Payne v. Volkman

• Decision Date: 08 April 1924
• Parties: PAYNE ET AL. v. VOLKMAN ET AL.
• Court: Wisconsin Supreme Court

183 Wis. 412

198 N.W. 438

PAYNE ET AL.

v.VOLKMAN ET AL.

Supreme Court of Wisconsin.

April 8, 1924.

Appeal from Circuit Court, Rusk County; James Wickham, Judge.

Action by J. A. Payne and John G. Krcma against Charles Volkman and others. From a judgment of dismissal, plaintiffs appeal. Affirmed.

The plaintiff Krcma was a licensed real estate broker, residing at Ladysmith, Wis. The plaintiff Payne was a promoter living in Minneapolis. The defendants were copartners as Volkman Bros., doing a general mercantile business at Ladysmith, Rusk county, Wis. A large amount of evidentiary matter is recited in the complaint. We shall state only so much of the complaint as is necessary to an understanding of the question raised, and that in substance and not in the language of the complaint itself.

It appears that the defendants were desirous of disposing of their business, including the real estate used in connection therewith. After a series of negotiations, the plaintiffs procured from the defendants the following proposal:

“Merchants' Proposal to the People of Ladysmith and Vicinity.

Believing that co-operative buying and selling, on the American, Rochdale plan is the most just way of doing business, we hereby make the following proposition, viz.:

First. As soon as approximately 125 shares of capital stock of $200, each have been subscribed for, and a co-operative company, known as the Ladysmith Co-Operative Mercantile Company, or some other appropriate name, has been incorporated in accordance with the laws of this state, we agree to turn over to said company our entire stock of merchandise, fixtures, and unexpired fire insurance policies. Also the whole store building, now owned and occupied by us, and the meat market, together with all outbuildings, and sheds, and both lots on which said buildings stand.

Second. An invoice of said stock shall be taken by two persons, one chosen by the president of the co-operative company, and one by us, or we will act ourselves; and the prices allowed for said goods shall be on the basis of present wholesale, or market, value. The fixtures, and such goods as are old, shelf-worn, or damaged, shall be appraised by the two persons so chosen, and, in case they cannot agree, they to choose a third party to help them decide the real value of such goods and fixtures. The value of the real estate to be decided by the arbitration, or other persons chosen in the same manner. We also agree to take 5 shares of stock in said company.

Third. We agree to give a clear bill of sale to the co-operative company, at the time the valuation is determined, of the stock, fixtures, and a warranty deed of the real estate, and settlement shall be made by the directors of said company, on the following basis, to wit: We are to receive in cash and subscription notes, such portion of the proceeds, of the shares of stock sold and settled for, as shall equal the agreed value of the stock, and fixtures, and at least 50 per cent. of the appraised value of the real estate, and a mortgage on said real estate to settle the unpaid balance thereon.

Fourth. The membership as collected, by the solicitors may be used by them for organizing expense, and shall cover all expense of organizing to said company.

Fifth. We agree not to dispose of any merchandise by special or reduction sale methods while this company is being organized.

Sixth. That no member of this company shall hold more than $1,000 in shares nor have more than one vote.

In witness whereof we have hereunto set our hands this 9th day of July, 1921, at the city of Ladysmith, county of Rusk, and state of Wisconsin.

Chas. Volkman.

Fred Volkman.”

At or about the same time the plaintiffs entered into a contract with the defendants, of which the following is a copy:

“Agreement.

It is hereby agreed between J. A. Payne of Minneapolis, Minn., and John G. Krcma of Ladysmith, Wis., parties of the first part, and Volkman Brothers of Ladysmith, Wis., parties of the second part, that the parties of the first part, are to do the soliciting to sell the stock, and fixtures, and other property according to a proposition of even date herewith, belonging to the parties of the second part, and to furnish all literature, by-laws, fees necessary to incorporate a co-operative company, according to law, and to complete the sale.

Said second parties agree to pay the parties of the first part a commission of 7 per cent. (in cash) on all property sold as soon as said company is organized and have settled for said property.

‘Either party has the right to terminate this contract at the end of two weeks, providing that not sufficient subscriptions have been secured to organize the company. If there has been, then a reasonable time shall be given the parties of the first part to complete the sale.

Said first parties agree to divide all receipts from this sale equally between themselves, and to pay all the expense on the same basis.

In witness whereof we have hereunto set our hands this 9th day of July, 1921.

Chas. Volkman.

Fred Volkman.

J. A. Payne.

John G. Krcma.”

In reliance upon this agreement, the plaintiffs obtained a considerable number of subscribers to and purchasers of the stock of the proposed corporation; among others the defendants subscribed for 5 shares of such stock--2 1/2 shares each. On the 3d day of August, 1921, a meeting of about 30 farmers and residents of Rusk county, Wis., was called at Ladysmith. At this meeting the proposal made by the defendants was submitted to those present. It was there decided to form a co-operative company, to be known as the Rusk County Co-operative Store Company, with a capital stock of $50,000 divided into 250 shares of the par value of $200 each. The proposal made by the defendants was accepted by the meeting on behalf of the proposed corporation. The plaintiffs were hired on behalf of the proposed corporation as solicitors to secure the necessary subscriptions to the capital stock of the company; all stock subscribed for to be paid in cash, by check, or by subscription notes, payable to the order of the company.

In addition to the $200 per share, each member was to pay a $10 membership fee, which was to be paid to the plaintiffs for their services in selling the stock and procuring subscribers and the cost of incorporation. The plaintiffs thereupon entered upon the performance of the agreement, and between the 9th day of July, 1921, and the 30th day of September, 1921, secured purchasers and subscribers for 132 shares of the capital stock of the company, at $200 per share, and obtained 127 stockholders and members for such company, and the plaintiffs allege that they fully carried out their agreement. The subscriptions were paid in cash, by check, or by subscription note--in cash the sum of $1,500, the sum of $24,900 in subscription notes, and upon the membership fee $310 in cash and $960 in notes. On the 1st day of November, 1921, the company was incorporated under the name of Rusk County Co-operative Store Company, with...