119 Ky. 393 | Ky. Ct. App. | 1905
Opinion of the court by
Reversing.
To induce the holding of the annual fair of the Kentucky Live Stock Breeders’ Association at or near the city of Owensboro for the year 1903, certain persons of that community gave to appellant association a writing obligating the subscribers to make up any loss that might be sustained by the association. The paper, omitting signatures, is as follows:
“The Kentucky State Fair to be held by the Kentucky Live Stock Breeders’ Association during the week beginning September —, 1903. For the purpose of having the above described fair in or near the city of Owensboro, and of providing a fund- to cover possible loss in giving said fair, the undersigned hereby subscribe the sums set. opposite their names on condition that not less than-are subscribed. The loss, if any, to be. divided among the subscribers to the fund in proportion that each subscription bears to the total amount subscribed.”
This suit was brought by the Kentucky Live Stock Breeders’ Association, and by the Citizens’ National Bank, which
A demurrer was sustained to the petition as amended, and the action was dismissed by the court. In an opinion delivered by the- learned chancellor who sat in the case it is disclosed that the court construed the writing sued upon to be a contract of indemnity against loss, several in nature, upon which no cause of action could be based until! the obligee had actually sustained loss, and had paid it. The petition disclosing that some part of the loss claimed was represented by the debt it owed the bank for borrowed money, and other parts- by unpaid bills or accounts against the association, the trial court was of the opinion, and) so held, that there was in fact no loss, inasmuch as it had1 not been definitely ascertained and1 actually paid. It was also thought
There is a class of liabilities that do not entail loss unless and until they are paid. Contingent and inchoate liability for the debts or doings of another may be so classed. But where one in his own business had expended more than the business had produced, whether the expenditure represented capital invested, or borrowed means, or property and labor bought upon the credit of the concern, the deficit is in fact and in commercial understanding a loss. If appellant association had borrowed all the money it expended, it would be no more a loss than it is now. Or if it had been settled by an assessment upon its stockholders, it would be the same thing. The fact is, the very contingency contemplated by the parties as a “possible” result of the venture has occurred. It follows that the undertaking of the subscribers to bear the failure to the extent indicated has become absolute.
The next question is, what is the extent of each subscriber’s liability ? The paper in terms limits it to a pro rata proportion of the total amount subscribed. No one guaranties the solvency of another, or that any other subscription-will be paid. The appellant association risked the solvency of each subscriber, and, where any are insolvent, the association will bear that loss. The question whether all- whose names appear on the paper as subscribers are in fact bound thereon is not yet fully presented.- Some who are apparently bound may be able to show that they were never bound, because, for example, they did not execute the paper. Others-may be held never to have been bound, because their undertaking was contrary to the purposes of their charter, as in cases of certain corporations, and the act would be, therefore, ultra vires. On what may, on the face, appear an ineffectual attempt to bind a trading partnership or corporation, may be
From what has been saidi, llie trial court can fix the liability or determine the nonliability of the putative subscribers. Those who never became- bound are not subscribers, and the pro rata liability of those who are bound will be measured without reference to those who escape because they were never bound. Under the Civil Code of Practice (section 26) persons severally liable upon the same contract may be included in the same action at the plaintiff's option. The nature of this case presents circumstances of great complication, and other difficulties in the way of adequate relief at law, sufficiently indicated by the facts above recited, that makes it more appropriate that it should be determined and
Judgment reversed, and cause remanded, with directions to overrule the demurrer to tlie petition as amended, and for further proceedings not inconsistent herewith.