Edgcomb v. Clough

• Court: United States State Supreme Court of Pennsylvania
• Citation: 118 A. 610
• Parties: EDGCOMB v. CLOUGH.
• Decision Date: 24 June 1922

118 A. 610

EDGCOMB
v.
CLOUGH.

Supreme Court of Pennsylvania.

June 24, 1922.

Appeal from Court of Common Pleas, Warren County; Edward Lindsay, Judge.

Action by Alfred E. Edgcomb against L. S. Clough. Judgment for defendant, and plaintiff appeals. Affirmed.

Argued before MOSCHZISKER, C. J., and FRAZER, WALLING, SIMPSON, KEPHART, SADLER, and SCHAFFER, JJ.

W. K. Swetland, of Coudersport, and J. Raymond Peck and Richard Hay Woolsey, both of Philadelphia, for appellant.

J. E. Mullin (of Mullin & Woods), of Kane, W. E. Rice, of Warren, Edward R. BoSley, of Buffalo, N. Y., and Frank J. Woods, of Kane, for appellee.

SCHAFFER, J. Plaintiff brought an action of assumpsit against defendant to recover the sum of $501,600, as damages for the breach of an alleged parol agreement to engage in a joint adventure concerning lands belonging to defendant, or the forest products thereon, situate in the state of New York. To plaintiff's statement of claim defendant filed a demurring affidavit of defense, upon which the trial court entered judgment in his favor. Plaintiff appeals.

It is conceded the alleged parol contract was made in New York, concerns property

118 A. 611

located there, and is governed by the laws of that state. Two questions arise out of the contract as pleaded: First, is it within the statute of frauds of the state of New York? Second, was a definite, completed, enforceable contract entered into, or was what transpired between the parties only negotiations looking toward a contract? The answer to both these propositions by the common pleas was adverse to plaintiff.

The statement of claim sets forth that plaintiff was a lumberman of experience and defendant the owner of a large tract of forest lands, comprising about 25,000 acres; that the parties plaintiff and defendant had prior negotiations concerning the sale of the lands, resulting in a written agreement to effect that purpose, terminated, however, by the expiration of the time limit fixed in it, which defendant refused to extend. The statement goes on to recite that after the termination of the written agreement, defendant urged plaintiff to undertake the development of the lands, pursuant to which request they met in the city of Buffalo on April 19. 1919. At this meeting, defendant submitted to plaintiff a written prospectus, made part of the statement of claim, containing a description of the lands and a proposition for the organization of a corporation to develop them. This prospectus recited the intention to organize the corporation "to acquire some 25,000 acres of hardwood forests" belonging to defendant, with an estimate of the timber thereon and of its value. It set forth that it was proposed to develop to the heart of the property a railroad 22 miles long, and to construct sawmills and other plants for the manufacture of the timber. To finance the enterprise the prospectus outlined a plan for an issue of $1,000,000 7 per cent. cumulative preferred stock and $2,000,000 in common stock in payment for the property. After stating that this prospectus was submitted by defendant to plaintiff, the statement proceeds with the averment that at that time, on April 19, 1919, it was "orally agreed by and between plaintiff and defendant that defendant would join in a joint adventure with the plaintiff, to effectuate the sale of the forest products situate upon the hereinbefore described lands and set forth in the said written prospectus submitted by the defendant, either in the open market or to third parties, and would join in whatever development of the property should become necessary to carry out this purpose, the lauds hereinbefore described the defendant orally promised and agreed should be used and developed for the best interests and purposes of the said joint adventure." This oral understanding manifestly contemplated a development as outlined in the prospectus, through a corporation to be organized to acquire the lands which were to be conveyed to it and to be paid for as the prospectus provided, by the issue of common and preferred stock.

After the matter above quoted, the statement proceeds with the allegation that "plaintiff, relying upon the said agreement of the defendant," orally agreed to use his skill and experience for the purpose of accomplishing the development of the property and the sale of the forest products thereon, and sets forth that the sums realized from the joint adventure should be distributed, $1,600,000 to defendant, and all further sums accruing, after deducting necessary expenses, to be divided equally between plaintiff and defendant. The statement further recites that it was orally agreed that to "carry out the development of the lands" and effectuate the sale of the forest products, a corporation should be organized "upon such a basis of division of the common and preferred stock" as that the defendant should receive $800,000 of preferred stock, and $800,000 to be derived from a proposed bond issue to be made by the corporation, and that plaintiff and defendant were each to receive one-half of the common stock of the corporation (without stating what was to be the amount of the common stock unless it is to be inferred that it was to be the amount fixed in the prospectus $2,000,000), and that after the formation of the corporation the parties were to co-operate in the placing of bonds of the corporation to the amount of $1,000,000. It is alleged that the division of the common stock fixes the right of the parties to share equally in the profits of the joint adventure.

The allegations set forth in the statement of claim, as above summarized, do not indicate a definite fixed contract between the parties, but that negotiations were being carried on between them along the lines of the prospectus. This is further evidenced by a letter, made part of the statement of claim, written on April 21, 1919, two days after the meeting in Buffalo, by defendant to plaintiff's attorney, in which copies of the prospectus were inclosed, with the request for any further suggestion relative to it, wherein it was stated that a telegram had been received from third parties, asking for an interview in regard to the timber tract, to which defendant replied that he was "negotiating with other parties." The statement of claim follows the recounting of what took place at the interview in Buffalo, with the averment that defendant had caused articles of incorporation for a new company to be prepared, which were forwarded to plaintiff and his attorney for execution. These articles of incorporation are attached to the statement of claim, made part of it, and show the main purposes for which the corporation was to be formed, to be to purchase, lease, or otherwise acquire lands and timber lands. It is set forth in the statement that it was agreed plaintiff should employ

118 A. 612

an engineer and go upon the property in company with defendant to work out the best means of transportation of the products of the proposed corporation to market, either by the construction of a railroad or a flume, and that plaintiff employed an engineer and with defendant proceeded to an examination of the property to ascertain the best means of transportation. It is stated that plaintiff, relying upon the agreement, entered into on April 19th, "and the purposes expressed in the articles of incorporation of the proposed corporation duly executed and accepted by the plaintiff as aforesaid," and to carry out the purposes of the joint adventure expended money and time in placing the forest products situate upon the property of defendant before prospective purchasers for the purpose of "securing a market for the said products when said property should be developed," and as a result that arrangements were made for the sale of the pulpwood on the property and of the hardwood at certain prices mentioned, "said sales to be contingent upon the development of the said property and means of transportation by the new corporation" in accordance with the terms and conditions of the covenants and agreements between the parties; that at a subsequent meeting plaintiff was ready and willing to carry out his agreement, to complete the organization of the company, and to co-operate with defendant in placing the bonds, to begin the work of development of the property, and to put the products thereon upon the market, but that upon request of defendant to proceed with the organization of the corporation, the placing of its bonds, the development of the property, and "the sale and delivery of the soft and hard woods thereon," defendant refused to carry out the terms of the agreement.

In his statement of claim, plaintiff pleads the law of the state of New York governing transactions in and concerning Real Property, which he avers to be as...