Locke v. Taylor — 161 A.D. 44

Majority

p. 44

Fred M. Locke, Appellant, v. Vernon E. Taylor and Daniel H. Finucane, Respondents.

Fourth Department,

March 4, 1914.

Headnote

Contract — action on subscription agreement — evidence — estoppel.

In an action to recover moneys alleged to have been subscribed by the defendants for the purpose of inducing the rebuilding of a manufacturing plant, the plaintiff was unable to produce the subscription paper. The plaintiff testified that the defendants agreed to pay the sum claimed, upon an equal amount being expended in the rebuilding of the plant. But the defendants claimed that such sum was to be paid to a “ company ” to be organized for the purpose of building the plant.

Evidence examined, and held, sufficient to sustain a verdict in favor of the plaintiff.

The defendants were estopped from claiming for the first time after the commencement of the action that their subscription was only to become effective upon an equal amount being obtained from other designated parties, and evidence of such condition was properly excluded.

Evidence as to the defendants’ understanding of what was meant by the word “ company,” as used in the subscription paper which he signed, was incompetent, as there was no allegation that the signature was obtained by fraud or was made by mistake.

Appeal by the plaintiff, Fred M. Locke, from an order of the County Court of Livingston county, entered in the office of the clerk of said county on the 11th day of August, 1913, setting aside the verdict of a jury in favor of the plaintiff and granting a new trial upon the ground that the verdict was contrary to law.

This action was brought to recover the sum of $200, with interest thereon, alleged to have been subscribed by the defend

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ants for the purpose of inducing the rebuilding and reconstruction of a manufacturing plant in the village of Lima, N. Y., which had a short time before the subscription was made been destroyed by fire.

Plaintiff was unable to produce the subscription paper and secondary evidence of its contents was received. Though defendants, who are partners, admit that a subscription paper was signed by one of them in the name of both, the form and contents of the paper so signed were a matter of dispute in the testimony on the trial. Plaintiff gave testimony tending to show that it was in the following form: “We, the undersigned, agree to pay the sums set opposite our respective names to parties rebuilding the Lima Insulator plant, the same to become due and payable on an equal amount being expended on the rebuilding of the plant.”

On the other hand, the testimony given on behalf of the defendants tended to show that it read: “We, the undersigned, agree to pay the sums opposite our respective names to a company to be organized for the purpose of building and equipping an insulator plant upon the premises in the town of Lima lately occupied by the Lima Insulator Co., upon the conditions following: The said sums are to become due and payable when an amount equal to the amount subscribed shall have been expended on the erection "of said plant.”

Whatever may have been the exact language of • this subscription paper, it was actively circulated by and in behalf of a citizens’ committee appointed for that purpose at a public meeting of the citizens of that village, convened to consider ways and means to secure the rebuilding of the plant; and many subscriptions in varying amounts were secured, aggregating, inclusive of defendants’ subscription, nearly $2,000. At this time plaintiff’s wife was the owner of the site and wreckage of the old insulator plant, which she had purchased at a sale of the property by the trustee in bankruptcy of the corporation owning the plant at the time of the fire. The wife and son of plaintiff, then knowing that a subscription paper was to be prepared and circulated for the purpose therein indicated, began about that time the reconstruction and rebuilding of the plant; .and • thereafter, expended in rebuilding the plant and

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equipping it with machinery upwards of $25,000. The interest of the wife and son in the subscription here in question was thereafter assigned by them to this plaintiff.

George D. Peck, for the appellant.

Charles D. Newton [George W. Atwell, attorney], for the respondents.

The evidence warranted no other inference than that plaintiff’s assignors rebuilt the insulator plant in the expectation of receiving the subscriptions made by these defendants and others, and to some extent at least in reliance thereon. The purpose for which the subscriptions were made, whichever may have been the true form of the subscription paper, was, primarily at least, to secure the reconstruction of the insulator plant. If it was in the form which' plaintiff asserts, without. other limitation, then plaintiff, as- the assignee of the right therein of the parties who actually rebuilt the plant, was entitled to collect the subscription. The purpose of such a subscription agreement is to induce the parties who are or may become rightfully in the project of rebuilding to proceed with the enterprise. If acted upon by such parties, then the subscription agreement becomes ah enforcible contract for their benefit. It is then no longer a naked promise to give or contribute a sum of money; but is, when thus acted upon, supported by a consideration sufficient to establish the agreement as a valid contract to pay the sum subscribed. (Keuka College v. Ray, 167 N. Y. 96 .)

The learned trial judge, in his charge to the jury, submitted for their determination the question whether the subscription agreement was in the form as claimed by the plaintiff, or that asserted by defendants; further instructing them that if they found it to • have been as claimed by the former, plaintiff was entitled to a verdict; but if they should find that defendants’ version was correct, then they should further determine whether ;a company, within.-the meaning of. that ..tórm-.as'- used therein,' had-been, organized' for the. ,pur- • pose, .of building and'.'equipping the--plant'.as '.thereto' expressed.

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It was conceded that no corporation had been formed for that purpose. But there was evidence that plaintiff’s assignors had, while the reconstruction of the plant was proceeding, formed a partnership and were acting as partners in that business under the name of M. IP. Locke Manufacturing Company. The jury was in effect further instructed that the words “ company to be organized ” as used in the subscription agreement, if found to be in the form claimed by defendants, were ambiguous; and might mean either a corporation or a partnership to be organized, dependent upon the understanding and intention of the parties as to the meaning of the words; and then left it to the jury to determine what the parties understood that expression to mean. If they should find that it was understood and intended that a corporation was to be organized for that purpose, then, as the court charged, plaintiff was not entitled to recover; but if the partnership as formed met the understood requirements of the contract, then plaintiff was entitled to a verdict. Under the instructions of the court, to which no exceptions on the part of the defendants appear hi the record, the verdict of the jury in plaintiff’s favor seems to be supported by the evidence. Uor was the verdict disturbed by the trial court as being against the weight of the evidence. The single ground of reversal indicated in the opinion of the court was the exclusion of evidence offered by defendants to the effect that their subscription to the agreement as made was not to become effective and a 'valid subscription until • another subscription by designated parties in an amount equal to defendants’ subscription had been obtained. The exclusion of this evidence was considered by the trial judge as presenting error sufficient to require setting aside the verdict. It is to be observed that there is no suggestion that any such condition attached to defendants’ subscription appeared either in the paper itself or in connection with defendants’ signature thereto; nor is there any claim that either plaintiff or his assignors at any time down to the time the action was brought had any intimation of such a claim, or even that the fact that defendants’ claim that their subscription was a conditional one only had been called to the attention of any other subscriber to the paper. When the subscription was made by defend

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ants without any condition appearing on the paper, or being in any way communicated to the parties for whose benefit it was ostensibly made, ‘it became in effect an offer to pay the sum subscribed on compliance by those parties with the terms of the agreement. Acceptance of the contract on their part and their reliance thereon is shown by the fact that they thereafter continued the work of reconstruction of the plant with knowledge of the fact of defendants’ subscription and its purpose.

Under the circumstances defendants are estopped from now claiming that their subscription was to become effective as an actual subscription only in the event the condition, which it was sought by the' excluded evidence to prove, was fulfilled. Such an, oral, secret collateral agreement is at variance with the terms of the writing and ineffectual. (Phœnix Warehousing Co. v. Badger, 6 Hun, 293 ; Yonkers Gazette Co. v. Jones, 30 App. Div. 316 ; Lyell Avenue Lumber Co. v. Lighthouse, 137 id. 422 ; 151 id. 902; affd., 208 N. Y. 628 .) It follows that this evidence was properly excluded.

It is also urged that it was error to exclude the evidence as to defendant Mnucane’s understanding of what was meant by the word “company” as used in the subscription paper which he testifies he signed. While the meaning of that word as used in the subscription agreement was properly submitted to the jury as a question of fact for their determination in the event they should find defendants’ version of the contract to he the true one, yet the witness’ understanding of its meaning when he signed was not material or competent on that question, there being no allegation or claim that the signature was obtained'by fraud or was made by reason of misconception or mistake.

The order should be reversed, with costs, and defendants’ motion for- a new trial denied, with ten dollars costs, the verdict of the jury reinstated and judgment thereon entered for the plaintiff.

All concurred; Bobson, J., not sitting.

Order reversed, with costs, and verdict of jury reinstated.

Cases cited

Keuka College v. Ray 167 N. Y. 96 N.Y. 1901-05-10 p. 46
Lyell Avenue Lumber Co. v. Lighthouse 208 N. Y. 628 N.Y. 1913-06-03 p. 48