Gansey v. Orr

• Decision Date: 31 March 1903
• Parties: GANSEY v. ORR et al.
• Court: Missouri Supreme Court

73 S.W. 477

173 Mo. 532

GANSEY v. ORR et al.

Supreme Court of Missouri, Division No. 2.

March 31, 1903.

STATUTE OF FRAUDS—AGREEMENT TO INDEMNIFY.

1. A promise made to induce a purchase of stock in a corporation, whereby the promisors agree, in case the corporation fails and is unable to return to its stockholders the money invested by them, that they will repay to the purchaser the amount paid out by him, is within Rev. St. 1899, § 3418, which provides that no action shall be brought to charge any person upon any special promise to answer for the debt or default of another unless the agreement shall be in writing.

Appeal from Circuit Court, St. Louis County; R. Hirzel, Judge.

Action by Frances Gansey against William A. Orr and Isaac H. Orr. Judgment for plaintiff, and from an order granting a new trial she appeals. Affirmed.

This is an action upon an express contract claimed to have been entered into between plaintiff and defendants in the fall of 1890, in respect to which the petition alleges that defendants were at that time organizing a corporation known as the Wm. A. Orr Shoe Company, and that they requested plaintiff to buy shares of the capital stock of said company, and, as an inducement for her to do so, promised and agreed that if said company should fail, and not be able to return to its stockholders the moneys they invested in its capital stock, then defendants individually would pay her the amount of money she should pay out in the purchase price of said stock, and that, relying on this promise of defendants, plaintiff promised to buy and did buy the capital stock of said company to the amount of $7,000, and paid therefor $7,000 in cash; that said company thereafter failed and was placed in the hands of a receiver, and its assets were not sufficient to pay its creditors in full, leaving nothing to return to or distribute among its stockholders; that plaintiff then demanded of defendants that they pay her the $7,000 she had paid for said capital stock of said company, which defendants refused to do. The answer was a general denial, and also that the promise of defendants was a promise to answer for the debt, default, or miscarriage of the Wm. A. Orr Shoe Company, and was not in writing. The reply denied the new matter in the answer. There was a verdict for plaintiff against both defendants for $7,953. On motion of defendants the court granted them a new trial upon the grounds that it erred "in refusing to give a peremptory instruction to find for each defendant as requested at the close of the case, in refusing instructions asked by each defendant at the close of the case, and in giving the instructions asked by plaintiff." From the order granting defendants a new trial, plaintiff appeals.

In the summer of 1890 the Orr & Lindsay Shoe Company of St. Louis announced its intention of retiring from business at the end of that year. A plan was set on foot for the organization of a new concern to purchase its stock in trade and to succeed to its business. In their plans the defendant William A. Orr, a son of the Orr who was a member of the firm of the Orr & Lindsay Company, upon the incorporation of the concern, the William A. Orr Shoe Company, became its president. In the organization of this company the promoters were advised and assisted in all matters requiring the services of a lawyer by the defendant Isaac H. Orr, a member of the St. Louis bar. Plaintiff is the wife of John Gansey, a teamster, who for many years during the life of William Orr's father had done the hauling for Orr & Lindsay. William Orr had placed on the Gansey farm a driving mare, and on a Sunday in September, 1890, as was his custom, he drove out to the Gansey farm to see the mare, and took with him his codefendant, Isaac H. Orr. Plaintiff testified as follows: "I had several conversations with William A. Orr about the formation of the William A. Orr Shoe Company. He first told me he was going to organize a company, and spoke to me a good deal before he organized it. We had our first conversation on this subject about 1890, the year they organized. The conversations were all held at my house on the Hanley road. He had several conversations with me of that nature. William A. Orr told me that it would be a good thing to take stock in it. He told me it would be a good investment; that they would buy and sell for cash, and it would be safe. I first saw Isaac H. Orr just before I went into the concern. He came out to my house one Sunday with William A. Orr. I had never seen Isaac H. Orr before that. I was away from home when he and William A. Orr came out. They waited till I came back. I had gone up to another farm, near Creve Cœur Lake, to see about it. I left to go to the farm before dinner, and did not get back until about four o'clock that same afternoon. When I got back home, Mrs. Conroy and William A. Orr and Isaac H. Orr and some others were there. The Orrs were down in the orchard, northeast of the house. I met them after I got home. The time before this Sunday that William Orr was out to see me, I told him I would consider the taking of the stock or going into the concern. He brought Isaac H. Orr out, and Isaac and he talked to me about it. They told me it would be a good thing; that Isaac was to be the attorney for it. I had great confidence in the Orr people. They said it would be a good thing; they would buy and sell for cash. I said, `I don't know anything about your business. In case they would fail, what would I do?' They said they would pay my money back. This conversation took place in my house, in the back parlor. They had come up out of the orchard and gone in the house. There were others present at the time, but we three were talking together. The Orrs stayed at my house until after we had some lunch. In that conversation they asked me to take stock in the new concern they were organizing, and I told them in case it was a failure what would I do? and they told me they would pay me my money back. Mr. Isaac Orr and Mr. Will said that—Mr. Isaac particularly, because he said he would be attorney, and he would be a stockholder, and he would pay me the money back. I did agree at that time to take the stock. I told him I would go down, and I did. I gave my check first for four thousand, and then for three thousand— seven thousand. It was about the same time —not so far apart—not so very long, I don't think. I gave a check to A. C. Stewart, and he paid it to Mr. Orr; and then Mr. Scott— I gave him a check, and he gave it to Mr. Orr. I never got any certificates for my stock. They never issued them until after the concern was broke up. That is what I heard. I never got any money back. They declared one dividend. It was four hundred and eighty dollars. There was only one dividend declared. That was the first year. I was away from home at the time, and when I got back I had a letter from them. I had several conversations with Mr. Will Orr, who was president of the company, about the company, after I had gone into it. At first he said they were getting along fine. Then he said it was pretty hard times—different things about it. I never had any other conversation with Mr. Isaac Orr after that Sunday. I never saw him, except to see him go in and out. Before I had the conversation with William and Isaac Orr, William would come out to my place on Sunday afternoons and talk the matter over with me. The conversation I had with Mr. Isaac Orr and William occurred towards the fall of the year. It was warm weather. It was pretty late in the afternoon when they left my house that Sunday." She was corroborated to some extent by one Mrs. Conroy, who testified she was present and heard the conversations. Defendants testified that nothing was said at the time of their visit to the Gansey farm to Mrs. Gansey about the William A. Orr Shoe Company, and that neither of them made any such promise or had any such conversation as Mrs. Gansey claims about stock in the company, and that Mrs. Conroy was not present at that time. In the latter part of December, 1890, Mrs. Gansey purchased from defendant William A. Orr 70 shares of stock in the new company, standing in the name of William A. Orr, but of which he was trustee for the company. She received one dividend in 1891. After that dividends ceased, but the business continued until 1896; and Mrs. Gansey visited the store during all those years, meeting William A. Orr frequently, knowing that the stock was depreciating in value, but never until a few days before the bringing of this suit did she intimate to either defendant that she claimed to have a contract with them to indemnify her. There was irreconcilable conflict between the evidence of Mrs. Gansey and Mrs. Conroy, on the one part, and of the Orrs, Chas. S. Broadhead, Esq., and other witnesses for the defense, on the other part. Upon the first trial, in the circuit court, city of St. Louis, plaintiff testified: "Q. When did Isaac Orr promise? A. He did—both together—at my house. Q. That was the time you said you would see about it. You said when they made that promise you would see about it? A. Yes. Q. When you went down to the place of business you only saw Will? A. I don't remember seeing Isaac. I am not sure. By the Court: I understand, when they made the promise out there, you said you would see about it—you didn't accept, but you would see about it? A. That was Mr. Will Orr. Q. They were both at your house. I understood you to state on direct examination that one of them stated in the presence of the other, if anything went wrong in the business, or if the business failed, they would pay you back the money. You said, `Well, I will see about it.' Then you went down to the store and saw Will Orr, yet didn't see Isaac Orr? A. I don't remember. Q. And subsequently the same statement was made by Mr. Will Orr—that if the business was not successful, or if anything happened, then he would pay back your money. Thereupon you subscribed...