Warner v. Bonds

Wood, J., (after stating the facts). The court was correct in sustaining the demurrer to appellant’s amended complaint and in dismissing same, and in rendering judgment for the appellees on their cross complaint for the amount of the note sued, on less the credit of $500 which appellees, by their demurrer, admitted had been paid to them. The court evidently treated this suit upon the pleadings as an ordinary suit upon the part of the appellees against appellant to recover on the instrument set out in the statement, the first part of which is in the form of an ordinary promissory note and the latter part containing provisions for the securing of the payment of the same by the deposit of certificates of stock as collateral and specifying the manner in which these collaterals should be disposed of in the event the contract was not performed on the part of the appellant according to its terms. There is nothing in the contract itself to indicate that the payment of the sum mentioned therein was conditioned upon whether or not the Pope County Beal Estate Company, a corporation, succeeded in managing its business so as to enable the appellant as a stockholder of that corporation to pay the note .by reason of dividends declared on his stock in the corporation. The contract evidencing the indebtedness sued on by the appellees was purely a contract between individuals. The shares of stock for which the note was executed belonged to appellees as individuals, and they sold these shares to the appellant as individuals, and not as a corporation. The corporation did not own the stock. The corporation, under the plain terms of the contract, had no connection with the transaction, and should not have been made a party to the lawsuit. As we view the pleadings on the part of the appellant, they discover an effort to make the performance of the contract on his part depend upon conditions that are entirely outside of and disconnected with the contract itself. This can not be done. See Collins v. Southern Brick Co., 92 Ark. 504, and authorities cited. The appellant’s pleadings did not allege facts sufficient to show fraud on the part of appellees entering into the contract that would make the same void. . The agreement set up in appellant’s pleadings, signed by himself and appellees, showing that each had made an individual note to the Pope County Beal Estate Company, covered by stock as collateral, and showing an agreement that the time for the payment of these individual notes should be extended if it was impossible to pay the same when due, does not show upon its face that it had any connection with the contract on which appellees seek to recover herein, nor are there any allegations in appellant’s pleadings sufficient to make such agreement a part of the contract on which this suit is based. Moreover, there are no provisions in this agreement itself or allegations in the pleadings to show that there was any consideration therefor. Appellant’s answer to appellees’ cross complaint puts him in the attitude of conceding that he owes the appellees the amount sued for, less the credit of $500 cash which he claims to have paid (and which appellees, by their demurrer, admit), but he says that judgment should not be rendered against him, because appellees agreed to extend the time and agreed that appellant should pay the note out of his share of dividends accruing to his stock in the corporation. But, as we have shown, these conditions are not contained in the written contract upon which appellees bottom their right to recover and the court was correct in not considering them as a sufficient defense to appellees’ suit. The court was not warranted in treating appellant’s answer to appellees’ cross complaint, or any of the pleadings filed by appellant, as a suit on the part of a minority stockholder against the corporation and its board of directors to wind up the affairs of the corporation and to grant him some speciñe relief from the fraud and mismanagement of its governing body. • Undoubtedly this can be done in a proper case. See Redbud Realty Co. v. South, 96 Ark. 281, and other authorities cited in the brief of learned counsel for appellant. But, as we view the pleadings, this is not such a case. The decree is therefore correct, and the judgment is affirmed.