149 Iowa 429 | Iowa | 1910
Plaintiff brings this action at law stating his claim and cause of action substantially as follows: On. and prior to June 10, 1893 the Oxford State Bank was a corporation organized under the laws of this state with banking powers and doing business at Oxford. It had a paid-up capital stock of $25,000, divided into two hundred and fifty shares of $100 each, and one hundred and forty of said shares, representing 11/25 of said stock, were owned and held by the defendants herein, Lewis Linebarger and H. Linebarger & Son. On the date named defendants sold and transferred their said shares of stock in said bank in varying amounts to seventeen different persons as follows:
To N. Crow............................... 5 shares
“ Jas. Flannery ..........................10' “
“ Joe Yokum.............................10 “
“ M. Ackerman .......................... 1 “
“ H. Linebarger .......................... 3 “
“ C. C. Oakes..........'..................10 “
“ E. A. Doty ............................10 ■ “
“ E. D. Jones............................ 3 “
“ M. McDonough......................... 5 “
“ L. R. Wolfe ...........................20 “
“ James Burns ...........................20 “
“ J. P. Oakes............................10 “
“ Sarah Burnett.......................... 5 “
“ W. G. Williams.......................... 5 «
“ Jas. Stratton ........................... 5 “
“ Fred Rapp............................. 5 «
“ Carl Gergenheimer ......................10 “
At the time of said sale, Lewis Linebarger was its president, Fred Rapp vice president, and H. N. Linebarger cashier. The sale of said stock was effected at the agreed price or book value of $125 per share. Among the bills receivable of the bank at the date of the sale were two promissory notes representing the aggregate principal sum
Articles of agreement, made and entered into this 10th day of June, 1893, by and between LI. Linebarger & Son and Lewis Linebarger, parties of the first part, and Fred Rapp, vice president, and H. N. Linebarger, cashier of the Oxford State Bank, parties of the second part, witnesseth: That the said first parties have this day sold to Jas. Burns, L. R. Wolfe, Fred Rapp, J. P. Oakes, James Sherlock and others, one hundred forty (140) shares of the capital stock of the Oxford State Bank, and they, the said first parties, II. Linebarger & Son and Lewis Linebarger, guarantee to the said purchasers of said stock, or their successors, should all or any of them sell said stock, fourteen twenty-fifths (14/25) of the loss if any occur to said second parties caused by the said bank losing any or all of two certain promissory notes or any part thereof, belonging to the said Oxford State Bank described as follows and indorsed by the Northwestern Guaranty Loan Co. of Minneapolis, Minn, (said corporation being in the hands of a receiver) ; one dated April 19, 1893, for $1,000 due four months after date without grace, signed by A. B. Morgan and payable at American Exchange National Bank of New York City, and known as discount number 14,456 N. W. Guar. Loan ¿lumber 10,002; one of $2,500, dated December 16, 1892, due five months after date without grace, signed by Edward H. Carroll and payable at American Exchange National Bank of New York City. Entered upon the books of said Oxford State Bank and known as discount number 13,423. N. W. Guar. Loan Co. number 8,577. The said second parties agreeing to wait for pay*433 ment until tbe affairs of the Northwestern Guaranty Loan Co. have been fully settled. The said second parties agree to transfer to said first parties fourteen twenty-fifths (14/25) interest in said claims after first, parties have been paid the said 14/25 of loss, if any, of said claims to second parties. The officers of the said Gxford State Bank agree to use due diligence in the collection of the above-described notes. Dated at Oxford, Iowa, this 10th day of June, 1893, H. Linebarger & Son.' Bred Rapp, Y.-P. Lewis Linebarger. H. N. Linebarger, Cashier.
It is further alleged that though due diligence has been exercised, it has been found impracticable to make collection of said notes, whereby loss has occurred to the purchasers of said stock, all of whom have assigned their claims arising upon said obligation to the plaintiff. Upon these allegations he seeks to recover an amount equal to the 14/25 of the sum remaining due upon said worthless notes. To this petition the defendants demurred upon grounds which may be abbreviated as follows: (1) The alleged written contract is too vague, uncertain, and indefinite to be capable of legal enforcement. (2) There is a defect of parties, in that H. N. Linebarger, who is named in the contract, is made neither plaintiff nor defendant in this proceeding. (3) The contract is to pay losses incurred by the “second parties” named in the writing, and no loss to them is alleged. (4) No consideration is shown for the agreement. The writing shows affirmatively that there was no consideration. (5) There is shown no privity between the parties of the second part and the purchasers of the stock. The demurrer being sustained, the plaintiff elected to stand on his pleading, and, judgment being entered against him for costs, he appeals.
Applying these rules to the contract here in controversy, and looking at the facts admitted by the demurrer, the parties are revealed in the following situation. The defendants, owning a controlling interest in the bank, were desirous of selling their stock and had arranged to dispose of their shares in varying proportions to seventeen different purchasers. The value of the shares depended, of course, upon the value or amount of the net assets of the bank, and in arriving at such value for the purposes of the sale the two promissory notes in question were treated as being good and collectible. Defendants knew that these notes were of little value and likely to result in loss to the bank and ultimate loss to the stockholders; but that fact was unknown to any of the purchasers of the stock except ifapp, the vice president, who took five of the shares. It was not yet certain that the notes would prove a total loss, for the corporation w'hich had indorsed them was then in the hands of a receiver, and how much, if anything, would be realized upon the bank’s claim was unknown. It is manifest there
Had the writing in express words named all of the several purchasers as obligees, its validity as an enforceable contract would be open to no reasonable doubt. So, too, had the writing expressly described Rapp and Linebarger “parties of the second part” as trustee for the benefit of all the purchasers, little, if any, difficulty would be found in upholding the right of the said purchasers to the benefit of the' obligation thus assumed by the defendants. But, even in the absence of express words, is not such the reasonably clear and natural effect of the language actually employed ? It does expressly recite the sale of the shares to the several purchasers and the possibility of loss to the latter by reason of the doubtful character of the notes, and then proceeds to guarantee said purchasers and their successors in the ownership of said shares against loss on account of said notes to an amount equal to 14/25 of the shrinkage thus resulting in the assets of the bank. It is hardly necessary to say that the trust or representative character of the agreement is not necessarily negatived by the failure to describe the parties
Defendants concede that they executed and delivered the paper on which the action is based. It must be presumed that they intended thereby to agree to something. Mature men of business experience acting honorably and fairly, as we must presume defendants to have acted in this transaction, do not ordinarily put their names to contracts without intending to bind themselves to some act or course of conduct on which he to whom or for whom it was given may rely and for the performance of which they will hold themselves responsible. It is possible, of course, that an agreement may be so grossly obscure and uncertain that, when tested by all the rules of construction, the real meaning and purpose of the parties can not be unraveled; but instances of this nature ' are very rare, and the courts are always reluctant to uphold such an objection.
It follows, from what we have said, that the demurrer to the petition should have Been overruled. The judgment of the district court will he reversed, and the cause remanded for further proceedings in harmony with the views here expressed. — Reversed.