Powell v. Batchelor
| Decision Date | 04 October 1915 |
| Parties | W. L. POWELL, Respondent, v. D. L. BATCHELOR, et al., Appellants |
| Court | Kansas Court of Appeals |
Appeal from Jackson Circuit Court.--Hon. Frank G. Johnson, Judge.
AFFIRMED.
Judgment affirmed.
Williams Hunter & Griffin, E. D. Ellison and James C. Williams for appellants.
Cook & Gossett for respondent.
--This suit is for damages for breach of a written contract concerning the assets, stock, and business management of a corporation called the Investment Security Company. The contract is dated December 17, 1909, and, by its terms, is between plaintiff and the defendant, D. L. Batchelor, but the petition charges that the latter was acting for himself and as agent for his co-defendant, James P Batchelor.
It seems that sometime in October, 1909, D. L. Batchelor, who for years had been the station agent for the Santa Fe Railroad at Las Vegas, New Mexico, came to Kansas City to look after some business for his brother, James P. Batchelor. While in the city he became acquainted with plaintiff through an advertisement of the latter's concerning the business (and the opportunity of securing an interest therein), of the Investment Security Company. This was a corporation organized under the laws of Missouri, in 1904, as the Powell-Moore Realty Company, but which had shortly thereafter changed its name to that it now bears. Originally its capital stock was $ 10,000 but this had been increased to $ 35,000. At the time Batchelor's attention was called to the company, all its stock was practically owned and controlled by the plaintiff. It was then maintaining what appeared to be an extensive and profitable real estate brokerage and rental business. Its office occupied five or six rooms, and presented an imposing appearance fitted up with desks, furniture, filing cases, cabinets, maps and all the paraphernalia usually found in a large and prosperous business of that kind. It was also imposingly organized, having a legal department, in charge of an ex-judge from Leavenworth, a rental department, a real estate department, a "business chance" department, a "stock-selling" department and perhaps others. The five or six men who worked under the company did so on a plan by which each man obtained what business he could and divided his commissions with the company. The personnel of these men changed from time to time, some going out others taking their places.
Whether the company really had a valuable and extensive business or was a mere pretentious shell does not definitely appear for reasons which will be hereinafter stated. Evidently, however, plaintiff must have made Batchelor some very flattering representations in regard thereto, judging from the stipulation for the release of Powell from liability on account thereof contained in the contract sued on and which will be set forth later. At any rate, Batchelor desired to purchase an interest in the corporation but thought the capital stock was larger than necessary. Thereupon Powell reduced the capital stock to $ 12,000. Whether this was done regularly as provided by statute or merely by "unanimous consent" does not appear. It was done, and thereupon Batchelor bought of Powell one-half of the stock paying therefor the sum of $ 6000. This money, for some unexplained reason, was not paid to Powell but went into the treasury, and a little over one-third of it seems to have been checked out by Powell to pay old debts of the company.
Batchelor went into the corporation the latter part of October, 1909, and was made president while Powell was elected secretary and treasurer. The business was conducted by both of them from that time until December 17, 1909. At that date trouble had been brewing for some time between Powell and Batchelor. The latter was claiming that Powell had fraudulently misrepresented the condition of the company to him, and Powell was perhaps objecting to the unauthorized withdrawal by Batchelor of $ 4200, the amount remaining in the treasury of the $ 6000 Batchelor had paid in. Matters being in this condition, the contract sued on was entered into on the date last above mentioned. It recited that, whereas Batchelor and Powell were the joint owners of The Investment Security Company, and Batchelor was dissatisfied, therefore, Powell agreed to turn into the company's treasury a farm of 120 acres in Greene county, and withdraw entirely from the management of the business. He also guaranteed that the liabilities of the company at that time (aside from mortgages on real estate), did not exceed the sum of $ 1500. Batchelor agreed and bound himself to pay said liabilities, to continue the business under the same name for a period of six months, during which time Powell was to have the option of buying Batchelor's interest at the price of $ 6000. Batchelor further agreed not to sacrifice any of the money or assets of said company without Powell's consent, to maintain said business in good running order, keeping its expenses paid and obligations promptly met during said six months, so that Powell might have an opportunity to get others interested with him in finally taking over the business, or so that a reasonable sale of said business would be possible at any time during that period. It was further provided that said Powell was released from any and all obligations of any kind whatever and absolved from any alleged liability regarding any previous representations of every kind; that the stock then held by both parties, or either of them, should be offered for sale, and, when any was sold, the proceeds were to be applied to the purchase of Batchelor's stock, and if said Batchelor failed to receive $ 6000 within six months, then Powell was to forfeit all interest in the company and its assets. Powell also agreed to assign his $ 6000 of stock to said Batchelor pending the final completion of this contract.
Pursuant to the execution of this contract, Powell deeded the Greene county farm to the company (subject to incumbrances aggregating $ 1500 with interest accrued thereon since the summer and fall of 1909), assigned his stock to Batchelor, turned over the entire management of the business to him, and engaged in another business. Batchelor carried on the business from December 17, 1909, until the 30th of March, 1910. He says that during this time, although he cut down expenses as low as he could, the business was conducted at a loss of $ 150 per month.
According to Batchelor's testimony he called on Powell about March 20, 1910, and asked him if he desired to exercise the option contained in their contract, and Powell told him he did not as he had no intention of ever embarking in that business again. Thereupon, on March 30, 1910, Batchelor caused the corporation to deed the Greene county farm to Blanche Batchelor, wife of James P. Batchelor. He also caused the company to transfer a twenty-five-foot lot on Jackson avenue in Kansas City to his son, C. D. Batchelor, and to turn over to C. D. Batchelor and J. H. Batchelor, son of J. P. Batchelor, certain stock in the Automatic Rapid Mail Service Company, a corporation organized to manufacture and sell a device for picking up mail sacks by railway trains when going at high speed. This device, however, had not been approved by the United States Government and its value depended wholly upon that approval. The recipients of these pieces of property and shares of stock paid nothing to the company for them. On the same day, said D. L. Batchelor made a conditional sale of three-fourths of the capital stock of the Investment Security Company to three men who were then in the company's offices, retaining a one-fourth interest himself. It was provided in this contract of sale that Batchelor would hold the purchasers harmless from anything growing out of the contract between him and Powell, but it was further provided that in case Powell chose to exercise his option thereunder, then said purchasers of said capital stock would assign their respective stock in accordance therewith and Batchelor would pay them back the consideration he had received from them plus twenty per cent profit, they to have all the earnings of the company that might accrue in the meantime. Batchelor then turned the corporation, its offices and furniture, over to these men and returned to Las Vegas.
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