Busch v. Stromberg-Carlson Telephone Mfg. Co.

CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)
Citation217 F. 328
Decision Date12 October 1914
PartiesBUSCH et al. v. STROMBERG-CARLSON TELEPHONE MFG. CO.

217 F. 328

BUSCH et al.
v.
STROMBERG-CARLSON TELEPHONE MFG.
CO.

United States Court of Appeals, Eighth Circuit.

October 12, 1914


Syllabus by the Court.

The decisions of questions of fact upon the weight of conflicting evidence in the trial of an action at law without a jury are not reviewable in the national courts.

An agreement whereby each of 56 subscribers covenants with the others, with a corporation, and with its manager, to sell at par or to take and pay at that rate for the amount of bonds of the corporation maturing 20 years later set opposite his name, in consideration of the covenants in such agreement of the corporation and its manager to sell and deliver to him or to others that amount of bonds at that rate and to pay him 5 per cent. commission in cash and 40 per cent. in full-paid unassessable stock of the corporation for selling or purchasing the subscribed bonds, is an 'underwriting,' a contract to insure the sale of the bonds at par, and, if they are not sold, to buy them at that price, and not a mere contract to make a loan to the corporation. Neither the subsequent insolvency of the corporation nor the subsequent depreciation or worthlessness of the bonds and the stock constitutes any defense to an action against a subscriber for his breach of his agreement.

Where acts are stipulated to be done at specified times by one covenant of a contract, and acts are stipulated to be done without fixing any time for their performance by another covenant thereof, the latter covenant does not condition the former, is independent of it, and a breach of the latter constitutes no defense to an action for a breach of the former.

The same rule generally governs where acts are stipulated by one covenant to be done at different times from those fixed by another covenant for the performance of other acts.

The subscribers agreed to take and pay for the bonds at times specified in the underwriting, if not sold to others before that time. Just before the defendant signed the underwriting, the corporation, at the demand of the defendant and other St. Louis directors, agreed to build a plant at St. Louis costing about $1,000,000, and the defendant thereupon raised his subscription from $50,000 to $100,000. This agreement fixed no time for the erection of the plant, and was neither embodied nor referred to in the underwriting and the plant was never built.

Held, these facts constituted no defense to an action against the defendant for a breach of his contract to sell or take and pay for the bonds at the agreed times.

An underwriting is assignable.

The measure of damages for the breach by a subscriber of his contract of underwriting is the difference between the price at which he agreed to insure the sale or to purchase the securities and their value. [217 F. 329]

Franklin Ferriss, of St. Louis, Mo. (Allen C. Orrick, of St. Louis, Mo., on the brief), for plaintiffs in error.

Irvin V. Barth, of St. Louis, Mo. (Warwick Hough and Warwick M. Hough, both of St. Louis, Mo., and Hubbell, Taylor, Goodwin & Moser, of Rochester, N.Y., on the brief), for defendant in error. [217 F. 330]

Before SANBORN and CARLAND, Circuit Judges, and REED, District Judge.

SANBORN, Circuit Judge.

The complaint of the plaintiffs in error is that a judgment was rendered against Adolphus Busch, the defendant below, for $27,636.67, because he failed to pay the last installment of $20,000 of his subscription of $100,000 to an underwriting contract for the bonds of the United States Independent Telephone Company, a corporation. A jury was waived, and at the request of both parties the court made a special finding of the facts in this case. Exceptions were taken to some of the findings, and to some failures to find as requested, but an examination of the record has convinced that there was substantial evidence to sustain the findings made, and that the evidence in support of the material findings requested and refused was not conclusive; so these exceptions are here dismissed. The decisions of a court in the trial of an action at law without a jury upon the weight of conflicting evidence are not reviewable in the national courts. Gibson v. Luther, 196 F. 203, 204, 116 C.C.A. 35, 36.

The defendant was one of the directors of the telephone company and the first of about 56 subscribers to sign the underwriting. This contract was made on November 23, 1895. By it Mr. Busch subscribed for $100,000 at par value of the bonds of the telephone company, which were secured by the pledge of personal property under a collateral trust agreement, and agreed to pay the amount of this subscription in five equal installments on February 1, 1906, May 1, 1906, August 1, 1906, November 1, 1906 and February 1, 1907, respectively. He paid the first four installments and took $80,000 of the bonds, which were dated October 2, 1905, and were to mature October 1, 1935, and $32,000 at par full-paid, nonassessable stock of the company; but when the last installment of his subscription fell due, the company, which had been prosperous and promising when he made his subscription, had become insolvent, and he declined to pay it.

The main contention of counsel for the plaintiffs in error is that the underwriting agreement is a mere executory contract to loan money to the telephone company, and not an agreement to insure the sale of or to purchase its bonds, and that there can be no lawful recovery for the breach of such a contract by a subscriber: (1) Because an action for specific performance will not lie; (2) because the breach causes no damage, for the agreement to repay the loan offsets the contract to make it; (3) because no recovery can be had for a refusal to advance money on overdue bonds; and (4) because the insolvency of the company and the worthlessness of the bonds releases from the previous obligation to loan to it.

Conceding, without admitting that this might be the result if the underwriting were a mere contract to loan money, let us see if it was such an agreement. It is entitled 'Underwriting Agreement.' It recites that the telephone company has authorized the issue and the securing of the payment of its bonds, that it has sold or agreed to sell a part of them, that it desires to sell an additional $2,500,000 thereof to finance its future business 'and to secure the underwriting of said $2,500,000 bonds or such portion thereof as it shall not sell,' and that the [217 F. 331] manager has acquired $1,000,000 of the stock of the telephone company (which the record shows had been previously acquired and donated to him by stockholders), and that the company has...

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11 practice notes
  • Portner v. Tanner, 1060
    • United States
    • United States State Supreme Court of Wyoming
    • 17 Julio 1923
    ...54 N.E. 1050; Paine v. Brown, 37 N.Y. 228; Ballou v. Billings, 136 Mass. 307; King v. Faist, 37 N.E. 459; Busch v. Stromberg-Carlson Co., 217 F. 328, S. C. 133 C. C. A. 244; Kokomo Co. v. Inman, 134 N.Y. 92; Frost v. Knight, L. R. 7 Ex. 111; National Co. v. Vulcanite Co., 78 N.E. 414; Remy ......
  • In re Danville Hotel Co., No. 260-D.
    • United States
    • United States District Courts. 7th Circuit. United States District Court of Northern District of Indiana
    • 15 Junio 1929
    ...when considered in its entirety was that of an underwriter of bonds, as defined in Busch v. Stromberg-Carlson Telephone Mfg. Co. (C. C. A.) 217 F. 328, Stewart v. Miller & Co., 161 Ga. 919, 132 S. E. 535, 45 A. L. R. 559; 1 Cook on Corporations (7th. Ed.) 74, and 1 Fletcher, Cyc. Corporatio......
  • Combined Metals, Inc. v. Bastian, 4362
    • United States
    • Supreme Court of Utah
    • 12 Marzo 1928
    ...Cullum, 92 U.S. 447, 23 L.Ed. 496, is a leading case. To the same effect are the cases of Busch v. Stromberg-Carlson Tel. Mfg. Co. (C.C.A.) 217 F. 328, and Allen v. Bissinger, 62 Utah 226, 219 P. 539; Williston on Contracts, § 111; Philpot v. Gruninger, 81 U.S. 570, 14 Wall. 570, 20 L.Ed. 7......
  • Stewart v. Stewart, (Nos. 4829, 4830.)
    • United States
    • Supreme Court of Georgia
    • 26 Febrero 1926
    ...is to be construed as equivalent to the term 'commission.' " Id. J 453, and note. In the case of Busch v. Stromberg-Carlson Tel. Mfg. Co., 217 F. 328, 331, 133 C. C. A. 244, 247, it was held that an underwriting[132 S.E. 539]contract is not a contract to make a loan, but is one to insure th......
  • Request a trial to view additional results
11 cases
  • Portner v. Tanner, 1060
    • United States
    • United States State Supreme Court of Wyoming
    • 17 Julio 1923
    ...54 N.E. 1050; Paine v. Brown, 37 N.Y. 228; Ballou v. Billings, 136 Mass. 307; King v. Faist, 37 N.E. 459; Busch v. Stromberg-Carlson Co., 217 F. 328, S. C. 133 C. C. A. 244; Kokomo Co. v. Inman, 134 N.Y. 92; Frost v. Knight, L. R. 7 Ex. 111; National Co. v. Vulcanite Co., 78 N.E. 414; Remy ......
  • In re Danville Hotel Co., No. 260-D.
    • United States
    • United States District Courts. 7th Circuit. United States District Court of Northern District of Indiana
    • 15 Junio 1929
    ...when considered in its entirety was that of an underwriter of bonds, as defined in Busch v. Stromberg-Carlson Telephone Mfg. Co. (C. C. A.) 217 F. 328, Stewart v. Miller & Co., 161 Ga. 919, 132 S. E. 535, 45 A. L. R. 559; 1 Cook on Corporations (7th. Ed.) 74, and 1 Fletcher, Cyc. Corporatio......
  • Combined Metals, Inc. v. Bastian, 4362
    • United States
    • Supreme Court of Utah
    • 12 Marzo 1928
    ...Cullum, 92 U.S. 447, 23 L.Ed. 496, is a leading case. To the same effect are the cases of Busch v. Stromberg-Carlson Tel. Mfg. Co. (C.C.A.) 217 F. 328, and Allen v. Bissinger, 62 Utah 226, 219 P. 539; Williston on Contracts, § 111; Philpot v. Gruninger, 81 U.S. 570, 14 Wall. 570, 20 L.Ed. 7......
  • Stewart v. Stewart, (Nos. 4829, 4830.)
    • United States
    • Supreme Court of Georgia
    • 26 Febrero 1926
    ...is to be construed as equivalent to the term 'commission.' " Id. J 453, and note. In the case of Busch v. Stromberg-Carlson Tel. Mfg. Co., 217 F. 328, 331, 133 C. C. A. 244, 247, it was held that an underwriting[132 S.E. 539]contract is not a contract to make a loan, but is one to insure th......
  • Request a trial to view additional results

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