Central of Georgia Ry. Co. v. Woolfolk Chemical Works, Limited

• Decision Date: 13 November 1970
• Docket Number: No. 2,No. 45529,45529,2
• Citation: 122 Ga.App. 789,178 S.E.2d 710
• Parties: CENTRAL OF GEORGIA RAILWAY COMPANY v. WOOLFOLK CHEMICAL WORKS, LTD. Oct, 26, 1970. Rehearing Denied
• Court: Georgia Court of Appeals

Page 710

178 S.E.2d 710

122 Ga.App. 789

CENTRAL OF GEORGIA RAILWAY COMPANY v. WOOLFOLK CHEMICAL WORKS, LTD.

No. 45529.

Court of Appeals of Georgia, Division No. 2.

Oct, 26, 1970.

Rehearing Denied Nov. 13, 1970.

Certiorari Granted Jan. 11, 1971.

Syllabus by the Court

1. (a) Where a contract or undertaking is personal, it binds only the original parties and those who may assume the obligation or ratify or adopt the contract, even though the contract contains a provision that it is binding upon the successors and assigns of one of the contracting parties.

(b) A third person may assume the obligation of a contract expressly in writing, or he may do so by implication where his conduct manifests an intent to become bound. In the latter event all the relevant circumstances must be considered.

(c) In the instant case defendant, as the party moving for summary judgment, has not carried its burden of proving that it did not assume the obligations of the contract sued upon.

2, 3, 4. Nor has defendant carried its burden of proving its defenses that the claim is barred by the statute of limitation, that the contract sued upon is void as being illegally in restraint of trade and against public policy, and that the action is barred because of waiver of breach of other provisions of the contract.

In 1925 Central of Georgia Railway Company and J. W. Woolfolk entered into a contract for the arrangement of a spur or sidetrack facility to serve Woolfolk's business in Fort Valley, Ga. Woolfolk incorporated the business, and in 1938, and again in 1939, similar agreement were entered into between the railway and the J. W. Woolfolk Company, the corporation, for the purpose of extending the sidetracks. All the contracts contained the following provisions:

'The Tenant will not place or permit to be placed within eight (8) feet of the center line of straight track, or within ten (10) feet on curves, anything which is higher above the ground than the leval of the top of the rail, nor will the Tenant place or permit anything to be placed where it will project over the said tracks unless it clears the top of the rail by at least twenty-two (22) feet.'

'The Tenant also agrees to indemnify and hold harmless the Railway Company for loss, damage or injury from any act or omission of the Tenant, its employees or agents, to the person or property of the parties hereto and their employees and to persons or property of any other person or corporation, which in or about said tracks; and if any claim or liability other than from fire shall arise from the joint or concurring negligence of both parties hereto it shall be borne by them equally.'

The 'Tenant' in the 1925 contract was Woolfolk, the individual, and in the 1938 and 1939 contracts it was the J. W. Woolfolk Company, the corporation. 'Tenant' was defined in all the contracts as follows: 'The word 'Tenant' as used herein shall include any person or persons, firm or corporation, singular or plural, party of the second part hereto, his, its or their heirs, executors, administrators, successors or assigns, and any person or corporation who may be operating said plant, or using said track, or who may enter upon the above described premises, as his, its or their successor, licensee or assignee.'

On June 28, 1941, the J. W. Woolfolk Company made a conveyance of all its assets to its shareholders to be effective as of April 30, 1941, and on July 15, 1941, filed a petition for dissolution. On the same date the shareholders, and other members of their families, filed a certificate of limited partnership in the name of Woolfolk Chemical Works, Limited, which was to be effective as of May 1, 1941, the day after the effective date of the conveyance of assets to the shareholders. On August 9, 1941, a decree of dissolution of the corporation was entered. Woolfolk Chemical Works, Limited, the partnership, continued to operate the business, and in 1943 erected a loading platform adjacent to the sidetrack. The platform has been used continuously by the partnership since its erection, and the sidetrack running alongside it has been used continuously by the railway prior to and subsequent to its erection. The platform violated the clearance provisions contained in the railway's contracts with Woolfolk and the corporation set forth above, and in 1964 one of the railway's employees was caught between it and a moving railway car and was injured. The platform and the sidetrack on which the car was moving were both located on land contained in the conveyance of assets from the corporation to the shareholders.

The employee sued the railway under the F.E.L.A. in Alabama State Court, but before the action was tried the railway settled the case by paying $60,000 to the employee. The railway then brought the instant suit against Woolfolk Chemical Works, Limited, on the indemnity agreement contained in the contracts with the dissolved corporation. The trial court granted summary judgment for defendant partnership, and the railway appeals.

Harris, Russell & Watkins, John B. Harris, Jr., Macon, George B. Culpepper, Jr., Ft. Valley, for appellant.

Shoob, McLain & Jessee, C. James Jessee, Jr., Atlanta, Robert E. Lanyon, Ft. Valley, for appellee.

EBERHARDT, Judge.

1. Defendant urges as the first point in support of its motion that it did not assume any of the obligations or liabilities of the dissolved corporation and was not its successor or assign under the contracts containing the indemnity agreements. Plaintiff railway does not urge that the indemnity agreement was a covenant running with the land rather than a personal undertaking. See Atlanta Consol. Street Ry. Co. v. Jackson, 108 Ga. 634, 638(2), 34 S.E. 184; Waycross Air-Line R. Co v. Southern Pine Co., 115 Ga. 7, 10, 41 S.E. 271; Willcox v. Kehoe, 124 Ga. 484, 52 S.E. 896; Jones v. Brown, 156 Ga. 452(2), 119 S.E. 624; Grant-Jeter Co. v. American Real Estate Co., 159 Ga. 80, 125 S.E. 73; Cravey v. Druggists Co-Operative Ice Cream Co., 66 Ga.App. 909, 19 S.E.2d 845; Goldberg v. Varner, 72 Ga.App. 673, 34 S.E.2d 722; James Talcott, Inc. v. Roy D. Warren Commercial Inc., 120 Ga.App. 544, 171 S.E.2d 907. Where a contract or undertaking is personal, it binds only the original parties and those who may assume the obligation or ratify or adopt the contract, even though the contract contains a provision that it is binding upon the successors and assigns of one of the contracting parties. See, in addition to the above authorities, Greer v. Pope, 140 Ga. 743, 747(3, 4), 79 S.E. 846; Mitchell v. Atlas Roofing Mfg. Co., 246 Miss. 280, 149 So.2d 298 and authorities cited.

A third person may, or course, assume the obligation expressly in writing, or he may do so by implication where his conduct manifests an intent to become bound. Greer v. Pope, 140 Ga. 743, 79 S.E. 846, supra; Gregers v. Peterson Ice Cream Co., 158 Cal.App.2d 746, 323 P.2d 572; Walker v. Phillips, 205 Cal.App.2d 26, 22 Cal.Rptr. 727; McGill v. Baker, 147 Wash, 394, 266 P. 138; Corvallis & A.R. Co. v. Portland E. & E.R. Co., 84 Or. 524, 163 P. 1173. In the latter event all the circumstances must be considered, such as the subject matter of the contract, the third person's acts and words, whether he acquiesced in the terms of the contract, performed its obligations, or accepted its benefits. Thus in Greer v. Pope, 140 Ga. 743, 79 S.E. 846, supra, Pope and Ballard entered into a contract with Greer and others whereby the latter would be accorded a telephone line and connections with Pope and Ballard's telephone exchange. The contract was declared to be 'binding upon the assigns and heirs of (Pope and Ballard), so that the same shall be operated against all persons holding under them.' Pope and Ballard then 'incorporated their telephone interests' into the Monticellor Telephone Company, and that company subsequently sold and transferred its property to Southern Bell which took with notice of the prior contract. Greer and others then sued Pope and Ballard, the Monticello Telephone Company, and Southern Bell seeking specific performance or, in the alternative, damages for breach of the contract for failure to render service in making telephone connections. As to the Monticello Telephone Company, while the evidence was 'very meagre,' the Supreme Court held that 'there was enough to authorize the jury to infer that the company assumed the obligations of Pope and Ballard to the plaintiff.' This evidence consisted of an admission in the pleadings that Pope and Ballard, after incorporating, accepted and transacted business according to the prior agreement, and testimony to the effect that the corporation continued to perform the contract until the business was sold to Southern Bell. As to Southern Bell, the Supreme Court held that the evidence was not sufficient to show that it had become bound to perform the contract by assuming its obligations, the evidence showing only that it had notice of the contract when it purchased the business and that it performed under it for two months when it discontinued the telephone service.

Similarly, in Gregers v. Peterson Ice Cream Co., 158 Cal.App.2d 746, 323 P.2d 572, supra, a distributor and producer of dairy products entered into a contract whereby the producer was obligated to supply, and the distributor to buy, products at fixed prices. The producer then sold its going business to a third party 'free from all liabilities and encumbrances,' and the contract was not specifically assigned by the producer to its successor in the business. The agreement and bill of sale of the business provided that the producer would no longer engage in the business being sold. One month after the sale the producer's successor attempted to bill the distributor at a new price, and the distributor sought a declaratory judgment that the successor had assumed the producer's obligation to supply the products at fixed prices. The California court held that the evidence supported the...