Davis v. Shafer

• Decision Date: 16 May 1892
• Citation: 50 F. 764
• Parties: DAVIS et al. v. SHAFER et al.
• Court: U.S. District Court — Western District of Missouri

50 F. 764

DAVIS et al. v. SHAFER et al.

United States Circuit Court, W.D. Missouri, Southern Division.

May 16, 1892

(Syllabus by the Court.)

A contract for the building of a creamery and cheese factory which purports to be between the contractors, as parties of the first part, and the undersigned subscribers, as parties of the second part, whereby the parties of the first part agree to do the work, etc., for the sum of $6,850, and the parties of the second part agree to furnish at their own expense the necessary land and water for such building, and receive a credit on the contract therefor of $200, and the subscribers agree to pay the above amount on the completion of the building according to specifications; and the parties of the second part, the subscribers, agree as soon as the above amount is subscribed, or in a reasonable time thereafter, to incorporate under the laws of the state fixing the aggregate amount of stock at not less than $6,850 to be divided into shares of $100 each, and shares to be issued to the subscribers in proportion to their paid-up interest therein, to which is attached a heading for the subscribers, thus: 'Names of Subscribers. No. of Shares. Amount of Stock after Incorporation,'-- which was signed by the defendants, as such subscribers, for various shares. Held, that this was a contract, inter partes, between the parties of the first part and the subscribers of the second part, whereby the subscribers became jointly and severally bound to the parties of the first part for the payment of the sum of $6,850.

The contract being plain and unambiguous, parol evidence as to the intention of the subscribers in signing it, or their understanding of its terms, is not admissible to vary its expressed terms. Nor are any statements made by the soliciting agent of the party of the first part, made while soliciting subscribers, as to the meaning and effect of the contract, in the absence of fraud or deceit, competent evidence.

Where the contract employs words and phrases of doubtful or ambiguous meaning and application, the construction placed upon it by the parties thereto by word and acts, especially where such construction has been acted on by the parties should prevail over any mere technical, grammatical, or logical interpretation; but where the contract is free from ambiguity, and its meaning is clear in the eye of the law, such mode of construction is inadmissible.

The provision of the contract respecting the organization of the subscribers into a corporation in no wise affected the assumption of the subscribers of the payment of the sum of $6,850. That was a matter subsequent, inter sese, as to the subscribers, as to how their interests in the joint property afterwards should be held and managed.

When said contract was signed by the first four subscribers it provided for the payment in cash of the sum subscribed upon the completion of the work. Afterwards, to meet the requirement of subsequent subscribers, the provision was interpolated, allowing the subscribers to pay one third in cash, one third in 60 days, and one third in 4 months after the completion of work; the deferred payments to bear 8 per cent. interest from date. Held, that where there are several parties to an instrument, some of whom have executed it, and in the progress of the transaction it is altered as to some who have executed it, and in the progress of the transaction it is altered as to some who have not signed it, without knowledge of the first signers, but not in a part affecting the liability of the latter, and is then executed by the others, the contract is good as to the first signers, according to the terms agreed upon by them, and is good as to the subsequent signers, with the addendum obligation.

Where the first signers of the contract are the managing committee of the property, with whom a copy of such contract, after all the subscribers have executed it, is left, and this committee afterwards accept the property from the contractors as completed according to contract, and certify that the contractors are entitled to their pay, retain and mortgage the property as that of the creamery company, held, that all the subscribers are deemed to have waived such alteration, or, at least, are estopped from asserting such alteration.

The following memorandum, placed opposite the name of one of said subscribers, 'Only responsible for 3 shares,' is to be regarded as a part of his undertaking, and qualifies the contract so as not to bind him for a greater sum than three shares. Its subsequent alteration without his consent would discharge him. And, having paid the sum subscribed by him, he is not estopped by the subsequent acceptance of the work from pleading such alteration.

Mann & Talbutt, for plaintiffs.

Goode & Cravens, for defendants.

PHILIPS District Judge.

This is an action by plaintiffs, a firm doing business at the city of Chicago under the name of Davis & Rankin, to recover a balance due on the following contract: 'CONTRACT AND SPECIFICATIONS FOR COMBINED BUTTER AND CHEESE FACTORY

OF CENTRIFUGAL POWER AND MACHINERY.

'We, Davis & Rankin, party of the first part, hereby agree with the undersigned subscribers hereto, party of the second part, to build, erect, complete, and equip for said party of the second part a combined butter and cheese factory, at or near Greenfield, Dade county, Missouri, as follows, to wit: Said building shall be constructed and finished in substantial accordance with the specifications hereon, in a thorough and workmanlike manner. The engine, boiler, and all other machinery and fixtures shall be set up, and shall be in good running order, before the party of the second part shall be required to pay for said factory. The parties of the second part shall be required to pay for said factory. The parties of the second part do hereby agree to furnish at their own expense suitable land for said building, together with sufficient water on said lot for the use of the business, and they shall be credited therefor, as a payment on this contract, the sum of two hundred dollars, ($200.00;) and it is further understood that, in case the said second party shall fail to furnish said land and water within ten days after the execution of this contract, then the said Davis & Rankin, at their option, may furnish the said land and water. Davis & Rankin, at their option, may furnish the said land and water. Davis & Rankin further agree to provide and keep hired at the expense of the stockholders an experienced butter and cheese maker for one year, if desired. The above building is to have a capacity for handling 16,000 to 20,000 pounds of milk per day. Said Davis & Rankin agree to erect said butter and cheese factory as set forth by the above specifications for sixty-eight hundred and fifty ($6,850) dollars payable in cash, or note as follows: One third cash when factory is completed; one third in secured notes, due sixty days after factory is complete; one third in secured notes, due sixty days after factory is completed. Notes to draw 8 per cent. interest from date. We, the subscribers, agree to pay the above amount for said butter and cheese factory when completed according to said specifications. Said building to be completed in ninety days or thereabout after the above amount ($6,850) is subscribed. As soon as the above amount of ($6,850) is subscribed, or in a reasonable time thereafter, the said subscribers agree to incorporate under the laws of the state, as therein provided, fixing the aggregate amount of the stock at not less than $6,850.00, to be divided into shares of $100 each, said share or shares as above stated to be issued to the subscribers hereto in proportion to their paid-up interest herein. It is hereby understood that Davis & Rankin will not be responsible for any pledge or promise made by their agents or representatives that do not appear in this contract, and made a part thereof either in printing or writing. For a faithful performance of our respective parts of the contract we bind ourselves, our heirs, executors, administrators, and assigns.

'Executed this, the third day of August, 1889. ------------------------------------------------------------- "Names of Subscribers. No. of Shares. Amount of Stock. after Incorporation." -------------------------------------------------------------

The aggregate of the sums subscribed was about $7,000. Over $4,000 of this subscription was paid to the plaintiffs, and on the failure to pay the balance of the $6,850 this suit was brought.

The answers admit the execution of the contract, and its completion and performance by the plaintiffs according to the specifications, and its acceptance by the defendants, who still hold and are operating the plant, as a voluntary association, without having incorporated as the contract contemplated. They interpose as a special defense: First that the contract is only several, and that both by its terms and the understanding of the parties thereto the subscribers were to be bound only to the extent of the sums subscribed by them, which sums varied from one to three hundred dollars. And, second, that the contract when signed by them had in it a blank space between the works, 'sixty-eight hundred and fifty dollars, payable in cash,' and the words following, 'We, the subscribers, hereto agree to pay the above amount, ' etc.; and the following words: 'Or note as follows: One third cash when factory if completed, one third in secured notes due sixty days after factory is completed, one third in secured notes due four months after factory is completed, notes to draw 8% interest from date,'-- are alleged to have been inserted in this blank space after the execution of the contract. And, third, that plaintiffs...