Kauffman v. Raeder

• Decision Date: 10 April 1901
• Docket Number: 1,473.
• Parties: KAUFFMAN v. RAEDER et al.
• Court: U.S. Court of Appeals — Eighth Circuit

108 F. 171

KAUFFMAN v. RAEDER et al.

No. 1,473.

United States Court of Appeals, Eighth Circuit.

April 10, 1901

This is an action on a contract. At the close of the evidence the court directed a verdict in favor of the defendants. The writ of error challenges the judgment which followed that verdict. The material facts established when the court directed the verdict were these: The plaintiff in error, John W. Kauffman was in 1895 the owner of certain real estate in the city of St. Louis, Mo., at the northwest corner of Ninth and Olive streets. On June 19, 1895, he made a lease of this property to the Central Realty & Improvement Company, a corporation for a rental of $35,000 per annum, payable quarterly on August 1st, February 1st, November 1st, and May 1st in each year. In July, 1895, the Century Building Company, a corporation, was organized for the purpose of taking an assignment of this lease and constructing a building on these premises. On July 19, 1895, the lease was assigned to the Century Building Company, and that corporation assumed the payment of the rents reserved therein to the plaintiff Kauffman. After the lease of June 19, 1895, had been made the defendants in error and their associates, for the purpose of relieving the Century Building Company of the payment of the rent on this lease for one year, and of securing the payment and satisfaction of the first $35,000 payable upon this lease, made the following contract with John W. Kauffman: 'This agreement, made and entered into in triplicate this 19th day of June, 1895, by and between John W. Kauffman, of the city of St. Louis, party of the first part, and Henry Raeder, Jonathan Clark, B. S. Crocker, and A. S. Coffin, of the city of Chicago, state of Illinois, and C. W. Wall, A. O. Rule, and R. F. Kilgen, of the city of St. Louis, state of Missouri and the McCormick-Kilgen-Rule Real-Estate Company, a corporation organized under the laws of the state of Missouri, of the city of St. Louis, state of Missouri, parties of the second part, witnesseth: That whereas, the said parties of the second part propose and intend to organize a corporation under the laws of the state of Missouri, and particularly under Act March 21, 1891, of the general assembly of said state, with a capital stock of one million dollars ($1,000,000), six hundred thousand dollars ($600,000), of the same to be preferred and to draw a preferred dividend of six per cent. (6%) per annum, said company to be known and styled the 'Century Building Company,' or such other name as may be hereafter agreed upon, said company to be organized for the purpose of acquiring a certain lease, dated the 19th day of June, 1895, entered into between said party of the first part and the Central Realty & Improvement Company, which lease covers certain premises in the city of St. Louis, at the northwest corner of Ninth and Olive streets, in said city, and to which lease reference is hereby made as part hereof, and also for the further purpose of erecting a building on said premises, including the premises covered by the Durning lease, referred to in said last-mentioned lease; and whereas, the said parties of the second part have requested, and do hereby request, the said party of the first part to accept and receive from said proposed corporation, or the said parties of the second part, in payment of four (4) installments of rent provided for in said lease,-- said four (4) installments being respectively due August 1, 1895, the first day of November, 1895, the first day of February, 1896, and the first day of May, 1896, and aggregating thirty-five thousand dollars ($35,000) and being for eight thousand seven hundred and fifty dollars ($8,750) each,-- three hundred and fifty (350) shares at par of the preferred capital stock of said proposed corporation, or thirty-five thousand dollars ($35,000), divided into four (4) installments equal to said installments agreed to accept said shares of stock for said installments of rent, at and upon the times they become due, upon the condition that the said parties of the second part agree, on or before the 1st day of July, 1898, to purchase said shares of preferred stock from said party of the first part, at and for the price of thirty-five thousand dollars ($35,000), and in addition thereto an amount equal to interest at the rate of six per cent. (6%) per annum on the said several installments of rent from the time they become severally due and payable, less any dividend which the said party of the first party may have received on account of said preferred stock: Now therefore, the said parties of the second part do hereby agree and bind themselves to purchase said preferred stock from said party of the first part, as hereinbefore recited, and to pay therefor the price hereinbefore set forth; and the said party of the first part agrees to sell and transfer to said parties of the second part the said stock at the times and for the price hereinbefore set forth. This contract shall be binding on the said parties, respectively, and as well their respective heirs, executors, administrators, and assigns.

'In witness whereof, the said parties have hereunto set their hands the day and year first hereinbefore written.

'(Signed)

John W. Kauffman. 'Henry Raeder. 'Jonathan Clark. 'B. S. Crocker. 'A. S. Coffin. 'C. W. Wall. 'A. O. Rule. 'R. F. Kilgen. 'McCormick-Kilgen-Rule Real-Estate Co.,

'(Corporate Seal.)

R. F. Kilgen, V. Pres., 'A. O. Rule, Secy.'

Kauffman satisfied the debt and discharged the lessee and its assignee from their liability for the $35,000 rent which fell due on and before the 1st day of May, 1896, and took the 350 shares of the preferred capital stock of the Century Building Company according to his covenant in this agreement. Some time in 1897 he assigned this stock and delivered the agreement to the Merchants-Laclede National Bank, a corporation engaged in a general banking business in the city of St. Louis, Mo., as collateral security for an indebtedness which he owed the bank. In September, 1898, he paid his debt to the bank, and redeemed and recovered possession of the certificates and the agreement. During all the time between the execution of the agreement and the trial of this action the stock and the agreement have been under his control, and he has been able, willing, and ready to assign and deliver them to the defendants, upon their payment of the $35,000 and interest, pursuant to the terms of their agreement. On May 16, 1898, he caused the cashier of the Merchants- Laclede National Bank to send the following letter to each of the obligors in this agreement to pay the $35,000, and each of them received the letter in the ordinary course of the mail:

'Dear Sir: As collateral security to a loan made to John W. Kauffman, we hold 350 shares of the preferred stock of the Century Building Co., together with an agreement, signed by you and others, agreeing to pay for said stock $35,000, with interest, amounting to $4,313.74 to July 1st next, the maturity of the agreement. We desire to notify you that we hold the stock and agreement, and to request you to arrange to take up your agreement on the date named, namely July 1st, 1898.

Yours, truly,

'(Signed)

George E. Hoffman, Cashier.'

On July 18, 1898, the attorneys for Mr. Kauffman wrote to the defendant Jonathan Clark that the contract had not been performed on his part, that Mr. Kauffman proposed to take immediate measures to enforce his rights as defined in the agreement, and asked him to advise them if it would be necessary for them to resort to the courts to assert the rights of their client. Three days later Mr. Clark answered that he was ready at any time to perform his part of the contract, that he supposed that if legal action was necessary to collect the claim that action must be taken against all the parties to the contract, so that it would be of no avail for him to pay his proportion of the amount due, but that if Mr. Kauffman would accept the proposition he would pay him $5,000 and permit him to retain his proportion of the stock, provided he would release the writer from any further obligation on the contract. In October, 1898, one of the attorneys of the plaintiff in error again demanded of Mr. Clark the payment of the amount owing upon the contract, and he declined to pay or take any further action in the matter, and waived a tender or production of the certificates of stock and their assignment. He declared that he did not intend to do anything about performing the contract, and that it would make no difference in his decision if the certificates of stock were presented. Upon this state of facts the court below directed a verdict for the defendants on the sole ground that no tender or offer of the certificates of stock and an assignment thereof to the defendants was made by the plaintiff or waived by the defendants on or before July 1, 1898, although it was conceded that they were in the control of the plaintiff, who was ready and willing to transfer them during this time, and that within four months after July 1, 1898, a proper demand of performance was made of the defendant Clark, and he refused to perform and waived the production and offer of the certificates and assignment.

Syllabus by the Court

The situation of the parties when a contract is made, its subject-matter, and the purpose of its execution are always material to determine the intention of the parties and the meaning of the terms they used, and when these are ascertained they must prevail over the dry words of the agreement.

Where one party to a contract has received and retained the benefits of a substantial partial performance thereof by the other party, he cannot rescind it, but the contract must stand, he must...