Kentucky Distilleries & Warehouse Co. v. Blanton

• Decision Date: 08 November 1906
• Docket Number: 1,463.
• Citation: 149 F. 31
• Parties: KENTUCKY DISTILLERIES & WAREHOUSE CO. v. BLANTON.
• Court: U.S. Court of Appeals — Sixth Circuit

149 F. 31

KENTUCKY DISTILLERIES & WAREHOUSE CO. v. BLANTON.

No. 1,463.

United States Court of Appeals, Sixth Circuit.

November 8, 1906

An agreement by an assignee for the benefit of creditors of an insolvent corporation, made in a contract for the sale of property, that he will deliver to the purchaser certificates for at least 90 per cent. of the capital stock of the corporation, is complied with by the delivery or tender of 90 per cent. of the certificates of stock outstanding, although the articles of incorporation state the amount of capital stock at a larger amount than that actually issued.

This is a bill to compel specific performance of a contract for the sale and purchase of the Edgewater Distillery Plant, located in Harrison county, Ky., and certain personal property connected with its operation and business. Preliminary negotiations resulted in a contract bearing date of April 6 1899. The vendor in the agreement is J. I. Blanton, as assignee under a deed of general assignment made by the T. J Megibben Company, a corporation organized under the laws of Kentucky. The vendee is the appellant, the Kentucky Distilleries Company, a corporation of New Jersey.

The important provisions of the agreement so far as now necessary to be stated are as follows: (1) The vendor should within 10 days deliver 'a complete merchantable abstract of title' to all of the real estate. (2) The vendor within 10 days also to report the sale to the Harrison county court and procure an approval by that court. (3) The vendor agreed to deliver deeds in accordance with the terms of the sale to the vendee within 10 days after such confirmation; but the vendee was bound to deliver forms of deeds required to the vendor for execution within three days after notice of such confirmation. (4) The contract required that at time of delivery of deeds the property should be 'free and clear of all liens, charges, encumbrances, taxes and assessments whatsoever.' (5) The consideration to be paid was $40,000, payable in cash on delivery of one deed for the real estate and another for the movables, brands, trade-names, good will, accounts for storage, etc. (6) Without further consideration the vendor agreed to deliver to the vendee 90 per cent. of the certificates of the capital stock of the T. J. Megibben Company, and to procure the resignation of the officers and directors of that corporation, and a meeting of the old board to select the nominees of the purchasing company.

At the March term of the Harrison county court, 1899, Blanton had been, by a regular order of the court, directed to sell all of the assigned estate, either publicly or privately, as he deemed best, the sale, if public, upon terms named, and, if private, to be reported to the court for its approval. The contract of sale bears date of April 6, 1899, but was not in fact signed and delivered for some ten days later. Blanton reported his sale April 22, 1899, which was within the time fixed by the contract. It was confirmed on May 29th, a date as early as feasible under the statute and the practice of the court. On the same day an abstract of title and order of confirmation were sent to Mr. Charles H. Stoll, at Lexington, the counsel for the company and the company's agent most concerned in this sale. No objection was then or ever made that the abstract had not been sooner sent. It was received and retained without objection to the time of its delivery either then or later. This abstract and the proceedings of the county court were sent to Messrs. Pirtle & Trabue for examination and an opinion upon the title. On June 23d, nearly a month later, Pirtle & Trabue wrote the counsel for the assignee that in order to perfect the title four things should be done, namely: (a) The confirmation should be set aside, the property appraised, a resale had, and a new report of sale made within 10 days after such sale; (b) revenue stamps should be affixed to certain deeds; (c) certain liens mentioned should be satisfied and released of record; and (d) the assignor, the T. J. megibben Company, should join the assignee in his deeds to perfect the record title. The next day, in a personal interview, the vendee's counsel concluded that a resale was not essential, but that an appraisement was important before confirmation. The steps pointed out were at once taken by the vendor, the former confirmation set aside, an appraisement had, and a new report of sale made and approval asked. This report was confirmed July 24, 1899. This result was again reported to Mr. Stoll and inquiry made as to when it would suit to close the matter. Mr. Stoll was then off on his summer vacation, and, under date of July 31st, replied that he was sending the papers to Pirtle & Trabue 'for their opinion. Upon its return, if satisfactory, a deed will be prepared and I will be ready for settlement with you. ' The contract provided that the delivery of the deeds should be at Louisville, at Mr. Stoll's office, upon notice to him of their readiness for delivery. But in his letter Mr. Stoll notified Mr. Blanton that it would be unnecessary for him to go to Louisville, 'as arrangements will be made to settle there (meaning Mr. Blanton's home, Cynthiana) upon the execution of the deed. ' Under date of August 2d, Pirtle & Trabue advised Stoll that the second confirmation was premature and should be set aside, and the report of sale lie over to the August term. They also suggested that the statutory provisions in respect to appraisements might require the sale to be set aside and an appraisement made, and a contract of sale executed in reference to the appraisement and reported and confirmed. But this seems to have been a mere fugitive suggestion; for they conclude their opinion to Stoll by saying: 'We are not disposed to hold that the direction that the report of sale shall be filed within 10 days after sale is mandatory, but we have no question that the report of sale should lie over to the August term. ' Stoll inclosed this letter to Blanton and advised him that he had directed Pirtle & Trabue to correspond directly with him. Thereupon Blanton's attorneys, Messrs. Blanton & Berry, wrote to Pirtle & Trabue, saying, among other things, that they thought no appraisement necessary, and that, if the whole matter was to be done over again and a new contract of sale made, it would result in great delay. They expressed a willingness to do this if they insisted. A copy of this letter was sent to Stoll. They also stated that the order of confirmation had, by mistake, been entered prematurely, and would be set aside as suggested. Under date of August 22d, Pirtle & Trabue replied, saying: 'We think after the order of confirmation of the sale has been entered at the August term of the court that the objections heretofore made will be cured. We think we have expressed this opinion heretofore when we stated that it would not be necessary to begin over again in this matter. We should like to have the order entered on the 28th day of August approving and confirming the sale. The above opinion is given upon the assumption that the last report of sale shows that the appraisement was made prior to reporting the sale. We should like to see the last report of sale. As soon as we hear from you that the order confirming the sale has been made we will prepare a deed and send it to you. ' August 29th copies of order setting aside former confirmation and of the new order of August 28th confirming it were sent by Blanton, with an inquiry whether any other orders were necessary. To this Pirtle & Trabue replied, under date of August 30th, as follows: 'We have received your letter of the 29th inst., inclosing copy of order setting aside the previous confirmation of sale and continuing the case to the August term, and the order entered August 29th confirming the sale ordering the deed, etc. These orders seem to us all that is necessary. We will at once prepare a deed and send it to Mr. C. H. Stoll for his approval with the request that upon approving same he forward it to you for execution, and he will then arrange for the delivery of the deed and the payment of the money.'

Up to this time the Kentucky Company had manifested an earnest desire to straighten out the title and bring the trade to a conclusion. For reasons not shown, there occurred, just about the time of this opinion by Pirtle & Trabue, a change of mind as to the desirability of the property. A change of counsel occurred for reasons which may be conjectured, and the question of the sufficiency of the title was submitted to a Mr. Austrian, of Chicago, who is described as of the general counsel of the buying company. Austrian wrote Blanton, under date of September 5th, asking when he would be ready to finally consummate the matter. Blanton thereupon informed him of the conclusion reached by Pirtle & Trabue and their promise to prepare forms of deeds, and that since then he had heard nothing from them or Stoll. He also wrote that he was ready at any time to close the matter. But Mr. Austrian moved slowly. On September 14th he wrote that he would be in Louisville 'inside of the next week or ten days, at which time I will be pleased to take up the matter of the Megibben plant and bring the same to a conclusion. ' Time could not possibly have been regarded at this stage of the matter as of any moment, for Mr. Austrian did not materialize, nor was he heard from. Though written to three times to know the reason of the delay, no reply was elicited until December 13th, when he broke the silence by writing that Blanton's last inquiry of the cause of delay had been 'referred to Mr. Levy Mayer, who is at present out of the city. As soon as he returns he will endeavor to give you a reply. ' This was the first time that Mr. Blanton...