Hills v. McMunn

Mr. Justice Farmer delivered the opinion of the court: The real issue of fact made by the pleadings is whether the written agreement dated August 18, 1904, was after-wards modified by a parol agreement between McMunn and Hills, acting for himself and Weber. Appellant’s contention is, that on account of the objections of McMunn, and others associated with him in business, to the name of the Arizona corporation, and also on account of their objections to operating under a corporation organized under the laws of that territory, it was agreed to substitute a new corporation organized under the laws of Illinois, and that otherwise the contract should remain as written. This is squarely denied by the answer of McMunn. On the trial no testimony was offered on the part of appellees except that of McConahey. He was about to leave the city and was permitted on that account to testify before appellant’s case had been concluded. At the conclusion of the testimony for the complainant and cross-complainant appellees moved to dismiss the bill for want of equity. The motion was allowed and the bill dismissed. While some questions of law are raised and discussed in the brief and argument, the principal question discussed by counsel for both sides is as to the sufficiency of the evidence to entitle appellant to the relief prayed. What is referred to in the record as the contract between the parties consists of a proposition submitted by Weber to McMunn under date of August 9, 1904, and an acceptance thereof by McMunn under date of August 18, 1904. Said proposition and acceptance- are as follows: “Auditorium Hotel, Chicago, Illinois, August 9, 1904. “S. W. McMunn, Esq., Chicago, Ill. “Dear Sir—The Slick Steel Piling Company is a corporation orgánized under the laws of Arizona, with five thousand shares of $100 each, par value, and is the owner of U. S. patent No. 639,884, under date of December 26, 1899, for steel piling, being the prior patent for this kind of product. I will deliver you three thousand shares of this stock for $25,000, of which amount $15,000 is to be cash paid to me, the remaining $10,000 is to be placed in the treasury of the Slick Steel Piling Company for operating expenses. “I make you this offer and will hold same open for ten days, when you will please report to me the progress you have made in Pittsburg, Pa. Faithfully yours, A. H. WEBER." “Chicago, August 18, 1904. “The above proposition is accepted by me. The payment of the sums above mentioned are to be made by me only when satisfactory evidence is presented to me that the Slick Steel Piling Company is a lawful corporation of the Territory of Arizona and duly and legally organized, and when a good title to letters patent No. 639,-884, free and clear of all liens and encumbrances, is conveyed to said Slick Steel Piling Company, all of which must be done within thirty days from August 18, 1904, or this agreement shall be at an end and void. All of which is agreed to by A. H. Weber. S. W. McMunn. , , 404 Lakeside Harrison 4348. Fred Hills. A. H. Weber.” Hills testified to having two conversations with Mc-Munn prior to the execution of the contract. In each of them McMunn made some objection to the word “Slick” in the name of the Arizona company and also to an Arizona corporation. The second conversation was shortly before the contract was signed, and he testified McMunn told him that these were objectionable features to Pittsburg people with whom he was connected and that he would prefer an Illinois corporation; that he (Hills) thereupon stated he was willing to substitute an Illinois corporation and that he and Weber would pay their share of the expense of organizing it. After this conversation McMunn signed the acceptance of the proposition of August 9. The acceptance was also signed by Hills and Weber. Said acceptance was in fact signed August 19 or 20 but was dated August 18. Hills testified that in the afternoon of August 20 he first learned from Weber the exact ownership of the patent; that he then learned Behrend owned three-fourths, which could be obtained for $6000; that a man named Cochran owned one-eighth, which could be bought for $1500, and that a man named Campbell, living either in Pittsburg or Cincinnati, owned one-eighth, which could be bought for $1000, and that he at once began negotiations with them for the purchase of their respective interests. Copies of letters and telegrams were offered in evidence which corroborated him. The third conversation between Hills and McMunn occurred after the signing of the contract and during the same week. At this time, according to Hills’ testimony, they talked over the organization of the new corporation and McMunn suggested the name “United States Steel Piling Company.” After learning of the ownership of the patent and the money that would be required to procure it, Hills testified he told McMunn about it, and told him that neither he nor Weber had the money to pay for it, and that McMunn told him to go ahead and procure the patent and “we will take care of the thing as soon as ever we get meetings and get a settlement and get a new corporation, or whatever is done they will be taken care of just the same.” Hills finally procured assignments from all the owners of the patent for $8500. This money was paid by McMunn to the parties making the assignments and said assignments were made to Hills. After this was done, Hills testified McMunn requested him to assign the patent to Mc-Conahey, a lawyer officing in McMunn’s suite but not employed by him, and he consented to it on condition that the patent should be turned over to the Slick Steel Piling Company or the new corporation if organized, and that McMunn said, “Well, I will fix that.” At this time, which was about September i, Hills was in the employ of McMunn and had been for a short time previous. He was afterwards taken ill and removed to a hospital, where he remained ten days or two weeks. During Hills’ stay in the hospital McMunn organized the United States Steel Piling Company and caused the patent to be conveyed to it by McConahey. Hills testified that after returning to McMunn’s office from the hospital he spoke to McMunn about having learned from a newspaper of the incorporation of the United States Steel Piling Company, and that McMunn said they would soon get things fixed to hold the first meeting, and that it was all right. Hills continued to work for McMunn and said he occasionally spoke to McMunn about the matter, and Mc-Munn would tell him to go on and keep at work and not bother, as everything would come out all right; that he did continue to work until October 25, when he made a written demand on McMunn for the money and stock he claimed due him on the contract, which demand was replied to the next day by a denial by McMunn of any liability. The proof tends to show that the services of Weber and Hills were valuable, if not necessary, in procuring the assignments of the patent. Weber had procured from Behrend an assignment of his three-fourths interest to the Slick Steel Piling Company, which was held in escrow by George M. Eckels, an attorney of Chicago, until payment was made; also, Weber had an option on Cochran’s interest, and it appears that he had some interest in or claim upon Campbell’s interest. Copies of several letters written by Hills to Webpr between August 23 and September 28 were introduced in evidence. Hills testified that these letters were all written by McMunn’s stenographer in his office and were shown to McMunn and corrected by him before mailed. These letters all tend strongly to show that Hills understood the contract to be in force, with the modification that an Illinois corporation was to be substituted for the Arizona corporation. In a letter dated September 28 Hills wrote Weber that McMunn advanced the money to pay for the patent; that the assignments had been made to him and he had transferred the patent to a trustee, who was to turn it over to the Slick Steel Piling Company, or to another company if that was not legal. He further wrote that McMunn had decided to abandon the Arizona company and had incorporated the United States Steel Piling Company with the same capital stock as the Arizona company, and that he expected a meeting of the new company within a few days. He also stated in the letter that he had heard of no intention of McMunn to make any change in their original offer, except that they would have to pay the cost of incorporating the new company, and that he thought the stock they secured in a new company would be valuable because it would be a live and pushing company. Other letters informed Weber of what Hills was doing to procure the patent; that McMunn would furnish the money, and referred to their (Hills’ and Weber’s) interest in the transaction. We shall not take time to further quote from the evidence. We have read it, and also the analysis made of it by counsel for the respective parties. The proof shows Mc-Munn knew of the relations of Hills and Weber to each other and their interest in the subject matter of the contract. According to Hills’ testimony McMunn was kept informed, at all times, of the negotiations for the patent and of the progress made, and of the correspondence of Hills with Weber and their relations thereto. There is no evidence of any intimation from McMunn to Hills, at any time, that he regarded the contract as terminated and was seeking to purchase the patent on his own account. It is true that when the contract was made McMunn did not contemplate advancing money for the purchase of the patent. At that time he understood the patent was owned by the Slick company, as stated in the proposition of Weber of August 9, which became part of the contract. When he learned that company did not own the patent and that Hills and Weber had not the money to procure it he would have been authorized to refuse to advance the money and thereby terminate the contract. He appears, however, to have been desirous of owning the patent, and according to the testimony told Hills to go ahead and secure the assignments and he would furnish the money, and but for his objections to the Arizona company the patent might have been transferred to it. If, as testified to by Hills, it was at the instance of McMunn a new corporation was substituted for the Arizona company as transferee of the patent, he cannot now claim this was an abandonment of the contract. Nor can he be heard to say that because the transaction was not consummated within the time named in the written contract said contract is not binding, for the reason that, according to the evidence, if not partly responsible for the delay he at least acquiesced in and consented to it. We have only undertaken to give the substance of what appears to us some of the most important parts of the testimony of Hills and the documentary evidence offered. We have read and considered it all, and are of opinion there are no such contradictions or inconsistencies in it as to materially weaken its force. The testimony of other witnesses to which we have not referred had not a direct bearing upon the real controversy. Our conclusion is that the evidence, uncontradicted, established the modification of the written contract. The appellees contend that the power of attorney from Weber to Hills gave the latter no power to modify a contract. It is true, a modification of the contract is not mentioned in the power, but it was very broad in its terms and gave Hills full power to represent Weber in all business in connection with the Slick Steel Piling Company and procuring control of the Behrend patent. But we do not see how McMunn is in a position to raise this question. According to the testimony of Hills, Weber was informed of the modification, and he not only did not question Hills’ authority to make it, but has by his answer and cross-bill ratified and confirmed it. It is also claimed there is a fatal variance between the allegations of the bill and the proofs. While some of the allegations are not proved in the words alleged, they are substantially so, and there is no material variance. It is further urged that Hills had no such interest in the subject matter of the litigation as to authorize him to maintain the suit. The evidence shows he notified McMunn of his agreement with Weber, and the contract of August 18 is signed by Hills, Weber and McMunn. There appears to have been a slight modification of the original agreement between Weber and Hills with reference to a commission of $500 to be paid Hills for a sale of the stock of the Slick company, but otherwise their interest in the stock and the proceeds of the sale remained as we have before mentioned. The proof shows Hills had the beneficial interest in one-half of the subject matter of the litigation, and this is admitted by the answer and cross-bill of Weber. We think he was entitled to maintain the suit. Winkelman v. Kiser, 27 Ill. 21; Smith v. Bates Machine Co. 182 id. 166. It is also contended that the case made by the bill and proofs shows no grounds for the interposition of a court of equity, and that if appellant has any remedy the law will afford adequate relief. The stock of the United States Steel Piling Company is not shown to have had any market value or to have ever been on the market for sale. Whatever value it has is dependent upon the value of the patent owned by the corporation. It is said in Cook on Corporations (sec. 338) : “If the stock contracted to be sold is easily obtained in the market and there are no particular reasons why the vendee should have the particular stock contracted for, he is left to his action for damages. But where the value of the stock is not easily ascertainable or the stock is not to be obtained readily elsewhere, or there is some particular and reasonable cause for the vendee’s requiring the stock contracted to be delivered, a court of equity will decree a specific performance and compel the vendor to deliver the stock.” We think the case one for the exercise of equitable jurisdiction and that the court erred in dismissing the bill. The judgment of the Appellate Court and the decree of the circuit court are reversed and the cause remanded. Reversed and remanded.