Mordecai v. Seignious

The opinion of the Court was delivered by Mr. Justice Gary. The appeal herein is from an order overruling a demurrer to the complaint, which (omitting the exhibits) will be set out in the report of the case. The questions raised by the exceptions involve a construction of the following contract: “Fxhibit ‘A.’ — Royal Fertilizer Company of Charleston, S. C., A. J. Salinas & Son. general agents. Office, Nos. 2 and 4 Exchange street; factory, Ashley River. Charleston, S. C., Oct. 20th, 1891. Messrs. Piedmont Guano Co., Charleston, S. C. — Dear Sir: We hereby offer to sell }'ou for account of the Royal Fertilizer Company of Charleston, S. C., the following fertilizers, on the terms and at the prices hereinafter named, subject to the approval of the general agents at Charleston, S. C.: tons soluble guano, $ May 1st, 189 $ Nov. 1st, 189 tons am. dis. bone, $ May 1st, 189 $ Nov. 1st, 189 tons acid phosphate, $ May 1st, 189 $ Nov. 1st, 189 1,000 tons bulk dissolved bone, $10.30, May 1st, 1892, $ int. at 7 per cent, to Nov. 1st, 1892. tons ash element, $ May 1st, 189 $ Nov. 1st, 189 tons bone ash, $ May 1st, .189 $ Nov. 1st, 189 tons kainit, $ May 1st, 189 $ Nov. 1st, 189 . For all credit purchases, notes to be given payable at Charleston, S. C., without any expense whatever.of remittance to them; the purchasers have privilege of having goods sacked, they furnishing sacks and tags, expense of sacking to be borne by sellers. All of said goods, as also all proceeds therefrom, are to be held in trust [103] by you for the payment of your obligations to the company as per above offer; all proceeds of said goods, as collected, must be first applied to the payment of said obligations, whether the same shall have matured or not, until they are paid in full; and further, any goods shipped you in excess of above amount, you hereby agree to receive subject to all the conditions of this contract, unless otherwise agreed upon. On June 1st next, or sooner if possible, you agree to deliver to the company, or their order, notes or other obligations of the planters or other purchasers to whom you may sell these goods, for the gross amount of the sales of the same, to be held by them as collateral security for the payment of your obligations above mentioned. The same will be returned to you in ample time for collection, in accordance with the provisions hereinbefore stated. All car load lots will be delivered f. o. b. cars at company’s works, on Ashley River; less than car load lots will incur a charge of $1 per ton cartage. All the productions of the company are sold at the rate of 2,000 pounds to the ton, and unless otherwise stated bags of 200 pounds each, with inspection fee paid, and are to be delivered by seller and received by purchaser on or before 1st May next. This sale cannot be transferred or assigned without the consent of the general agents. In case of the destruction of their works, or any part of the same, by fire or other .cause, the right is reserved by the company to cancel the whole or any part of this sale. The company also reserves the right of canceling the whole or any part of the above contract in case of your failure to meet any indebtedness that may be due them by you, or in case of any occurrence that they may regard as unfavorable to your credit. Goods guaranteed 13 per cent, available phos. acid. traveling agent. Accepted in duplicate. Jas. M. Seignious, Pt. Piedmont Guano Co. 189 Approved October 20th, 1891. A. J. Salinas & Son, general agents.” [103] Appellant’s attorneys, in their argument, admit that the grounds of demurrer and the exceptions, although differing [104] in phraseology, raise the same issues. The first ground of demurrer to the complaint is as follows: “I. Because the true construction of the contract alleged in the complaint between the Royal Fertilizer Company and the Piedmont Guano Company, with regard to the notes to be taken by the latter for the sale by it of goods purchased from the Royal Fertilizer Company, is that there was no trust impressed upon these notes upon their execution, but that there was a covenant that they should be delivered by way of collateral security to the Royal Fertilizer Company. There is no allegation in the complaint that they were so delivered, but, on the contrary, it is alleged that the Piedmont Company refused to deliver the notes, or to pay over any part of the cash proceeds of the notes to the Royal Fertilizer Company. That company, therefore, had no lien on or property in the notes, and the plaintiffs have no right to follow the notes or the proceeds thereof into the hands of the defendant, Seignious.” The appellant contends that the words, “all proceeds therefrom,” do not include the notes that were taken by the Piedmont Guano Company upon the sale of said goods, but that said words refer to money arising from cash sales thereof. The words, “in accordance with the provisions hereinbefore stated,” show that the notes that were taken by the Piedmont Guano Company, upon the sale of the goods, became subject to provisions which had been previously stated in the contract. When we turn to the provisions thereinbe-fore mentioned, we find them to be as follows: “All proceeds therefrom are to be held in trust by you for the payment of your obligations to the company;” and 2. “All proceeds of said goods, as collected, must be first applied to the payment of said obligations, whether the same have matured or not, until they are paid in full.” There are no other provisions to which it can reasonably be said that the words, “in accordance with the provisions hereinbefore stated,” had reference. The word “all” precedes and qualifies the word “proceeds,” and is used in both the first and second [105] of the provisions just quoted, which, also, tends to show that the word “proceeds” is comprehensive enough to include the notes. In the interpretation of an instrument of writing, that construction is preferred which will give effect to all its provisions, rather than that which will render any of them ineffectual. The foregoing construction gives effect to all the provisions of the contract, while that for which the appellant contends would render of no force and effect the words, “in accordance with the provisions here-inbefore stated.” It is manifest that one of the objects of the contract was to secure the payment of the indebtedness of the Piedmont Guano Company to the Royal Fertilizer Company. The construction for which the appellant contends is, also, antagonistic to this intention, in that it would place it in the hands of the Piedmont Guano Company, by selling the goods on credit and taking notes therefor, to deprive the Royal Fertilizer Company of all security for its ■ indebtedness. The object in requiring the Piedmont Guano Company to deliver to the Royal Fertilizer Company the notes of the planters to whom it sold the goods, was not to enable the Piedmont Guano Company to pledge the notes as collateral security but for the safe keeping of said notes, to avoid just such a complication as has arisen in this case, by taking it out of the power of Piedmont Guano Company to transfer said notes to other parties. But even if the first of the provisions hereinbefore mentioned is not applicable to the notes, it, nevertheless, would be the case that the money arising from the collection of the notes would have to be applied, first, to the extinguishment of the Piedmont Guano Company’s indebtedness to the Royal Fertilizer Company, and this would be sufficient to create a trust. Under this view, the Piedmont Guano Company would be regarded as holding said notes under an agreement that the money arising from the collection thereof should be paid first in satisfaction of said indebtedness. In such a case, the legal title would be in the Piedniont Guano Company, while the beneficial interest would be in the Royal Fértil106 izer Company, which is one of the most common instances of a trust. These-views show that the Circuit Judge was not in error in overruling the first ground of the demurrer. 2 The second ground of demurrer is as follows: “II. Because, if the above is not the correct construction, but the true construction is, that the notes were impressed with a trust in favor of the Royal Fertilizer Company by virtue of said agreement, yet the legal estate in the notes, upon the facts stated in the complaint, was not in the Royal Fertilizer Company, and any equity it might or may have in the same, or in the proceeds thereof, can only be set up in equity, and not in a case at common law, as for money had and received.” The facts are set forth in the complaint out of which the trust arose, and there are allegations to the effect that the defendant, with full knowledge of the trust, participated in a breach thereof, by collecting certain of said notes and refusing to pay over the sums collected by him. A good cause of action is stated against him, and whether the issues arising in this case are to be tried on the law or chancery side of the Court, the defendant is not entitled to have the complaint dismissed. Latham v. Harby, 50 S. C., 428. There was also no error on the part of the Circuit Judge in overruling the second ground of the demurrer. It is the judgment of this Court, that the judgment of the Circuit Court be affirmed.