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E. Peoria Elevator Co. v. Geo. W. Cole Grain Co.

SEPTEMBER 11, 1958.

EAST PEORIA ELEVATOR COMPANY, PLAINTIFF-APPELLANT,

v.

GEO. W. COLE GRAIN CO., AND MARGARET B. WRIGLEY, EXECUTOR OF THE WILL OF BERNARD E. WRIGLEY, DECEASED, DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Peoria county; the Hon. JOHN T. CULBERTSON, JR., Judge, presiding. Reversed and remanded with directions.

PRESIDING JUSTICE DOVE DELIVERED THE OPINION OF THE COURT.

Rehearing denied October 20, 1958.

The complaint in this case was filed on February 2, 1951, by the East Peoria Elevator Company, a corporation, against the George W. Cole Grain Company, a corporation, and Margaret B. Wrigley, as executor of the Will of Bernard E. Wrigley, deceased.

On February 4, 1955, the complaint was amended and, as amended, the plaintiff sought to recover a judgment against the Cole Grain Company requiring it to account to the plaintiff for all moneys received by it for rental of grain storage space in plaintiff's elevator and for judgment for the amount found due the plaintiff upon such accounting. The amended complaint also sought an accounting and money judgment against Margaret B. Wrigley, as executor of the Will of Bernard E. Wrigley, deceased, for all moneys paid by lessees of grain storage space in plaintiff's elevator which was intended for the plaintiff and which Bernard Wrigley allegedly wrongfully diverted to others.

After answers and replies were filed the issues thus made were referred to a special master. The cause was heard by the special master upon the evidence offered by the respective parties and upon a stipulation of facts. The special master recommended that a decree be entered dismissing the complaint as amended for want of equity. Objections to this report were filed and overruled by the special master and upon a hearing before the chancellor upon exceptions to the special master's report, all exceptions were overruled, the report approved, and a decree rendered dismissing the amended complaint for want of equity at the costs of the plaintiff. To reverse that decree plaintiff appeals.

It appears from the evidence and the stipulation of the parties that the plaintiff is an Illinois corporation, having its principal office and elevator in Peoria, Illinois. It operated a public warehouse designed solely for the storage, handling, treatment and drying of grain and for the receipt and delivery of grain by railroad. Its warehouse had a capacity of 905,000 bushels of corn, oats, wheat and soybeans and as the operator of a class "B" public warehouse, it was subject to the Public Warehouse Act and also to the rules and regulations of the Illinois Commerce Commission.

Defendant, George W. Cole Grain Company, is also an Illinois corporation, with its principal office and place of business in the Board of Trade Building at Peoria, Illinois. During the period in question this company was doing business as a grain brokerage or commission house and held a seat on the Peoria Board of Trade and bought and sold all types of grain for its customers and also for its own account and regularly rented storage space of the plaintiff and from time to time had annual contracts for storage space with the plaintiff.

Bernard E. Wrigley was president and principal owner of the Cole Grain Company and he operated it and several country elevators located in Illinois. He was active in the daily buying and selling of grain for his companies and their customers. The offices of the Cole Grain Company were in the Board of Trade Building in Peoria and Mr. Wrigley handled the business affairs of that company from those offices.

From 1940 until his death, which occurred on March 31, 1950 Bernard Wrigley was the assistant manager and treasurer of the plaintiff and from 1944 until his death he was its vice-president. He was the sole active manager of the day to day affairs of the plaintiff and handled all its business affairs from his office at the Cole Grain Company offices in the Board of Trade Building in Peoria.

Della M. Herring was for many years, cashier of the plaintiff and upon Mr. Wrigley's death in 1950, she was elected to succeed him as treasurer of the plaintiff. She had also worked directly under Wrigley's supervision as cashier or bookkeeper for the Cole Grain Company and was familiar with the way Mr. Wrigley conducted the business of the plaintiff and the business of Cole Grain Company. At various times the Cole Grain Company and also Mr. Wrigley, individually advanced money to the plaintiff and a running account between these two companies was kept by Mr. Wrigley.

For many years the Elevator Company had entered into contracts with various customers for specified amounts of storage space based upon an annual rate established by the Elevator's tariffs. While the record does not show the amount of storage space leased to Cole Grain Company prior to July 1, 1949, it does show that as early as 1933 it had entered into such contracts with Cole Grain Company and from 1940 it had entered into similar storage contracts with Terminal Grain Company.

On July 1, 1949 the Elevator Company and the Cole Grain Company entered into a contract for 100,000 bushels of storage. On July 29, 1949, the amount was increased to 150,000 bushels and on October 8, 1949, it was increased to 225,000 bushels. On July 27, 1949, a similar 100,000 bushel storage contract was entered into by the Elevator Company and the Terminal Grain Company, and on October 21, 1949, the amount of storage for Terminal Grain Company was increased to 140,000 bushels. These contracts provided for the payment of the Elevator's tariff for annual storage which was $12,000 for 200,000 bushels and also contained this clause: "Said space shall be used by party of the second part (lessee) only for the storage grain owned by the party of the second part and it shall not use such storage space, or any part thereof, for storage of grain owned by others, and it shall not directly, or indirectly, operate a warehouse business for the storage of grain of others."

The record discloses that during the latter part of June, 1946, the Cole Grain Company entered into a contract effective July 1, 1946, with Corn Products Refining Company which had been one of its largest customers since 1918. This contract designated the Refining Company as "Buyer" and the Cole Grain Company as "Seller." It recited that the contract was made expressly for the purpose of storing at any one time a maximum of 200,000 bushels of corn or other grains belonging to the Corn Products Refining Company in the elevator of the plaintiff in space which the Cole Grain Company had leased of the plaintiff. This contract also recited that the plaintiff acted as warehouseman and not the seller; that the period of storage under this contract covered two years beginning July 1, 1946, and provided for a minimum rental charge of $18,000 for space per year payable semi-annually in advance beginning July 1, 1946. The contract also obligated Corn Products Refining Company to pay the established rates prescribed for drying and for treatment of grain and for other elevator services. This contract was executed on behalf of the Cole Grain Company by Wrigley, who was its then president, and by Della M. Herring, its then secretary and a rider was attached thereto consenting to its execution, which rider was signed, "East Peoria Elevator, by B.E. Wrigley, Treas."

Under this contract between Cole Grain Company and Corn Products Refining Company the Refining Company issued checks aggregating $39,636.65 in various amounts and at different times between June 29, 1946, and April 26, 1948. Four of these checks, each for $9,000 and each marked "for storage" and one check for $2,036.60 marked for "excess elevation" were made payable to the order of Cole Grain Company. These five checks aggregate $38,036.60. The four checks each for $9,000 were endorsed by Wrigley and credited to the account of the Cole Grain Company and Wrigley endorsed the $2,036.60 check and it was credited to the account of the Terminal Grain Company. The balance of $1,600.05, which represents the difference between $39,636.65 and said sum of $38.036.60 is the aggregate amount of five checks issued by the Refining Company and payable to the Elevator Company. Two of these checks aggregating $741.72 and marked "drying" and "excess storage," respectively, were deposited to the credit of the Elevator Company. The other three checks aggregating $858.33 were endorsed and credited to the account of Cole Grain Company. To recapitulate: of the $39,636.65 received by Wrigley from Corn Products Refining Company under its contract with the Cole Grain Company, $36,858.33 went to the credit of the Cole Grain Company; $741.72 was placed to the credit of the Elevator Company and $2,036.60 was placed to the credit of Terminal Grain Company. As a part of the same transaction Wrigley drew a check on the Cole Grain Company account for $15,224.02 and this was placed to the credit of the Terminal Grain Company, so that ultimately Terminal Grain Company received $17,260.62, the Cole Grain Company $21,634.31 and the Elevator Company $741.72.

With reference to this transaction the amended complaint charged that plaintiff, Elevator, had leased to the Cole Grain Company storage space sufficient to contain at one time 225,000 bushels of grain for an agreed annual rental of $13,500 and had also leased to the Terminal Grain Company storage space sufficient to contain 150,000 bushels of grain for an agreed annual rental of $9,000 per year; that these leases contained the restrictive covenant above set forth which precluded the lessees from using the space it had leased from plaintiff for the storage of grain belonging to any one other than the lessees; that Wrigley, on behalf of the Cole Grain Company, entered into an agreement with Corn Products Refining Company for the storage of 200,000 bushels of grain in plaintiff's elevator for two years beginning, July 1, 1946, at an annual charge of $18,000 per year, payable semi-annually in advance; that Wrigley caused a rider to be attached to said agreement which recited: "For and in consideration of $1.00 and other good and valuable consideration in hand paid, the receipt whereof is hereby acknowledged, East Peoria Elevator hereby agrees and consents to the foregoing agreement" and that said rider was signed; "East Peoria Elevator by B.E. Wrigley, Treas."; that this agreement between the Cole Grain Company and the Corn Products Refining Company violated the restrictive covenant in the contract between the Elevator Company and the Cole Grain Company and that the Elevator Company did not authorize Wrigley to execute this consent. The amended complaint then concluded that Wrigley, as manager and as an officer of the Elevator Company abused the confidence reposed in him and used his position as managing officer, to divert moneys which plaintiff should have received to the use of the Cole Grain Company and demanded that the Cole Grain Company and the executor of the Will of Bernard E. Wrigley should account to plaintiff for all sums paid Cole Grain Company under this contract which became effective on July 1, 1946.

The provisions of the contract between the Cole Grain Company and the Refining Company differ materially from the standard provisions of the annual storage contracts between the plaintiff and the Cole Grain Company. The storage contracts between the plaintiff and its lessee do not assume that the lessee would use the leased space for the storage of the same grain during the full term of the lease. These contracts contemplate that the grain originally stored will be removed and replaced by other grain during the term of the lease and provide that the Elevator would transfer, i.e., load in and out of its elevator, four times the amounts of the authorized annual storage without any additional charge, and that for such "transfer" in excess of that amount, an additional charge of one half cent per bushel, on merchantable grain, would be paid.

Each of these standard form annual storage contracts further provided that no part of the annual charge would be refunded if the lessee fails to use any part of the leased space at any time during the term of the lease. Such provision is not contained in the agreement between the Cole Grain Company and the Refining Company. That contract, however, does provide that for the "elevation" of more than 200,000 bushels of grain during the term of the contract, the Buyer will pay to the Seller an additional sum of one-half cent per bushel for the first 200,000 bushels of excess grain handled, and one-cent per bushel for any additional grain handled by the Seller for the Buyer. This provision was clearly intended to indemnify the Cole Grain Company, against any additional rental charges which it might incur to the plaintiff, under the provisions of its leases with the plaintiff, if the "transfer" of grain made by the plaintiff, as a result of the Refining Company contract, exceeded the amount of the "transfers" authorized by its annual rental contracts with the plaintiff. The agreement between the Cole Grain Company and the ...


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