Ottawa Cnty. Nat. Bank v. Bouldin

• Decision Date: 22 December 1925
• Docket Number: Case Number: 15532
• Citation: 1925 OK 1025,246 P. 434,117 Okla. 104
• Parties: OTTAWA COUNTY NAT. BANK v. BOULDIN et al.
• Court: Oklahoma Supreme Court

1925 OK 1025

246 P. 434

117 Okla. 104

OTTAWA COUNTY NAT. BANK v. BOULDIN et al.

Case Number: 15532

Supreme Court of Oklahoma

Decided: December 22, 1925

Syllabus

¶0 1. Pleading--Demurrer--Waiver by Pleading Over. Where a demurrer to a petition is sustained by the court, and plaintiff asks leave to file and does file an amended petition, he thereby waives the error, if any, in sustaining the demurrer, and the filing of the amended petition is an abandonment of the original petition.

2. Partnership--Mere Agreement for Relation in Future. The law has always treated the partnership relation as founded in voluntary contract. It does not surprise parties into a partnership against their will, and where parties have entered into a contract to become partners at some future time, or upon the happening of some future contingency, they do not become partners until the agreed time has arrived or the contingency has happened. The mere agreement to form a partnership does not of itself create a partnership.

3. Same--Liabilities as Partner -- Burden of Proof. Where there is no partnership existing as a matter of law, a defendant cannot be charged as a partner unless his conduct is such as to estop him denying the partnership, and a plaintiff who relies upon such conduct must plead the estoppel, and where one defendant denies he is a member of a partnership, the burden of proof is upon the plaintiff.

4. Same--Necessity for Allegation in Petition. Where plaintiff sues F. R. B. and A. A. B. as individuals, recovery cannot be had against A. A. B. as a partner of F. R. B., in the absence of any allegation in the petition setting up a partnership.

5. Reformation of Instruments -- Option Contract not Reformed to Constitute Sale of Corporate Stock. Where F. B. and A. B. sign an agreement drawn in the form of an option contract for the purchase of shares of stock in a corporation, equity will not reform the contract, and convert it into a contract for the purchase and sale outright of such stock, and upon such reformation render judgment against A. B. for the sum at which H. agreed to sell the stock, where there is no evidence tending to prove A. B. had any knowledge of the fact that F. B. and H. had agreed the signed agreement was not to be an option, and in the absence of any evidence tending to prove F. B. was the agent of A. B. or had any authority from A. B. to enter into such a contract.

Marshall W. Hinch and Clyde Morsey, for plaintiff in error.

Y. P. Broome, for defendant in error A. A. Beard.

RUTH, C.

¶1 Plaintiff's petition alleges defendants agreed to purchase from L. B. Hering 1,000 shares of the capital stock of the Redskin Mining Company, for the sum of $ 5,000, and paid $ 25 when the agreement was signed and agreed to pay the balance in monthly installments, and that Hering duly assigned the contract to plaintiff for a valuable consideration.

¶2 Defendant Beard demurred to the petition, which demurrer was by the court sustained, and plaintiff filed its amended petition, wherein it alleges:

"That it was expressly understood by and between Hering and defendants that the transaction was a sale of said stock and not an option to purchase same; * * * that through a mutual mistake in the parties in drafting said written agreement, same was drawn in the form of an option contract, but that said contract was expressly intended to be a contract of sale and not an option for the purchase of said stock."

¶3 Plaintiff tenders the stock into court for the benefit of defendants, prays that the contract be reformed, and prays judgment against the defendants in the sum of $ 4,975. Plaintiff attaches a copy of the agreement which bears date as of September 15, 1920, the last payment to be made January 1, 1921, and the assignment to plaintiff bears date as of October 14, 1922.

¶4 The defendant Bouldin entered no defense, but defaulted. The defendant Beard filed answer consisting of a general denial, and for further answer says that there was no mistake in drafting the contract, but that the contract fully and completely sets out the agreement between the parties. Defendant further alleges that long after the option had expired, and after Hering is alleged to have assigned his contract to plaintiff, and on the 27th day of December, 1922, Hering voted said stock at a stockholders' meeting of the Redskin Mining Company, and voted it in favor of a resolution passed by the stockholders at the meeting, authorizing the transfer of all said Redskin Mining Company's assets to the creditors of the company, and pursuant to said resolution the assets were so transferred and the company wholly divested of all its property and assets, and the said company at this time and at the time of the filing of this action had no property or assets whatever, and at the time of filing this suit the company had ceased to engage in any business, had become dormant, and did not, at the time of the filing of this suit, and does not now, legally exist as a corporate entity. The cause was tried to the court, judgment was rendered against the defendant Bouldin for the sum claimed, and judgment was rendered in favor of the defendant Beard for his cost. From the judgment in favor of Beard, the plaintiff appeals.

¶5 The petition tendering the stock into court, praying for reformation of the contract, and praying judgment for the sum alleged to have been agreed to be paid for the stock, presents squarely a petition for specific performance of a contract for the purchase and sale of stock in a corporation, and while this court has passed upon this precise question, we are not called to pass upon it at this time, as the cause was not tried upon that theory in the trial court; the defendant Beard standing squarely upon the contract, as an option contract.

¶6 Plaintiff contends: "(1) That the agreement was not an option contract. (2) That this being an equity case, this court will review and weigh the evidence and render such judgment as the trial court should have rendered. (3) That if the court was correct in its conclusion that the contract was drawn in the form of an option, then the instrument should have been reformed as to both defendants."

¶7 The court could reach no other conclusion than that the agreement was drawn in the form of an option contract, as the plaintiff specifically alleges in his amended petition that it was so drawn, but was so drawn through mutual mistake, and the determination of the mutuality depends upon the testimony introduced. A demurrer was sustained to the plaintiff's original petition, and plaintiff asked for and was granted time to amend, thereby waiving any error in the order sustaining the demurrer and abandoning his original petition.

"By making application to amend after a demurrer has been sustained, it is plain that the party intends to waive whatever error there may be, if any exists, in order that he may have the privilege of curing the defect in the original pleading. The filing of an amended pleading is an abandonment of the prior one, and the application to file an amended pleading manifested an intention to abandon the former." Board of Com'rs of Garfield County v. Beauchamp, 18 Okla. 1, 88 P. 1124; Berry v. Barton, 12 Okla. 221, 71 P. 1074; Morrill v. Casper et al., 13 Okla. 335, 73 P. 1102; Rogers v. Brown, 15 Okla. 524, 86 P. 443; Carle et al. v. Oklahoma Woolen Mills, 16 Okla. 515, 86 P. 66; Cates v. Miles, 67 Okla. 192, 169 P. 888; Cabell v. McLish, 61 Okla. 224, 160 P. 592; Campbell v. Thornburgh, 57 Okla. 231, 154 P. 574; Guess v. Reed, 49 Okla. 124, 152 P. 399; Chidsey v. Ellis, 31 Okla. 107, 125 P. 464; Pacific Mut. Life Ins. Co. v. O'Neil, 36 Okla. 792, 130 P. 270.

¶8 The defendant Bouldin was called as a witness for the plaintiff. Bouldin had defaulted in answer, and appeared perfectly satisfied to have judgment rendered against him. We gather from the evidence that Bouldin was not furnishing any money in the deal and Bouldin appeared to be a willing witness for the plaintiff. Bouldin was being sued for $ 4,975, and testified for plaintiff, and his testimony, summarized, is as follows: Witness saw Hering and asked him if he had any more of the Redskin he wanted to sell; that he thought he could handle it. Hering asked who Bouldin was going to sell it to, as he, Hering, knew Bouldin could not buy it. (Hering evidently knew the financial standing of the man he was dealing with.) Bouldin said he was going to sell it to A. A. Beard. Witness then saw Beard at the Miami Hotel, and told Beard he could get Hering's stock for $ 5 per share. That they (Bouldin and Beard) would not have to put up any money; that he could "tie up" the Hering stock and they would pool it with their stock, and he (Bouldin) could sell the pooled stock immediately, or in a very short time, and Beard said. "We'll see about it". According to the record, these were the only words spoken by Beard before the contract was entered into. Bouldin then saw Hering. He "thinks" he reported back to Beard, but does not remember what Beard said, but he feels "he would not have made the contract if it had not been satisfactory to Beard." Bouldin had sold some of Hering's Redskin stock to some Vinita people on a commission basis, and Hering was going to pay Bouldin a ten per cent. commission for handling this stock. Bouldin "did not know who was going to put up the money for the purchase of the stock; he expected to turn it so quick that he didn't think any cash would be necessary."

"Q. Didn't you use the same form of contract, now it was understood between you and Mr. Hering and the other parties that was an option in that Vinita case wasn't it? A. Yes, sir."

¶9 Bouldin drew the contracts for Hering, both in the sale of stock to the Vinita people and the Beard deal. The contract drawn in option form, as admitted by the amended petition, was sent to Beard at Tulsa, who signed and returned same to Bouldin at Miami. So far as the record discloses, Bouldin never sold...