Boston Box Co. v. Shapiro

Braley, J. The plaintiff’s amended declaration contains a first count for a balance of $1,301.96 and interest, alleged to be due according to an account annexed for paper boxes sold and delivered to the defendants, who are copartners manufacturing ice cream cones under the firm name of Southwest Cone Company; and a second count to recover damages for breach of an alleged oral contract of the defendants to purchase “ two million paper boxes.” The entire report of the auditor to whom the case had been referred was introduced, and his findings for the plaintiff on the account annexed were admissible. While the reasonableness of the price charged was disputed, it was also agreed that the items in this count, with certain exceptions which need not be enumerated, were actually delivered and received by the defendants. It was for the jury to determine the amount which the plaintiff was entitled to recover under this count. But as to the second count, the auditor expressly found, that the contract therein declared on, that the defendants agreed to purchase two million boxes, was never made. It would follow on this finding, that the plaintiff had failed before him to make out a case under the second count. The auditor however went further, and found, that there was an oral contract between the parties, that the defendants should purchase of the plaintiff the product of one hundred tons of paper stock which would be approximately two million boxes, and that the total amount of stock purchased by the plaintiff during the' period alleged to be covered by the contract was sufficient “ to manufacture a little in excess of two million boxes,” and that, for breach of this contract, the defendants were liable in damages. It was agreed, however,' at the trial before the jury, that not more than five or six hundred thousand boxes possibly could be made from one hundred tons of paper stock, and neither party, either at the hearing before the auditor or at the trial, con — 377 — tended “ that any such contract was made but both parties expressly disclaimed it.” The defendants thereupon moved to recommit the report for review as to that part relating to the contract as found by him. The motion was denied, and the defendants excepted. This exception must be overruled. It was on the record matter of discretion, and not matter of law, whether the motion should be allowed. Tobin v. Kells, 207 Mass. 304, 309, 310, and cases cited. The defendants also moved to strike out so much of the report as related to the contract found by the auditor, and excepted to the denial of the motion. This exception must be sustained. The report as to the second count did not conform-to the pleadings. The declaration had not been further amended, and this portion of the report was inadmissible, and should have been excluded, with appropriate instructions to the jury not to consider it in evidence. Snowling v. Plummer Granite Co. 108 Mass. 100. Fisher v. Doe, 204 Mass. 34, 38, G. L. c. 221, § 56. It follows in this connection, that the presiding judge should have given the defendant’s third and fourth requests, that the plaintiff under the pleadings could not recover on the contract found by the auditor, and the exceptions to his refusal so to rule must be sustained. It is unnecessary to review the defendant’s exceptions to so much of the auditor’s report as dealt with damages. If the contract he found was excluded, damages based thereon could not be assessed. The case accordingly stood for trial on the second, as well as on the first count of the amended declaration. The question, whether the contract declared on had been entered into, was for the jury on conflicting evidence. Gerrish Dredging Co. v. Bethlehem Shipbuilding Corp. 247 Mass. 162. The plaintiff company was organized on or about August 2, 1918, and the defendant Joseph Shapiro, one of the three original incorporators, was with the other defendants as co-partners doing business as the Southwest Cone Company, which in the manufacture and vending of ice cream cones required paper boxes for the shipment of the cones. It-was decided by the incorporators, consisting of Shapiro, — 378 — Friedland and Farr, to organize the corporation, and with the knowledge and consent of Shapiro and the other defendants, Friedland entered into a contract with a wholesale paper company for the purchase of raw stock from which to manufacture the boxes. It could be found on the evidence introduced by the plaintiff, that when the order for the stock was placed, Joseph Shapiro told the agent of the wholesale paper company which was to furnish the stock, that his firm intended to use a large number of the boxes which the proposed corporation was to manufacture. And that the defendants made substantial advancements to the plaintiff for the purchase of machinery, “ and secured further sums ” for them “ by the indorsement of the company’s notes.” The delivery of boxes began about November 21, 1918, and continued until about June 1, 1919, the number delivered amounting to seven hundred and sixty-two thousand, nine hundred and five. It is not contended, that the alleged contract, having been made before the organization of the corporation had been completed as required by our laws, is unenforceable. The plaintiff, although subsequently fully organized, was at the time a corporation de facto. And on the testimony of its witness Friedland in connection with the evidence just described, the jury, notwithstanding the positive denial of the defendants and the evidence of the incapacity of the defendants’ factory to use more than five or six hundred thousand boxes during the period, could find, that in August, 1918, Samuel Shapiro agreed orally with Friedland, representing the corporation, “ to purchase . . . two million paper boxes to be delivered within one year, as follows, 1,000,000 No. 5 extra; 600,000 No. 8, and 400,000 of two sizes, 2^ and 6.” The plaintiff claimed that it purchased the stock for the purpose of fulfilling the contract. It was admitted, that about June, 1919, the defendants notified the plaintiff that they would accept no more boxes, and that the total amount of raw stock purchased during the year was approximately four hundred and nine tons, each ton being sufficient for the manufacture of five or six thousand boxes. But, even if — 379 — some of the stock bought by the plaintiff for the purpose of fulfilling the contract still remained, the defendants’ first request, that, unless the plaintiff proved by a fair preponderance of the evidence that the defendants agreed to purchase two million boxes of the sizes specified at the prices specified within one year, it cannot recover under count two of the declaration, should have been given. Its refusal was error. It is also contended, that, if the alleged contract had been proved, the plaintiff could not recover for loss of profits, and that the instruction, to which the defendants excepted, that such loss could be recovered, was wrong. If the defendants were found to have wrongfully refused to accept and pay for the boxes which remained to be manufactured under the contract, and delivered at the date of the breach, the measure of damages was the estimated loss, directly and usually resulting in the ordinary course of events. The question was for the jury, and the loss of prospective profits under the circumstances shown by the record could be properly allowed. Gagnon v. Sperry & Hutchinson Co. 206 Mass. 547, 555. Nelson Theatre Co. v. Nelson, 216 Mass. 30, 35. G. L. c. 106, § 56. See Tufts v. Bennett, 163 Mass. 398. This exception is overruled. The fifth and ninth requests not having been pertinent to the questions at issue under the second count, were denied rightly. The bill in equity, brought by a minority stockholder of the plaintiff in which Joseph Shapiro was one of the defendants, should not have been admitted for the purpose of contradicting Joseph Shapiro and Samuel Shapiro, who had testified that, until the present action, they had never heard there was a contract between the parties for the purchase of two million- boxes. Samuel Shapiro is not named in the bill, and it does not appear that Joseph Shapiro was ever served, with process or entered an appearance in the suit. See Melvin v. Whiting, 13 Pick. 184; Elliott v. Hayden, 104 Mass. 180; Boyle v. Chase, 117 Mass. 273; Johnson v. Russell, 144 Mass. 409; Radclyffe v. Barton, 161 Mass. 327. The defendants filed a declaration in set-off consisting of several items, on which the jury returned a verdict of — 380 — $332.50, the amount found by the auditor; but the verdict does not include the sixth item, as the judge, subject to the defendants’ exception, ruled that they could not recover. The circumstances under which the promissory note declared on in the sixth item was given to one of the defendants Joseph Shapiro by the plaintiff, and by him indorsed without consideration to the partnership, do not appear to have been in dispute. Shapiro, who held the promissory note of Friedland, the plaintiff’s bookkeeper, for $500, had demanded payment. But Friedland, being unable to pay, suggested at a meeting where all the officers and stockholders of the plaintiff corporation and Shapiro were present, that the plaintiff issue its note to Shapiro for $500, taking an assignment from Shapiro of the note held by him and collecting the amount of the note so issued in small instalments from Friedland’s salary, who was to continue and did continue in the plaintiff’s employment. The officers and stockholders having assented, the note in suit was issued to Shapiro, and “ there was no vote of the corporation authorizing or ratifying its issue.” If Shapiro had assigned the Friedland note to the plaintiff and taken in exchange the note of the plaintiff, he would have been a holder in due course, and the defendants by the indorsement would have succeeded to his title. Merchants National Bank v. Harden, Orth & Hastings Co. 234 Mass. 161,168. But there is no statement in the record, that Shapiro ever assigned or indorsed the Friedland note to the plaintiff, or surrendered or cancelled the note of Friedland. It is plain, that the new note was made for the sole accommodation of Friedland, and that neither Shapiro nor the defendants took the note for value. The plaintiff is a business corporation, and the defendant partnership, of which Shapiro was a member, were chargeable with his knowledge, that the note was given by the corporation as accommodation paper. It is settled, even if all the officers, directors and stockholders assented to the issuance of the note, that such a note is ultra vires, and cannot be enforced by the defendants who took with notice that the note was without consideration. J. G. Brill Co. v. Norton & Taunton Street Railway, 189 Mass. 431. Johnson v. Johnson Brothers, — 381 — 108 Maine, 272; Ann. Cas. 1913 A, 1303, 1313, and cases collected in note. G. L. c. 107, §§ 52, 75. The defendants’ tenth, eleventh and twelfth requests, relating to the alleged right of the defendants to recover on the note, could not have been given, and the instructions to the jury were right. The result is, that the verdict in set-off is to stand, but the verdict for the plaintiff must be set aside and a new trial granted. So ordered.