Gambar halaman

sequently took over the entire property, good will, and business of the old concern at Bemidji, which, though not dissolved, ceased to do business at that place. The Trade Company was at this time indebted to the Merchants' National Bank of Crookston, of which defendant herein was president, in the sum of about $2,000. Prior to and during the proceedings for the reorganization, negotiations were had between the officers of the corporation and defendant Stephens, representing his bank, for a loan of money to enable the new concern to complete the construction of a cold storage plant which the Trade Company had commenced, but had not completed. After the organization of the Produce Company, the secretary thereof, after so negotiating with Stephens, reported to the board of directors, at a meeting held on March 9, 1907, that Stephens, for the bank, would advance to the new concern money to complete its plant, on condition and consideration that the Produce Company convey to him certain real property received by it from the Trade Company, upon which was situated the cold storage plant referred to, as security for the repayment of advances to be made and also the payment of the $2,000 indebtedness of the Trade Company. That the proposition was then submitted to the board of directors there is no substantial controversy. That it was at that meeting accepted by the board two members of the board affirmatively declared. The third member, who was called as a witness, said that the matter was discussed, but he had no recollection of an acceptance being made at that time. The court was justified in finding that soon after this meeting Stephens was informed of this acceptance; and, while the evidence is not as clear as might be desired, it sufficiently appears that he was so informed prior to March 23, 1907. On that date there was another meeting of the directors of the Produce Company, at which the following resolutions were adopted: “Resolved, that A. D. Stephens of Crookston, Minnesota, be and is hereby appointed trustee of the real property of the Northland Produce Company, to hold same in trust and as security for loans made to said company by said A. D. Stephens, trustee, or by the Merchants' National Bank of Crookston, Minnesota, and that said property be deeded to said A. D. Stephens as Such trustee. “Be it resolved, that John D. Lunn, secretary and treasurer, is hereby authorized to borrow from said A. D. Stephens, trustee, of said bank, a sum of money not to exceed seven thousand ($7,000) dollars, and shall give for the same a note or notes of this company, executed in corporate form, and,

shall give in writing to this company an agreement to deliver by warranty deed said real property back to said company, upon full payment of the company's obligation to him, A. D. Stephens, or the Merchants' National Bank by said company.” But the resolutions, which were recorded in the minutes of the meeting, were never called to the attention of Stephens or the bank, and there is no evidence that Stephens knew anything about them. But the evidence does show—at least, tends to show —that the transaction was completed, the property deeded to Stephens, and the money advanced by the bank, upon the basis of the proposition which was accepted at the March 9th meeting of the board of directors. The secretary of the Produce Company, who was also its general manager, and who, acting for the corporation, closed the transaction, Stephens, and MacGregor, who as cashier of the bank accepted the deed, all so testified. The bank thereafter advanced from time to time $5,000 to the Produce Company, and the same has been repaid in full. The plaintiff thereafter brought this action to compel a reconveyance of the property so transferred to Stephens; a reconveyance having been refused by him until the Trade Company debt was paid. This the plaintiff refused to pay, claiming that the deed was not given as security therefor, but solely for the advances to be made to the Produce Company. The trial court in substance and effect found that the Produce Company assumed that debt, and that the deed was executed and delivered as security for its payment, as well as for the payment of advances to be made the new Company, and ordered judgment for defendant. Plaintiff appealed from an order denying a new trial. It is contended by plaintiff on this appeal (1) that the findings of the trial court, in respect to the assumption of the debt of the Trade Company and that its payment was secured by the deed, are not sustained by the evidence; (2) if the findings be held supported by the evidence, that the contract was beyond the authority and power of the plaintiff corporation, and ultra vires and void; and (3) that a new trial should be granted for errors committed on the trial in rulings on the admission and exclusion of evidence, and also for misconduct on the part of the trial Court. [1] 1. The contention that the evidence fails to support the findings must be resolved against the plaintiff. Within the rule guiding this court in such cases, we have only to inquire whether the evidence is clearly and palpably against the findings. If there be evidence in the record fairly tending to support the findings, they must be sustained. MacGregor all testified to the facts essential to support the findings, and it was for the trial court to say whether they told the truth, or whether their version of the transaction was the mere framework of an afterthought. Witnesses Lunn and Russell testified to the fact that the board of directors accepted defendant's proposition to advance money to the new corporation on consideration that the debt of the old concern be secured by the trust deed. If this testimony be true, a contract was then entered into between the parties, even though it was not reduced to writing or spread upon the minutes of the corporation. It is well settled that a private corporation is bound by its parol contracts, except, perhaps, where by law they are required to reduce their agreements to writing. Cyc. 1031; Ten Eyck v. Railway Co., 74 Mich. 226, 41 N. W. 905, 3 L. R. A. 378, 16 Am. St. Rep. 633. The claim that this was the contract between the parties is corroborated by the subsequent conduct of plaintiff. In May, following the completion of the bargain and the execution of the deed, the Produce Company made a payment upon the old debt, and applied for and obtained an extension of the time of payment of the balance due thereon. The letter so remitting the payment and asking for an extension was written upon the letter paper of plaintiff, and was signed in plaintiff's name by its secretary. And, though it appears that the affairs of both corporations at the time were conducted by the same persons, it was for the trial court to say whether this application was in the interests of plaintiff and for its benefit, or for the benefit of the old company. Again, the contract claimed is not at all unusual in such cases. Here the old company was indebted to defendant or his bank, and had sold and transferred all its property, assets, and business to the new company. Defendant had the right, before the transfer, at least, to resort to that property for the payment of his debt. The new company required more money for the completion of the plant started by the old, and in view of the transfer of the entire property and business at Bemidji, practically all the old concern possessed, it was perfectly natural that defendant insist that in consideration of further advances the new concern pay the old debt, since it owned or was about to acquire all the property. Some confusion appears in respect to the matter by subsequent correspondence upon the subject. But this correspondence, the trial court may well have determined, concerned only the amount which defendant had agreed to advance. He insisted that the amount was to be limited to $5,000; this, including the old, making the total debt $7,000. While Lunn, the secretary,

seems by his letters to have understood the agreement to be for an advance of so without regard to the old debt. It was for

the trial court to reconcile the conflicts in the evidence and to ascertain the facts.

[3] The resolution of March 23d contains no reference to the old debt, but this is not conclusive against defendant. It was not adopted by the corporation at his request, nor had he any notice of the same. He was not required, before trusting the company, to ascertain what its records contained. Hastings Malting Company v. Iron Range Brewing Company, 65 Minn. 28, 67 N. W. 652. Records of private corporations are at most only prima facie evidence, are not conclusive upon strangers to the corporation, and are open to contradiction or explanation by parol evidence. State v. Guertin, 106 Minn. 248, 119 N. W. 43, 130 Am. St. Rep. 610. If this resolution was intended as an expression of the contract as authorized by the meeting of March 9th, it was incomplete, and cannot be held to abrogate the agreement theretofore entered into by the acceptance of defendant's proposition at that meeting, especially so since defendant was not informed thereof before completing the transaction.

The fact that defendant brought an action against the Trade Company upon the old debt, and recovered therein a judgment against it, is of no special significance. Under the contract as claimed by defendant, plaintiff was at most only secondarily liable for that debt, and it is quite clear that defendant cannot be held to have lost or waived his rights against plaintiff by attempting to collect the debt from the principal debtor. It was for the trial court to say whether this act on the part of defendant tended, and, if so, to what extent, to contradict his theory of the contract. We therefore conclude, though the evidence is conflicting in some material respects, that the case is not brought within the rule which justifies this court in holding that the trial court proceeded clearly and palpably against the evidence.

[2] 2. The further contention that the contract, conceding it to have been made as claimed by defendant, was beyond the authority of the corporation and void, is not sustained. Plaintiff having succeeded to all the rights, property, good will, and business of the Trade Company, and, to enable it to complete the plant so acquired and to continue the business, having obtained a loan of money from defendant in consideration of its agreement to pay the debt of its predecessor, even if beyond its powers as limited by its charter, will not, having received all the benefits of the transaction, be permitted to plead its want of authority to enter into the agreement. Hunt v. Hauser Malting Co., 90 Minn. 282, 96 N. W. 85; Central Bldg. Ass'n v. Lampson, 60 Minn. 422, 62 N. W. 544; Moore v. County, 104 Minn. 30, 115 N. W. 750; Clearwater County Bank v. Bagley-Ogema Tel. Co., 133 N. W. 91, recently filed.

3. The other assignments of error present no sufficient reason for granting a new trial. The pleadings, properly construed, presented the issues substantially as covered by the findings, and there is no substantial basis for the contention that plaintiff was in any way prejudiced or prevented from presenting all its objections and defenses to the alleged contract. The question whether plaintiff was released by an extension of the time of payment granted by defendant to the Trade Company was not involved under the pleadings, nor does the record disclose that plaintiff was prevented from presenting the question by any action or ruling of the court. The trial court found that plaintiff “assumed” the old debt, and it is claimed that the answer of defendant made no such claim. That by the transaction plaintiff became responsible for the payment of the debt, the contract having been made as claimed by defendant, seems quite clear. It is immaterial, then, whether it be said that plaintiff assumed or agreed to pay it, or its liability be expressed in some other language.

The order appealed from is affirmed.

LEWIS, J. I dissent. The secretary of the plaintiff, Lunn, and the vice president, attested the minutes, as written up by Lunn, of the meeting held March 9th, and also of the meeting held March 23d. Conceding that some sort of a proposition was submitted by Lunn to the directors at the meeting of March 9th, there is no tangible evidence that a final resolution was then

passed, or at any other meeting, by which the corporation assumed the debt of the Trade Company, or authorized the directors to deed the real estate over to Stephens for security for such a debt. The record absolutely contradicts Lunn's testimony that he must have failed to record in the minutes the resolution which he thinks was passed March 9th. His evidence is contradictory and unsatisfactory, and it should not be accepted as sufficient to impeach his own record, solemnly made and attested by himself and another officer. That the talk, whatever it was, between the directors at the meeting of March 9th, was not final and binding upon the corporation, conclusively appears by the action of the board at the subsequent meeting of March 23d. Lunn participated in the proceedings of that meeting, and deliberately took part in the passage of a resolution which denied the authority claimed. Whatever money was loaned by the bank or Mr. Stephens was subsequent to the meeting of March 23d, and unquestionably was in pursuance of the authority thereby conferred. There is no evidence that the money was loaned to the plaintiff company in reliance on the action of the board of directors at the meeting of March 9th. In fact, Mr. Stephens repudiated all agreements to extend credit by his letter of June 28th. I register my protest against impeaching such a record by the character of evidence here relied on, and I consider the evidence so manifestly and palpably against the decision that a new trial should be granted.

[ocr errors][ocr errors][graphic][graphic][graphic][graphic][graphic]

PFEIFFER. v. NORMAN. (Supreme Court of North Dakota. Oct. 26, 1911.)

(Syllabus by the Court.)

1. SALEs (§ 481*)—CoNDITIONAL SALES-REcovery of PURCHASE Money PAID—PLEADING—“REscIND”—“CANCEL.” The effect of a pleading is not necessarily determined by the technical definition of a single word. Words used in a pleading must be construed with reference to the context, and, when it is apparent that a word is not used in its statutory sense, courts will interpret it in the light of its relation to and as explained by the pleadings as a whole. Held, in the case at bar, that the words “rescind and cancel,” employed in the pleadings, and particularly in the answer of the defendant, are modified by other language of the pleadings, and that they are not used to indicate a statutory rescission of a contract. [Ed. Note.—For other cases, see Sales, Dec. Dig. § 481.* For other definitions, see Words and Phrases, vol. 1, pp. 949–951; vol. 7, p. 6139.]

2. SALEs (§ 479*)—CoNDITIONAL SALEs—OPEBATION of ContRACT-TITLE. A conditional sale contract does not convey title, and if its terms provide therefor it entitles the vendor to retake possession of the property described therein, on default by vendee, if it has previously been delivered to him ; and the rights of the vendee are terminated when this is done. [Ed. Note.—For other cases, see Sales, Cent. Dig. §§ 1418–1438; Dec. Dig. § 479.”]

3. SALEs (§§ 469, 479*)—CoNDITIonAL SALES —RETAKING PoSSESSION.—DEMAND AND NOTICE. Under the contract considered in this case, the title remained in the vendor until all the conditions of the contract should be performed by the vendee, and under its terms, the facts showing that the vendor retook possession of the property on consent of all interested parties, no demand or notice was necessary, and the contract relations of the parties were terminated when the vendor retook the property. [Ed. Note.—For othér cases, see Sales, Cent. Dig. § 1357; Dec. Dig. §§ 469, 479.”]

4. SALEs (§ 481*)—CoNDITIONAL SALES.–REcovery of PURCHASE MONEY PAID. In the absence of any statutory provision on the subject, it is held that when a conditional sale contract permits the termination thereof on default of the vendee, and the vendor retakes possession of the property involved, as he had a right to do, the vendee cannot recover, in an action at law, partial payments made on such contract; and to hold otherwise would be to offer a bounty for the violation of contracts. [Ed. Note.—For other cases, see Sales, Cent. Dig. §§ 1449–1455; Dec. Dig. § 481.*]


covery of PURCHASE Mon EY PAID.

If the parties to such a contract enter into

a new contract at the request of the vendee, after the vendor has resumed possession, and their former contract relations have ceased, this does not entitle the vendee to recover payments made under the original contract.

[Ed. Note.—For other cases, see Sales, Dec. Dig. § 481.*]

6. SALEs (§ 481*)—CoNDITIonAL SALFs—RETAKING PossFSSION.—DEMAND AND NOTICE. Any rights which may have accrued to the vendee to notice or demand, although time was

made of the essence of the contract involved in this suit, were waived. [Ed. Note.—For other cases, see Sales, Dec. Dig. § 481.*] Appeal from District Court, Grand Forks County; Templeton, Judge. Action by William Pfeiffer against M. Norman. From a judgment on motion for judgment notwithstanding the verdict or for a new trial, plaintiff appeals. Affirmed.

W. J. Mayer, for appellant. Murphy & Duggan, for respondent.

SPALDING, J. The material facts in this case are as follows: On the 22d day of October, 1906, respondent delivered to one Downey certain furniture, rugs, window shades, etc.; the value and price of each article being agreed upon in the contract entered into. Such contract provided that Downey had purchased of respondent the temporary right to the furniture and property therein named, and that by prompt payment of certain sums monthly to respondent, amounting in the aggregate to the price placed upon the property, the respondent should execute to him a bill of sale. The last payment became due February 2, 1907. The agreement contained certain provisions regarding the care and use of the chattels and the further provision that, if he should make default in any of the payments agreed to be made or in any of the conditions of the contract, the respondent was authorized and empowered at his election at once without notice to resume possession of said property and to take the same wherever situated, but in such case all payments theretofore made should be forfeited to the use of the respondent; and that, if the same should deteriorate or be damaged more than by ordinary wear and tear, he should be entitled to resume possession at once and without notice and in the same manner as if default had been made in any of the other conditions. Time was made of the essence of the contract.

The evidence shows that payments were made by the purchase of feed from a firm of which Downey was a member, on the agreement that the purchase price should be applied on this contract. A balance still remained due when this action was brought and tried, and Downey misused the furniture and other materials and abandoned it. Thereupon, and with the consent of Downey and appellant, respondent took possession thereof. Downey subsequently requested that he be allowed to complete payment therefor, but no payment was made after May 11, 1907, and after storing it for two years respondent sold the goods at private sale. In the meantime Downey's firm dissolved partnership, and he assigned all his claims to a repayment of the payments made on such chattels to the appellant, his former partner, and in September, 1909, appellant brought this action to recover the whole amount paid.

*For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key No. Series & Rep'r Indexes

It is only necessary to give a brief abstract of the complaint. It alleges the purchase of the chattels by Downey; the price to be paid therefor; that by the terms of their agreement respondent was empowered to rescind the same for failure to perform on the part of Downey; the payments made; and that respondent, having elected to rescind said contract, seized and repossessed himself of the goods and disposed of the same to his own use; the assignment of Downey's claim to appellant; and a demand for a return of all the money paid on the contract to the respondent and the refusal of such demand. The answer contains the usual qualified general denials; admits the execution of the contract, and a difference in the articles in price, which difference is sustained by the evidence without conflict; an allegation that Downey failed to pay any part of the price of such property and delivered all of the same to the defendant for storage at the rate of $2 per month; that it was stored by him for two years; that he repeatedly requested Downey to pay for the same, but that he failed to do so; that no notice of any transfer of any obligation to the appellant was ever given respondent; and an admission of partial payment, through the purchase of feed of appellant's and Downey's firm, and that it was credited to the account of said Downey. The answer contains a further allegation that in “the month of January, 1909, respondent elected to reScind and cancel said contract for the reason that no other settlement of said contract seemed probable and the goods were constantly deteriorating in value; that it had been used and marred and injured and was of the value of $35 and no more.” It also sets up a counterclaim against the appellant for goods sold him, which it is unnecessary to further notice, as the amount involved is not in controversy, neither is the validity of the counterclaim. No demurrer or motions were interposed to the answer, and the case was duly tried to a jury. After both parties had rested, respondent moved for a directed verdict, on the ground that the facts proved were insufficient to constitute a cause of action in any sum, and that upon the pleadings and proof it conclusively appeared that Downey was indebted to the respondent in the sum of $19.50, and that if the plaintiff was the owner of the rights and burdens of Downey he was indebted to the respondent in the sum of $31.15, and upon other grounds which are immaterial. The motion was denied, and the jury returned a verdict in favor of appellant for $40.75 damages, whereupon respondent submitted a motion for judgment non obstante veredicto or for a new trial, in brief upon the grounds stated in his motion for a directed verdict. This motion

respondent for $12, a portion of the counterclaim. From this judgment an appeal was duly perfected. After considering the record, we are satisfied that only two questions are presented: (1) What was the effect of the pleadings upon the issue; and (2) the nature of the contract between respondent and Downey, and the rights of the parties under it. [1] 1. The appellant's case is built up on the theory that, because he pleads a rescisSion of the contract by the respondent, and that in his answer the respondent admits a rescission, appellant is entitled to a return of all sums paid. It is contended by the respondent that the word “rescission” was “artlessly” used in his answer, and that it is not to be taken in the sense or meaning that the respondent had elected to rescind in such a sense that he must return everything of value received from appellant or Downey. We find several authorities which use the word “rescind” or “rescission” to designate the act of taking possession of property sold on a conditional sale contract, wherein Such taking possession is not construed as a technical, legal rescission, entitling the vendee to recover payments made. Patterson v. Murphy, 41 Neb. 818, 60 N. W. 1; Bryson v. Crawford, 68 Ill. 362. But it is elementary that the words of a pleading must be conStrued with reference to the context. When the answer of the respondent is read as a whole, and particularly the allegation in which the word “rescission” is used, we are Satisfied that a fair construction of its terms does not lead to the conclusion that he was pleading a rescission in the statutory sense. The answer must also be read in the light of the allegations of the complaint. Appellant set out in effect the terms of the agreement by which Downey received possession of the furniture, and then in construing the terms of such agreement, which was received in evidence, he alleges that under its terms the respondent is authorized and empowered to rescind the same, etc.; and that, having elected to rescind said contract, he Seized and repossessed himself of the goods. The respondent in his answer, after setting out the terms of the contract and other items of defense, alleges that the defendant did elect to rescind and cancel said contract for the reason that no other settlement of Said contract seemed probable, and the goods were constantly deteriorating in value, and under the terms of said agreement said defendant, as authorized by said contract of sale, possessed himself of the said furniture. We think that the meaning of the words “rescind” and “cancel” is modified by the later allegation explaining how he rescinded and canceled said contract, namely, by retaking possession thereof, which he was authorized to do by the contract, and that the only interpretation which can properly be placed upon the allegation of the respond

« SebelumnyaLanjutkan »