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HESS v. FACTORS CORP. OF AMERICA

May 29, 1950

HESS et al.
v.
FACTORS CORPORATION OF AMERICA



The opinion of the court was delivered by: BARD

This is a civil action to recover $ 20,576.79 as the cost of certain cattle purchased by the plaintiffs for another, plus their commissions and incidental expenses incurred by them. On the basis of the pleadings and the testimony, I make the following special Findings of Fact:

1. The plaintiffs are Leo R. Hess, Walter Barnholt, Segel H. Hess and Bertha M. Hess, Copartners, trading as Moog & Greenwald, all of whom are residents and citizens of Illinois.

 2. The defendant is Factors Corporation of America, a Pennsylvania corporation which has its principal office in Philadelphia, Pennsylvania.

 3. The matter in controversy, exclusive of interest and costs, exceeds $ 3,000.

 4. In 1946 and 1947 the plaintiffs were engaged in business at Union Stockyards Chicago, Illinois, as commission buyers of cattle and livestock for other people.

 5. The defendant is engaged in the business of factoring accounts and financing inventories, and in order to secure its advancements it is given a lien on the merchandise by the accommodated party.

 6. In January 1946 the plaintiff commenced to act as commission buyers of cattle for Louis A. Cross Company (hereinafter called Cross), a New Jersey corporation which had its principal place of business in Pitman, New Jersey. Cross was engaged in the business of slaughtering cattle and selling the meat and by-products on the wholesale market.

 7. At first, the cattle purchased by the plaintiffs on behalf of Cross would be shipped by freight to Elsmere Junction, Delaware, on consignment to the plaintiffs. Upon telegraph notice of the amount due, Cross was required to pay the plaintiffs the full amount due on the cattle, including the purchase price, commissions, and incidental charges, before the plaintiffs would release the bill of lading to Cross so that Cross could obtain the cattle from the railroad. This was accomplished by a sight draft drawn on Cross.

 8. On January 28, 1946 the defendant entered into two written agreements with Cross.

 9. The first agreement provided that the defendant would purchase the accounts receivable of Cross and advance 90% of the money immediately and the balance on collection less commission charges. All collections on these accounts were to be turned over to the defendant. Louis A. Cross, president of Cross, personally guaranteed the performance of this agreement.

 10. The second agreement provided that the defendant would advance 75% of the price of the inventory purchased if Cross would advance 25% *fn1" . Under this agreement, Cross would notify the defendant of the amount due on each shipment of cattle, verified by the telegram from the plaintiffs, and would give the defendant a check for 25% of this amount and a note with lien attached for the full amount. The defendant would then deposit its own check for the full amount in the Corn Exchange National Bank in Philadelphia with instructions to transmit this amount to the Drovers National Bank in Chicago for credit to the plaintiff's account.

 11. Under this arrangement the plaintiffs would usually receive payment of each shipment of cattle before the shipment arrived at Elsmere Junction, Delaware.

 12. Because of this arrangement, the plaintiffs thereafter consigned the cattle on a bill of lading directly to Cross without drawing sight drafts.

 13. This method whereby the plaintiffs received payment immediately from the defendant and shipped the cattle directly to Cross began late in January or early in February 1946, and continued through April 2, 1947.

 14. On April 3, 1947 the plaintiffs, upon the oral request of Cross, shipped to Cross 25 head of cattle which the plaintiffs had purchased for Cross on that or the previous day. The purchase price of these cattle was $ 7,029.60; the plaintiffs' commissions were $ 19.75; the incidental expenses were $ 2.63.

 15. By telegram dated April 3, 1947 the plaintiffs notified Cross of this shipment and that the total amount due the plaintiffs was $ 7,051.98.

 16. The April 3rd shipment of cattle was turned over to and received by Cross on April 5, 1947, without plaintiff having received payment for the shipment.

 17. On April 7, 1947, the plaintiffs, upon the oral request of Cross, shipped to Cross 43 head of cattle which the plaintiffs had purchased for Cross on that or the previous day. The purchase price of these cattle was $ 13,487.90; the plaintiffs' commissions were $ 32.35; the incidental expenses were $ ...


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