Rollins v. Denver Club

• Decision Date: 01 June 1908
• Parties: ROLLINS v. DENVER CLUB.
• Court: Colorado Supreme Court

96 P. 188

43 Colo. 345

ROLLINS v. DENVER CLUB.

Supreme Court of Colorado

June 1, 1908

Appeal from District Court, City and County of Denver; John I Mullins, Judge.

Action by E. W. Rollins against the Denver Club. From a judgment for defendant, plaintiff appeals. Affirmed.

Orahood & Hurlbut, for appellant.

Tyson S. Dines, T. H. Hardcastle, and P. H. Holme, for appellee.

CAMPBELL, J.

The Denver Club was incorporated under the laws of this state not for pecuniary profit, but for social purposes. The sum of $35,000 was subscribed by its members as a building fund. Plaintiff, a member of the club from the beginning, was one of the subscribers to this fund, and to him, as to the others, was issued and delivered a receipt or certificate as follows: 'D. C. No. 27, $1,000.00. The Denver Club Building Fund. The Denver Club has received from E. W Rollins the sum of one thousand dollars, on account of the construction of the clubhouse in the city of Denver. The above sum is to be repaid at the convenience and pleasure of the club with interest at the rate of six per cent. per annum. In consideration of the several subscriptions of other members of the club to the fund of thirty-five thousand dollars, of which this is a part, it is agreed by the holder hereof that no demand will be made for the payment of this obligation, or any part thereof, until it can be prudently discharged in the discretion of the board of directors, from the surplus revenue of the club. All dividends upon the principal and payments of interest will be made pro rata. This certificate is transferable upon the books of the club only in person or by attorney on the surrender of this certificate properly endorsed. Witness the corporate seal of said club, and the signature of its president and secretary hereto affixed at Denver, Colo., this 1st day of September, A. D 1887. Edward F. Bishop, Secretary. Henry R. Wolcott, President.' [Seal of the Denver Club.] No part of the principal or interest having been received, plaintiff on June 5, 1903, demanded payment of the principal and interest without result, and six days later brought this action against the club. After alleging its incorporation, the execution and delivery by it of the certificate, nonpayment, and demand, the complaint thus sets out the breach of the contract: 'That the said amount and the interest thereon could have long since been prudently discharged, and that the board of directors of said club, under the exercise of the supposed discretion confided to them by the terms of said instrument, are improperly, wrongfully, and illegally refusing to exercise any discretion whatever in an attempt to compel this plaintiff to surrender the said instrument upon the payment of the principal thereof, requiring, as a condition precedent to the payment of any sum whatsoever, the forfeiture of the accrued interest thereon.' The complaint further alleges that defendant's board has refused to declare any dividends on this series of instruments, although having moneys on hand applicable to that purpose, but, on the contrary, from time to time has violated that portion thereof which provides that 'all dividends upon the principal and payments of interest will be made prorate,' in that it has heretofore paid several of the instruments of like character without making any pro rata apportionment on account of either the principal or interest hereon to the plaintiff. In its answer the defendant says that it did not execute, though its officers, without authority, may have executed and delivered, this certificate to the plaintiff; admits that neither the principal nor interest thereof has been paid; and denies that it could have been prudently discharged by the exercise of the discretion vested in its board, and denies that it has wrongfully or illegally refused to exercise or that it has wrongfully or illegally exercised any discretion given to it by the certificate, or that it ever attempted to compel plaintiff to forfeit any interest thereon. It alleges that during the lifetime of these instruments it has never had any surplus revenue out of which only, if at all, was it obliged to pay these instruments. It admits that all of them, except that of the plaintiff, have been paid, but without interest; that it offered to treat plaintiff in the matter of payment as it did all other certificate holders, and, in order to pay them, the club, not having any surplus revenue for such purpose, was obliged to and did borrow the money therefor. This new matter in the answer was denied in the replication. We have made this summary of the contents of the pleadings to bring out clearly the issues which the parties themselves tender, particularly in view of the fact that plaintiff in argument has attempted to ignore the case which he made in his complaint, and to base his recovery upon other grounds.

As preliminary to the main discussion, we notice the point made by defendant, to which a large part of the briefs of both parties is devoted, that the contract embodied in this certificate was not made by or under the authority of the club as a corporation, but, at most, is an agreement of its officers. There is a by-law of the club, of which plaintiff had constructive, if not actual, notice, declaring that no debt beyond the ordinary running expenses of the club shall be created without a two-thirds vote of the meeting of the club. It does not appear that such vote was taken, and there may be a serious doubt if the contract was ever legally ratified. If it were necessary to pass upon this point, it is not altogether clear that the defendant could be held; but, in disposing of the case upon another ground adverse to the plaintiff, we have assumed, for the purpose of the present opinion, that the contract was made by the defendant in its corporate capacity.

The foregoing summary of the pleadings sufficiently discloses that plaintiff's interpretation of the contract when he drew his complaint was not that there was an absolute promise by the...