Goodman v. Purnell

• Decision Date: 10 April 1911
• Docket Number: 218.
• Citation: 187 F. 90
• Parties: GOODMAN et al. v. PURNELL et al.
• Court: U.S. Court of Appeals — Second Circuit

187 F. 90

GOODMAN et al. v. PURNELL et al.

No. 218.

United States Court of Appeals, Second Circuit.

April 10, 1911

This cause comes here upon a writ of error to review a judgment in favor of defendants in error, who were plaintiffs below. The judgment was entered upon a verdict, which was directed by the trial judge at the close of the case; exception to such direction being duly reserved. The facts sufficiently appear in the opinion.

Foley Martin & Nelson (John F. Foley and Frank A. Spencer, Jr., of counsel), for plaintiffs in error.

Everett Clarke, Benedict & Ward (Edward G. Benedict, of counsel), for defendants in error.

Before LACOMBE, COXE, and NOYES, Circuit Judges.

LACOMBE Circuit Judge.

The action is brought upon a written contract between the parties, executed January 14, 1908. The plaintiffs, described therein as vendors, in consideration of $20,000 agreed to sell, assign, transfer, and deliver to defendants, described therein as vendees, 'the entire capital stock outstanding, amounting to $35,000 par value of the Empire Iron & Metal Company, a corporation incorporated under the laws of the state of New York. ' They further agreed, in delivering the stock, to pay all debts now due by the said Empire Iron & Metal Company, to the end that the vendees shall be saved harmless and indemnified from any debts due by the company up to and including January 14, 1908. The vendees agreed to pay $1,000 in cash upon the execution of the agreement, $9,000 in cash on January 21st, and to give two notes, for $5,000 each, dated January 14th, payable respectively, four and eight months after date, with interest at 6 per cent. per annum; said notes to be secured by a first mortgage on the plant of the company, located at Sewaren, N.J., and further indorsed by the vendees individually. They also agreed to pay, on or before January 24th, $20 per ton for every ton of sash weights that the metal company delivers to the vendees. The vendees also agreed to assign all outstanding book accounts as a further consideration, and to pay to the vendors the cost price of all raw material now on hand.

The $1,000 was paid on execution. On January 15th one of the defendants was taken down to the plant at Sewaren by plaintiffs and introduced to the foreman as the purchaser of the business. He went all over the plant, examined it, and discussed its requirements with the foreman. On January 21st the parties met. At that time the plaintiffs owned all the stock outstanding, 350 shares, and tendered to vendees the certificates therefor, properly indorsed. Defendants said that they were not just ready at that time to close the deal; that they were not sure of the debts of the company from the books. The debts were actually between $9,000 and $9,500, and plaintiffs had expected to pay them with the $9,000 cash which defendants were to pay. The spokesman for plaintiffs then told defendants that plaintiffs would allow them to pay out of the $9,000, if they so desired, all the debts of the company, besides which plaintiffs would give them a bond for $5,000 to protect them against any loss--an indemnity bond. Defendants asked to see the minute book, and a further interview was arranged for January 23d. In the interim plaintiffs procured a bond for $5,000 in favor of defendants, and the parties again met on the 23d; defendants' counsel being present. There is testimony that in 1906 the number of directors was reduced from nine to five; that before the 23d two of them resigned; that at the meeting of the 23d the three remaining directors attended, and stated that they were prepared to pass any resolutions which might be requested by defendants. In the view we take of the case, however, such testimony was immaterial.

At this second interview it was again stated that defendants might themselves use the $9,000 to pay the debts and the $5,000 bond was tendered. Counsel for defendants stated that he was not satisfied until he had gone more fully through the minutes of the company and the conditions of the contract. This interview terminated without result. The minute book stock certificate book, and some loose sheets were turned over to defendants. The next day, January 24th, there was a further interview, at which counsel for both sides were present. Counsel for defendant then took the position that plaintiffs had as individuals made a contract which they could not carry out; that they could not sell material which belonged to the metal company. Nothing came of this interview. The details of these interviews as above set forth...