127 Ark. 28 | Ark. | 1917
(after stating the facts). It was charged and is now claimed by appellees that Remmel was guilty of making false representations to induce appellees to sign their subscription contracts for stock in the company and that Rose allowed his name to be used in connection therewith. On the other hand it is insisted by appellants that there is no testimony in the record sufficient to sustain the charges of fraud and that there was no consideration for the circular letter sent to the stockholders by Messrs. Remmel and Rose and that this circular letter did not create a binding obligation upon appellants when it was received and the terms thereof accepted by . appellees. It is true there is no evidence in the record to show that either Remmel or Rose or the option holders were guilty of fraud; but it by no means follows that the circular letter did not create a binding obligation on the part of the option holders and Messrs. Remmel and Rose. The evidence shows that in June, 1905, serious differences arose between the cash subscribers of stock on the one hand and the option holders and Messrs. Remmel and Rose on the other. The dissensions aroused by their disagreements jeopardized the formation of the corporation, and in order to adjust these differences the circular letter referred to was mailed to each one of the cash subscribers for stock by Messrs. Remmel and Rose and was received and acted upon by the cash subscribers. The terms of the letter were accepted by the cash subscribers for stock. It will be noted that the cash subscribers to stock had charged appellants and Messrs. Remmel and Rose with fraud and were claiming that they were released from any further obligations to pay their subscriptions for stock. This circular letter was sent out in an effort to compromise their differences and to induce other parties to subscribe for stock, and did accomplish that purpose.
(1) In Gardner v. Ward, 99 Ark. 588, this court held that the compromise of a disputed claim is a sufficient consideration to uphold the terms thereof, even though the claim be without merit. So, too, in Fender v. Helterbrandt, 101 Ark. 335, the court held that the compromise of a disputed claim is a sufficient consideration to support an express promise although there may have been no merit or foundation for such claim.
(2) Again in S. H. Kress Co. v. Moscowitz, 105 Ark. 638, it was held that a compromise of a disputed claim furnished sufficient consideration to uphold the terms of a contract. Therefore we are of the opinion that the circular letter when received, its terms accepted and acted upon by the subscribers of stock, created a binding obligation on the part of the option holders and Messrs. Remmel and Rose.
(3) Again it is contended that Messrs. Remmel and Rose had no authority to send out the circular letter and to bind the option holders by its terms. We think the record warranted the chancellor in finding that they did have such authority. At least it clearly shows that their action was within the apparent scope of their authority and this was sufficient to bind appellants. The decree of the chancellor is right to the extent that it recognized the circular letter and the acceptance of its terms as imposing a binding obligation upon appellants, but we think the court erred in entering a decree against appellants in favor of appellees for specific sums set opposite the names of the respective appellees regardless of the debts of the company. To illustrate, there is a large indebtedness against the corporation and all its assets are charged with its payment. The corporation has something over 15,000 acres of coal lands and its indebtedness amounts to nearly $100,000.00. If the lands should be sold for $40.00 per acre, the proceeds of sale would have to be applied first to the payment of the debts of the corporation and this would absorb something more than $5.00 per acre of all the lands owned by the company and the remainder amounting to about $35.00 per acre on all the lands of the company would be required to pay the cash subscribers of stock; and there would be nothing left for the option holders. This would be inequitable and contrary to the terms of the agreement. The agreement contemplated that if the lands should be sold for more than $35.00 per acre that the option holders and Messrs. Remniel and Rose should be entitled to share ratably in the distribution of the assets of the company. The decree of the chancellor makes the shares of stock held by the option holders and by Messrs. Remmel and Rose under their agreement with the option holders, bear the whole indebtedness of the corporation. This was error. The shares of stock owned by the cash subscribers and the shares issued to the option holders and to Messrs. Remmel and Rose under their agreement with the option holders, should bear ratably the debts of the company, and the balance should be distributed ratably between them if the lands are sold for more than. $35.00 per acre. For instance, if the debts of the company amount to $100,000.00 and the coal lands of the company comprising some 15,000 acres are sold for $40.00 per acre, and the option holders and Messrs. Remmel and Rose under their contract with them, should own 51 per cent, of the shares of stock and the cash subscribers should own 49 per cent., the debts would have to be paid before any distribution of assets could be made, and of the remainder, the option holders and Messrs. Remmel and Rose under their contract with them would be entitled to 51 per cent, and the cash subscribers to 49 per cent. In this way, the obligation imposed by the terms of the circular letter would be upheld, and the assets distributed according to the intention of the parties as expressed by the terms of the circular letter.
From the views we have expressed, it follows that the decree should be reversed with directions to the chancellor to render a decree in accordance with this opinion.
It is so ordered.
