Stillinger & Napier v. Central States Grain Co.

• Decision Date: 26 April 1957
• Docket Number: No. 34084,34084
• Citation: 164 Neb. 458,82 N.W.2d 637
• Parties: STILLINGER & NAPIER, a Partnership, composed of Robert J. Stillinger and T. D. Napier, Appellee, v. CENTRAL STATES GRAIN COMPANY, Inc., a corporation, Appellant.
• Court: Nebraska Supreme Court

Page 637

82 N.W.2d 637

164 Neb. 458

STILLINGER & NAPIER, a Partnership, composed of Robert J. Stillinger and T. D. Napier, Appellee, v. CENTRAL STATES GRAIN COMPANY, Inc., a corporation, Appellant.

No. 34084.

Supreme Court of Nebraska.

April 26, 1957.

Syllabus by the Court

1. Preliminary negotiations leading to the execution of an integrated agreement of uncertain meaning are admissible for the purpose of determining the intentions of the parties, the conditions existing at the time, and the objects thereby to be accomplished, but not to vary plain terms of the instrument.

2. An officer or director of a corporation occupies a fiduciary relation to the corporation and is treated by a court of equity as a trustee.

3. An officer or director of a corporation, being a fiduciary, is denied business relationship with it without complete and truthful disclosure of all material facts known to him concerning the transaction and the subject matter of it. A material nondisclosure by a fiduciary constitutes a misrepresentation and a fraud.

4. A civil conspiracy is a combination of two or more persons to accomplish by concerted action an unlawful or oppressive object, or a lawful object by unlawful or oppressive means.

5. The principal element of conspiracy is an agreement or understanding between two or more persons to do a wrong to or inflict an injury upon another. It involves action and an intent to commit the act which results in the injury.

6. A conspiracy, like other facts, may be proved by direct or circumstantial evidence, and one means of proof is by showing overt acts or representations of the individuals charged with conspiracy.

7. A conspiracy need not be established by direct evidence of the acts charged but may, and generally must be, proved by a number of indefinite acts, conditions, and circumstances, which vary according to the purpose to be accomplished. If it be proved that defendants, by their acts, pursued the same object, although by different means, one performing one part and another another part, with a view to the attainment of the same object, the conclusion is justified that they were engaged in a conspiracy to effect that object.

8. If a conspiracy between the parties is established, whatever was done in pursuance of it by one conspirator is considered as the act of all and all are liable irrespective of the fact of the extent to which they benefited thereby, since it is sufficient if the proof shows such concert of action in commission of an unlawful act or such other facts from which a natural inference arises that the unlawful overt act was in furtherance of a common design of conspirators to commit the conspiracy

9. If a construction contract is substantially performed, the damage which the owner is caused by defective workmanship or unsuitable material used is measured by the fair and reasonable cost of remedying the defects.

Neighbors & Danielson, James L. Macken, Scottsbluff, Beatty, Clarke, Murphy & Morgan, North Platte, for appellant.

C. M. Bosley Palisade, Robert C. Bosley, Hayes Center, for appellee.

Heard before SIMMONS, C. J., and CARTER, MESSMORE, YEAGER, CHAPPELL, WENKE, and BOSLAUGH, JJ.

BOSLAUGH, Justice.

The action of appellee was for the recovery of a judgment of $21,750 and interest against appellant; an adjudication that it was a lien upon its grain storage facilities at Imperial, Nebraska; and for a foreclosure of the lien. The lien claimed included work and material furnished in the construction of grain storage facilities at Atwood, Kansas.

It was stated in the cause of action of appellee that it, as a subcontractor, on November 16, 1951, made a contract with Western Construction Company, trade name of Jack E. Mack, because of which appellee performed construction work on the Imperial and Atwood facilities; that payments for the period to April 1, 1952, were made; that appellee had not been paid for work done and materials furnished from April 1, 1952, to April 21, 1952; and that the amount owing therefor was the sum of $21,750.

The pleading of appellant upon which the case was tried was the second amended answer and cross-petition. It answered the petition of appellee by an admission of the contract of November 16, 1951, called the subcontract, between it and Jack E. Mack; by a denial of all other matters set forth therein; and by allegations that the lien claimed by appellee was false and fraudulent, that the claim of lien was filed with dishonest design for the purpose of defrauding appellant and casting a cloud on the title to its property, that the claim of lien included items not furnished to the Imperial construction, and that it failed to give appellant credit for payments made to or received by appellee.

The cross-petition asserted four causes of action:

The first was based on payments made by appellant to suppliers of materials to appellee incident to the construction contemplated by the subcontractor. The suppliers filed liens against the Imperial and Atwood grain facilities and appellant was compelled to pay and discharge them in the sum of $14,303.46 for which it sought judgment against appellee.

The second asserted that appellee contractually warranted its work and material; that it knowingly, in violation of its obligation, installed defective concrete and failed to tighten bolts and braces; and that the damage to appellant because of the former was $15,000 and the damage resulting to appellant because of the latter was $5,000, for the total of which it prayed judgment.

The third claimed that appellee and Jack E. Mack conspired to defraud appellant and as a consequence thereof it was damaged by misapplication by Jack E. Mack in the sum of $22,854.90 which appellant seeks to recover.

The fourth alleged that by overpayment made by appellant to appellee, accomplished by conspiracy and fraud of Jack E. Mack and appellee, it suffered damage in the sum of $16,962.50 for which judgment was asked against appellee.

The cause of action of appellee and the first cause of action of appellant were disposed of by stipulation of the parties and judgments in accordance with the stipulation. They are not involved in this appeal. The district court, after trial of the issues concerning the second, third, and fourth causes of action, found generally for appellee and against appellant and that the proof failed to establish fraud or conspiracy by or between Jack E. Mack and appellee in any respect as charged by appellant or a proper measure of damages for any of the acts or wrongs alleged to have been committed by appellee. The trial court rendered a judgment dismissing the second, third, and fourth causes of action and denied the motion of appellant for a new trial. The appeal is from the denial of the motion for a new trial.

The numerous persons who participated in the circumstances of this litigation and who were witnesses for appellant may appropriately be identified as a contribution to economy of space and prevention of the necessity of repetition of their given names:

John Ellis, an investment broker associated with Eastman, Dillon & Co., a member of the New York Stock Exchange, and Robert Brady, an employee of that firm, met Jack E. Mack, hereafter referred to as Mack, the former in February and the latter in February or March of 1951. They assisted Mack in procuring financing for the grain storage venture and they presented the proposal of Mack for the venture to Henry Sears & Co. and Payson & Trask.

Henry Sears, a partner, and Stellan C. Wollmar, an associate, of Henry Sears & Co., a private investment company of New York City, each participated in the preliminary negotiations with Mack.

Charles E. Saltzman, a partner of Henry Sears & Co., was a director of appellant when the agreement with Mack was executed.

Frederick K. Trask, Jr., was a partner in Payson & Trask, New York City, a firm employing its own capital in the equity financing field. He participated in the preliminary negotiations with Mack.

James E. McMullen, a partner in Payson & Trask and secretary-treasurer of appellant, had part in the preliminary negotiations with Mack and represented his firm, Henry Sears & Co., and appellant in their dealings with Mack after the agreement was made. He is a public accountant and has held important assignments with large industrial concerns.

Robert Hellendale and Edgar C. Morrison are each associated with the law firm of Carter, Ledyard & Milburn of New York City and they each participated in the preliminary negotiations, and the drafting of the agreement of appellant with Mack and the stock option agreement.

John D'Antonio, a graduate and practicing engineer, was employed by appellant as its technical representative during the construction of the Imperial and Atwood facilities to perform the duties of engineer specified in the agreement with Mack.

Arven D. Reynolds was employed by Mack from September 1949 to February 1952 as office manager.

Jack E. Mack was president and director of appellant, the contractor for the construction of the facilities, and he was sole owner of Western Construction Co.

The individuals named in the foregoing identification will each henceforth be referred to herein by his surname.

Robert Stillinger was a partner of appellee. He will be identified herein by his surname.

Mack was engaged in the construction of grain storage facilities. The Commodity Credit Corporation needed storage capacity of which there was a shortage and in order to interest persons in construction thereof offered to guarantee rentals therefor during a designated period of time. Mack had occupancy agreements for ten sites in Kansas and Nebraska and desired to build facilities thereon for himself but he had to secure large financial assistance to realize his desires in this respect. He went to New York City in the early part of 1951 seeking financial aid. He talked to Ellis and his associate Brady concerning his proposals...