Thornburg v. Doolittle

148 Iowa 530 | Iowa | 1910

Ladd, J.

The petition alleged the sale of two mines > to the defendant and associates; that by their direction conveyances were executed to the Iowa-Oregon Company; that in consideration thereof they paid $10,000 down and agreed to pay a like amount within one year; and that plaintiff was to receive forty thousand shares of the capital stock of said company of the par value of $1 per share; that they entered into an agreement for the organization of said company with a capital stock of two hundred and fifty thousand shares; that by the terms of said agreement defendant became liable for $1,000 of the deferred payment, for which sum, with interest, judgment' was prayed. Subsequently, the petition was amended by alleging the execution of the deeds, furnishing of the abstracts and that the company had taken possession of the mines. The answer, as amended, interposed a general denial, save as otherwise appeared therein, admitted the execution of the contract, averred that it was without consideration, and was procured by fraud, in that plaintiff falsely represented that he had paid $20,000 for one-half of the mines, and that each of two subscribers had paid the amounts respectively subscribed and pleaded settlement. He further alleged that one hundred and sixty thousand shares of capital stock had never been deposited with the First National Bank of Baker City, Ore., as stipulated in the contract. The last allegation, with some others, was stricken on motion.

i. Abstracts of title: agreement to furnish same: I. After plaintiff’s evidence in chief had been introduced, defendant asked that a verdict be directed in his favor, for that such an abstract of title to the mine as agreed had not- been furnished; that the petition did not allege, nor the evidence prove, that plaintiff had deposited capital stock with the bank as required by the contract. An amendment to the petition, alleging the furnishing of abstracts, and that the company had taken possession of the mines, was filed. In permitting this, there was no abuse of discretion. The evidence disclosed that abstracts were furnished to and retained by the company, that it had taken possession of the mines, that for a part of the time they were under the supervision of defendant, and that the stockholders, nearly three years after the making of the contract, entered into an agreement to exchange the property and stock for Missouri land. These circumstances sufficiently established the acceptance, of the titles to the mines as in compliance with the contract.

,, tract^of sale" purchase °f pnce: tender, The second ground involved the construction of the contract therein challenging the sufficiency of the petition, which also was done by motion in arrest of judgment. It will be noted that the petition proceeds on ^he theory that plaintiff had sold to defendaXLt and his associates certain mines. We -¿pg evidence bears this out. The contract recited that plaintiff had executed deeds of the mines which “shall be delivered” to the company, and that in consideration thereof defendant and his associates “agree to pay for one-half of the capital stock of” said company $10,000 in cash, and a like amount in one year, each to pay, in proportion to the amount subscribed, the entire amount to go to plaintiff. The conveyance of the mines to the company, and not the stock, was the consideration for which defendant and his associates undertook to pay the $20,000. What follows fixes the interest of the respective parties in the company. Its capital stock was to be two hundred and fifty thousand shares of the par value of $1 each. Plaintiff was to have hálf of this stock, and defendant with his associates one-half, but from each half forty-five thousand shares were to be contributed to the treasury; the remaining one hundred and sixty thousand shares were to be deposited in the First National Bank of Baker City, Ore., and plaintiff was not to sell any of his one-half within a year; forty thousand shares were to be issued to defendant and his associates and left in the bank until the deferred payment was met; but the board ,of directors of the company was authorized to procure of the bank any number of these on payment of twenty-five cents a share, the bank to insert the number of shares and the names of the parties entitled thereto in the stock certificates and forward to the secretai'y of said company to be properly executed. The moneys so paid were to be applied on the deferred payment, and, upon full payment, the bank was to deliver this first forty thousand shares and enough stock to make up the last forty thousand shares. It was expressly agreed,' however, that defendant and his associates should pay, or cause to be paid, into the bank, the entire $10,000 within one year, “binding themselves individually each for his proportionate share as indicated by the number of shares of stock held by him, but nothing herein shall be construed to hold any of said second parties liable for any greater part of the said sum of ten thousand dollars than is by himself subscribed and paid,”

3. Same: consideration. 'The defendant’s portion of the deferred payment was $1,000, and there is no pretense that he ever paid the same to the bank, and, unless released therefrom, this was owing plaintiff, not for stock, as assumed appellant, but as part of the consideration for the conveyance of the mines to the company. The contract is silent as to who was to organize the company; but it plainly indicates that this was to be done for the purpose of acquiring and operating the mines. The objects to be accomplished through the stipulation with reference to the issuance and distribution of stock were: (1) The awarding to each the interest in the mines to which he was entitled; (2) the procurement of funds for the operation of the mines through the sale of treasury stock contributed by the stockholders' ratably; (3) the security of the deferred payment owing by defendant and others by the deposit of the stock with the bank. That the shares of stock to be issued to defendant and his associates were so held plainly appears from last clause of the contract authorizing the board of directors to sell the shares of any delinquent and apply the proceeds upon the amount due from him. And the parties to the agreement so construed the depositing stock as being for the security of plaintiff. One of the subscribers, B. B. Keltz, testified to having issued, as secretary, certificates for one hundred and sixty thousand shares, one-half of which was sent directly to the plaintiff. Though forty thousand shares issued to defendant and his associates were to be deposited with the bank, they were delivered to them, and the remaining certificates for the forty thousand shares were sent by Keltz to plaintiff’s attorney, who retained them as collateral security on the deferred payments. The defendant knew this, and, upon being employed by plaintiff to collect the several amounts subscribed by his associates, arranged that plaintiff send certificates of stock as payments were, made, Being held as security, the defendant is not entitled to the certificate of four thousand shares until payment of the debt has been effected. It follows that there was no error in permitting recovery in the absence of the delivery or tender of the stock.

4. abstract of title I evidence of aeiecrs. II.The ninth division of the answer was rightly stricken, for that plaintiff was not required to deliver an abstract of title to defendant 0r any of the subscribers, and the allegation that he had not done so constituted no defense.

The exclusion of the testimony of defendant concerning a conversation about the abstract was without prejudice, for the defect referred to was subsequently cured and the title accepted.

s'Same. Sfcratl-act? evidence. III. The shareholders of the Iowa-Oregon Company negotiated a contract for the exchange of the stock therein for Missouri land, and this was signed by all the shareholders, including defendant. This was received in evidence over objection. It was admissible as tending to prove an acceptance of plaintiff’s performance of the agreement. Surely, after the company received the deeds to the mining claims and the abstracts of title thereto and retained them without objection for more than two years, an agreement of all the alleged purchasers of the mines to transfer the claims with their shares for land was material and competent evidence of acceptance.

6' vIí.uE”Cha?mess rr r' IV. II. O. Hyatt had been manager at the mines a year-and worked at other mines, but said he was unable to say what these were worth. He was then asked, “What in your opinion was the fair value of this mine in the fall of 1904 ?” Over defendant’s objection that the witness had stated he did not know and was not qualified to answer, he was permitted to say, “Why, we considered the mine worth $50,000 when we-A motion to strike the answer as not competent was overruled. That this was error appears from Clausen v. Tjernagel, 91 Iowa, 285. This was without prejudice, however, for its only bearing was on the plea of want of consideration, and defendant disposed of this by admitting as a witness that the mines were worth $1,000.

Some other matters are mentioned in argument, but none requiring discussion.

The judgment is affirmed.