Bushnell v. Elkins

• Decision Date: 20 April 1926
• Docket Number: 1238
• Citation: 34 Wyo. 495,245 P. 304
• Parties: BUSHNELL v. ELKINS [*]
• Court: Wyoming Supreme Court

245 P. 304

34 Wyo. 495

BUSHNELL v. ELKINS ^[*]

No. 1238

Supreme Court of Wyoming

April 20, 1926

APPEAL from District Court, Niobrara County; CYRUS O. BROWN, Judge.

Action by Charles T. Bushnell and another against Roy Elkins, on a promissory note given for a share of corporate stock. There was judgment for defendant and plaintiff appeals.

Reversed.

Thomas M. Fagan, for appellant.

The court erred in receiving parol testimony to vary the terms of a written instrument; Stickney v. Hughes, 12 Wyo 397; an unconditional promise in writing to pay, cannot be defeated by parol evidence; Hargin v. Pinkerton (Kan.) 204 P. 675; the court erred in refusing plaintiff permission to cross-examine with respect to alleged statements of guaranty; 12 R. C. L. 1053; the court erred in giving additional instructions after the cause had been submitted and in overruling plaintiff's motion for a judgment notwithstanding the verdict; the alleged misrepresentations were nothing more than expressions of opinion in regard to future happenings; a false representation must relate to facts to constitute actionable fraud; 12 R. C. L. 244-252; Stevens v. Inch (Kan.) 158 P. 43; Bank v. Swan, 3 Wyo. 356; a finding of fraud, without evidence, should be set aside; Dodd v McCrane (Ark.) 46 Am. Dec. 301; the cause should be reversed with directions to enter judgment for appellant.

Harold I. Bacheller and E. Paul Bacheller, for respondent.

No objections were made by appellant to the evidence of his own witnesses regarding false representations; 3 C. J. 816; 22 C. J. 195; Cronberg v. Johnson, 29 Wyo. 11; parol evidence is admissible to show the circumstances under which an instrument was executed; Stickney v. Hughes, 12 Wyo. 397; false representation concerning the ability of a proposed corporation to pay dividends may be the basis of fraud if recklessly made; 2 Flech. Cyc. Corps. 1339; the same rule applies to oral representations made in soliciting stock subscriptions; Brick Co. v. Collins, (Ark.) 135 A. S. R. 197; Brown v. Co., (Cal.) 136 P. 542; Hinkley v. Co., (Ia.) 119 A. S. R. 564; Savage v. Bartlett, (Md.) 28 A. 414; Ramsey v. Co., (Mo.) 22 S.W. 719; Campbell v. Co., (Utah) 148 P. 410; Mack v. Latta, 83 N.Y. 242; Motor Co. v. Thies, (Nev.) 65 P. 373; Phelps v. Grady, (Calif.) 141 P. 926; Bonding Co. v. Mount (Texas) 183 S.W. 783; Henry v. Building Ass'n., (Calif.) 105 P. 960; a promise of a salaried position as an inducement to purchase stock without intention of keeping it, is actionable fraud; Holmes v. Wilkes, (Minn.) 153 N.W. 308; U. C. J. 1093; and cases cited; Sweet v. Kimball, (Mass.) 55 A. S. R. 406 Vulcan Co. v. Mfg. Co., 248 F. 853; Goodwin v. Fall, (Me.) 66 A. 727; the rule applies to any promise made without intention of performance; Goodwin v. Horne, 60 N.H. 485; Bank v. Green, (Ia.) 115 N.W. 893; Carney v. Co. (Nebr.) 110 N.W. 882; Casper Motor Co. v. Marquis, 223 P. 764; Jenkins v. State, 22 Wyo. 34; the cause was properly submitted to the jury on the instructions of the court.

BLUME, Justice. POTTER, C. J. and KIMBALL, J., concur.

OPINION

BLUME, Justice.

This is an action brought by Charles T. Bushnell and Keeline Co-Operative Mercantile Company, a corporation, against Roy Elkins, on a promissory note for $ 200. The case was tried to a jury, which returned a verdict in favor of defendant, upon which judgment was entered and from which Charles T. Bushnell, hereinafter called the appellant, has appealed. The case has been tried twice. The first trial resulted in a disagreement of the jury and we have been asked by the attorneys for both parties to render a final judgment herein, either affirming the case or to direct a judgment in favor of the appellant.

About October 5, 1920, Roy Elkins, the respondent herein, and others, joined in signing the following statement:

"The undersigned, believing that a Co-operative store and shipping company on the ROCHDALE PLAN would be of great benefit to the people of Keeline, Wyo., and vicinity, do hereby subscribe for the number of Two Hundred Dollars ($ 200) shares, set opposite our respective names of the capital stock of such a company now being organized at Keeline, Wyo.

"We also hereby agree: --1st, to assist in incorporating the said company as soon as possible according to the law of Wyoming;

2nd, to settle for said share or shares by cash or note as soon as company is organized, and also to pay one membership fee of $ 10.00 which may be used for organizing expenses;

3rd, that the business and property of Chas. T. Bushnell shall be taken over according to the proposal hereto attached;

4th, that said proposal is hereby accepted by me."

The proposal attached, as above mentioned, is in the following words and figures:

"Merchants Proposal.

To the people of Keeline, and vicinity.

Believing that a co-operative buying and selling on the American Rochdale plan is the most just way of doing business, we hereby make the following proposition:

"As soon as 75 shares of capital stock of Two Hundred Dollars ($ 200) each have been subscribed for and a cooperative company known as the Co-Operative Company or some other appropriate name has been incorporated in accordance with the laws of this state, we agree to turn over to said company, our entire stock of general merchandise, fixtures, and unexpired Fire insurance policies, also the coal sheds and scales.

"An invoice of said stock shall be taken by two persons, one chosen by the President of the Co-Operative Company and one by me, and the prices allowed for said goods shall be on the basis of present wholesale cost, freight and cartage added.

"The fixtures and such goods as are old, or damaged shall be appraised by two persons so chosen, and in case they can not agree, they to choose a third party.

"We agree to give a clear bill of sale to the Co-Operative Company at the time the valuation is determined, of the stock and fixtures.

"I am to receive in cash and subscription notes such portion of the proceeds of the shares of stock sold and settled for as shall equal the agreed values of the stock and fixtures.

"If there remains any unpaid amount at the time of delivery of said bill of sale, I agree to take a promissory note executed by the directors of said company for the balance of the agreed value of the property thus transferred.

"The membership fees as collected by the company shall be used for organizing expenses and shall cover all costs for same to said company.

"That no member of this company shall hold more than One Thousand Dollars, $ 1000, in shares or have more than one vote.

"In Witness whereof I have set my hand this 5th day of October, 1920, at Keeline, Wyo. Niobrara County, State of Wyoming.

Chas. T. Bushnell."

The number of shares mentioned in the merchants' proposal aforesaid were duly subscribed. The respondent, Roy Elkins, subscribed for one share. On or about December 8, 1920, a corporation under the name of Keeline Co-Operative Mercantile Company was duly organized, as mentioned in the foregoing papers, under the laws of this state relating to co-operative associations, being sections 5119 to 5134, W. C. S. 1920, both inclusive. Bylaws of the said corporation were duly adopted on December 8, 1920, by the subscribers of the capital stock of the said corporation, and the respondent Elkins gave his promissory note of $ 200 on that date, in accordance with his subscription. The promissory note is an unconditional agreement to pay, is dated December 8, 1920, and was made due on or before the 8th day of December, 1921. It is given to said corporation and is endorsed by it, and it was, at the commencement of the action, owned and held by appellant. An invoice of the merchandise held by the latter was duly taken, in accordance with his proposal aforesaid, on December 11, 1920, the property invoicing the sum of $ 16,564.97, and it was duly transferred to said corporation, which thereupon engaged in the mercantile business and continued therein until about the time of the trial in this case, when apparently it became insolvent. Neither the appellant nor his agent ever acted as directors of the corporation, organized as aforesaid.

1. It is claimed by the respondent that there was no consideration for the note sued on, for the reason that no stock in said corporation was ever delivered to him. Appellant, however, secured the right to his stock by virtue of his subscription contract and the note which he executed pursuant thereto, and he thereby became a stockholder in the corporation, even though no certificate was issued to him. The issuance of the certificate was immaterial, except as evidence of his ownership of a share in the company. Mechanics' Savings Bank v. Gish, (Iowa) 200 Iowa 463, 203 N.W. 687, 692, and cases there cited. Further, appellant delivered to the corporation, organized as aforesaid, merchandise to the value of $ 16,564.97, and the corporation incurred an indebtedness and a liability to that amount, upon the strength of the subscription to the capital stock of said corporation and the execution of a note by respondent and his associates, and respondent is, accordingly, hardly in position, at this time, to claim that there was no consideration for the note.

2. The respondent pleaded and introduced testimony to the effect that in order to induce him to subscribe to the capital stock of said corporation, and to execute the promissory note aforesaid, appellant and his agent represented that it would be advantageous for respondent to buy his merchandise from the corporation aforesaid; that 8 per cent of such purchases would be credited upon said promissory note; that the note would be renewed from time to time until such credits of 8 per cent would pay the principal and the...