68 Colo. 121 | Colo. | 1920
Lead Opinion
delivered the opinion of the court.
The defendant in error brought suit below against the Plains Iron Works Company and others to recover $10,000' in money and to enforce specific performance of an agreement to give him 250 shares of stock in said company, all as a “commission”' or compensation for services. The suit was also upon two claims, assigned to him by one Hallman and one Gaiser, for 25 shares each of said stock, for services alleged to have been rendered by them. The decree required the defendant company to pay the $10,000 with interest and required defendant Hubbell to transfer to plaintiff 299 shares of the stock on the three claims. The court found generally the truth of the complaint and made specific findings. Defendants bring error.
The defendant McConney had an option on the property of the F. M. Davis Iron Works, insolvent, in the hands of a receiver, and the complaint alleges that “it was agreed between the said McConney and the said Haggott, that
We do not decide the question whether the transactions upon which this action is founded were such that plaintiff is not here with clean hands.
We shall treat the complaint as if the words “undertake to interest” read “succeed in inducing.”
It is this contract between McConney and Haggott, as set up in the complaint, on which the judgment (as to Haggott’s services) against the Plains Company is based. It was not in writing. Haggott procured one Tully, since de
The defendant corporation was formed, pursuant, as plaintiff claims, to this agreement, the option was assigned, and March 21st, 1916, the Iron Works property was conveyed to it, and one share each issued to the five directors. June 19, 1917, shares were issued, 249 to McConney, held by Hubbell as trustee, and the remaining shares to Hubbell as trustee for various parties.
The complaint alleges that the Plains Company adopted and assumed the McConney-Haggott contract, but defendant’s counsel contend that no adoption or assumption of the contract by the Company is shown by the evidence, 'and that therefore the judgment against it is erroneous.
No express assumption by the Plains Company is shown, but the plaintiff relies upon the familiar principle that when a contract is made by promoters or others, to be performed by a corporation not yet formed, such corporation,- when formed, is bound by such contract, if, with knowledge, it accepts the benefits thereof; and claims that the defendant company, knowing all the facts, accepted the option and property and is therefore bound to carry out the contract.
There is here no contract purporting to be a contract between McConney and Haggott on the one side and the unborn corporation on the other, as in some cases, e. g., Bommer v. Am. Spiral Co., 81 N. Y. 468. Nor is there evidence of any agreement between Haggott and Tully, Lowe and Hubbell that the company should do anything or become liable on the contract between them and him; there is alleged simply an agreement that they would give him $10,000 and 250-shares of stock or cause the company to assume that obligation, in which case they should be exonerated. • ,
If a corporation when 'formed accepts the benefits of a contract previously made in its name or for its benefit, under such circumstances as to make itself liable thereon, it becomes liable because the law implies the assumption of the burdens in consideration of the benefits.- The principle is the same as that in the implied promise in assumpsit, the consideration having been accepted the promise is conclusively presumed, and need not be otherwise proved, because the conduct of defendant is inconsistent with any other supposition.
But what implication is there in the present case, in the acceptance by the company of the property or the option'?
Tully, Lowe and Hubbell, by the terms of the contract, had their choice either to cause the company to assume the contract with Haggott, and so free themselves, or to continue to bear the liability themselves, in which case it is clear that the company was not to be liable. The acceptance by the company of the option and property was consistent with either alternative, assumption of liability by it or continuance of liability by the three promoters; therefore it gives rise to a presumption of neither.
Again: It seems impossible that the company should issue the ten per cent of the stock to Haggott under the terms of the arrangement set up in the complaint as quoted above, because it is prometed there that all the stock should be issued for the purchase of the iron works and then be distributed to Haggott and the others.
The complaint alleges that the contract which is the basis of the suit provided that the stock should be issued by the company in payment for the property, and we must presume that this was done because no other consideration for its issue appears and because no consideration except its issue appears for the conveyance of the property to the
It follows from the foregoing that the specific finding of the court that there was an agreement between McConney and Haggott that the Plains Company should adopt the agreement for commissions was not in accordance with the pleadings and the finding that the assignment of the option to the Plains Company was “on the condition that the said company should pay the said Warren A. Haggott and the said R. B. McConney $10,000 each” and issue them stock, and the finding that 299 shares were at all times “held in trust by said Plains Company for the use and benefit of said” Haggott, Gaiser and Hallman are without evidence to support them and are not in accordance with the contract set up' in the complaint.
If, however, Tully, Lowe and Hubbell, in consideration of the transfer of the option, agreed with Haggott that his contract with McConney should be carried out and 250 shares distributed to Haggott after the issue of the stock in payment for the property, then the provisions in the decree that the stock be transferred from Hubbell to Haggott would be correct but for the fact that, by the terms of the complaint, he and Tully and Lowe are exonerated and that the decree is insufficient in this, that it does not disclose who of Hubbell’s cestuis qui trustent should bear the loss. The amount of their several interests does not appear. There are several of them who are not parties to this suit. The suit must fail without them unless they are sufficiently represented by their trustees. That, however, seems doubtful.
The decree in form renders a judgment in general terms against all the defendants fori the cash commission with
Haggott has given the heirs and estate of Tully a receipt in full. This receipt he said referred only to a certain transaction concerning stock therein mentioned, although in terms it is a receipt for all matters. Since the court found that the allegations of the fifth defense, in which accord and satisfaction and this receipt are set up, were not true, we suppose that the testimony of Mr. Haggott must have been taken as sufficient to vary the meaning of the receipt in his own handwriting. This might be done by the court, since a receipt has not the characteristic of a contract, which may not be varied by parol testimony. The same may be said of the accord and satisfaction with Hubbell, also stated in the fifth defense, the facts of which are similar except that there was no written receipt.
As to the claims of Hallman and Gaiser, assigned to Plaggott, the evidence is that the agreement was made for services which they had rendered. The only evidence of any services performed by them is that they procured Tully and Lowe and sold or tried to sell stock in The HydroCarbon Products Company, called the Carbon Company. Upon the employment of Haggott by McConney to get somebody to capitalize the proposed corporation, he, Haggott, employed Hallman and Gaiser to help him and they procured Tully and Lowé and Tully and Lowe-afterwards procured Hubbell. If we assume that Tully, Lowe and Hubbell
(Want of consideration is not pleaded, but need not be. Alden v. Carpenter, 7 Colo. 87, 92.)
The judgment should be reversed with leave to amend or re-plead and a new trial granted.
Allen, J. and Scott, J. dissent.
Judgment Reversed.
Rehearing
On Motion for Rehearing.
En Banc.
We adhere to our former opinion though not to all the inferences that seem to have been drawn from it: It should be understood that we do not detérmine whether his cestuis qui trustent can be represented by Hubbell, and, if