Lowery v. Fuller

• Decision Date: 05 April 1926
• Parties: FRANK LOWERY, APPELLANT, v. J. E. FULLER, RESPONDENT. [*]
• Court: Kansas Court of Appeals

281 S.W. 968

221 Mo.App. 495

FRANK LOWERY, APPELLANT, v. J. E. FULLER, RESPONDENT. ^[*]

Court of Appeals of Missouri, Kansas City

April 5, 1926

Appeal from the Circuit Court of Livingston County.--Hon. Arch M Davis, Judge.

AFFIRMED.

Judgment affirmed.

A. G Knight for appellant.

Ed. C Hyde, Laurence M. Hyde and Ira B. Hyde for respondents.

ARNOLD, J. Bland, J., concurs. Trimble, P. J., absent.

OPINION

ARNOLD, J.--

This is an action in damages based upon an alleged violation of the terms of a contract for the sale of stock of the Fuller Lumber Company, a corporation.

The Fuller Lumber Company, a Missouri corporation, was operating six lumber yards in the States of Missouri and Iowa. In 1921, J. E. Fuller was president, Frank Lowery (plaintiff herein) secretary, and Roy Miller, treasurer of said company, the three owning all the capital stock of the concern consisting of 1250 shares. Fuller owned 850 shares, Lowery 250 and Miller 150. Lowery had charge of the books of the company and did part of the buying and auditing. Lowery and Fuller lived at Princeton, Mo., where the company maintained a yard and the principal offices of the company. Roy Miller lived at Trenton and managed a yard which the company maintained at that place. As shown by the record, Fuller received a salary of $ 2400, Lowery $ 3,000 and Miller $ 1800 per year for their services.

On March 24, 1921, Fuller and Lowery entered into a written contract by the terms of which Fuller sold Lowery the 850 shares of the capital stock of the company owned by him, for the price and sum of $ 185 per share, payment to be made as stipulated. The contract is not long and therefore may be set out in full herein, as follows:

"Between J. E. Fuller of Princeton, Mo., party of the first part and Frank Lowery of Princeton, Missouri, party of the second part, witnesseth:

"Party of the first part is the owner of 850 shares of the capital stock of the Fuller Lumber Company, a corporation of Princeton, Missouri and the said Frank Lowery, a second party, agrees to buy or procure purchasers thereof of the said 850 shares of stock of above named at $ 185 per share upon the following terms and conditions:

"That payment shall be made on the said 850 shares as follows:

"There shall be $ 85 per share paid in cash or good bankable notes bearing eight per cent. per annum interest due in one year or less. The said J. E. Fuller, first party, agrees to carry balance of the purchase price for a term of two years as evidenced by promissory notes on the collateral form of old Bank of Mercer county, due on or before two years from date with eight per cent. per annum interest from date until paid and with the above-mentioned stock as security.

"It being understood and agreed that outside of the regular yard indebtedness for merchandise bought and not paid for the said J. E. Fuller has incurred no indebtedness against said corporation, except salaries and wages.

"The sum of thirty thousand dollars is hereby paid on the above sale, receipt of which is hereby acknowledged. It being understood and agreed that parties hereto have thirty days in which to complete said sale, and if said second party fails or refuses to complete said sale within thirty days, said sum to be retained by first party as liquidated damages.

"Said Fuller agrees that he will not directly or indirectly engage in the retail lumber business in any county in which a yard of the Fuller Lumber Company is at present located.

"As a total at least half of the $ 85 per share to be paid in cash within thirty days.

"It is understood and agreed that the said Fuller Lumber Company owes income tax of $ 6150 shown by their 1920 report. Any additional assessment shall be paid by present stockholders. J. E. Fuller, Frank Lowery and Roy Miller in proportion to number of shares owned by each of them.

"Signed in duplicate this 24th day of March, 1921.

"(SIGNED) "J. E. FULLER

"FRANK LOWERY."

From the second paragraph in the contract it is readily seen that Lowery and such others as he might procure to take stock were purchasing all of J. E. Fuller's holdings in the corporation. It appears the company was prosperous and paid substantial dividends. As part of his dividend for the year 1920, Lowery accepted a note of one W. L. Collings for $ 1950 which had been given to the company for a bill of lumber purchased. The said note was dated June 1, 1920, due December 1, 1920, and was endorsed to Lowery as follows:

"To Frank Lowery

Fuller Lumber Company

By J. E. Fuller."

It further appears that in 1921 Lowery and Miller (brothers-in-law) became dissatisfied and Miller resigned and opened an opposition lumber yard in Trenton, Mo. Thereupon Lowery refused to have anything to do with the Company's yard in Trenton and Fuller personally took charge of it and on March 24, 1921, the contract above set out was entered into.

As part of the $ 30,000 required by the terms of the contract to be paid upon its execution, Lowery delivered to Fuller the $ 1950 Collings note, on which he made the following endorsement:

"Payment guaranteed, 3-28-21

Frank Lowery."

On April 8, 1921, Fuller collected the interest to that date on the said note and $ 500 on the principal and endorsed the note without recourse to the Fuller State Bank of Princeton, Mo., of which he was president. Thereafter the bank collected from Collings the interest and an additional sum of $ 200 on the principal.

In 1922, Collings was declared a bankrupt and the Fuller State Bank brought suit against Lowery on his endorsement and guaranty of the Collings note. Lowery filed a demurrer to the petition in that suit and the bank thereupon filed an amended petition embracing the facts just stated and alleging that Lowery assigned said note after maturity to Fuller for a consideration of $ 2077.33, guaranteed payment, waiving demand notice, protest and notice of non-payment and agreed to extension of time without notice; that Fuller endorsed the note without recourse to the bank, after maturity, for a consideration of $ 1556.66. Lowery's answer to the petition was a general denial. A judgment was rendered in favor of the bank and against Lowery for $ 1379.16 and $ 75 attorney's fee, and on November 7, 1922, Lowery paid the judgment.

As stated in the contract between Fuller and Lowery for the sale of the stock, the Fuller Lumber Company owed the U.S. Government a balance on its 1920 income tax of $ 6150. The company's return showed that it owed the U.S. income and excess profit tax in the sum of $ 8207.70; but before the execution of the contract now involved, and when the return was sent to the collector of internal revenue, a payment of $ 2057.70 was made, thus leaving a balance of $ 6150 as above indicated.

The record discloses that at the date of the contract the Missouri state income tax for 1920 in the sum of $ 483.16 was not paid. In 1922, there was an additional assessment of $ 745.71 paid by the corporation which, in the meantime, had changed its corporate name to the Lowery-Miller Lumber Company. Thereafter Lowery procured an assignment from the other holders of stock in the corporation of such rights as it was claimed they had against Fuller, under the contract, and this suit followed.

The petition alleges the formal matter above stated and charges that the Fuller Lumber Company thereby became and was liable for all the amounts so paid by plaintiff, and that plaintiff was compelled to pay the Fuller State Bank and that said note and endorsement constituted a liability and outstanding obligation of said company to plaintiff.

It is further alleged in the petition that by the terms of the contract entered into between Frank Lowery and J. E. Fuller, aforesaid, said Fuller agreed that outside the regular yard indebtedness for merchandise bought and not paid for, the said Fuller, on behalf of said company, had incurred no indebtedness against said company except for salaries and wages; that it was further understood and agreed that the said Fuller Lumber Company owed the U.S. Government a balance of $ 6150 based upon the 1920 return, and that any additional assessment for income tax should be paid by the then stockholders of the Fuller Lumber Company, to-wit, J. E. Fuller, Frank Lowery and Roy Miller, in proportion to the number of shares owned by each; that at the date of said contract, in addition to the $ 6150 owing to the U.S. Government by the Fuller Lumber Company there was an additional assessment of $ 745.71 due the U.S. Government for the year 1920 and a State Income Tax for the year 1920, of $ 483.13, all of which the Fuller Lumber Company, after the purchase of the stock aforesaid, was compelled to, and did, pay and which by the terms of said agreement, the said J. E. Fuller was obligated to pay to plaintiff and others purchasing said stock his proportionate share, to-wit, 850/1250ths of said total sum of $ 1228.84, or the sum of $ 835.46, which said Fuller refused to pay; and that said Fuller further refused to pay the judgment, note and attorney's fee.

Judgment is sought herein for the amount of his proportionate share of the judgment referred to, together with the amount of the income tax paid as alleged in the sum of $ 833.46, or a total sum of $ 1849.62, together with interest and costs.

The note in question is filed as an exhibit and is in words and figures as follows:

"Princeton Missouri, June 1, 1920.

"1950.00

"Six months after date; I, we, or either of us, as principals promise to pay to Fuller Lumber Company or order Nineteen Hundred Fifty and No/100 Dollars.

"For value received, with interest thereon from date at the rate of eight per centum per annum, which shall be due and paid annually and if the...