contract.

For this reason the case is reversed, with costs, and a new trial ordered in accordance with this opinion. Reversed.