Grand Rapids Furniture Company v. Grand Hotel and Opera House Company

• Decision Date: 09 December 1902
• Parties: GRAND RAPIDS FURNITURE COMPANY v. GRAND HOTEL AND OPERA HOUSE COMPANY, ET AL
• Court: Wyoming Supreme Court

70 P. 838

11 Wyo. 128

GRAND RAPIDS FURNITURE COMPANY v. GRAND HOTEL AND OPERA HOUSE COMPANY, ET AL

Supreme Court of Wyoming

December 9, 1902

Rehearing Denied April 13, 1903, Reported at: 11 Wyo. 128 at 148.

ERROR to the District Court, Sweetwater County, HON. DAVID H CRAIG, Judge.

Action by the Grand Rapids Furniture Company against the Grand Hotel and Opera House Company, A. M. Gildersleeve, Augustine Kendall and Walter H. Revell, to recover certain personal property. The plaintiff claimed the property as vendor in a conditional sale to one H. H. Edgar. The stipulated facts were that, on September 28, A. D. 1895, H. H. Edgar was the owner of certain real estate, in Rock Springs, Sweetwater County, in the State of Wyoming, upon which he was then erecting an opera house building. On said date he purchased of the plaintiff 642 opera chairs, agreeing to pay therefor the sum of ten hundred fifty-nine dollars and sixty cents ($ 1,059.60), as follows: One-third cash, balance in three months, interest at the rate of eight per cent. per annum said chairs to be used as seats in said opera house as a place of amusement. The plaintiff delivered said chairs to Edgar, who attached three hundred forty (340) thereof to said building with small screws, the balance not being fastened or attached to said building in any manner, but being fastened together in sets of five on slats and movable at will. In the contract of purchase it was agreed as follows: "It is mutually agreed and understood that the title to the seats or any portion thereof as above described, shall not pass to said second party, but shall be and remain in said the Grand Rapids School Furniture Company, party of the first part until full payment therefor in cash shall have been made to said first party. And should said second party at any time fail to make payments or settlements as stipulated herein, party of the first part may, at their option and without notice, take possession of said chairs."

Said contract of purchase was never filed in the office of the County Clerk of Swetwater County. All of said sum of money has been paid to plaintiff except the sum of three hundred sixty-one dollars and forty cents, which it claims with interest.

On March 29, A. D. 1897, the said Edgar sold, for a valuable consideration, and made and executed and delivered to Ed Thorpe, Charles Swanson, Gus Swanland and A. T. Chalice his warranty deed for the real estate above described, the opera house building thereon and chairs in controversy, the said Ed Thorpe, et al., at the time they purchased said property, having notice that the plaintiff claimed a lien upon the said chairs for the said amount of three hundred sixty-one and forty one-hundredths dollars and interest, and which sum said Ed Thorpe and others agreed to pay, having assumed the same.

At the time of said sale the said Edgar delivered the possession of the chairs in controversy to the said Thorpe, et al., who remained in possession of the same until the sale or conveyance to said Kendall and Gildersleeve, when they delivered possession of the same to the said Kendall and Gildersleeve, who remained in the possession of the same until their sale to the defendant, to which said Kendall and Gildersleeve delivered possession of the same.

At the institution of this suit the property in controversy was in the possession of the defendant, and that prior to the institution of this suit the plaintiff demanded of the defendant the possession of the said property, but that the defendant refused to deliver the same to the plaintiff.

That on February 15, A. D. 1898, Ed Thorpe, et al., the owners of said real estate, in consideration of one dollar, executed and delivered their agreement for a deed for said real estate to the said A. M. Gildersleeve, and also their agreement for a bill of sale of the personal property on the premises; that thereafter, on February 25, A. D. 1898, the said Ed Thorpe, et al., in pursuance of the said agreement theretofore entered into between them and the said A. M. Gildersleeve, for the consideration of seven thousand one hundred and seventy-five dollars to them paid by the said Augustine Kendall and A. M. Gildersleeve, made, executed and delivered to the said Augustine Kendall and A. M. Gildersleeve a warranty deed conveying to them the said real estate, and also executed to said Kendall and Gildersleeve a bill of sale for all of the personal property in said building situate on said premises, and including the chairs herein in controversy and which purchase price was a fair value of said property.

That the plaintiff is a corporation duly organized and existing under and by virtue of the laws of the State of Michigan.

That the defendant, the Grand Hotel and Opera House Company, was duly organized and incorporated under the laws of the State of Wyoming on March 8, A. D. 1898, its incorporators being A. M. Gildersleeve, Augustine Kendall and Walter H. Revell, each of said incorporators subscribing for one share of the capital stock of said company, the amount of said capital stock being $ 25,000, divided into 500 shares of the par value of $ 50 each. That since the incorporation of defendant, no stock of said corporation has been sold to any person except Kendall, Gildersleeve and Revell, being only one share to each in their original subscriptions. That the Kendall and Gildersleeve herein mentioned are the same persons who are the incorporators of said corporation, and respectively cashier and assistant cashier of the First National Bank of Rock Springs, Wyoming. That there has never been an election of officers of the said corporation, but the said Revell has, by tacit consent, acted as general manager of said corporation.

That on March 8, A. D. 1898, said defendant purchased the chairs in controversy and the real estate on which said opera house building is situate, and in which is situated the chairs and other personal property from Kendall and Gildersleeve, and paid them therefor the sum of $ 8,000, of which $ 1,700 was in cash, the balance by assuming the payment of a note for $ 6,300, and the said Kendall and Gildersleeve, on the 26th day of February, 1898, signed a note in favor of the First National Bank for said sum of $ 6,300, the signature to said note being as follows: "The Grand Opera House Co." That said Kendall and Gildersleeve have not yet executed or delivered a deed conveying said real estate and premises to the said corporation, but have delivered possession of said personal property, as stated before. That the said Kendall and Gildersleeve had actual notice of plaintiff's claim before the purchase of the property.

The action was replevin. Judgment was rendered for defendants, and plaintiff prosecuted error.

Affirmed.

John H. Chiles, for plaintiff in error.

There can be no question but that, as between the plaintiff and Edgar or Thorpe, et al., or Kendall and Gildersleeve, the plaintiff is entitled to recover in this cause, for the reservation of title in the plaintiff is valid. (Warner v. Roth, 2 Wyo., 63; Bunce v. McMahon, 6 Wyo., 24; 42 P. 23.) Since Section 2837, Revised Statutes of Wyoming, with reference to filing the contract with the County Clerk, enacted since these decisions, make the sale or contract void only as to purchasers without notice. Kendall and Gildersleeve were promoters acting for and on behalf of the corporation. The fact that they agreed to pay plaintiff's claim if they could not beat it; the fact that they borrowed money from the First National Bank and signed the name, The Grand Hotel Company, shows that the purchase of this property was made for the defendant company. "When the contract is made in the name or in behalf of the projected corporation, and is treated as a proposal to such corporation to be acted upon by it when it comes into existence, then, in the absence of other controlling circumstances, acceptance of benefits under the contract justifies the inference that the corporation has accepted or adopted it." (Alger on Promoters of Corp., Sec. 208.)

As a general rule, a corporation is not affected by the personal rights, obligations and transactions of the shareholders who form the corporation, yet this rule cannot be applied blindly. A court of equity will look beyond the technical doctrine whenever this becomes necessary to do justice between the parties.

Notice to all the shareholders in a corporation should, under ordinary circumstances, be held binding upon the association in its corporate capacity.

If an association of persons owning property subject to equitable claims obtains an act of incorporation, the property will remain subject to these claims, after it is vested in the corporate name. (Allen v. Francis, 123 Cal. 474; 1 Morawetz on Corp., Sec. 229; Paxton Cattle Co. v. Bank, 21 Neb. 621; 59 Am., 852; R. R. Co. v. Christy, 79 Pa. St., 54; Moore Hdw. Co. v. Towers, 87 Ala. 206; 13 Am. St., 23; Low v. Railroad Co., 45 N. H., 370; Whitney v. Wyman, 101 U.S. 392; Beal v. Chase, 31 Mich. 490; McArthur v. Printing Co., 48 Minn. 319; 31 Am. St., 65; Simmons v. Doran, 142 U.S. 417; Schulte v. R. R. Co., 3 Woods, 692; Battelle v. Pavement Co., 37 Minn. 89; 33 N. W., 327; Leonard v. Loan Assn., 55 Ia. 594; 8 N. W., 463; Bridge Co. v. Rollins, 13 Colo. 4; 21 P. 877; Buffington v. Bardon, 80 Wis. 639; 50 N. W., 776; Morawetz Priv. Corp., Sec. 548; Note to Pittsburg Min. Co. v. Spooner, 17 Am. St., 161-168; Reichwald v. Commercial Co., 106 Ill. 439; Pratt v. Oshkosh Match Co., 89 Wis. 406; Davis v. Dexter Butter, &c, 52 Kan. 693; 35 P. 776.)

A corporation will be bound by contracts made on its behalf by its promoters before organization if, after it has organized with full knowledge of all the facts, it assumes the contract and...