Starbird v. J. H. McShane Timbee Co.

Sedgwick, J. During the year 1907 the J. H. McShane Timber Company, a corporation, owned property and. a business in the Big Horn mountains in Wyoming, which had cost the company about $400,000. The capital stock of the company was $250,000, all of which was held by J. H. and F. J. McShane. In the beginning .of the year the company was largely involved in debt and the business was unprofitable and very much embarrassed. It became apparent that the business could not be continued and that a sale of the entire property and business would soon become unavoidable. This plaintiff had been conducting a somewhat similar business in Idaho, and was contracting for one in the state of Washington. He heard incidentally that the McShanes were anxious to sell their property — 80 — and business, and wrote them that he had heard that they desired to sell and suggested that he might be of assistance to them. Afterwards it was suggested to the Mc-Shanes by a former owner of the property that this plaintiff might be able to effect a sale. The McShanes requested the plaintiff to meet them at the property, and a verbal understanding was arrived at between them under which the plaintiff became very much interested in assisting the McShanes in placing and keeping the property and business in condition to sell and in finding a purchaser. There was at that time no definite contract between them as to compensation to the plaintiff for his services, but it seems to have been understood that the plaintiff was authorized to sell the property, and he was promised if he succeeded in making such sale that he would be amply paid therefor, “more money than he had ever had.” With this indefinite understanding the plaintiff, who appears to be an active man and to have had some experience and a large acquaintance with parties who might be expected to become purchasers of such property, gave considerable time and attention to the undertaking of selling the property and in assisting the McShanes in so doing. In the meantime the condition of the business did not improve. Matters continually grew worse. The McShanes became desperately anxious to sell. The plaintiff demanded a definite agreement as to his authority in the matter, and •in March, 1908, the timber company gave him a memorandum in which they agreed to sell the whole property to the; plaintiff for the sum of $260,000. The memorandum con-' eluded with these words; “The intent of this instrument is an option of purchase, and is and shall remain in force until July 1, 19OS.” Afterwards the McShanes executed a writing whereby they gave the plaintiff “the right, privilege and option” up to January 1, 1909,. of selling the entire capital stock of the company for a price therein stated, and agreed to pay him $25,000 for making such sale. At the same time they executed a writing, which is called a supplemental instrument, in which they re — 81 — ferred to the last-named writing, and extended it t.o April 1, 1909, and included, not only the stock of the company, hut all of its property rights also. Both of these writings bore the same date and appear to have been delivered together in September, 1908. In November, 1908, the creditors became insistent, and the McShanes became unable to obtain further money or supplies so as to continue the operation of the plant. They were indebted to the First National Bank of Omaha in the sum of $74,000, and to Paxton & Gallagher in about the sum of $25,000 for supplies, and to the Bank of Commerce of Sheridan, Wyoming, in a large amount. When Paxton & Gallagher refused to furnish supplies, Mr. McShane appears to have stated to Mr. Pearce, their manager, the condition of the company’s affairs, and informed Mr. Pearce that it was impossible for them to continue the business, and suggested that it would be better to go into bankruptcy or have a receiver appointed. Mr. Pearce suggested that it would be better to turn the property and assets over to trustees to hold and manage the same for the creditors, and upon this suggestion a contract was entered into appointing Mr. Pickens, of Paxton & Gallagher, Mr. Davis, the first vice-president of the First National Bank, and Mr. Perkins, president of the Bank of Commerce of Sheridan, as trustees, and all of the property was assigned to them in that capacity. The trustees took possession of the property in November, 1908, and continued the business. In January, 1909, the property was sold to McPherson & McLaughlin for $182,850. While this sale was being consummated, this plaintiff served notice on all the parties interested that he claimed a commission of $25,000 if the property was sold, and afterwards the plaintiff began this action in the district court for Douglas county against J. H. and F. J. McShane and the McShane Timber Company and the three trustees to recover the $25,000 commission. Upon the trial, when the evidence was completed, the trustees moved for an instructed verdict in their favor. The McShanes — 82 — and the McShane Timber Company moved for an instructed verdict in their favor. The plaintiff dismissed his action as to the trustees, and moved for an instructed verdict in his favor against the McShanes and the McShane Timber Company. The court thereupon dismissed the action as against the trustees and discharged the jury, and afterwards rendered a judgment in favor of the plaintiff against the McShanes and the McShane Timber Company for $18,798, and the defendants have appealed. The action was based upon the contract, authorizing the plaintiff to sell the property, to recover the $25,000 agreed commission for doing so. There was no allegation of the value of the plaintiff's services. The plaintiff insists that there is sufficient evidence of the value of the services to support the judgment, and also insists that under the evidence the plaintiff was entitled to the full sum of $25,000, and that the defendants cannot complain of the judgment for a less amount. With the contracts above stated between the plaintiff and McShane, the latter employed the plaintiff to assist in the management of the business and care of the property, and to put it in condition to sell. They paid him $800 a month, and agreed that his salary should begin from the preceding January. They also paid all of his expenses incurred either in the care of the property or in endeavor to sell. The plaintiff insists that the salary was paid him because the employment would require him to employ a man to manage his business, and that plaintiff gained nothing by receiving this salary. But the plaintiff testified that in May, 1907, he was operating a lumber plant in Chance, Idaho, and “had gotten out all our timber and still had all of our property, and I was undertaking to get our money out of it, and was tied up in another contract I was figuring on." He closed this latter contract by purchasing a mill at Springdale, Washington. He says that his plant at Springdale was to “start up” April 1, 1909. He looked after his personal interests himself, and there is no evidence that he employed a man in his place or was put to — 83 — any expense in that regard. As we have already stated, his first contract of March 28, 1908, was merely an option to purchase the property for a fixed price of $260,000, and was to remain in force until July 1, 1908. The contract for commission for selling the property upon which he sues, which was dated a few days later, fixed the value of the property at which he was authorized to sell at a somewhat less figure. This price was fixed upon careful inventories of cash values estimated by plaintiff himself, and was about $250,000. He was not engaged in the business of a broker, and had no advantages for securing purchasers such as a clientage of a broker’s agency might have supplied. McShane agreed to give Mr. McPherson the same commission if he would sell the property. He made the same agreement with several others. The plaintiff had no exclusive agency to sell the property. No doubt this employment with a salary was dependent upon the more important matter of selling the business. McPherson, who was also promised $25,000 if he should make a sale of the property, appears to have been very active in the matter. He knew that the property was about to be sacrificed and was ready to take an interest in it himself, but did not want to undertake the purchase alone, and afterwards did actually purchase it from the trustees with Mr. McLaughlin. Mr. McLaughlin was engaged in similar business in another location, and when the property was offered to him for $250,000 he expressed himself as unwilling to pay more than $225,000, and afterwards reduced this from time to time, and finally made the definite offer of $180,000 for the property. The contract with the trustees gave them full power to sell the property for such price and upon such terms as they found to be in the interest of the creditors. It was provided that the McSlianes might make contracts for the sale of the property subject to the approval of the trustees. At a meeting in Omaha in January, 3909, with McPherson and McLaughlin, at which the trustees and others interested Avere present, including Mi*. J. H. McShane, a contract of sale was made by the trus — 84 — tees to McPherson & McLaughlin. McShane had understood that these purchasers would pay at least $200,000 for the property, and when they proposed to pay only $180,000 he protested. The trustees finally offered to accept $182,-500, with a few dollars added as expenses, and McShane at once left them, declaring that that amount would not be sufficient to pay the indebtedness. In this he appears to have been right. The indebtedness largely exceeded the amount of the sale. This plaintiff was not present when the sale was made. It does not appear that the purchasers or the trustees, or any of them, knew that the plaintiff had any contract for a commission, nor that he was employed to make a sale. They seem to have understood that the plaintiff was employed at a salary, and supposed that that was the extent of his relation to the business. When the property was turned over to the trustees they contracted with the plaintiff to continue in their employment, so that he had notice of the assignment and of the duties and poAvers of the trustees. He knew that, while these defendants were still interested in the property and in bringing about as advantageous a sale as possible, no sale of the property could be made except by or through the trustees, and of course his power to act was limited accordingly. When it was found that the property could not be sold for the price for which the plaintiff had been authorized to sell, it, and that it must be sold for some price, no new agreement was made authorizing him as agent to sell for a lower price, and yet these defendants continued to avail themselves of his efforts to secure a purchaser for the property. We have attempted to state the facts sufficient to show in a general way the nature of the plaintiff’s employment and the necessary construction of his contract. Neither the plaintiff nor any one of the other parties authorized by the McShanes to sell the property nor Mr. McShane himself can be said to have done so. How much the efforts of any one of them contributed to the result it is difficult to determine. The sale was consummated and closed by the — 85 — trustees. They never employed nor authorized this plaintiff to sell the property. Under these circumstances, it seems clear that it cannot be said that the plaintiff has sold this property and so became entitled to the stipulated sum that was to be paid him if he made such sale. On the other hand, it was not the understanding of the parties that the salary paid to the plaintiff should necessarily be in full payment for all services rendered by him, if such services were of greater value than the amount of the salary. So far as we have observed from the examination of the abstract, evidence was offered by the plaintiff as to the value of his services, but was excluded upon objection. At all events, there is not sufficient evidence in the record to justify the judgment upon the ground of the value of the plaintiff’s services. The plaintiff should be allowed to amend his petition, if so advised, and count upon a quantum meruit upon payment of costs accrued to the time of making such amendment. The judgment of the district court is reversed and the cause remanded for further proceedings. Reversed. Rose, Fawcett and Hamer, JJ., not sitting.