Gill v. Ruggles

• Decision Date: 28 April 1914
• Docket Number: 8833.
• Citation: 81 S.E. 519,97 S.C. 278
• Parties: GILL ET AL. v. RUGGLES.
• Court: South Carolina Supreme Court

81 S.E. 519

97 S.C. 278

GILL ET AL. v. RUGGLES.

No. 8833.

Supreme Court of South Carolina

April 28, 1914

Appeal from Common Pleas Circuit Court of Marion County; M. L Bonham, Special Judge.

"To be officially reported."

Action by Charles E. Gill and others against Charles F. Ruggles. Judgment for the plaintiffs, and defendant appeals. Reversed.

The material paragraphs of the second cause of action were:

"Third. That at Marion, in the county of Marion, in the state of South Carolina, during the month of December, 1908 the defendant, Charles F. Ruggles, agreed and contracted to purchase from the Midland Timber Company and Southern Land & Timber Company certain timber and timbered lands, situate in said county of Marion and state of South Carolina.

Fourth. That, for the benefit and with the knowledge of the said Charles F. Ruggles, these plaintiffs paid to said timber companies the sum of $25,000 on the purchase price of said timber and timberland, and said timber companies on the 24th day of December, 1908, duly conveyed the said timber and timberlands to the said Charles F. Ruggles; and he thereby became seised in fee and possessed of said timber and timberlands.

Fifth. That these plaintiffs have received no benefit whatever from the sum so paid to said timber companies for the exclusive benefit of the defendant, Charles F. Ruggles.

Sixth. That the said Charles F. Ruggles received the benefit of said sum of $25,000 so paid by plaintiffs, has failed and refused to repay same, and is now due and owing these plaintiffs said sum of $25,000, with interest from said date."

Defendant introduced the following agreement:

"Supplemental agreement, made and entered into this 23d day of December, 1908, between Charles E. Gill, of Wausau Wisconsin, Charles H. Leib, of Minneapolis, Minnesota, and Charles F. Ruggles, of Milwaukee, Wisconsin, witnesseth:

Whereas, these parties entered into an agreement under date of August 10, 1908, looking towards the acquisition of certain timberlands and timber rights in the state of South Carolina, and providing for financing the purchase and operation thereof on certain contingencies; and

Whereas, since the said date the said timber had been examined, and the owners of said timber and said timberlands and rights have now agreed to sell the same to these parties including certain other timbers in the vicinity, estimated to contain approximately thirty million (30,000,000) feet of timber, for the sum of three hundred and seventy-five thousand ($375,000) dollars cash; and

Whereas, the said Ruggles, on the conditions herein named, has agreed to furnish such money and perfect the said purchase:

Now, therefore, this agreement witnesseth, that the Wisconsin-Carolina Lumber Company, mentioned in the said contract of August 10, 1908, having relinquished all of its rights to purchase the said timber and timberlands and rights to the said Gill, that the said Gill hereby surrenders and assigns all right to purchase the said timber, timberlands, and rights in the same to the said Ruggles, and the said Ruggles agrees to pay the said consideration of three hundred and seventy-five thousand dollars and take the title to said property, and these parties shall thereupon proceed to the organization of a corporation under the laws of the state of South Carolina, and in such organization provide for two classes of stock, preferred and common. The preferred stock in such organization shall be issued bearing 6 per cent. per annum cumulative dividends to cover the cash investment in said property and in any improvements that may be made thereon in the way of manufacturing plants, etc., for which the said Ruggles shall furnish the money, as hereinbefore stated There shall be an issue of common stock in such amount as shall be agreed upon as convenient, which common stock in said organization will represent all of the net profits thereof, and the same shall be divided between these parties as follows: To the said Ruggles and to his nominees, sixty (60%) per cent. thereof, and to the said Gill and Leib and their nominees, forty (40%) per cent. thereof.

In the said Wisconsin & Carolina Company, which has relinquished its rights, the said Gill and said Leib, H. S. Wunderlich, R. C. Libbey, and some others were interested and put in certain sums of money, with the exception of said Libbey, who put in certain sawmill property. The said Libbey and Wunderlich are to be engaged in the active operation of the manufacturing plant which is to be erected by the corporation to be organized, as provided in this agreement, until their services in that behalf are terminated by the corporation, and the said Gill and said Leib agree that they shall be so engaged and so serve the corporation, but neither they nor any of the parties to this agreement shall receive any salary or draw any money for living expenses or personal expenses, other than for expenses incurred in the conduct of the business of the corporation, and whatever moneys are advanced to any of said parties, including the said Libbey and Wunderlich for living expenses, shall be charged to them on the books of the corporation and interest at the rate of 6 per cent. accumulative thereon, all of said parties receiving such benefits and profits as they will derive through being interested in the distribution of the common stock of the said corporation, in full satisfaction of any interests they had in the said Wisconsin-Carolina Lumber Company, and in full compensation for the services they are to render to the new corporation.

The said corporation shall be so organized that these parties shall co-operate together for the good thereof, and for their mutual good, and the said Gill and said Leib shall devote themselves to the active work of the conduct of the business of said corporation as long as they shall remain in managerial positions therein, and shall use their best endeavors to carry through to a successful termination the undertaking and enterprise involved in the manufacture and sale of said timber and the products thereof.

As before, it is now contemplated that a manufacturing plant adequate and appropriate to the business shall be constructed and put in operation upon the premises on the site already provided for, without further delay, and as soon as practicable in the due course of business, and the said Ruggles has agreed and does hereby agree to furnish funds for the construction of such plant and the conduct of the business at a working capital up to and not to exceed the sum of one hundred and fifty thousand ($150,000) dollars, for which preferred stock in said corporation shall be issued, the same as the initial investment in said property. Said amount shall be made available from time to time, as required, and paid out according to such system of business that may be adopted in the conduct of such undertaking.

Upon the organization of such corporation, said Ruggles will convey the said property over to it, and the said stock therein shall be issued and divided in accordance herewith.

In witness whereof, the parties hereto have hereunto set their hands and seals all the day and year first above written.

[Signed] Charles E. Gill. [ Seal.]

[Signed] Charles H. Leib. [ Seal.]

[Signed] Charles F. Ruggles. [ Seal.]

In the presence of:

[Signed] Chester B. Wright,

[Signed] John H. Rademaker."

The exceptions upon which the defendant based his appeal were as follows:

"I. Because his honor erred, it is respectfully submitted, in allowing the plaintiffs, Charles E. Gill and H S. Wunderlich, to testify, over the objection of the defendant, as to negotiations with the defendant at Marion, S. C., relative to the purchase of certain property mentioned in the complaint, at a date prior to December 23, 1908, on the ground that all such negotiations were subsequently merged into a written agreement bearing date December 23, 1908, and in refusing to strike out the said testimony on motion of the defendant on the same ground.

II. Because his honor erred, it is respectfully submitted, in allowing the plaintiffs, Charles E. Gill and H. S. Wunderlich, to testify, over the objection of the defendant, as to negotiations with the defendant at Marion, S. C., regarding the property mentioned in the complaint, at a time prior to December 23, 1908, on the ground

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