Chicago Bldg. & Mfg. Co. v. Beaven

• Decision Date: 21 June 1912
• Citation: 149 Ky. 267,148 S.W. 37
• Parties: CHICAGO BLDG. & MFG CO. v. BEAVEN et al.
• Court: Kentucky Court of Appeals

148 S.W. 37

149 Ky. 267

CHICAGO BLDG. & MFG CO. v. BEAVEN et al.

Court of Appeals of Kentucky.

June 21, 1912

Appeal from Circuit Court, Marion County.

Action by T. A. Beaven and others against the Chicago Building &amp Manufacturing Company. From the judgment, defendant appeals and plaintiffs Peterson, Walker, and Mattingly prosecute a cross-appeal. Affirmed upon the cross-appeal, and reversed on the original appeal.

John McChord, of Lebanon, for appellant.

H. W Rives, Proctor K. McElroy, and W. W. Spalding, all of Lebanon, for appellees.

MILLER J.

This is the second appeal of this action. The opinion delivered upon the first appeal may be found in 133 Ky. 596, 118 S.W. 384 and contains a correct statement of the facts out of which the litigation grew and the principal portions of the contract sued on.

Briefly stated, the Chicago Building & Manufacturing Company (hereinafter called the Building Company for brevity) entered into a written contract with 55 farmers residing in the neighborhood of St. Mary's in Marion county, whereby the Building Company agreed to erect a creamery or butter factory for the sum of $4,950. Each subscriber bound himself to pay $100 for one share of stock in a corporation to be organized, in case the contract should become effective. The contract was tentative in its nature, and only bound the subscribers thereto in the event that $5,500, which was necessary to erect the creamery and start it in business, should be raised, and certain other specified facts should be found to exist. That feature of the contract is contained in this provision:

"It is agreed by the respective parties to the attached creamery contract, that when the required stock has been subscribed thereto, said subscribers will meet and choose an executive committee, as provided in said contract, and they may then, if they desire, select an investigating committee, consisting of one or two of said executive committee, who shall, at the expense of second party therein, immediately visit factories erected by second party on this co-operative system. If said investigating committee, after full investigation of said factories and books of same, find that a factory run upon this system pays from 6 to 10 per cent. upon the investment, and that the milk of the cow, when handled by such a factory, averages at the rate of $35 to $60 per cow, in a year, then this contract shall remain in full force and effect. But if said committee certify hereon that such evidence is found to be otherwise, said attached contract shall be canceled by second party and be delivered to said committee to be by them destroyed."

The contract further provided that, in the event the foregoing facts were found to be true, and the contract should become operative, the subscribers should then appoint a building committee, which should procure a suitable site for the creamery and superintend the building of it. This portion of the contract may be found in the former opinion on page 599.

After the $5,500 had been subscribed, an organization meeting was held in the depot at St. Marys, pursuant to a notice given to all the subscribers. It appointed a building or executive committee of its own number, which procured the site upon which the appellant subsequently erected the creamery, according to the plans and specifications. In September, 1908, that committee reported as follows to appellant: "We, the undersigned executive committee, in behalf of and for the first party to the contract for the butter factory at St. Marys, county of Marion, and state of Kentucky, do hereby certify that in company with your special agent, Mr. A. Grider, have examined in detail the said factory, and have checked off the specifications, and find nothing lacking to complete the same, in accordance to said contract and specifications aforesaid, and we have this day received the keys to said factory. Charles Beaven. George Mattingly. W. M. Spalding. W. A. Walker. B. J. Lancaster."

The other proceedings are well narrated in the following excerpt taken from the opinion upon the former appeal of this case, to wit:

"But, previous to this time, and on August 27, 1908, the appellees instituted separate actions against the appellant company, in which they asked to have their several subscriptions declared void, and that the company be required to erase and cancel their respective names from the subscription list, and be perpetually enjoined from asserting any claim against either of them on account of said subscription. They sought this relief upon the ground that the agent, who secured the subscriptions, practiced a fraud upon the subscribers by representing, as an inducement to obtain their subscriptions, that the company was going to erect a creamery at St. Marys, and organize the company to operate it, and that the stock would be $100 per share, and the cost of the plant $4,950, and that the company would guarantee dividends of 6 per cent. on the stock; and, further, that the president of the Marion National Bank had agreed to take two shares of stock, and to furnish to the creamery the milk of 20 cows. They averred that in subscribing they did not know they were signing any contract as individuals, but supposed they were obligating themselves to take stock to the amount of their subscription in the company that would be organized.

"When the case came on for trial, the company filed an answer and counterclaim, in which, after traversing the averments of the petition and setting up the facts hereinbefore stated in reference to the completion of the creamery, and its acceptance by the subscribers, it asked judgment against each of the appellees for the amount of their respective subscriptions. A general demurrer to this pleading was sustained, and thereupon an amended answer, counterclaim, and cross-petition was filed. In this pleading it was averred that all of the subscribers had paid their subscriptions, except nine, and that each of these nine had filed suits similar to the ones brought by these three; that of the $4,600 received from the paying subscribers it had retained $4,050, and had paid $550 to the creamery company, leaving $900 due to it as a balance on the construction price of the factory. It further averred that the paying subscribers had, in October, 1908, organized a corporation, under the laws of the state, for the purpose of operating the creamery. It set up the stipulation in the contract providing that, 'for any unpaid or deferred balance of

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