Case Name: A. S. Holmes Refining Company, Plaintiff, v. The United Refiners' Export Oil Company, Defendant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1898
Citations: 33 A.D. 62
Docket Number: 
Parties: A. S. Holmes Refining Company, Plaintiff, v. The United Refiners’ Export Oil Company, Defendant.
Judges: 
Reporter: Appellate Division Reports
Volume: 33
Pages: 62–70

Head Matter:
A. S. Holmes Refining Company, Plaintiff, v. The United Refiners’ Export Oil Company, Defendant.
Contract for the continuing sale of goods—delivery to the purchaser by a corporation succeeding the vendor-—the question of notice of the change, by the corporation to the purchaser, and of the existence of a new contract between the parties, is one for the jury—-effect of changing a name in the transaction of business without explanation to the other party..
One A. S. Holmes entered into an individual contract for the continuing sale and delivery of oil, against which he drew drafts upon the purchaser in excess of the value of the oil so delivered up to the. date thereof; subsequently, no new or modified contract having been entered into, oil was furnished to such purchaser by the A. S. Holmes Refining Company. In an action brought by the latter company to recover for such oil which, subsequent to its incorporation, it had consigned to the purchaser, the question arose under the evidence, whether, until after the oil in question had been furnished, the purchaser had notice of the incorporation of the company.
Held, that a question was presented for the jury whether the purchaser had a right to assume that, when such oil was shipped, it was on account of A. S. Holmes, and that A. S. Holmes and the A. S. Holmes Refining Company were the same; and -whether the minds of the parties to the action ever met on any new contract or arrangement different from the contract made with Holmes.
It seems, that simply changing a name in the transaction of business without explanation to the other party, and continuing to transact the business the same as before the change, may justify the supposition that the change was in name only, and that a contract theretofore made was to be fulfilled as stipulated by the original parties.
Motion by the defendant, The United Refiners’ Export Oil Company, for a new trial made upon a case containing exceptions ordered to be heard at the Appellate Division in the first instance upon the verdict of a jury rendered by direction of the court after a trial at the Erie Trial Term.
This action was commenced in Erie county, May 13, 1893, to recover $1,079.23, with interest thereon from March 6, 1893, for a quantity of export oil shipped and delivered by the plaintiff to the defendant during the first five days of the month of November, 1892.
The complaint alleged that the plaintiff was a corporation created under the laws of the State of New York.
The defendant answered denying the incorporation of the plaintiff and alleged that the jfiaintiff’s name was one under which A. S. Holmes conducted business; denied that the plaintiff had shipped the oil in controversy ; alleged a written contract with A. S. Holmes, dated March 31, 1891, under which the oil was shipped; alleged that the defendant had permitted A.'S. Holmes to overdraw his account in the business to the' extent'of $3,122.33, and that between the 28th day of October, 1892, and the 5th day of November of that year, the said Holmes had consigned to the defendant under the contract and not otherwise, oil to the net value of $2,153.97, which sum the defendant had credited Holmes upon his said indebtedness, leaving a balance of $968.36 due the defendant. The answer further alleged that the said A. S. Holmes, being indebted largely and in failing circumstances and with intent to hinder, delay and defraud his creditors, made or caused to be made or created a corporation under the name of the plaintiff; that the pretended capital stock of the concern was $3OO;O0O, all of which, except ten shares of $100 each, said Holmes agreed to take ;■ that no capital was paid in to said pretended corporation, and that said corporation had taken possession of the property owned by Holmes with intent to hinder, delay and defraud the creditors, particularly this defendant and to prevent the defendant ¡from collecting from said Holmes the amount so owing to it from said overdrafts.
The trial occurred on the 14th day óf May, 1897, and upon the close of the evidence the court directed a verdict for the plaintiff in the sum of $1,350.23, tó which the defendant’s counsel duly excepted, and the court ordered the defendant’s exceptions to be heard in the Appellate. Division in the first instance, and in the meantime that, the judgment be suspended.
George A. Lewis, for the plaintiff.
James Parker Hall, for the defendant.

Opinion:
Ward, J.:
Upon the trial the defendant admitted " that in the- first five days in the month of November, 1892, it received oil, sold the samé, and after deducting commissions and all charges due it, had in its hands the sum of $1,079.23,. subject to the order of. whom it should' concern. That the shipment was made from the Holmes Refining., Company in Buffalo.".
It further appeared that the A. S. Holmes Refining Company took charge of the factory and business of A. S. Holmes October 10, 1892'; that before that time it had been conducted by A- S. Holmes, and- that the same treasurer and bookkeeper were retained by the company as-had been employed by Holmes. The accounts of the company were kept in the same manner and upon the samé books that A. S. Holmes had used, arid the bookkeeper could not tell from any entry on the books " where Holmes left off and the refining company commenced." A. S. Holmes became the president of the company and had charge of the business after October,. 1892, the same as before, and the business was conducted in about the same way. The certificate of the incorporation of the plaintiff was filed October 3,1892,;, the oil after October tenth was shipped in the name of the " A. S-. Holmes. Refining 'Company." There was a rubber stamp used on the billheads of A. S. Holmes marking thereon "A. S. Holmes Refining Company." The business between the defendant and A. S. Holmes originated in a written contract dated March 31, 1891, whereby the defendant undertook to erect without delay at Perth Amboy, N. J. tankage for 50,000 barrels of oil with pipe connections and' pumps, and to erect a dock to' load steamers employed in the oil trade, etc. Holmes agreed-to ship export oil to the defendant at that place. The defendant is a New Jersey corporation transacting business in New Jersey and in New York city. The contract provided for commissions and contained many important and complicated provisions under which the business was to be carried on, among which was that the oil should be inspected and that Holmes might draw upon the defendant for the oil shipped not to exceed ninety per cent of the value of the oil to be accepted and paid by the defendant; the contract was made binding upon the heirs, executors and assigns of the parties and to continue in operation for five years unless terminated by a six months' notice of withdrawal from the contract, which could be done at any time after two years from the date of the contract.
After the incorporation of the plaintiff, and before the 1st day of November, 1892, a large amount of oil was consigned to the defendant, and, as we understand the evidence, in the plaintiff's name; and 'in that name drafts were drawn upon the defendant, upon the shipments of oil, which exceeded the value of the oil upon which they were drawn in the sum of about $3,700. The amount of these overdrafts was received by the plaintiff. A controversy arose between the parties in regard to these overdrafts; correspondence and telegrams ensued between the defendant and A. S. Holmes. •Some of those letters and telegrams were signed " A. S. Holmes," others " A. S. Holmes Refining Company." And some of the communications of the defendant' were addressed to." A. S. Holmes " and some to " A. S. Holmes Refining Company." Other drafts had been drawn upon the oil shipped prior to November 1, 1892, which the defendant .did not honor and which the defendant finally refused to honor, the final refusal being in a telegram of November A, 1892, from the defendant to A. S. Holmes in this language: "We refuse your further drafts until balance against you has been absorbed."
After the refusal of the defendant to honor the drafts the following correspondence occurred between the. parties : '
" A. S. Holmes Refining Company, Successor \ to A. S. Holmes Oil Refinery. I Buffalo, October 31, 1892. )
" United Refiners' Export Oil Co., .
. " 23 Beaver Street, N.' Y.:
" Dear Sir.— Mr. Holmes turned over his refining interests to us this morning of the 10th inst. . "
" Please send us a statement of our accounts from that date and oblige,
" Yours truly,
(Signed) " A., S. HOLMES REFINING CO.,
" By O. P. Stevenson, Treasurer."
Note.— ("A. S. Holmes Refining Company, successor to" is stamped in red with a rubber stamp over the printed heading " A. S. Holmes Oil .Refinery.")-
" New York, November 1, 1892.
" A. S. Holmes Refining Co.,
" Buffalo, N. Y.: .
" Gentlemen.— I am in receipt of yours of October 31st, asking us to send account- of A. S. Holmes Refining Company from and after October 10.
" As this is the first notification we have had from, yon of the change of business, we can only state that up to this time no account has been kept with the A. S. Holmes Refining Company.
" We note that your company are the successors of A. S. Holmes and will have statement of his account made, and after settlement wrill open an account in your name if desired."
(Signed by the president of the defendant.)
" A. S. Holmes Refining Co., Successors to A. S. Holmes, Refiner of Petroleum. "Buffalo, N. Y., 11/3/92.
" United Refiners' Export Oil Co.,
" 23 Beaver Street, N. Y. :
" Dear Sirs.— Kindly open account with ns beginning N ovember 1st arid put through such account all consignments which may be invoiced on our own billheads — to include oil you receive on and after the 1st. "Any invoices made on Mr. A.. S. Holmes', own bill-heads should go through his account. Any drafts for our account will be signed as below .and if you will advise us as to the proper time to send drafts forward with B — L attached, will follow instructions. "
" Hoping that this will be satisfactory to you, we are "Very truly yours,
" A. S. HOLMES REFINING C0.5
" By C. P. Stevenson, Treasurer."
To which the defendant replied :
"New York, November 4, 1892.
" A. S. Holmes Refining Co.,
"Buffalo, N.'Y.:
" Gentlemen.— We are in receipt of your letter of the 3d inst. asking us to open account with you beginning November 1st. Before doing so, it would be necessary for us to have your written acceptance of the contract made March 31, 1891, with Mr. A. S. Holmes and your agreement to become, a party thereto in his stead, or if, as we infer from your letter, Mr. A. S. Holmes proposes to ship us his oil for his account we would require you to enter into a contract of a similar nature. We also require a settlement of balance due of A. S. Holmes before opening up a new account as his successors:"
The defendant kept the account of the oil shipped on the 1st, 3d, 4th and 5th days of November, 1892, on its books in the name of " A. S. Holmes."
A. S. Holmes held $290,000 of the $300,000 stock of the plaintiff. A witness by the name of Johnson testified that his name was mentioned in the certificate of the plaintiff corporation, but that no stock was issued to him, and that he signed the application for the incorporation at the request of Holmes. The president of the defendant testified in answer to the question as to how he came to address a letter to the " A. S. Holmes Refining Company " as follows : " We believed that they were one and the same concern. A. S. Holmes and the A. S. Holmes Refining Company."
No contract, written or otherwise, had 'been made between the plaintiff and the defendant, hut there was proof upon which the jury might have found that, until the defendant's refusal to pay Holmes' overdrafts, it had no notice of the- incorporation of .'the plaintiff; that the overdrafts' had all occurred after the plaintiff had become. incorporated, upon oil which had been consigned to the defendant by it under the contract made, with A. S. Holmes'that when Mr. A. S. Holmes, the president of the plaintiff, discovered that the overdrafts were not to be honored, the.position' for the first' time was taken that the defendant was dealing with a party other than A: S. Holmes and that the defendant must account to that-party for the oil shipped in November,. 1893, without a settlement of the balance due upon the Holmes contract for the overdrafts. Had the-plaintiff in fairness and justice to the defendant upon its incorporation given it full notice of such incorporation; that it did not recognize the obligations of' the Holmes contract; that it was prepared to make a new contract and to open a new account, it is probable that the overdrafts made after the incorporation of the plaintiff would not have been paid; the defendant would have under-" stood its exact legal relations, to the case. But simply changing the name of "A. 8. Holmes", to that of "A. S. Holmes Refining Company " upon its letter heads and hills and in all other respects' continuing the business under the contract .with Holmes, was not a sufficient notice of the corporate existence of the plaintiff. .Simply changing a name in doing business, without explanation to the other party, and continuing to transact the business the same as before the change, may well lead to' the supposition that the change was in, name only and the contract was to be fulfilled as stipulated by the original parties. The evidence leads .to the suspicion, if" not the belief, that A. S. Holmes was the controlling spirit with the plaintiff; that he did not intend to pay his debt to the defendant.; that when he found he could get no more money on the-overdrafts he resorted to the expedient of claiming that the corporation had abrogated the contract, so that he might recover for the oil sent in November, discharged of his obligations to the defendant. Holmes was not a witness upon the trial. He seemed - to have disappeared " from the scene of his former operations. , - . .
At the close of the evidence the defendant's counsel asked to go to.the jury "on the question as to whether, under the evidence, the defendant had a right to assume that when the oil was shipped, this oil in question, that it was. for the purpose of taking up A. S. Holmes' account, and on the question that the formation of the corporation and the continuance of the business, as was testified to,- . with Holmes as president and in charge, and owning, the greater part of it, would be a fraud on the defendants under the circumstances, and the further question that rinder the evidence the defendant had a right to assume in so far as its relations with Holmes and the Refining Company were concerned, that they were both one and the same. And upon all the evidence that we have a right to go to the jury."
The learned trial court concluded to submit the serious legal questions involved'in this case to' our consideration, where greater deliberation may be had than was afforded at the trial. .
• It was a question for the jury whether at any time the minds of the parties to this action met upon any new contract or arrangement different from the contract with Holmes. A new contract could not be made whereby the defendant assumed to deal with the plaintiff corporation, unless the defendant had knowledge of and assented to it.
In Boston Ice Company v. Potter (123 Mass. 28), Potter, becoming dissatisfied, ceased to take ice of an old company, and contracted for ice with a new one. The old one afterwards bought the new one's business, without notifying Potter thereof until after the delivery and consumption of the ice. Held, that the old company could not maintain an action for the price against Potter, it having no privity of contract with him.
In The Arkansas Smelting Co. v. Belden Co. (127 U. S. 387) Mr. Justice Gbay, in speaking for the Supreme Court of the United States, said: " Every one has a right to select and determine with whom he will contract, and cannot have another person thrust upon' him without his consent. In the familiar phrase of Lord" Denman, You have the. right to the benefit you anticipate from the character, credit and substance of the party with whom you contract.' " '
The plaintiff was distinctly notified by the defendant's letter of November' 1, 1892, that it would open no new account with the plaintiff as successor of Holmes until after settlement of the Holmes account, so that the oil which was delivered after the receipt of that letter, the price of which is sought to be recovered in this action, having been delivered in the face of this notification, the jury might have inferred that the oil was shipped and received upon the condition that the Holmes account was to be settled. The defendant's letter of November 4, 1892, in which the defendant declined to. open a new account until the plaintiff had given a written acceptance of the Holmes agreement and paid the overdraft, was import* ant evidence to be considered by the jury upon the same subject.
The defendant's answer alleged that the incorporation of the plaintiff was a fraudulent contrivance to cheat the defendant and other creditors.
There is evidence in the cáse Which'a jury might say tended to sustain that conclusion. We- think the trial court erred in not submitting to the- jury the question that the defendant's counsel requested the court to submit, and substantially as requested, or at least such questions as we have discussed, as appropriate for the, consideration of the jury.
The defendant's exceptions-should be sustained, and a new trial ordered, with costs to the defendant to abide the event.
All concurred.
Defendant's exceptions sustained and a new trial ordered, with costs, to the defendant to abide the event.
Sic.