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Gould v. Walker

April 23, 1959

ROBERT GOULD, D/B/A ROBERT GOULD COMPANY, PLAINTIFF-APPELLANT & CROSS-APPELLEE,
v.
HIRAM WALKER & SONS, INC., A CORPORATION, AND HIRAM WALKER, INCORPORATED, A CORPORATION, DEFENDANTS & COUNTER-CLAIMANTS, AND IRVING H. LAKE ET AL., INTERPLEADED COUNTER-DEFENDANTS-APPELLEES & CROSS-APPELLANTS.



Author: Knoch

Before SCHNACKENBERG, PARKINSON and KNOCH, Circuit Judges.

KNOCH, Circuit Judge.

On September 19, 1940, at a New York Tax Commission Warrant Agent's sale, Robert Gould purchased, subject to prior sales and outstanding equities, all the right, title and interest of Pennsylvania Whiskey Distributing Corporation (later known as Kent-Darby, Ltd.) herein called "Pennsylvania", in (inter alia) a contract to purchase 1,367 barrels of whiskey from the Hiram Walker Companies, herein called "Walker", on which partial payment had been made and, in addition, warehouse receipts representing 833 barrels of whiskey. Of the total 2200 barrels only 1608 are involved in the matter now before us.

In 1941 Gould brought this action to compel delivery by Walker upon payment by Gould of charges for storage, insurance, taxes, and the balance due on the purchase contract. Walker answered Gould's demand alleging the receipt of notices of other claims from the numerous interpleaded counter-defendants (herein called "Tavern Keepers") each based on alleged prior purchases of the whiskey in question from Pennsylvania.

It was stipulated that prior to September 1940, Pennsylvania sold each of the Tavern Keepers varying numbers of barrels of whiskey; and that in each instance a part, at least, of the agreed purchase price had been paid Pennsylvania. Specific proof of the exact agreed prices and amount of payment made was reserved for later accounting.

Gould contended that he had acquired the entire legal and equitable title to the whiskey and that, as a matter of law, he took subject only to payment of the unpaid balance of the purchase price, and equities of which he had legal notice at the time of his purchase.

The only contested issue at that time was whether he took subject to or free from the rights of Tavern Keepers.

On appeal, this Court (7 Cir., 1944, 142 F.2d 544) concluded that Gould took title subject to the claims of the Tavern Keepers and remanded the cause to the District Court for further proceedings consistent with that finding.

The parties then stipulated as to the amounts paid by each Tavern Keeper and the number of barrels covered by each payment.

However, under authorization of the District Court's decree of April 14, 1943 (subsequently reversed on appeal as heretofore indicated) Gould had taken delivery and disposed of the whiskey. It thus became the duty of the District Court to assess damages.

The Tavern Keepers were all retailers, not blenders or distillers of liquor. Under the law they were projibited from accepting delivery in barrels and could do so only in bottled form. Damages were assessed by the District Court on the basis of the wholesale value of each barrel of whiskey in bottled form, less all amounts payable as contract balances, storage and other charges, Federal Excise Taxes, and cost of bottling.

An exception was made of two Tavern Keepers who were found not to have paid Pennsylvania the full amount of their agreed purchase price. They were awarded solely the return of the amounts they had paid.

Gould asserts that all the Tavern Keepers should have been awarded damages solely in return of the amounts they had paid. His theory is that all were technically in default in completing payments and were tardy in asserting their rights. Gould argues that each Tavern Keeper should receive only the amount he actually paid, less an allocable share of the payments made by Gould to "protect" the property.

The whiskey would have been deliverable to the Tavern Keepers only after Pennsylvania had paid the Federal Excise Taxes, bottled the whiskey and been reimbursed for its cost. Gould thus contends that the Tavern Keepers owed Pennsylvania about $200 per barrel. This is about what would have been owed to Pennsylvania, had Pennsylvania paid the Federal Excise Taxes, Walker's charges for storage and insurance, shipping charges and bottling cost, and delivered the whiskey to the Tavern Keepers in bottled form. These things, however, were not done. In computing the value of each of the barrels, in bottled form, the District Judge gave full consideration to ...


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