Tucker v. Colorado Indoor Trap Shoot, Inc.

• Decision Date: 23 June 1970
• Docket Number: No. 42431,42431
• Citation: 471 P.2d 912
• Parties: Lloyd G. TUCKER, Frances L. Miller and Robert S. Zschach, d/b/a Consolidated Sales Company, Plaintiffs in Error, v. COLORADO INDOOR TRAP SHOOT, INC., a Foreign Corporation, Defendant in Error.
• Court: Oklahoma Supreme Court

Page 912

471 P.2d 912

Lloyd G. TUCKER, Frances L. Miller and Robert S. Zschach, d/b/a Consolidated Sales Company, Plaintiffs in Error, v. COLORADO INDOOR TRAP SHOOT, INC., a Foreign Corporation,

Defendant in Error.

No. 42431.

Supreme Court of Oklahoma.

June 23, 1970.

Syllabus by the Court

1. If defendants, after their demurrer to plaintiff's evidence has been overruled, do not stand upon the demurrer, but put on evidence, they waive the demurrer, and if they do not move for a directed verdict after the parties have finally rested, they cannot urge against an adverse verdict that the evidence was insufficient to establish some elements of plaintiff's cause of action.

2. Promoters of a corporation to be formed are personally liable on a contract made on behalf of such corporation, but if the party with whom they contract agrees to look to the corporation, rather than to the promoters, for fulfillment of the contract, the promoters are relieved from liability thereunder.

3. It is only where errors complained of have resulted in a miscarriage of justice, or constitute a substantial violation of some constitutional or statutory right, that this Court will reverse a cause, because of the admission or rejection of evidence, the giving or refusing of instructions, or alleged errors in matters of pleading or procedure.

Appeal from the Court of Common Pleas of Tulsa County; Ed Morrison, Judge.

Action by a Colorado corporation against persons doing business as a sales company to recover money paid to said company under two companion contracts. After verdict and judgment for plaintiff, and the overruling of their motion for a new trial, defendants appeal. Affirmed.

Gable, Gotwals, Hays, Rubin & Fox, and Richard W. Gable, Ellis & Stark, and Victor Law Ellis, Jones & Givens and Jack Givens, Tulsa, for plaintiffs in error.

Rheam & Noss, Tulsa, for defendant in error.

BLACKBIRD, Justice.

This appeal involves a controversy arising out of the contractual relations between two business entities, one of which was Tulsa-based and called 'Consolidated Sales Company', referred to herein merely as 'Company', and the other of which was Denver-based and called 'Colorado Indoor Trap Shoot, Inc.', hereinafter referred to as 'Colindoor' of 'plaintiff'.

At the time Company and Colindoor contracted with each other, the Bloomer Company, a Chicago manufacturer of equipment for a certain type of indoor trap shoot establishment, had agreed to furnish such equipment for Company to sell under exclusive franchises in parts of the United States.

The transaction between Company and Colindoor involved in this action revolves around two written contracts dated August 30 and September 1, 1962, respectively, one of which, entitled 'CONDITIONAL SALER CONTRACT', is hereinafter referred to as 'P--1' (plaintiff's Exhibit 1), and the other, entitled 'SALES AGREEMENT', is hereinafter referred to as 'P--2' (plaintiff's Exhibit 2).

Under P--1, Colindoor was to purchase from Company the necessary equipment to open and operate one of the indoor trap shoot establishments in Colorado. Under P--2, in consideration for Colindoor's entering into P--1, and its payment to Company of $2,100.00 (which was referred to as 'earnest money'), Company agreed to sell Colindoor the exclusive right to sell, lease, and distribute all such indoor trap certain conditions, some of which will be hereinafter more particularly described.

The equipment which Colindoor agreed, in P--1, to purchase from Company for a total price of $27,500.00, included 6 Multi-Throw Automatic Trap Units. Of this sum, only $2,500.00 was required to be paid when these 6 units were ordered. By way of facilitating the financing of the remaining $25,000.00 of the equipment's purchase price, Colindoor, in one of P--1's provisions, agreed to furnish the necessary credit information, and file with 'CIT CORPORATION', or a lending institution of its own choice, the necessary applications and forms for 'PROCESSING OF THE REQUIRED FINANCED BALANCE * * *'; and, in the next paragraph of said contract, it was provided that the equipment would be shipped to Colindoor at Boulder, Colorado, 'UPON APPROVAL OF THIS SALES CONTRACT AND * * * (Colindoor's) CREDIT BY MULTI-THROW SALES COMPANY OF TULSA, THE SELECTED FINANCE INSTITUTION AND * * * (Company) * * *'. In the next consecutive paragraph of P--1, the parties to said contract declared it to be their understanding that Company would return the above mentioned $2,500.00 'DEPOSIT PAYMENT' to Colindoor should Colindoor 'BE UNABLE TO OBTAIN NECESSARY FINANCING CREDIT, EITHER THROUGH * * * (Colindoor's) OWN EFFORTS OR THOSE OF MULTI-THROW SALES COMPANY AND/OR ITS AFFILIATES.'

By the terms of P--2, Colindoor agreed to purchase, on or before February 1, 1963, 18 more Multi-Throw Automatic Trap Units, than the 6 covered by P--1 (together with accessory equipment like that described in said Conditional Sales Contract), but, in one of said contract's paragraphs, it was also provided that, if Colindoor failed to make such purchase by that date, the entire agreement became null and void, and the aforementioned $2,100.00 (prescribed by said contract to be paid Company by Colindoor) 'shall be returned * * * on or before March 15, 1963.'

Both the above mentioned $2,100.00 'earnest money' payment and the $2,500.00 'deposit payment' were made to Company by checks dated August 22 and September 1, 1962, respectively, drawn by one Dean M. Somers and Verna I. Somers, his wife, on a Denver bank.

Thereafter, Colindoor did not find an appropriate location for an indoor trap shoot establishment in Colorado, and Company did not ship the equipment described in P--1 to Boulder, as prescribed in said contract, or issue to Colindoor the exclusive Colorado franchise contemplated in P--2.

A few years later, Colindoor instituted this action, as plaintiff, naming plaintiffs in error 'D/B/A' Company, as defendants, to recover the $4,600.00 paid to Company, as aforesaid, together with interest from March 15, 1963, and costs. In its petition, said plaintiff alleged that it had caused the payments of $2,100.00 and $2,500.00 to be paid Company and that thereafter, in October, 1962, the defendant, Tucker, had been informed that plaintiff could not obtain the financing referred to in the above described contract provisions, and that defendants had not offered to obtain financing credit for plaintiff. Plaintiff further alleged, among other things in substance, that under the (above mentioned) terms of the two contracts it had with defendants, said contracts were now null and void, and plaintiff was entitled to the return of the $4,600.00; that plaintiff had made demand upon defendants for it, but that said demand had been refused.

The defendants (Tucker, Miller and Zschach) filed separate answers and/or amended answers, as individuals. In all of these answers, and execution of the two contracts was admitted, but defendants denied, in substance, that any of them signed same as individuals, or intended to incur any personal liability by reason thereof. They alleged that, instead, the contracts were entered into on behalf of Company, which was to be formed by defendants as promoters of such corporation. It was further alleged that, at the time of the execution of the two contracts, the parties that purported to act on behalf of Colindoor were likewise contracting and acting as promoters of a proposed corporation; that none of the parties executing said contracts intended to bind themselves personally, but only as promoters of their respective corporations; and that this was known to all of them. Defendants denied that plaintiff was unable to obtain the necessary financing to fulfill its contract agreements, and alleged that the defendant, Zschach, both for himself and on behalf of Company, offered to furnish the necessary financing. Defendants further alleged, in substance, that plaintiff's failure to purchase the equipment prescribed in the contracts constituted a breach thereof and relieved the defendants from any obligation to further perform thereunder.

Before the trial, both plaintiff and defendants answered interrogatories issued by the other, and, at the trial before a jury, the defendant, Zschach, was interrogated on cross-examination concerning some of the answers he had given to such interrogatories. When the hereinbefore described contracts were introduced in evidence by plaintiff, showing that the one referred to as P--1 was signed in the name of Colindoor, 'By: Dean M. Somers, Pres.', and the one referred to as P--2 was drawn for execution of both Colindoor and Company, as corporations, and it was further shown by plaintiff's evidence that, on the dates of these contracts, neither of the firms, in whose names the contracts were executed, had yet been incorporated, defendants demurred to plaintiff's evidence on the ground that both of said contracts were entered into as corporation contracts, and consequently defendants were not liable individually for any obligation that their execution purported to create. The court overruled this demurrer, defendants were allowed exceptions, and thereafter they introduced their own evidence, which included testimony from each of them. One of them, the defendant, Zschach, testified, on direct examination, that Company was not incorporated until October 22, 1962; that he is president of said corporation, and has approximately 'a hundred and thirty thousand dollars' invested in it. The witness denied that the business was operated as a partnership, before the incorporation. He further testified that the 6 Multi-Throw Automatic Trap Units, which Colindoor agreed to purchase under P--1, supra, were ordered from Bloomer Manufacturing, and were thereafter delivered to Tulsa, where they were left with Bekins Transfer Company. Mr. Zschach further testified that Company paid Bloomer $7,200.00 for them. Thereafter, plaintiff's counsel began his...