Des Moines Cotton-Mill Co. v. York Inv. Co.

• Citation: 60 N.W. 647,92 Iowa 396
• Parties: DES MOINES COTTON-MILL CO. v. YORK INV. CO. ET AL.
• Decision Date: 25 October 1894
• Court: Iowa Supreme Court

92 Iowa 396

60 N.W. 647

DES MOINES COTTON-MILL CO.

v.YORK INV. CO. ET AL.

Supreme Court of Iowa.

Oct. 25, 1894.

Appeal from district court, Polk county; S. F. Balliett, Judge.

Action to recover damages for the alleged breach of a written contract. There was a judgment for the plaintiff, and the defendants appeal. Reversed.Cummins & Wright, St. John & Stevenson, and Barcroft & McCaughan, for appellants.

J. A. McCall and Gatch, Connor & Weaver, for appellee.

GRANGER, C. J.

The petition was addressed to the equity side of the court. The defendants, in their answers, made some claim that the proceedings should have been at law, but the claim was not pressed in the court below, and the appeal is here without an assignment of error, and it is to be determined as in equity. The whole controversy is based upon a written contract, of which the following is a copy: “Memoranda made January 30, 1888, by and between E. R. Mason, Geo. H. Cowles, and J. F. Mason, parties of the first part, and Ben F. Elbert, York Investment Company, Wesley Redhead, and _____, parties of the second part, showeth: (1) That the parties hereto agree to associate themselves together as a body corporate for the primary object of erecting and operating a cotton mill in Polk county, Iowa, and, incidentally, for the purpose of buying and selling real and personal property. (2) The parties of the first part are to cause to be conveyed to said corporation about to be formed, clear of all incumbrance, the property known as the ‘Jonesville Cotton Mill,’ together with the implements, machinery, and mill property, not including stock, on hand and in process of manufacture, for which said parties of the first part are to be entitled to stock in said new corporation to the amount of $32,000, upon the understanding that the total stock of the company shall be $50,000. (3) The parties of the second part are to cause to be conveyed to said new corporation ninety lots in Elbert & York's addition to Grant park, and others near thereto, which are to be clear of incumbrance, and for which the said parties of the second part are to be entitled to $18,000 stock in said new corporation, upon the understanding that the total stock is $50,000; all the lots to be of equal value, with the fair average of those in Elbert & York's addition, and as may be agreed upon between J. F. Mason, representing the parties of the first part, and J. H. York, representing parties of second part, except that Dean avenue lots are not to be included. (4) All parties to use their best endeavors to secure as large subsidies, both in money and property, as possible, which, including subsidies already subscribed, are to be the property of the corporation about to be formed. (5) The new corporation is to issue its note for $11,520, due January 1, 1889, with 8% interest, which is to be guarantied by parties of the first part. (6) The new corporation is to issue its one or more notes to the total amount of $6,480, to be due January 1, 1889, with 8% interest, to be guarantied by some of the parties of the second part in proportion to the lots contributed by each, which said notes are to be secured by mortgage on the lots contributed, if the parties contributing and guarantying so desire. Parties of second part to guaranty money on said notes within ten days after issue. (7) Parties of the second part are to devote their time and energies to selling lots so to be contributed in said corporation about to be formed, and are not to offer other lots in said neighborhood in competition with lots of the company. Parties of the second part are not to be entitled to any commission or compensation for selling said lots, and all parties are at once to use their best endeavor to secure subsidies for the benefit of the company, in either money or property. (8) Parties of the second part are to be allowed to determine the location of said cotton mill, provided, only, that it be in an eligible, convenient location for such industry. (9) The mill to be erected to be not less than 62x220 feet, of brick, two stories high, with not less than 3,500 spindles, and not less than 130 looms, and not less than 30 set cards. (10) Articles of incorporation to be drawn in accordance herewith, under the laws of Iowa; the corporation to be managed by a board of five directors; three of the said board to be named by parties of the first part, and two by parties of the second part. Parties of first part are to name two, and parties of the second part one, of the executive officers. (11) The corporation to be completed and conveyance made from the 15th to the 20th of February, 1888. (12) Parties of first part to take charge of removal of said cotton mill, and to see that it is moved so soon as can be done after the incorporation of said company. (13) Upon filing of articles of incorporation and transfer of property, J. F. Mason is to take an invoice of stock in hand, and the new company is to purchase the same of parties of the first part, and is to pay 8% interest on the amount of such invoice till arrangements can be made to pay the same. (14) The erection of the buildings to be commenced not later than April 1, 1888, and to be finished as soon as possible, and mill moved at once upon completion. [Signed] J. F. Mason. E. R. Mason, per J. F. M. Geo. H. Cowles. York Investment Company, J. H. York, President; A. M. York, Secretary. Ben F. Elbert. Wesley Redhead.” Afterwards, and before the suit was commenced, the following assignment of said contract was made: “All our rights, including our right of action, arising under the 7th paragraph of the written contract, is hereby assigned to the Des Moines Cotton-Mill Company. [Signed] E. R. Mason. J. F. Mason. Geo. H. Cowles.”

The corporation known as the Des Moines Cotton-Mill Company was organized in pursuance of this preliminary contract, and a cotton mill was erected and put into operation. Each one of the parties designated as parties of the second part conveyed 30 lots to the corporation in pursuance of that part of their obligation. The capital stock was fixed at $100,000, instead of $50,000, as provided in the contract. $64,000 of this stock was issued to the Masons and Cowles jointly, and $12,000 to Redhead, and $12,000 to Elbert, and the same amount to the York Investment Company. The lots which they conveyed to the cotton-mill company were owned by them in severalty, and stock was issued to each one for the agreed value of the lots which he alone conveyed; and there were at that time no stockholders other than the parties who joined in the written contract preliminary to the organization of the corporation. Some question is made as to the right of the corporation to avail itself of the provisions of the written agreement. It appears to us that there is no legal obstacle in the way of so doing,...