Ford Hardwood Lumber Co. v. Clement

• Decision Date: 13 February 1911
• Citation: 135 S.W. 343
• Parties: FORD HARDWOOD LUMBER CO. v. CLEMENT et al.
• Court: Arkansas Supreme Court

135 S.W. 343

FORD HARDWOOD LUMBER CO. v. CLEMENT et al.

Supreme Court of Arkansas.

February 13, 1911.

Appeal from Mississippi Chancery Court; Edward D. Robertson, Chancellor.

Action by S. N. Clement and others against the Ford Hardwood Lumber Company. From a judgment for plaintiffs, defendant appeals. Affirmed.

On the 28th day of October, 1907, S. N. Clement entered into a contract with the Ford Hardwood Lumber Company, a corporation of Tennessee, by which he agreed to erect a mill at a certain location, and to saw for the corporation certain timber which the evidence showed amounted to 11,000,000 feet on lands described in contract. He was to saw the timber into lumber in a "first-class" manner and load same on tram cars for the sum of $3.50 per thousand feet log scale. The corporation agreed to have the logs delivered to Clement's mill, and to use its "best endeavors" to keep the mill supplied with logs, and to place the logs in such shape as to be readily handled by cable for drawing the logs into the mill. The payments were to be made on the 10th of each month for all logs sawed the preceding month. In case the corporation did not furnish sufficient tram cars, then Clement was to "bulk the lumber on platform, and the corporation was to then load same at its own expense." Such logs as were quarter sawed were to be paid for at the rate of $7 per thousand feet. In January, 1909, S. N. Clement filed his complaint against appellants in the chancery court, in which he set out the contract, and alleged that the parties entered upon the performance of it, that he had fully performed the contract on his part by erecting the mill and sawing the logs that had been delivered to him by appellants "in all respects as provided in said contract"; that appellants, after the contract was made, disposed of half the timber they had agreed to deliver to him; that they removed their log camp from the other lands described in the contract, took their teams elsewhere, and wholly abandoned performance of said contract, failing and refusing to keep, or to endeavor to keep, said mill supplied with logs. He alleged that the cost of sawing logs under the contract had been less than $1.50 per thousand feet, and that the cost of sawing the logs yet to be delivered would not exceed $1.50 per thousand feet. He alleged that the Ford Hardwood Lumber Company was insolvent; that it was a dummy corporation, and was contrived and used solely as a means of protecting E. M. Ford from personal liability for his obligations; that E. M. Ford has never paid any money to the corporation for the amount of the capital stock subscribed by him, and still owed the entire amount thereof. There were allegations that the corporation was a foreign corporation, and that it had not complied with the laws of this state, and was not authorized to do business in Arkansas, that all the stockholders were nonresidents, and only E. M. Ford had any property in this state. S. N. Clement further alleged that at the time the contract was made E. M. Ford represented to him that the corporation, Ford Hardwood Lumber Company, was the owner of all the timber described in the contract; that said representation was made with the intent that S. N. Clement should act upon it; that Clement did believe and act upon the representation by making the contract and erecting the mill and sawing the logs at great expense as alleged. He averred that the legal title to the land and timber described in the contract was in E. M. Ford, as he well knew at the time the contract was made. The prayer of the complaint was that S. N. Clement have a decree for damages in the sum of $21,000; that E. M. Ford be adjudged to pay the amount of his subscription to the capital stock of the corporation, and that same be applied to the satisfaction of the decree herein; that the equitable title in the lands described in the complaint be subjected to the payment of any judgment obtained by Clement; and that he have all other proper relief.

The appellant, Ford Hardwood Lumber Company, answered, admitting that it was a corporation of Tennessee, and that it entered into the contract with Clement. It admitted that E. M. Ford never paid any money to the corporation for the amount of the capital stock subscribed by him, but alleged that he paid all the capital stock in property. It admitted that all the stockholders were nonresidents, and that none of them except E. M. Ford had any property in Arkansas. It denies all the other allegations of the complaint, and sets up the following: "That the corporation was organized in good faith, and that E. M. Ford, who is the chief stockholder in said corporation, was the owner of certain timber in Mississippi county, Ark., and in the state of Mississippi, and, when the said corporation was organized and in payment of said stock therein, he credited on the books of the said corporation all of the said timber so transferred by him in payment of said stock, and that, when advised that said timber should be conveyed by a deed, the said Ford executed and delivered to said corporation his deed, conveying all of said timber, but, after the organization of said corporation and the issuance of said stock by him in payment of said timber, this defendant has had absolute control and charge of said timber, and the defendant, E. M. Ford, has never in his individual capacity claimed any interest therein or sought to control or dispose of the same. This defendant further states that, when plaintiff undertook to erect his mill upon said land, same was so erected in such an unworkmanlike manner that said mill was incapable of sawing lumber in such a way that it was of any value, but that it sawed unevenly and made it of such value on account of inferior grade that this defendant could not receive it and that the defendant was compelled to, and did, purchase additional machinery for the plaintiff, and the delay in the proper erection of said mill by the plaintiff and his inability to saw and deliver to this defendant lumber as per its contract resulted in the loss to this defendant of the sum of $5,000, and this plaintiff, after sawing approximately 500,000 feet of logs for this defendant, was never in a position to comply with his contract in any respect. This defendant further states that it entered into the contract with the plaintiff in good faith; that it was the owner of 6,000,000 feet of timber described therein, and states that it contracted for the timber on said section 16, but was unable to complete said contract, but expected to deliver to the plaintiff the amount of timber of the kind growing upon said section 16 from other land, had not the plaintiff put it beyond his power to carry out the terms of said contract." E. M. Ford answered, and admitted that he was and always had been the holder of practically all of the capital stock of the Ford Hardwood Lumber Company. He admitted that he had never paid in money the amount of the capital stock subscribed by him, but denied that he still owed for the whole or any portion thereof. He admitted that the title to the land and timber at the time said contract was made stood in his name, but says that title to timber was then and at all times held for the use and benefit of the Ford Hardwood Lumber Company, and was afterwards transferred to said corporation. He denied all the other allegations of the complaint, and concluded his answer with an averment that he entered into the contract for the Ford Lumber Company as its president, and that all of his acts were in his representative capacity as president of the lumber company, and not for himself individually.

Subsequent to this, W. E. Ammons and R. H. Clement were by consent of the parties made plaintiffs also, and joined in all the allegations of the original complaint, and prayed that the court would grant them the relief therein prayed if the court was of the opinion that they were entitled to such relief. Attachments were issued and levied upon the lands as the property of appellants.

The court, after hearing the evidence found that S. N. Clement made an arrangement with W. E. Ammons and H. C. Clement by which the latter were to take a part of the profits of the performance of the contract, that S. N. Clement was entitled to recover for the use of W. E. Ammons and Robert H. Clement the sum of $9,000 damages for breach of the contract by the appellants, and rendered judgment against appellants in favor of appellees for that sum, and sustained the attachment and directed the property attached sold to satisfy the judgment. The appellants have duly prosecuted this appeal.

W. J. Lamb and C. H. Trimble, for appellant. Julian C. Wilson and Percy & Hughes, for appellees.

WOOD, J. (after stating the facts as above).

First. In May, 1908, after S. N. Clement had operated the mill under the contract for some time, he made an agreement with Ammons and Clement by which they were to operate the mill for an indefinite time under the contract he had with the lumber company. S. N. Clement, in consideration that Ammons and Clement would carry out the contract for him with the lumber company, agreed to give them all the proceeds of the contract except 50 cents per thousand. In other words, agreed to let Ammons and Clement have $3 per thousand for performing his contract with the Ford Lumber Company. S. N. Clement told Ford to pay Ammons and Clement the proceeds of the contract for their services under it, except 50 cents per thousand. The residue of 50 cents per thousand for the logs sawed was to be retained by the company on the debt that S. N. Clement owed it. This agreement was entered into between S. N. Clement and Ammons and Clement with the consent of the company. There was no new contract made by the company with Ammons and Clement, and no releasing of S. N. Clement from the contract he had made with the company. He still retained his interest in the contract, and Ammons and Clement...