Jamestown Portland Cement Corp. v. Bowles

228 Mass. 176 | Mass. | 1917

Rugg, C. J.

These are suits in equity for the specific performance of an alleged contract. The first is brought by the Jamestown Portland Cement Corporation, a Virginia corporation, and four individuals in their capacity as a committee acting for certain stockholders in that corporation against the individual defendants as subscribers to an agreement to take stock in a proposed Massachusetts corporation and against that corporation, called the Yorktown Cement Corporation. The material averments are that the plaintiff corporation owned valuable marl and clay lands in Virginia, but was in financial difficulties. The defendant Bowles made an examination of the property and issued a prospectus according to which it seemed that these lands were capable of profitable development for the manufacture of cement. A subscription agreement was prepared, which the defendants signed, wherein they severally agreed each with the other, in consideration of the mutual agreements therein contained, to take the number of shares of preferred and common stock respectively of the Yorktown Cement Corporation (a proposed Massachusetts corporation) set opposite their respective names and to pay therefor according to terms stated. It was recited that the stock was to be a part of the issue referred to in the Bowles prospectus, and to be issued substantially upon the terms therein specified. That prospectus contained a description of the property and capitalization of the plaintiff corporation, and a statement that counsel advise that “a new corporation be formed to take over the property of the present [¡that is the plaintiff] corporation and receive the new money.” This was followed by an outline of the proposed capitalization of the new Massachusetts corporation, the terms upon which stockholders in the old corporation might exchange that stock for stock in the new corporation, and the amounts of stock proposed to be sold for cash and to be kept in the treasury.

Signature to this subscription agreement and the payment to a designated individual of a percentage upon their subscriptions (subsequently returned to the subscribers after deduction of expenses), together with the facts that that agreement was circulated for the purpose of securing subscriptions, that it was oversubscribed, and that information to this effect was communicated to the plaintiff corporation, are the grounds of the alleged liability of the defendants.

The bill avers that these facts constituted "an offer by and from said syndicate subscribers to the plaintiff corporation and its stockholders for a purchase, sale and reorganization by the syndicate subscribers in accordance with the plan outlined.” The acceptance of the offer is alleged to have taken place, through a vote of the directors of the plaintiff corporation “to accept, so far as they then had authority to accept,” and through the organization of a committee of the stockholders of the plaintiff corporation and a deposit of a large part of such stock with a depository with powers to complete the alleged agreement.

These allegations fall far short of setting out a binding contract on the part of the defendants as subscribers of the subscription agreement with the plaintiffs or any of them. There was no offer on the part of the subscribers addressed directly or indirectly to the plaintiffs. Manifestly the basis of the whole scheme was the land owned by the plaintiff corporation. But no obligation to buy it is set forth in the terms of the subscription agreement. No price is fixed. No terms of payment are stated. No proposal is to be found in the subscription agreement on the part of the subscribers to take over the property of the old corporation or the stock in it. The property was to be taken over by the proposed new corporation; but that is the only element looking in the direction of a contract between the parties to this suit which can be found in the agreement when read in connection with the prospectus. This alone without other necessary elements' does not constitute a contract. The ingenious suggestion that a price for the property of the plaintiff corporation may be conjectured from the difference between the cash subscription price of shares in the new corporation and the terms upon which shareholders in the old corporation might exchange for stock in the new is in itself uncertain. Moreover, the signed documents are not reasonably susceptible of such construction. The simple matter of price in a sale is not wrapt in such obscurity in ordinary transactions.

It hardly needs to be said that business agreements are to be construed so as to carry into effect commercial transactions plainly contemplated, and that corporate forms are not permitted to be used as a fraudulent protection to wrongdoers. Martin v. Meles, 179 Mass. 114. Sherwin v. Fletcher, 168 Mass. 413. Mills v. Potter, 189 Mass. 238, 243, 244. Athol Music Hall Co. v. Carey, 116 Mass. 471. Brightman v. Bates, 175 Mass. 105. Pennell v. Lothrop, 191 Mass. 357. J. J. McCaskill Co. v. United States, 216 U. S. 504, 515. But these undoubted principles do not warrant a court in asstuning a contract to exist where none can be found in the written instruments, oral negotiations and conduct of parties.

The subscription agreement with the Bowles prospectus had an important function: The two papers stated the rights and duties respecting the proposed adventure of the persons who signed. It bound them to important obligations in that regard. But it did not purport to bind them to other persons who were not parties to it, even though they ultimately might be affected by subsequent stages in the development of the plan, provided they then became subject to contractual obligations. That agreement does not constitute an offer to buy the property of the plaintiffs or any of them. Negotiations, proposals or schemes which do not possess the essential elements of a contract cannot be specifically enforced by order of a court of equity. |j There cannot be specific performance of anything short of a completed contract. The bargain must be determined by a meeting of minds as to the essential terms before there can be a contract. No vital factors of it can be left to future negotiation. It must be wholly settled as to obligation and duty imposed before it can be ordered to be executed by chancery. ;

The bill fails to set out an enforceable contract between the plaintiffs or any of them with the defendants or any of them. Being deficient in this respect, no relief can be granted. Fogg v. Price, 145 Mass. 513, 515. Grace v. Denison, 114 Mass. 16. Emerson v. Somerville, 166 Mass. 115, 116. Hudson Real Estate Co. v. Tower, 156 Mass. 82. Pray v. Clark, 113 Mass. 283. Domestic Telegraph & Telephone Co. v. Metropolitan Telephone Co. 12 Stew. 160.

The allegations of the bill in the second suit brought by a member of the committee of stockholders of the plaintiff corporation are indistinguishable from those of the first bill in the particulars in which that has been held fatally defective.

Order in each suit dismissing hill affirmed with costs.