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Kelble Operating Corp. v. Corporation.

May 2, 1938


Appeal from the District Court of the United States for the Southern District of New York.

Author: Hand

Before MANTON, AUGUSTUS N. HAND, and CHASE, Circuit Judges.

AUGUSTUS N. HAND, Circuit Judge.

This is an appeal from a judgment entered on a verdict directed by the court for the defendant in an action at law begun by the plaintiff to recover commissions from the defendant pursuant to an alleged contract, at the rate of 5 cents per gross ton on raw sugar unloaded by the defendant from steamers at Norfolk, Va. Under the contact between the defendant and the plaintiff the former is alleged to have agreed to pay the commissions on such sugar in consideration for the promise of the latter to refrain from soliciting future stevedoring business from Farr & Co., whose cargoes were to be unloaded.

The action was tried before a jury of one under a stipulation that at the conclusion of the case each party should move for the direction of a verdict and that no findings of fact or conclusions of law should be made. Each side moved for such direction and the court, after reserving decision on the motions, filed an opinion discussing the issues between the parties and directing a verdict in favor of the defendant. From the judgment entered on this verdict the plaintiff has appealed.

The plaintiff and defendant are each corporations engaged in the stevedoring business. One George Kelble had been in the employ of the defendant for some ten years prior to June, 1934, when he left its employ and, on June 13, 1934, organized the plaintiff Kelble Operating Corporation, of which he became president. In January, 1934, Kelble, at that time in the employ of the defendant to solicit business, arranged a contract between Farr & Co. and the Jarka Corporation whereby Jarka agreed to stevedore the vessels of Farr & Co. at certain prescribed rates, the cargoes consisting of raw sugar. The agreement by its terms was subject to cancellation upon thirty days' written notice. It fixed rates for stevedoring of vessels loading and discharging at Norfolk, Va., only.

Shortly after Kelble left the employ of the defendant he asked Leon H. Ackerman, who was in charge of the defendant's stevedoring at Norfolk, to call at his office in New York. Ackerman called and there was a conference between Kelble and himself at which a man named Marine, described as manager of the raw sugar department of Farr & Co., was present. Crosby, plaintiff's vice president, testified that on June 21, 1934, he was told bykelble, in the presence of Ackerman and Marine, that an agreement had been reached with the Jarka Corporation "whereby the Kelble Corporation was to receive five cents per ton on every ton of sugar going into warehouse at Norfolk, Virginia, and five cents a ton on every ton of sugar coming out of warehouse at Norfolk, in return for which the Kelble Corporation would cease any effort to secure Farr & Company's business at Norfolk. Captain Ackerman said he thought that was a very fine thing for both companies; that he had been over to Captain Jarka, and that Captain Jarka had approved the plan, and that it would eliminate cut-throat competition down there, and that probably the Kelble Corporation and Jarka would both make just as much money out of that arrangement as they would under any other arrangement." Crosby said he was also told that Marine remarked that: "he thought it was a good thing for both companies." Crosby added as a further summary of the arrangement related to him by Ackerman in the presence of Kelble and Marine that the payments were to be made to the plaintiff "progressively as the ships were discharged or loaded at Norfolk" and were "to continue * * * indefinitely during the life of the contract, that was then existing between Farr and Jarka; and new arrangements were to be made in the event a new contract was made."

Ackerman testified that at the conversation with Kelble on June 21, 1934, Kelble said: "Farr& Company were going to give him all their business up and down the Coast. * * * " Ackerman added that: "Mr. Marine was there, and Mr. Marine made a remark that he hoped that Kelble and myself could get together, because our contract had a thirty day cancellation clause in it, and it could be cancelled. I took that to mean a threat that if we did not get together with Kelble, the contract would be cancelled."

Ackerman also testified that at a second conference on the same day at which the same persons were present and also Crosby: "I came back and told them that I had told our company that apparently unless we agreed on the commission, we would probably lose Farr & Company's business, and that I had authority to negotiate the thing further with them; so then we discussed the details of the commission, how much it would be, and what would be satisfactory; and then we agreed on five cents a ton." ackerman also testified that he could not say that "anything definite was said" at the conference about Kelble Operating Corporation competing with Jarka, "but the fact that he was in the stevedoring business would mean that he would compete * * * with us."

On June 22, 1934, on the day after the foregoing interviews, a letter was sent to Kelble Operating Corporation by the Jarka Corporation signed on their behalf by Ackerman which, so far as relevant to the present discussion, was as follows:

"Gentlemen: -

"In view of the fact that arrangements for handling Farr & Co. business will in the future be made thru The Kelble Operating Corporation, it is understood and agreed that a commission of five cents per gross ton will be paid to the Kelble Operating Corporation by The Jarka Corporation on any Cuban Raw Sugar which is discharging from steamers and stored in the warehouse at Norfolk under our existing contract. * * * It is also understood that a commission of five cents per gross ton will be paid on sugar moving out of warehouse and loaded into steamers. This commission is based on the present stevedoring rate specified in our existing contract with Farr & Co. * * *

"In the event a new contract is made by Farr & Co. with The Jarka Corporation for additional future business, the commission to be paid to The Kelble Operating Corporation on this new business will be mutually agreed upon."

Whitlock, a member of the firm of Farr & Co., testified about a conference with Kelble and Ackerman, at which Marine was present. he said that no employee of his firm had any authority to negotiate an arrangement for commissions on their business, that the Kelble Operating Corporation had never negotiated contracts between Jarka and Farr & Co. or attempted to solicit any work for Farr & Co. at Norfolk, and that the recital in the letter of the corporation signed by Ackerman that "arrangements for handling Farr & Co. business will in the future be made through the Kelble Operating Corporation" was without foundation. While Whitlock knew that Farr &Co. sent copies of their correspondence with the Jarka Corporation during the summer of 1934 to Kelble Operating Corporation as to sugar loaded and unloaded at Norfolk and that Kelble at times came into their office to talk about Norfolk matters, he supposed these communications were because Kelble had a personal claim against the Jarka Corporation for commissions based on what he had done as freight solicitor before he left Jarka. Whitlock testified that, when he discovered that Kelble ...

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