Gilman v. Gross

• Decision Date: 22 October 1897
• Parties: GILMAN v. GROSS.
• Court: Wisconsin Supreme Court

97 Wis. 224

72 N.W. 885

GILMAN

v.GROSS.

Supreme Court of Wisconsin.

Oct. 22, 1897.

Appeal from circuit court, Milwaukee county; D. H. Johnson, Judge.

Action by J. H. Gilman, as assignee of the Reliance Wire & Iron Works, against Phillip Gross. Judgment for plaintiff, and defendant appeals. Reversed.

This is an action by the assignee for the benefit of its creditors of an insolvent corporation, the Reliance Wire & Iron Works, to collect from the defendant $1,000, the amount of an alleged unpaid stock subscription for 10 shares of the stock of the corporation. The defendant, at the solicitation of the president of the corporation, signed a written subscription for shares of its capital stock to the amount of $1,000, with the express understanding and agreement that such subscription was not to be binding on the defendant until nor unless 10 stock subscriptions of $1,000 each had been obtained. The subscription was not delivered to the corporation, but was left in the custody of the party soliciting subscriptions, for the purpose of obtaining further subscriptions, and not to be delivered to the corporation until at least 10 subscriptions of $1,000 each should have been obtained. Such 10 subscriptions were not obtained, and the subscription paper was not delivered to the corporation, but was kept among the private papers of its president, who had solicited the subscriptions. Yet the defendant was charged, upon the books of the corporation, with $1,000 for stock subscription, and an entry made on the stock book of stock issued to him, though none was in fact issued to him, and he was ignorant of these entries. Afterwards the defendant became the owner of a claim against the corporation of $1,000. The corporation gave him its note for $1,000, and for collateral security to it, and not otherwise, issued to him shares of its unissued stock to the amount of $1,000. Soon afterwards the corporation made its assignment for the benefit of its creditors to the plaintiff, who brings this action, as such assignee, to recover from the defendant an alleged subscription for the corporate stock to the amount of $1,000. This was the cause of action alleged. It is not alleged nor shown by the evidence that any of the debts of the corporation were incurred subsequent to the issue of the stock to the defendant. The action was tried by the court, without a jury. The plaintiff had judgment for the amount claimed, from which the defendant appeals.Winkler, Flanders, Smith, Bottum & Vilas, for appellant.

N. S. Robinson, for respondent.

NEWMAN, J. (after stating the facts).

No important fact is in dispute on the evidence. The contention in this court relates entirely to questions of the competency of certain testimony, the proper inference to be drawn from undisputed facts, and the appropriate conclusions of law therefrom.

First is the question whether the oral testimony to show the condition on which the subscription was to be delivered and to become operative was competent to be received and have effect. The evidence shows without dispute that it was the agreement that the subscription was not to be delivered to the corporation, or to be deemed a subscription at all, until a certain number of persons had subscribed to it, and that such others did not subscribe. This establishes clearly and beyond dispute that the subscription did not become operative and binding upon the defendant. But it is said that this evidence was inadmissible and incompetent for the purpose, because its effect was to vary the terms of the writing. This position is untenable, both in reason and on authority. In the proof of a contract are two elements,--whether an agreement was made, and its terms. Whether the parties consummated an agreement is, in general, subject for proof and refutation by oral testimony. It must be so in the nature of the subject itself. The delivery or nondelivery of such a writing is a significant fact, as bearing on this question of a completed contract. Generally, such promises do not become operative, as contracts, before delivery. The fact of delivery or nondelivery is ordinarily almost incapable of proof except by oral testimony. If it is wrongly delivered, contrary to the agreement of the parties, such delivery has no effect to make it become operative and binding. So, the question whether it was delivered in fact, contrary to the agreement on that behalf, is always necessarily open to question on parol testimony. This in no degree infringes upon the rule that the writing is the exclusive evidence of the terms of the contract. This is elementary. Many cases illustrating it are cited in appellant's brief. See, also, Jones, Ev. § 478; 23 Am. & Eng. Enc. Law, 791, and cases cited in note 2. This subscription was left in the custody of Mr. Hall, with the agreement that it was not to be delivered to the corporation nor to become operative until...