160 Ky. 123 | Ky. Ct. App. | 1914
Opinion of the Court by
Affirming.
This action was brought to enforce the specific execution of the following contract:
“This agreement made this twelfth day of March, 1907, by and between Jos. W. Cockill, hereafter known as the party of the first part, and B. M. Bartley hereinafter known as the party of the second part, both of Lookout, County of Pike and State of Kentucky.
“Witnesseth, That the said party of the first part is about to become the possessor of a certain lease of coal land from the Big Sandy Company, known as the Big Branch Sycamore Lease, lying between Big Branch and Sycamore Creeks.
“And as the said party of the second part is the owner of the surface and other rights of part of this lease, it is agreed by the said party of the second part to deed this surface and other rights to a corporation which will be formed and of which the said party of the first part will be one of the incorporators. The said party of the first part being bound to assign to said corporation all the rights as given him under the proposed lease to him from the said Big Sandy Company.
“Now, in consideration of this deed from the said party of the second part to this corporation, it is understood that the said party of the second part shall receive seventy (70) shares of the capital stock of this corporation, said shares being of par value of ($100) one hundred dollars each. It is further understood this said corporation shall not be capitalized to exceed eighty thousand ($80,000) dollars.
“Any buildings and improvements not essential for the development of said leased property can be removed from premises by the said party of the second part prior to January 1, 1908, provided said improvements are not in way of developments.
“The present road along Sycamore Creek is to be kept open and maintained for the benefit of both parties.
“Witness our hands and seals the date first written.
“J. W. Cockill, (Seal),
“B. M. Bartley, (Seal).
“Witness, R. S. Johnson, J. A. Bartley.”
“It is understood that said deed from said party of the second part to the said corporation is not to be made until (50%) fifty per cent of the stock has been paid and developments on the property be made in proportion to such payments.
“J. W. Cockill, (Seal),
“B. M. Bartley, (Seal).
March 12, 1907.
“Witness, R. S. Johnson, W. D. Bartley.”
After the making of the contract, Cockill became the owner of the coal lease of the Big Sandy Company. The corporation was formed and seventy shares of stock were issued to Bartley. The other stockholders put up $42,000, which was used in installing and equipping a coal plant on the property, which they operated from that time on. But Bartley failed to execute a deed to the corporation for the surface of the land. He died before the suit was brought, and the action was brought against his widow and children. A short time before his death, he conveyed the land described in the contract, also the shares of stock in the corporation in consideration of love and affection to his wife and two of his children. They resisted the specific performance of the contract on the ground that it was obtained by fraud, and was so inequitable and one-sided that it should not be enforced in equity. The chancellor adjudged the plaintiff the relief sought; the defendants appeal.
The chancellor properly held that there was no fraud in the obtaining of the contract. The matter was carefully discussed between the parties. Bartley understood just what he was doing, and the other parties to the contract faithfully carried out their part of it by putting up over $42,000 to install the plant. The proof is clear that they gave him the option either to take stock in the corporation or a less sum in cash, and that he preferred to
The defense that the contract was unconscionable is equally untenable. The contract does not call for seventy shares of the capital stock of the corporation having a market value of $100 a share. It calls for seventy shares of the capital stock of the par value of $100 each. This means seventy shares worth $100 each at par value; that is, if its selling value is at par with its face value. The evidence does not show that this stock was only worth ten cents a share; it shows that it was only worth this before the money was put into the corporation, but that after the money was put in, the stock was worth something over $50 a share., The coal under the land had been conveyed by Bartley under another lease; he only owned the surface. It was a rough, mountainous tract of land and the surface was worth comparatively little except for a coal operation. There was no such inequality in the contract as to warrant the chancellor in refusing to enforce it. Bartley was the vice president of the corporation; his son also was one of the officers; he lived two years after the contract was made and at no time tendered back his stock or demanded a rescission. He allowed his associates to put $42,000 into the venture, and they would suffer a great loss if a specific execution was not now enforced.
Judgment affirmed.
