Illinois-Indiana Fair Ass'n v. Phillips

• Decision Date: 09 February 1928
• Docket Number: No. 17775.,17775.
• Citation: 328 Ill. 368,159 N.E. 815
• Parties: ILLINOIS-INDIANA FAIR ASS'N v. PHILLIPS.
• Court: Illinois Supreme Court

328 Ill. 368

159 N.E. 815

ILLINOIS-INDIANA FAIR ASS'N

v.PHILLIPS.

No. 17775.

Supreme Court of Illinois.

Dec. 21, 1927.

Rehearing Denied Feb. 9, 1928.

Suit by the Illinois-Indiana Fair Association against George A. Phillips. A judgment for defendant was affirmed by the Appellate Court for the Third District (241 Ill. App. 454), and plaintiff appeals on a certificate of importance.

Affirmed.Appeal from Appellate Court, Third District, on Appeal from Circuit Court, Vermilion County; John H. Marshall, Judge.

Charles Troup, of Danville, for appellant.

Harold F. Lindley, of Danville, and O. B. Dobbins, of Champaign, for appellee.

DE YOUNG, J.

The Illinois-Indiana Fair Association, a corporation, instituted a suit in assumpsit upon a promissory note against George A. Phillips in the circuit court of Vermilion county. A jury was waived, and the cause was tried by the court. The issues were found for the defendant, and judgment was rendered against the plaintiff in bar of the action and for costs. The plaintiff prosecuted an appeal to the Appellate Court for the Third District, and that court affirmed the circuit court's judgment. Upon a certificate of importance granted by the Appellate Court the plaintiff prosecutes a further appeal to this court.

On April 4, 1917, the Eastern Illinois Fair Association was incorporated in this state for the purpose, among others, of exhibiting live stock and agricultural and horticultural products. Its original capital stock was fixed at $2,500, and consisted of 100 shares of the par value of $25 each. On May 19 of the same year the name of the corporation was changed to the Illinois-Indiana Fair Association, and its capital stock was increased to $75,000. Thereafter the corporation incurred a considerable indebtedness for the construction of race tracks, buildings, and other improvements and in the conduct of the fair, and certain of its officers indorsed its notes and became liable thereon to the extent of $100,000. To discharge this indebtedness and to supply the corporation with additional funds a plan was devised early in 1919 whereby 135 citizens of the city of Danville and vicinity, in Vermilion county, should underwrite capital stock of the corporation of the par value of $135,000. In March and April, 1919, an agreement was signed by that number of persons whereby each of them agreed with the others (a) that the subscribers underwrite the sale of $135,000 of the capital stock of the corporation; (b) that the stock to be sold consist of the corporation's unsold capital stock together with the necessary increase of such stock, and that the subscribers waive notice of the stockholders' and directors' meetings necessary to effect such increase; (c) that each subscriber join with the association and any others, assisted by the Chamber of Commerce of Danville in a campaign to last at least 30 days, to sell $135,000 of the capital stock of the association; that after the conclusionof the campaign the unsold portion of such stock, if any, be purchased by the subscribers, each to purchase and pay for his pro rata share, only, of such residue at the rate of $25 per share, and that in no event shall any subscriber be required to purchase more than 40 shares of the stock; and (d) that in case the subscribers be required to purchase any stock they shall have the right to pay for it at the rate of $200 per year by giving their notes, bearing interest at 6 per cent. per annum from the date of purchase. Pursuant to the agreement the association held a special meeting of its stockholders on May 31, 1919, and increased its capital stock to $200,000 and the number of shares of stock to 8,000. On July 3, 1919, application was made to the secretary of state for permission to sell 5,761 shares of the stock, having a par value of $144,025, and permission was granted. The campaign for the sale of the stock began on July 14, 1919, and representatives of the Chamber of Commerce of the city of Danville, as well as officers of appellant, took part in the campaign. The underwriters were divided into committees, each of which had a captain, and appellee was a member of one of these committees. To arouse enthusiasm meetings were held and luncheons were given. The active campaign, however, lasted only 4 days and met with little success, for only $13,500 of stock was sold, and of this total the sales made by appellee's committee aggregated from $4,400 to $4,600.

On October 21, 1919, appellee executed his promissory note for $1,000, payable to the order of appellant in annual installments of $200 each, the first maturing on November 1, 1920, with interest on the principal remaining unpaid at 6 per cent. per annum, payable annually. The note made provision for a reasonable attorney's fee, to be added to the principal in case of a default in making payment. Concerning the execution of the note, John G. Hartshorn and George M. McCray, the vice president and secretary, respectively, of appellant, testified that they called on appellee and told him that the campaign for the sale of the stock had ended; that $13,500 of stock had been sold, and that he would be entitled to a credit of $100; that a number of the underwriters were not able to carry as much as $1,000, and, since he was interested in the fair and was financially able to do so, they would like to have him take 40 shares in order that they might to some extent reduce the subscriptions of certain underwriters, and that appellee thereupon, without hesitation, signed the note. Appellee's version of this meeting was that, when Hartshorn and McCray requested him to sign the note, he asked them about the credit for the stock that had been sold and was to be apportioned; that they said the note was part of the agreement, and that the apportionment of the stock would be adjusted later, and that upon receiving this assurance he signed the note. No certificate of stock was delivered to appellee at the time. Subsequently, in December, 1919, appellee brought appellant additional stock subscriptions aggregating $325. Upon a portion of these subscriptions he delivered $50 in money, a Liberty bond for $50, and a note of Paul Atherton for $25. Four shares of stock were issued directly to the subscribers who paid the money and delivered the Liberty bond. Later, when Atherton paid his note a share of stock was issued to him. Shortly after May 4, 1925, Stanley Mires, the assistant cashier of the Palmer National Bank at Danville and acting treasurer of the fair association, presented the note to appellee for payment, claiming a balance of $875, with interest from November 1, 1919, due thereon. Mires at the same time tendered to appellee a certificate for 35 shares of appellant's capital stock. Appellee refused to pay the note and declined to accept the stock certificate. The instant suit followed.

Appellee filed various pleas to appellant's declaration. The fifth plea averred that appellee on August 1, 1919, procured and delivered to appellant subscriptions for its stock amounting to $1,000; that these subscriptions were accepted by appellant in performance of appellee's underwriting agreement; and that the note was thereby fully satisfied and discharged. To this plea appellant replied doubly: First, by denying that appellee had procured and delivered to appellant subscriptions which were accepted by it in satisfaction of the underwriting agreement and note; and second, by averring that after the campaign for the sale of the stock was ended, appellee, with full knowledge of the facts, bought from appellant 40 shares of its capital stock and gave his promissory note in payment thereof. Appellee, by rejoinders to this replication, pleaded the statute of frauds and that he never purchased the shares of stock. To the first rejoinder appellant by a surrejoinder pleaded that appellee accepted and actually received part of the goods or choses in action contracted to be sold or sold; that he gave something in earnest to bind the contract or in part payment; and that a note or memorandum in writing of the contract or sale was signed by appellee. Issue was taken upon appellee's second rejoinder and upon appellant's surrejoinder.

[1][2] The circuit court found that appellee gave the note in question not under or pursuant to a prior contract, but by virtue of an independent agreement to buy 40 shares of appellant's stock at $25 per share. This finding accords with the averments of appellant's second replication to the fifth plea. The trial court further found that the evidence failed to show that appellee had paid a portion of the purchase price of the stock for which the note was given or that he had accepted any of the stock, and that the transaction was within the statute of frauds. These findings of fact were approved by the Appellate Court and are binding upon this court. Affirmation by the Appellate Court of a judgment in a suit at law precludes this court from an examination of the record except to ascertain whether the law has been...