Ernest v. Schmidt

• Decision Date: 05 February 1929
• Citation: 199 Wis. 440,223 N.W. 559
• Parties: ERNEST v. SCHMIDT ET AL.
• Court: Wisconsin Supreme Court

199 Wis. 440

223 N.W. 559

ERNEST

v.SCHMIDT ET AL.

Supreme Court of Wisconsin.

Feb. 5, 1929.

Appeal by the plaintiff from an order of the Circuit Court for Milwaukee County, Hon. A. E. Braun, Judge, sustaining a general demurrer of defendants Strauss, Krause, Tallmadge, Brusse, Lenicheck, Grunwald, and Westphal, to plaintiff's complaint. The defendants Westphal, Schmidt, Strauss, Krause, Brusse, Lenicheck, Grunwald, and Tallmadge have served notice for a review of certain parts of the court's order, overruling demurrers of such defendants, upon grounds other than that included in the general demurrer.

The complaint, among other things, alleges: That the parties hereto were interested as stockholders and directors in a corporation known as the Ellwood Company, which company was the owner of certain real estate, and certain oil, gas, and mineral leases, and of certain personal property in Harris county, Texas; that on or about the 1st day of March, 1924, at a meeting of the stockholders and directors of said corporation, at which all of the parties hereto were present, it was realized that the corporation was financially embarrassed and unable to proceed with its exploitation of its property in search for oil and gas, and that it would become necessary, in order that it might be able to pay its operating expenses, to borrow the sum of $11,500; that the defendants thereupon requested the plaintiff to loan such sum to the corporation, and agreed to pay the plaintiff their pro rata share of said sum in the event that plaintiff would make said loan; that the plaintiff shortly thereafter requested the defendants and each of them to deliver to plaintiff their written agreement that, in case plaintiff made said loan of $11,500 to the corporation, the said defendants and each of them would repay plaintiff said sum; that on the 13th day of March, 1924, the following agreement was executed and delivered to the plaintiff:

“Milwaukee, Wisconsin, March 13, 1924.

Mr. E. A. Ernest, Milwaukee, Wis.--Dear Sir: In consideration of your having loaned to the Ellwood Company the sum of eleven thousand five hundred dollars ($11,500) in order to enable said company to promptly carry forward its development work in the field, we, the undersigned members and stockholders of the Ellwood Company, each hereby agree that if it should become necessary for you to take over the property under deed of trust in order to protect your loan of the said eleven thousand five hundred dollars ($11,500) at the due date of your note, March 1st, 1926, each of us hereby agrees to pay you our pro rata part of said sum and thus buy our pro rata interest in said property.

The property mentioned herein is the 29 acres of fee and leased land owned by the Ellwood Company, with its equipment and other personal property on said property, which has been deeded to Frank C. Fischer, trustee, by the Ellwood Company by deed of trust dated March 1, 1924.

This is done by us for the purpose of assuring you of our confidence in our company and its property, and to further assure you that you shall suffer no loss through the transaction other than your pro rata interest in said property should it become necessary to take over said property under the terms of your note.

+------------------------+
                ¦[Signed]¦H. A. Schmidt. ¦
                +------------------------+
                

Arnold Strauss.

Edward J. Kraus.

J. J. Tallmadge.

Otto Busse.

H. R. Ellwood.

A. E. Lenicheck.

Wm. H. Grunwald.

L. O. Schrankorst.

A. H. Westphal.”

That relying upon the promises and agreements of the defendants, and each of them, plaintiff loaned the corporation the sum of $11,500; that on or about the 1st day of March, 1924, the said corporation executed and delivered to one Frank C. Fischer, as trustee, a trust deed of all of its real estate, oil, gas, and mineral leases, and its personal property, for the purpose of securing the payment of approximately $30,000 in notes.

That thereafter the said Ellwood Company was unable to pay said notes, and after the notes secured by said trust deed fell due an action was commenced in the district court of the county of Harris, state of Texas, for the purpose of foreclosing under said trust deed, and such proceedings were thereafter had in said action that said property was sold and bid in at the sale by the plaintiff and others, and said sale duly confirmed by the said court; that after said sale was confirmed the plaintiff duly notified each of said defendants that he, with others, had been compelled to buy in said property in order to protect his said loan of $11,500, and demanded of said defendants, and each of them, that they and each of them pay the plaintiff their pro rata share of said sum of $11,500, together with interest, and that plaintiff was ready and willing to deliver to each of said defendants their pro rata share of plaintiff's interest in said property, all as provided for in said written agreement of March 13, 1924, and as is heretofore set forth.

Then follows an allegation of the failure and refusal of the defendants to comply with said request and agreement. The complaint then continues: That after such refusal on the part of said defendants, and each of them, the corporation under the name of the Wisconsin Production Company was organized by plaintiff and the other purchasers at said sale, under the laws of the state of Wisconsin, with a capital stock of 500 shares of no par value.

It is then in substance alleged that the Wisconsin Production Company issued to the plaintiff, out of the capital stock of 500 shares of no par value, 233 1/2 shares as payment for plaintiff's interest in said property; that the plaintiff is willing and able to deliver to each of the defendants their pro rata share of said stock certificates, but that each of them has refused and still neglects to pay plaintiff anything whatsoever. Then follows an allegation that, by reason of the failure on the part of the defendants to comply with the agreement, plaintiff has lost the sum of $11,500 and interest, for which amount he prays judgment against the defendants.

The defendants Schmidt, Strauss, Krause, Tallmadge, Brusse, Lenicheck, Grunwald, and Westphal separately demurred to the plaintiff's complaint, on the following grounds:

“First. That there is a defect of parties defendant, in that the Wisconsin Production Company and its stockholders should be made parties defendant.

Second. That several causes of action have been improperly united, in that the various causes therein contained do not affect all the parties to the action.

Third. That several causes of action have been improperly united, in that the various causes therein contained disclose a several liability, and not a joint liability of the defendants, if any.

Fourth. [Then follows the general demurrer.]”

The court then made an order overruling the first, second, and third demurrers, and sustaining the fourth demurrer. From the order sustaining the general demurrer, the plaintiff has appealed, while the defendants above mentioned filed notices of review of the order with respect to the first, second, and third demurrers aforesaid.

Alexander, Burke & Clark, of Milwaukee, for appellant.

Lenicheck, Boesel & Wickhem, Lines, Spooner & Quarles, and Maxwell H. Herriott, all of Milwaukee, for respondents.

DOERFLER, J.

Plaintiff's complaint can hardly be commended as a model of pleading. In many respects it is vague and indefinite, and it is only by careful study of the various parts, and of the pleading as a whole, that the intentions of the pleader become reasonably apparent. Such pleadings are not conducive to a speedy administration of justice, and have a tendency rather to impede the course of justice than to promote it. The brief states that the agreement set forth in the complaint in verbatim was drafted by a lawyer. This is hardly credible, but, if it be assumed that such is the case, it would be nigh impossible for us to conceive of a more indefinite and faulty document.

[1] The trial court sustained the general demurrer to the complaint. In the briefs filed by defendants' counsel it is quite apparent that they were confronted with the difficulties above referred to, in their effort to construe the complaint and to determine the general purport, from a legal standpoint, of such pleading. However, they are of the opinion that the agreement should be construed as an offer on the part of the defendants individually to purchase their proportionate share of the property, in the event that it should become necessary for the plaintiff to take over the property to protect his loan at the due date of his note. In order to meet any other plausible theory of the complaint, they have also treated it as an agreement of guaranty and as one of indemnity. We are persuaded that the opinion as expressed by defendants' counsel as to the legal aspect of the transaction is correct; that is to say, that it constitutes an offer to purchase a proportionate share of the property by the individual defendants, upon the happening of certain incidents, and upon the performance of certain conditions precedent.

[2] The first condition set forth in the agreement has reference to the necessity of the plaintiff taking over the property, in order to protect his loan at the due date of the note, which was March 1, 1926. That necessity must exist appears from the face of the agreement, and such necessity is not expressly pleaded. However, we are satisfied that, by taking all of the provisions of the agreement and of the allegations in the complaint together, under our liberal rules of code pleading, it can be said that the facts appearing are such as may be construed to mean a condition of necessity.

[3][4] It is further argued by counsel for the defendants that it must appear definitely in the complaint that the property was taken over by the plaintiff, either at the due date of the note, viz. March 1, 1926, or within a reasonable time thereafter....