Chesley v. Soo Lignite Coal Co.

• Decision Date: 15 May 1909
• Citation: 121 N.W. 73,19 N.D. 18
• Parties: CHESLEY v. SOO LIGNITE COAL CO. et al.
• Court: North Dakota Supreme Court

19 N.D. 18

121 N.W. 73

CHESLEY

v.SOO LIGNITE COAL CO. et al.

Supreme Court of North Dakota.

March 11, 1909.

Rehearing Denied May 15, 1909.

Syllabus by the Court.

A rescission of an express contract renders the same of no force or validity so far as its enforcement or damages for its breach are concerned; but the implied obligation of the parties to restore everything of value received thereunder remains in force, and may be enforced after rescission.

Under section 4698, Rev. Codes 1905, making officers, agents, and stockholders of nonresident corporations doing business within this state without complying with the statutes thereof “liable on any and all contracts of such corporation * * * made within this state,” these officers, agents, and stockholders are liable on the implied contracts or obligations of such corporations to return everything which was received by the corporation under an express contract with it by a party who has rescinded the express contract.

Appeal from District Court, Cass County; C. A. Pollock, Judge.

Action by J. A. Chesley against the Soo Lignite Coal Company and others. Judgment for plaintiff, and defendants appeal. Affirmed.Engerud, Holt & Frame, for appellants. Ball, Watson, Young & Lawrence, for respondent.

MORGAN, C. J.

The Soo Lignite Coal Company is a corporation organized under the laws of the state of South Dakota, and was engaged in the business of operating a coal mine in Pennington, in this state. The defendants Ball, Hollister & Welton were officers of said corporation during all the times covered by the transactions hereinafter set forth. The plaintiff was during all the time mentioned engaged in the business of selling coal in the city of Fargo. In February, 1904, he made a contract with said Soo Lignite Coal Company, by which he was to take 1,000 shares of stock in said company at the agreed price of $1,000, and he was also to receive the exclusive agency for the selling of that company's coal in Fargo, and he had a further right under said contract to receive each year 1,000 tons of the coal mined by said company at a reduced cost, the same to be shipped by the company whenever ordered by the plaintiff. Under the terms of said contract plaintiff was to execute to the said coal company 10 notes for the sum of $100 each, to be due at stated times therein set forth, and the plaintiff did execute and deliver to said company the 10 notes as provided for by the contract. The defendant Ball, as president of said company, indorsed said notes, and the same were transferred to the Merchants' State Bank of Fargo by the defendant Hollister. The money received upon the transfer of the notes was turned over to said coal company, and was used by it for its own business purposes. Among the other considerations for said contract between the plaintiff and said company was the promise of said company that it would convey 11 lots in the town of Pennington to the plaintiff. The stock certificates of said company to the amount of 1,000 shares, and also the deed to the said lots in the town of Pennington were deposited with the Northern Trust Company for the plaintiff, but he never demanded their possession, although he was notified that they were in the office of said trust company subject to his order, and the same were never, as a matter of fact, taken by the plaintiff. In the month of February, 1904, the plaintiff ordered two car loads of coal from the defendant company under the terms of said contract, but the coal was never shipped to him, nor delivered to him in any way. The notes which the officers of the company transferred to the Merchants' State Bank were protested for nonpayment, and were thereafter paid by the plaintiff prior to the commencement of this action. On the 22d day of April, 1905, the plaintiff canceled and rescinded the contract upon the ground that he was induced to make it by the false and fraudulent representations of the defendant company's agents, and upon the further ground that the company had failed to perform its agreement, and had not complied with the law of this state relating to foreign corporations.

The action came to trial before a jury, and at the close of the testimony the plaintiff and each of the defendants moved for a directed verdict. The court denied the defendants' motion, and, in pursuance of a direction of a verdict in plaintiff's favor, the jury brought in a verdict against the defendants for the sum of $1,091.89. The defendants Ball, Hollister & Welton thereafter moved for a judgment notwithstanding the verdict, and for a new trial, if such motion for judgment was denied. These motions were severally denied by the court, and the defendants appealed from said order and from the judgment entered on the verdict of the jury. The ground on which the trial court directed a verdict against all the defendants was that the defendant coal company never complied with any of the provisions of sections 4463, 4695-4697, Rev. Codes 1905. These sections pertain to the filing of a copy of the charter of corporations organized under the laws of a foreign state with the Secretary of State and the appointment of a resident agent upon whom service of process can be had and the doing of certain other acts by them before they are authorized lawfully to transact business in this state. The liability of the defendants in this case is based by the plaintiff, and it was sustained by the trial...