Tennessee Ice Co. v. Raine

• Decision Date: 18 May 1901
• Citation: 64 S.W. 29,107 Tenn. 151
• Parties: TENNESSEE ICE CO. et al. v. RAINE et al.
• Court: Tennessee Supreme Court

64 S.W. 29

107 Tenn. 151

TENNESSEE ICE CO. et al. v. RAINE et al.

Supreme Court of Tennessee.

May 18, 1901

Appeal from chancery court, Madison county; A. G. Hawkins Chancellor.

Proceedings by Gilbert D. Raine and others against the Tennessee Ice Company and another for the purpose of winding up its affairs, as an insolvent corporation. From a decree denying a petition and claim of the Jos. Schlitz Brewing Company, it appeals. Reversed.

Hays & Biggs, for complainants. R. F. Spragins, for defendants.

WILKES J.

The original bill in this case was filed to wind up the Tennessee Ice Company, as an insolvent corporation. It was filed by its manager and secretary on behalf of himself and all creditors and stockholders. The company was incorporated in 1890, and its charter is made part of the record. Answers were filed by some of the parties named as defendants, and there was an order to the clerk and master to report its indebtedness. Under this order the Jos. Schlitz Brewing Company, a foreign corporation, filed a balance of account for beer sold the company amounting to $453.40. It also filed a petition in the insolvency proceeding setting out that beer was sold to the company to the amount of $1,853.52, which was all disposed of by the company, and proceeds received by it and appropriated to its use and benefit, and that all but $453.40 of the proceeds had been paid the brewing company, and that it refused to pay this sum upon the ground that the contract made by the company was ultra vires and not warranted by any authority in its charter. The petition prays that its claim be allowed against the corporation, but that if that relief cannot be granted, because of the objection made, or for any other reason, then that petitioner be allowed to disaffirm the contract and recover for so much goods as had not been paid for, to wit, the sum of $453.40; that it have relief as upon an account for a balance of money had and received, or as for a conversion, and for such other and further and general relief as it might be entitled to under the premises. The petition was demurred to upon three grounds by the Second National Bank, as a creditor: (1) That the account was for beer sold and delivered, and it did not appear that the ice company was by its charter empowered and authorized to deal in beer; (2) that the sale of the beer to the company for purposes of resale was act ultra vires the charter; and (3) that the business of cold storage, which the company was authorized to carry on, did not give it the power to buy and sell beer, and its attempt to do so was beyond its power, and its contract void, and no recovery could be had thereon. This demurrer was sustained, the claims disallowed, and petitioner has appealed to this court and assigned errors.

We are of opinion there is error in the decree and action of the chancellor in the court below. Granting that the ice company had no right to buy and sell beer under its charter, which is not seriously questioned, and which we think admits of no doubt, the fact remains that it has received from the petitioner goods to the value of $453.40 which it has sold and converted to its own use, and for which it refuses to account. While the petitioner may not recover upon the contract as in affirmance of the same, it has the right to disaffirm such contract and sue for the proceeds of its property which the ice company, under the guise of a contract, has received, and which it seeks to repudiate without accounting for the benefits received. The contract is an executed one, so far as the petitioner is concerned. The property of the brewing company has been received and appropriated, and the ice company has the benefit.

The petition is in the alternative,--that a recovery be had in affirmance of the sale, but, if this cannot be done over the objection of the ice company, then that petitioner be allowed to disaffirm the contract and sue for the proceeds of the goods sold and not paid for, on the idea of a quantum valebat, or of money had and received, or consideration retained upon a void sale. A bill may pray for alternative relief, provided the prayer is consistent with the facts stated in the bill, when the complainant cannot foresee the result of his suit, or when the bill has a double aspect. Gib. Suit in Ch. § 183; Collins v. Knight, 3 Tenn Ch. 188; Merriman v. Lacefield, 4 Heisk. 218; Dodd v. Benthal, 4 Heisk. 609; James v Kennedy, 10 Heisk. 607; Marble Co. v. Harvey, 92 Tenn. 121, 20 S.W. 427, 36 Am. St. Rep. 71; Hill v. Harriman, 95 Tenn. 308, 32 S.W. 202; 1 Pom. Eq. Jur. p. 246. And, when there is a prayer for special and general relief, such relief may be granted as is justified by the averments of the bill, even though it be different from that primarily or specially asked for. Ross v. Young, 5 Sneed, 630; Hoyal v. Bryson, 6 Heisk, 141; O'Connor v. Hotel Co., 93 Tenn. 708, 28 S.W. 308. There is no objection in the demurrer in this case that alternative prayers are made in the petition, and the demurrer, as filed, does not go to the entire petition and relief asked, but only to that feature of it which seeks an enforcement of the contract, and not to the alternative feature that seeks a rescission and refunding. If there was an antagonism in the relief asked, it would be waived by the failure to object, but under the facts there is no real antagonism.

Counsel for the bank have cited a large number of authorities to sustain their contention that the courts will not enforce the ultra vires contracts of corporations; and this is undoubtedly true when the contracts are executory and the attempt is simply to enforce; but when the contract has been executed, on the one hand, and, on the other, the party has secured benefits for which it refuses to account, the rule is different, and, upon the repudiation of the contract by the party who has received the benefit, the opposing party may sue to recover the proceeds withheld. The petition in this case may, therefore, under the facts and prayer, be treated as one disaffirming a void executed contract, and seeking to recover back the consideration paid thereon. In Holt v Bank (C. C.) 25 F. 812, the court, speaking through Mr. Justice Brewer, said: "It may be considered as settled law to-day that when a corporation goes outside of its legitimate business and makes a contract, and that contract is executed, and the corporation has received the benefits of the contract, the courts will never listen to a plea of ultra vires." In Salt Lake City...