Cravens v. The Eagle Cotton Mills Co.
| Decision Date | 19 June 1889 |
| Docket Number | 14,340 |
| Citation | 21 N.E. 981,120 Ind. 6 |
| Parties | Cravens v. The Eagle Cotton Mills Company |
| Court | Indiana Supreme Court |
Petition for Rehearing Overruled Sept. 20, 1889.
From the Jennings Circuit Court.
The judgment is affirmed, with costs.
C. E Walker, A. D. Vanosdol and H. Francisco, for appellant.
C. A Korbly and W. O. Ford, for appellee.
Mitchell J. Berkshire, J., did not participate in the decision of this case.
This action was brought by the Eagle Cotton Mills Company, of Madison, Indiana, a manufacturing corporation organized under the general law of this State, to collect $ 4,000 alleged to be due from Charles L. Cravens upon a subscription made by the latter to the capital stock of the plaintiff. The facts are set out at great length, and in minute detail, in a special finding made by the court. Those material to present the questions for decision are the following: In November, 1883, a communication was presented to the Merchants and Manufacturers' Club, a voluntary association of the city of Madison, in which it was stated that the Eagle Cotton Mills Company, a corporation owning and operating two large cotton mills in the vicinity of Pittsburgh, Pennsylvania, with a view of transferring its business to this State, would sell all its machinery, including the good-will of its business, to an Indiana corporation, if one were legally organized. The price proposed was $ 100,000, of which amount $ 40,000 would be required to be paid in cash, and $ 60,000 in the capital stock of the new corporation. The scheme was regarded favorably by the club, and by the citizens of Madison, and the Eagle Cotton Mills Company, of Madison, Indiana, was duly organized and incorporated on the 13th day of November, 1883, the object of its formation being to acquire and own a cotton mill, and to engage in the manufacture of raw cotton into textile fabrics. The proposition theretofore made to the Merchants and Manufacturers' Club was under consideration when the Eagle Cotton Mills Company was organized, and while its stock was being subscribed for. The capital stock was fixed at $ 250,000, and was divided into shares of $ 25 each. The defendant was one of the incorporators of the company, an active promoter of the organization, and solicited subscriptions to its stock, and subscribed for one hundred and sixty shares in his own name. It was stipulated in the contract of subscription that the several subscribers should pay for the number of shares set opposite their respective names upon the call of the board of directors, provided solvent subscriptions to the amount of $ 125,000, including $ 60,000 promised to be subscribed by the Eagle Cotton Mills Company of Pittsburgh, should first be obtained; and provided further, that the amount subscribed was not to be payable until the contract with the last named company, for the purchase of its mills, had been ratified by the votes of those holding a majority of the stock subscribed outside the city of Pittsburgh. It is found that solvent subscriptions for the required amount had been secured, and that on the 3d day of April, 1884, after considering various propositions from the Pittsburgh corporation and others, a contract for the purchase of substantially the entire plant, including the good-will of the latter corporation, had been executed. The Madison corporation agreed to pay the other $ 20,000 in cash, and to transfer $ 95,000 of its paid-up capital stock as a consideration for the property, which was to be transferred and delivered to it at Madison, Indiana. It was also stipulated in the contract that the president of the Eagle Cotton Mills Company of Pittsburgh should be elected a director and president of the Madison corporation, and that a Mr. Townsend should act as secretary for the last named company, at a stipulated salary. This agreement was ratified on the day on which it was executed by the votes of those holding a majority of the shares of stock, at a stockholders' meeting regularly called. A location was obtained, mills erected and put in successful operation at Madison, Indiana. It is found that the defendant's subscription was accepted by the corporation, and that after the contract between the two corporations had been executed, but before it was ratified, the defendant gave notice to the plaintiff's board of directors that he withdrew his name from the subscription as a stockholder. The defendant refused to pay any part of his subscription. The facts found and the conclusions of law thereon stated by the court, formed the basis of a judgment in favor of the plaintiff for the full amount of the subscription, with interest.
On the appellant's behalf it is contended that the contract of subscription was subject to two conditions precedent, viz.:
Conceding that the first condition had been fully performed, the appellant's position, as we understand it, is, that the second condition had not been performed, because the contract entered into with the Pittsburgh corporation, and ratified by the vote of the stockholders of the plaintiff corporation, was not the one made or contemplated by the parties and referred to in the contract of subscription, and that the defendant had, therefore, the right to withdraw his name as a subscriber. Moreover, it is said that the contract between the two corporations was, for various reasons, ultra vires, and void.
The court found that the contract which the stockholders of the Madison corporation ratified was not made until after the stock was all subscribed; that an arrangement of some kind was under contemplation at the time, but had not been definitely agreed upon, and that there was, in fact, no contract between the two corporations when the subscription was made.
The appellant assumes that the written contract of subscription shows that a definite contract existed for the purchase of the Pittsburgh company's mills at the time the subscriptions were made; that he subscribed for stock with reference to that contract, and that the finding of the court that there was no contract, rests upon a violation of the rule which declares that parol evidence will not be heard to explain, modify, or contradict a written contract. This assumption is not warranted by the terms of the writing. While it is quite apparent that an arrangement of some kind was under contemplation at the time the subscriptions for stock were made, whereby the Eagle Cotton Mills Co. of Pittsburgh, might subscribe for $ 60,000 stock in the Madison corporation, and sell its mills to the latter, the plain inference is, that the final contract to that end had not yet been consummated. If a contract for the purchase of the mills had actually been executed, it would have been worse than idle to stipulate that no subscriptions to the stock should be collectible until after the contract had been ratified by a majority of the stockholders. It can hardly be conceived as possible that a contract was first made whereby the new corporation became bound to purchase the mills of the old, and that subscriptions for stock were afterwards taken subject to the condition that if the stockholders refused to ratify the contract, the subscriptions were to become uncollectible. The rule that a formal written contract, which appears upon its face to be complete, can not be enlarged, modified, or contradicted, by proof of prior or contemporaneous parol negotiations or agreements, is abundantly settled, and receives the fullest recognition in the decisions of this court. Singer Mfg. Co. v. Forsyth, 108 Ind. 334, 9 N.E. 372; Carr v. Hays, 110 Ind. 408, 11 N.E. 25; Tucker v. Tucker, 113 Ind. 272, 13 N.E. 710.
It is equally well settled, however, that the first duty of the court in interpreting a contract is to discover the intention of the parties, and while that must be done solely by considering the meaning of the language employed in the instrument, yet when the terms employed are susceptible of more than one meaning, it is the duty of the court, not only to regard the nature of the instrument, but also to inform itself of the circumstances which surrounded the parties at the time, so as to interpret the language employed from the standpoint which the parties occupied when they executed the contract. Daugherty v. Rogers, 119 Ind. 254, 20 N.E. 779, and cases cited; Heath v West, 68 Ind. 548; Ketcham v. Brazil, etc., Co., 88 Ind. 515; Nash v. Towne, 72 U.S. 689, 5 Wall. 689, 18 L.Ed. 527; Scott v. United States, 79 U.S. 443, 12 Wall. 443, 20 L.Ed. 438; Canal Co. v. Hill, 82 U.S. 94, 15 Wall. 94, 21 L.Ed....
To continue reading
Request your trial