defendant, on June 8, 1939, wrote Tate the following letter:
"Mr. Ben E. Tate
"I am sorry to have been so long in getting some word to you concerning the outcome of the matter which we discussed in New York.
"As matters now stand, it is absolutely impossible for me to put over with the other directors and stockholders of the Antrim Coal Company the deal we agreed upon. However, and very confidentially please, there are a number of changes in the Antrim Coal Company which I hope will be consummated within the next few weeks. I will do everything I can to meet your ideas at that time.
"Very truly yours,
/s/ Samuel L. Shober"
To this letter, on June 10, 1939, Tate replied as follows:
"Mr. Samuel L. Shober, Jr.
"c/o Hickman Williams & Company
"1608 Walnut Street
"I am delighted to get your letter of June 8. I am terribly disappointed that you were not able to work this situation out.I want to play along with you, as I told you in New York. I intend to do so, and will do so, as long as you acknowledge the obligation of $5,000. I had the utmost confidence in you and your standing and reputation at our first meeting, when you offered to give me a check for $5,000, in this office, and I explained it would be all right with me to wait to cover this deal until you got home. That has been a long time ago.
"You know, the very fact that we made the deal with you, prevented us from making it with Tad Jones, on which we would have gotten a check for $5,000. The fact that we made the deal with you, stopped us from activities in that field and stopped us from a development which you are pursuing now.
"I will be interested to know what develops, as outlined in your letter of June 8.
"Hope to see you soon.
"Very truly yours,
Ben E. Tate, President"
The first factual issue is whether defendant did or did not orally agree to purchase contracts on January 4, 1939.I am convinced that he did. Despite his testimony that some time in January his attorney examined the contracts in question and advised him not to purchase them, defendant made no effort to explain his apologetic letter to Tate five months later, in which he stated that he could not get the other directors and stockholders of the Antrim Coal Company to accept the "deal agreed upon." Nor did he deny receiving Tate's answering letter of June 10, 1939, and he nowhere suggested that he remonstrated against Tate's reference therein to his acknowledgment of his liability for the $5,000.
This conclusion likewise disposes of defendant's subsidiary contention that plaintiffs' recovery is barred because their complaint is for breach of a contract to purchase five exclusive agency contracts for the sale of coal and one of these "contracts" was on its face not an actual contract. This is unquestionably true. But since defendant, by his own admission, examined the contracts personally and by his attorney, and subsequently acknowledged, as I have found, that he was still liable for the agreed purchase price, there was an affirmance of his agreement to purchase and a waiver of the fact that the one exclusive agency "contract" was plainly not a binding written agreement. Since under Rule 8(f) of the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c, pleadings are to be construed so as to do substantial justice, the fact that the complaint refers to five "contracts" will not relieve defendant of his obligation to pay the agreed purchase price for these instruments, which obligation he recognized and acknowledged after full knowledge that one of them was not a contract.
I have also concluded from the evidence that defendant authorized Wattles to write the letter of January 13, 1939, on his behalf. According to the testimony of Wattles, defendant, after he had orally agreed to pay the $5,000 for the assignment of the contracts, prepared the assignments and requested Wattles to forward them to Cincinnati for execution. In view of the facts that Wattles was the person who had interested defendant in the development of the Antrim mine, had been instrumental in effecting the deal for the purchase of the contracts, and was at this time an employee or associate of the defendant, it seems clear that defendant, in directing him to send off the assignments for execution, impliedly authorized him to do all the acts necessary to consummate the deal, such as the sending of the letter in question to Continental.
There remains for determination the question whether Wattles had such an interest in the subject matter of the sale as to debar him legally from executing, on behalf of defendant, a memorandum satisfying the Statute of Frauds. Defendant contends that since Wattles was entitled to half the commissions earned by Continental under the agency contracts, since he was named as an assignor in the assignment of those contracts, and since he is a plaintiff in this action, it is clear that he had an interest in the subject matter of the sale. Whatever may have been Wattles' interest prior to January 4, 1939, in the contracts sold by Continental, the evidence shows that on that date he severed his relationship with Continental and became associated with the defendant and that he voluntarily relinquished at that time his right to a share of the commissions earned under that contract. At that time his account with Continental was squared up and it owed him no money. Therefore, on January 13, 1939, when he wrote the letter on behalf of the defendant transmitting the assignments to Continental for execution, he had no such interest in the proceeds of the sale as would disqualify him from acting as defendant's agent.
I am accordingly satisfied that the plaintiffs have established that Wattles, in the words of the Circuit Court of Appeals, "had no real interest in the chose which was the subject matter of the sale and assignments", and that, under its decision, his right to sign the memorandum for the party to be charged therewith could be established. Since I have concluded that Wattles was in fact authorized to act for defendant in writing the letter relied upon by plaintiffs, the elements of the right to recover are all present.
In view of the evidence that neither Tate nor Wattles is a real party in interest, judgment will be entered in favor of plaintiff Continental only.
I make the following
Conclusions of Law.
1. Wattles was duly authorized by defendant to write on his behalf the letter of January 13, 1939, to Continental transmitting the assignments of the contracts for execution, and agreeing to pay $5,000 for the assignments.
2. On January 13, 1939, Wattles had no interest in the contracts assigned to defendant or in the proceeds of the sale.
3. The letter of January 13, 1939, from Wattles to Continental Collieries, Incorporated, constitutes a memorandum executed by the defendant's agent on his behalf within the requirements of the Statute of Frauds of the Pennsylvania Sales Act.
4. Defendant, with knowledge that the so-called exclusive sales agency "contract" as to the coal mine at Antrim was not a valid contract, reaffirmed his agreement to purchase this document and the four contracts in suit for $5,000.
5. Judgment is hereby entered in favor of plaintiff Continental Collieries, Incorporated, against the defendant in the amount of $5,000 with interest thereon from January 16, 1939.
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