220 P. 710 | Utah | 1923
The plaintiffs commenced this action against one Oscar Peterson and the Deseret National Bank to declare a certain contract entered into between plaintiffs and Peterson terminated, the payments made by Peterson thereunder to be forfeited to the plaintiffs, and that all the documents, papers, etc., placed with the Deseret National Bank in escrow, together with all other property delivered to said Peterson under such contract, to be forthwith returned to the plaintiffs as provided in said contract. The case was tried to the court, which made findings of fact and conclusions of law in favor of plaintiffs, and entered judgment accordingly. Peterson, hereinafter called appellant, alone appeals.
The pleadings in the ease cover 42 pages of the printed abstract, and it is therefore impractical to set them forth here. It should be stated, however, that appellant, in his
In view of the questions raised by the appellant it becomes necessary to set forth certain parts of the contract entered into between the parties in full, and to state the substance somewhat fully as to other parts.
In the contract it is stated that said corporation, the Afton Live Stock Company, is the owner of lands, sheep, and other property, and is engaged in conducting the business of raising, grazing, buying, selling, and dealing in sheep, and that J. S. Ostler, Hattie K. Ostler, S. L. Ostler, and P. K. Goddard are the only stockholders and officers of the Afton Live Stock Company, a corporation; that said “stockholders are desirous of selling all of the outstanding capital stock of said corporation upon the terms and conditions herein set forth, it being the purpose and intention of the parties hereto that such sale shall carry with it all of the property and'assets of said corporation;” that, in consideration “of the promises and covenants hereto, hereinafter set forth, said stockholders hereby agree to sell to” appellant and the appellant “hereby agrees to purchase from said stockholders all of the outstanding capital stock of said corporation, consisting of (5,000) five thousand shares, payment for the same to be made as follows, to wit: Cash, upon the execution of this agreement, receipt whereof is hereby acknowledged by said first parties [plaintiffs], $25,000.00. * * *” The deferred payments are to be made as follows: November 1, 1919, $25,000 as principal and $4,834.90 as interest, leaving a balance of $113,140; July 1, 1920, the sum of $9,428.66, and interest, $4,525.60, leaving a balance of $103,711.34. Thereafter the sum of $9,428.66, with interest, is to be paid on November 1, 1920, on July 1,
“Reserving tile right unto the said party of the second part (appellant) to cancel this agreement by full payment of the amount due * * * at any of the above installment dates.”
It is then provided that the certificates of stock, together with a copy of the agreement, shall forthwith be “deposited in escrow” with the Deseret National Bank, together with other documents, all of which are specifically mentioned, and all of which shall remain in escrow “pending the full performance of this agreement or until such time as the same is terminated” as provided in the agreement; and, in case of full performance by the appellant, the certificates of stock placed in escrow shall, by the escrow holder, be delivered to appellant. The contract then provides:
“It is further understood and agreed that the said second party (appellant), in connection with the proper officer or officers of the said corporation, shall control and manage the affairs and business of said corporation during the life of this agreement it being understood, however, that said second party (appellant) is not to incur any expenses or indebtedness in that behalf except such as are reasonably necessary for the proper and businesslike conduct and management of said business, and is not to issue checks of the party of the first part (respondents) in amounts greater than ten thousand ($10,000) dollars, except the same be first countersigned by the president of said Afton Live Stock Company; and, whenever called upon to do so by the proper officer or officers of said corporation, said second party (appellant) shall exhibit a full and complete statement of the accounts relating to said business and showing, in detail the final condition thereof; provided, however, that all monthly statements from bank, together with canceled checks showing what they are issued for, shall be delivered to the bookkeeper of the Afton Live Stock Company monthly by said party, and expenses of bookkeeper, not to exceed one hundred ($100) yearly, shall he paid by said second party (appellant), as are all other expenses from April 1, 1919.
“It is further understood and agreed that said corporation is*441 now the owner of sixty-nine hundred and thirty-five (6,935) head of sheep, of which there are seven hundred and thirty-one (731) ewe lamhs of last year’s crop, three hundred (300) Cotswold bucks, and fifty-nine hundred and four (5,904) stock ewes ranging in ages from two to six years, the graded ages being as follows: 900 head of 2 year olds; 3,500 head of 3 year olds; the balance 4, 5, and 6 year olds. And it is agreed that at the beginning of each winter season for the period of two (2) years from and after the date hereof, said second party (appellant) shall have on hand, unin-cumbered, at least eight thousand (8,000) head of sheep of the same qualities and ages as those above specified, and at the beginning of each winter season thereafter shall have on hand at least six thousand (6,000) head of sheep of said qualities and ages.”
It is further provided that all the sheep and their increase shall be “kept marked and branded,” specifying the marks and brands. The contract then further provides:
“No sales of said sheep, or the increase thereof, or the wool therefrom shall be made without the written consent of said corporation; the proceeds of all sales shall be first applied to the payment of taxes and the expense of operation of said business, and the balance, or so much thereof as may be necessary, shall be applied to the installments of the purchase price as and when the same respectively fall due. Said second party (appellant) shall pay indebtedness incurred by him in connection with said business whether said indebtedness be incurred in the name of said second party (appellant) or in the name of said corporation. Said corporation is to pay all accrued indebtedness and all expenses in the operation of said business prior to the date hereof.
“It is further understood and agreed that, upon default being made in the meeting of any one or more of the payments herein-before provided for, or in the performance of any of the covenants herein stipulated to be performed by the second party (appellant), all the rights and privileges of second party herein and hereunder shall immediately cease, terminate, and be forfeited, and any and all moneys paid by said second party to said first party shall be retained by the said first party as liquidated damages and as rental for the use of property hereinbefore mentioned, and said Deseret National Bank shall deliver said certificates and contracts and agreements, also this agreement, to said first party. Provided, however, that the party of the second part shall not be considered in default until 30 days after any payment shall become due as herein-before provided.”
It is then agreed that the plaintiff stockholders “will maintain the corporate existence of said corporation during the
It will be observed that -the plaintiffs are all designated as “first party.” While the corporation and the other plaintiffs might well have been segregated and described in a different manner, yet that is of no importance, since the intention of the parties to the agreement and the purpose they all had in mind upon a consideration of the whole instrument seems to us to be quite clear.
' Before proceeding to a consideration of the assignments, it becomes necessary to refer to the findings of fact.
The court, after referring to the agreement, found:
“That prior to the making of said written agreement it had been agreed between the plaintiffs and the defendant Oscar Peterson that the defendant Oscar Peterson should purchase the capital stock of the Afton Live Stock Company and the said stockholders .should sell the same under substantially the same conditions as are contained in said written agreement for the consideration of $188,-132.90. That, pursuant to such agreement, which was entirely oral, the defendant Oscar Peterson had caused to be transferred to said plaintiff stockholders $25,000 face value of Liberty Bonds as an .initial payment of $25,000, and it was agreed between plaintiffs and the said Oscar Peterson that this initial payment should not be mentioned in the formal written agreement, but that the purchase price therein described should be $163,132.90, and the initial payment therein receipted for should be $25,000 instead of $50,000 and that thereupon the said agreement, marked ‘Exhibit A,’ was drafted, executed, and delivered.”
The court further found that the papers and documents mentioned in the agreement were deposited as therein provided; that, in addition to the initial payment of $25,000 provided for in the agreement, the appellant had paid the following sums, to wit: On November 3, 1919, $29,834.90; on July 1,1920, $13,954.20; on November 1, 1920, $10,602.88; on November 13, 1920, $900; on September 3, 1921, $3,000;
“That the said Oscar Peterson' took possession of the property of the Afton Live Stock Company and managed and controlled it exclusively from the time of the execution of the said written contract up to on or about April 21, 1922, at which time the greater part of the personal property of the Afton Live Stock Company was surrendered by the said Oscar Peterson to the receiver of a court of the state of Wyoming appointed in a suit in which the Rock Springs National Bank was plaintiff and the said Oscar Peterson and no other person was defendant, since which date the receiver has handled and disposed of said personal property. That Oscar Peterson, nevertheless, at all times up to the present time, has claimed the right to continue in the possession, charge, and custody of the property of the Afton Live Stock Company, and to manage and control the same, and has failed and refused to give to the officers of the plaintiff corporation any control or management whatever in the business and properties of said company, but has managed and controlled the same without consulting any of the said company’s officers. That said Oscar Peterson has sold sheep and wool of the plaintiff company without any written consent from any of its officers, and has not rendered to the plaintiffs or any of them any account of such sales, and has not exhibited a statement of any sort of the account relating to the business of the company or showing in detail the final condition thereof. That none of the plaintiffs demanded any such accounting of the said Oscar Peterson except that on or about October, 1921. J. S. Ostler, representing the plaintiff corporation, requested monthly statements from the bank, together with canceled checks of the Afton Live Stock Company issued by Peterson showing what they were issued for, to be delivered to the Afton Live Stock Company’s bookkeeper, but was informed by the said Oscar Peterson that all checks had been signed in his own name, and about October, 1921, the said J. S. Ostler, representing the plaintiff corporation, again requested from said Peterson monthly bank statements, together with canceled checks showing what they were issued for, to be delivered to the bookkeeper of the*444 Afton Live Stock Company, but that no suck statements, monthly or otherwise, were ever delivered by the said Peterson to the bookkeeper of the Afton Live Stock Company or to any of the plaintiffs. That, notwithstanding his default as hereinabove stated, the said Oscar Peterson, as stated in Iris answer and in the answer of the Deseret National Bank, has refused to instruct or permit the said Deseret National Bank to redeliver to the plaintiffs the stock certificates and other papers so deposited in escrow, and refuses to surrender the control and possession of the said properties and business of the plaintiff company to it, but claims and asserts that he is entitled to retain possession of said properties, and claims that he has paid certain sums of his own in the operation and management of said business of the Afton Live Stock Company which should be credited by the plaintiffs as a part of the purchase price for said stock.”
Tbe court tben found that appellant bad sold certain sbeep and wool of plaintiffs, tbe purchase price of wbicb bad been applied “upon payments due under said” agreement. Tbe court then found against appellant’s contentions respecting tbe alleged misconduct of J. S. Ostler, one of tbe plaintiffs. The court tben specifically found against tbe appellant upon all of his counterclaims, all of wbicb will hereinafter be more particularly referred to. Tbe court further found.
“That when the receiver heretofore mentioned took possession of the personal property of the Ashton Live Stock Company there were less than 6,000 head of sheep belonging to the Afton Live Stock Company, and there are now less than 6,000 head of sheep,” etc.
The court made conclusions of law whereby appellant was adjudged in default as stated in tbe findings of fact; that tbe Deseret National Bank should surrender all of tbe escrow papers to J. S. Ostler; that all tbe rights of appellant in tbe agreement “should be canceled and annulled, and tbe plaintiffs should be relieved of any further obligations thereunder, and that all sums of money paid by tbe said Oscar Peterson upon the purchase price of tbe shares of stock of tbe Afton Live Stock Company named in said contract should be forfeited to the plaintiffs”; that appellant be required to deliver to plaintiffs “all of tbe property of the said company of which be now has possession, control or custody. ’ ’
While a large number of errors are assigned, appellant’s counsel, in tbeir brief, have argued and relied only upon tbe following, which we here state in the language of counsel:
“There are a number of assignments of error, but they all touch upon two general propositions, and may be grouped under two general heads; the first being the admission by the court over defendant’s objection of evidence tending to vary the terms of the written agreement and the existence of a verbal contract not pleaded, and not one upon which the action was based; the second being the denial to the appellant of the right to introduce in evidence the facts necessary to establish the allegations contained in his different counterclaims. There are other assignments but they will be found to correlate themselves with the one or the other of the aforementioned features.”
In considering the errors assigned it will simplify matters if it be kept in mind that the court’s findings of fact are not assailed in any way.
Proceeding, therefore, to a consideration of appellant’s first ground of complaint, which is that the court erred in admitting in evidence the matters which are covered by the finding of facts hereinbefore set forth, and refers to the actual consideration or purchase price agreed upon by the parties and to the amount actually paid as the initial payment, we are clearly of the opinion that the appellant’s contention that the admission of the evidence is contrary to the parol evidence rule is not tenable. The evidence which was admitted in no way controverted, varied, added to, or affected anything contained in the written agreement. Counsel overlook the fact that the full purchase price is nowhere mentioned in the agreement, and all that is there said is that $25,000 was paid, the receipt of which is acknowledged. That statement is followed by the several amounts which remain unpaid, all of which are correctly stated, and were not in the slightest degree varied or affected by the evidence which counsel objected to, and which they now urge should have been excluded. Neither did the evidence enlarge, diminish, or in any way affect any of the conditions or obligations stated in the contract. The evidence objected to disclosed
“Testimony explaining how a written contract was formed or arrived at, is not prohibited by the rule that written instruments are not to he varied, added to or explained by parol testimony.”
Moreover this court has held against appellant’s contention in Brixon v. Jorgensen, 30 Utah, 97, 92 Pac. 1004, where some of the cases supporting the district court’s ruling are collated. This assignment must therefore be overruled.
This brings us to appellant’s second proposition, namely, that the district court erred in excluding the proposed evidence relating to his first and second counterclaims, in which is also incidentally included the forfeiture of the payments appellant had made under the contract. In this connection it is contended that, if appellant’s counterclaims, or only a portion of the claims preferred in them, had been allowed, as they should have been, he could not have been adjudged in default, as was done by the court, and hence no forfeitures could have been legally enforced against him. It is of the utmost importance, therefore, that the propositions above re
From what has been said it follows that the district court committed no error in excluding the profferred evidence relating to the first counterclaim.
As to the second counterclaim the appellant averred that, during the time he had possession, management, and control of the property and sheep mentioned in the contract, he had "paid out for and to the use and benefit of said plaintiffs in the care, feeding, and maintenance of sheep of said plaintiffs the sum of $45,000;” that the expenditure of said sum was necessary for the purposes aforesaid, and that there is due from plaintiffs said sum, which, with interest, aggregates $58,113.91, for which amount he demanded judgment. If our conclusion respecting the first counterclaim is sound, then it follows as a necessary corollary that appellant cannot recover on his second counterclaim. He was as much bound to supply the funds for the things enumerated and for which he sues in his second counterclaim as he was for those that were sued for in the first one. It necessarily follows, therefore, that the court’s ruling in excluding the proffered evidence relating to the second counterclaim must also be sustained
As to the third counterclaim, it is averred that, after appellant had taken possession of the sheep and property mentioned in the contract, he, "at the instance and request of plaintiff Afton Live Stock Company, and for its use and benefit in keeping up the sheep herds of said plaintiff corporation, defendant, delivered to said plaintiff Afton Live Stock Company 3,700 head of prime ewes of the reasonable market value of $15 per head; that said plaintiff received and accepted said sheep, but has wholly failed and refused to pay therefor,” etc.; that there is due appellant for said sheep the sum of $55,000, for which he demands judgment.
The district court, after hearing the evidence, found that appellant did deliver to said company 3,700 head of ewes; ‘ ‘ that said ewes were delivered and furnished * * * while the said Peterson was in sole charge and control of the prop
Appellant’s counsel, however, vigorously contend that the terms of the contract are not only unfair and unjust, but that they are unconscionable. They arrive at that conclusion by first adding together the payments which, according to the court’s findings, appellant had made on the contract, which, with interest, amounted to the sum of $115,569.36. They then add together the several sums of money claimed by appellant in his counterclaims, which aggregate the sum of $132,113.90. Counsel then contend that, under the contract, the plaintiffs have virtually received from appellant the sum of $247,683.26, and in addition thereto have repossessed themselves of the property.
It will be observed that under the court’s findings $132,-113.90, the aggregate amount claimed by appellant in his three counterclaims, consisted of legitimate expenses which
Quite apart from that, however, if the whole transaction between appellant and plaintiffs is viewed in its true light there is little, if any, merit left to his counsel’s contention. Appellant purchased a herd of sheep and other property kept in connection therewith. He agreed to, pay a stipulated price therefor, a part of which he paid at the time of the purchase and a part only of the deferred payments he after-wards paid. He took possession of the property as a purchaser, and, instead of securing the deferred payments by mortgaging the property purchased or otherwise, he agreed to maintain the sheep up to a certain number, and to properly feed and maintain them. Not to require a mortgage on the property sold was a distinct advantage to appellant, since it left him at liberty to sell and to dispose of it according to his necessities, provided only that he complied with the terms of the contract. In lieu of a mortgage or other security, however, appellant was required to give some assurance that his obligations would be met; that the property should be properly kept, and not be dissipated. This is precisely what was .contemplated by the parties and provided for in the contract. Appellant, as purchaser, might however, fail to live up to the terms and conditions of his contract, and hence some provision had to be made to protect the plaintiffs, which was that, in case of appellant’s default, the payments made by him should be forfeited as liquidated damages,
Let us assume that appellant had mortgaged the property as security for the deferred payments, and had defaulted, as is often the case in such transactions. Let us further assume that he had paid more than one-half of the purchase price, and had expended large sums of money in the upkeep and maintenance of the property purchased, which, if added to the payments made, would aggregate more than the original purchase price, and that all that was done before he made default. Let it be further assumed that after he had made all these payments and expenditures his general creditors had applied for and obtained a receiver to take possession of the property purchased, as well as his other property, and that ■thereupon the mortgagees of the property took possession under the mortgage, foreclosed, and sold the property, and applied the proceeds to the payment of the original purchase price; that, in view of falling prices, it was found that the mortgaged property was insufficient to pay the debt, and a deficiency resulted for which a personal judgment was demanded and obtained. Would, under those circumstances, any one seriously contend that such a transaction was unconscionable 1 We think not.
Nevertheless, such transactions and results, all know, frequently. occur. In this connection let it be remembered that courts take judicial notice of the general trend of business affairs and of the general fluctuations of prices, etc. We therefore know, as all others know, that, if appellant had entered into the contract in question just three years before he did, and during the World War period, instead of entering into it only a few months after the war had closed, his results would have been vastly different. Instead of purchasing sheep on a declining market he would have had the benefit of a rising one, and his speculative venture under the circumstances thén prevailing would have been
The. foregoing observations are here made for the sole purpose of showing that the contract in question is not subject to counsel’s criticisms, and that there is nothing contained therein which is contrary to good morals, or even improper. It therefore becomes entirely unnecessary to enter upon the question of forfeitures and the abhorrence of courts to enforce them which is so earnestly urged upon us by counsel.
While the writer, at the oral argument was much impressed with counsel’s contention that, in view of the sacrifices and losses which appellant had suffered under the contract, the same was, to say the least, very harsh in some of its provisions, yet, after a careful perusal of the whole record, and upon mature reflection, he is now thoroughly convinced that there is nothing in the contract or transaction, or in the court’s rulings, which, in reason, can be criticized, much less avoided, by any court of justice.
In view of what has been said, as already intimated, we can subserve no good purpose in attempting a review of the case cited by counsel upon the question of forfeitures and kindred subjects, and for that reason we shall refrain from so doing.
The judgment should be, and it accordingly is, affirmed. Costs to be taxed against appellant.