McDonald v. Markesan Canning Co.

Dodge, J. The contract here under consideration, which constitutes tbe basis of all rights urged, is tripartite, so tbat •each party assumes duties to each of tbe others and acquires rights against each. 'While primarily it is a contract between Fisk-Kyle Company and the association of men, afterwards to constitute tbe Markesan Canning Company, to tbe effect tbat tbe former should build the factory for $11,500 and tbe latter accept it and issue stock to those individual subscribers upon payment by them to the former, it is also a contract between each of tbe subscribers and Fisk-Kyle Company to tbe effect tbat the subscriber would pay, in consideration of tbe construction of tbe building, tbe 'sum set opposite bis ■name at a time specified. Further than this, however, it is a — 256 — contract between each, subscriber and the association, when merged in the corporation, that he, the subscriber, would pay the sum specified, would participate in the incorporation,, and would accept stock therein at par value for his contribution; and on the other hand that such corporation, upon such-payment, would accept such individual subscriber as a stockholder and accord him his lawful rights as such. The most, obvious question presented by the pleadings and evidence is whether plaintiff is entitled to the aid of a court of equity to enforce delivery to him of the stock in accordance with and by virtue of his original contract with the defendant. The principle is very firmly established in the jurisprudence of Wisconsin that one “having a choice between two inconsistent positions, who exercises that choice, is finally concluded and confined to the rights and remedies appropriate-to the position so chosen and excluded from those consistent only with the repudiated one.” Smeesters v. Schroeder, 123 Wis. 116, 101 N. W. 363; Pabst B. Co. v. Milwaukee, 126 Wis. 110, 105 N. W. 563; Smith v. Burns B. & Mfg. Co. 132 Wis. 177, 186, 111 N. W. 1123; Fox v. Wilkinson, 133 Wis. 337, 113 N. W. 669; Pfeiffer v. Marshall, 136 Wis. 51, 59, 116 N. W. 871; Voss v. Northwestern Nat. L. Ins. Co. 137 Wis. 492, 118 N. W. 212. This upon the ground that-by arrogating to himself the rights- and advantages resulting from the first position he necessarily intends to give up and waive any inconsistent rights which would follow the alternative choice. It does not necessarily rest upon grounds of estoppel, though those may be persuasive. In the instant case it is undisputed, indeed is established by the frank and definite testimony of the plaintiff himself, that in 1902, before the completed organization of the proposed corporation, he, on what he claimed was legal'justification, fully determined upon the choice to repudiate the-contract, to refuse to pay the sum subscribed by him, and to-x-efrain from participating in the proposed corporation; that — 257 — tbis mental determination was left in no uncertainty or doubt, but was then declared in the most unambiguous terms to bis associates, wbo took bim at bis word without protest, organized their corporation without further demand upon him to co-operate, and for four or five years he and they proceeded upon the theory of the entire abandonment of any contract as between them requiring him to become a member or giving him rights as such, he retaining his money and freedom from the obligation and risks of a member. The above-cited authorities establish the final and conclusive effect of such an election and consequent waiver of any rights as a stockholder, wholly independent of any prejudice to the other party or parties to the contract which might result from a change of front, and therefore it is not material to inquire whether any such prejudice had been suffered, though in the present case it is not difficult to discover from undisputed evidence that men who have borne the burden of an unpros-perous and struggling corporation through years and bolstered it with their private means and personal credit until after many years of such struggle have made it profitable and accumulated large surplus, will be prejudiced if one who has, contrary to his contract, refused to bear his share of such risk and burden is permitted to come in and assert a proportionate interest in its success. One who refuses to incur the risk cannot equitably demand a share in the success of an enterprise. Clearly plaintiff has neither legal right nor equity to now, after speculation has been transformed into certainty of profit, assert a right against the defendant that it perform the contract on its part which he so conclusively repudiated years before. It is contended, however, that by payment to Eisk-Xyle Company, voluntarily accepted by it, plaintiff became equitable assignee of all rights of that company existing by virtue of its contract relations with the defendant, and can enforce such rights, although he may have waived all the rights which — 258 — the contract, as between him and defendant, gave -him. If this be conceded, his rights cannot exceed those of Eisk-Kyle Company existent at the time of such payment, October 1, 1907. What, then, were those rights? Clearly no legal right to payment of either stock or money from defendant was conferred by the contract. That provided merely that Eisk-Kyle Company should build the specified building for $11,500 and should look for its pay to' the individuals who subscribed. Nevertheless, since Eisk-Kyle Company were to build the factory and transfer it to the Mcurhesan Company in anticipation that each subscriber would pay as he had agreed, the subsequent failure of any such subscriber to pay created a situation where the defendant had received something of value from Eisk-Kyle Company for which the latter had not been paid and for which the former had parted with nothing of value. It is urged that in such a situation there arose some equity that the defendant should respond to the Eisk-Kyle Company for such benefit derived by it to the loss of Eisk-Kyle Company. This contention rests upon a very broad equity, but in general it may be conceded, arguetido. It is unnecessary to decide whether that equity could exceed payment of either the money not received on the subscription or the shares of stock to the same amount at the election of defendant, as we have concluded that Eisk-Kyle Company had lost the right to demand either, for reasons now to be stated. When a court of equity is invoked to grant its peculiar remedies or to enforce rights so far variant from and in excess of any existing legal right, the plaintiff must approach it with diligence and freedom from misleading and embarrassing conduct. Especially will he not be permitted, after long delay and change in situation, to demand such equitable right if its then enforcement will work any substantial measure of hardship, inconvenience, or embarrassment to the other party such as would not have followed the prompt assertion of the right contended for. — 259 — Both, diligence and clean bands are essential. Combs v. Scott, 76 Wis. 662, 45 N. W. 532; Rogers v. Van Nortwick, 87 Wis. 414, 58 N. W. 757; Doctor v. Furch, 91 Wis. 464, 65 N. W. 161; Cross v. Bowker, 102 Wis. 497, 78 N. W. 564; McCann v. Welch, 106 Wis. 142, 81 N. W. 996; Kruse v. Koelzer, 124 Wis. 536, 541, 102 N. W. 1072; Likens v. Likens, 136 Wis. 321, 117 N. W. 799; Larscheid v. Kittell, ante, p. 172, 125 N. W. 442, and cases there collected; Burkle v. Levy, 70 Cal. 250, 11 Pac. 643; Hammond v. Wallace, 85 Cal. 522, 24 Pac. 837; Plymouth v. Russell Mills, 7 Allen, 438; Sagadahoc L. Co. v. Ewing, 65 Fed. 702. In the present case Eisk-Kyle Company were definitely infoimed prior to January, 1903, of plaintiff’s refusal to pay, confirmed by a judgment, albeit only of nonsuit, in June of that year. Upon such refusal it bad the duty and opportunity before it either to look to the plaintiff for payment by taking legal proceedings to enforce bis contractual liability or, perhaps, yielding to bis refusal, to then assert its equity against the defendant. The existence of such a claim upon the defendant’s treasury either for capital stock or for money was a material consideration, especially during the two or three years of its losing business and financial embarrassment Much of its capital stock was taken during that period, in ignorance of any such claim. We cannot say that the existence of such a cloud might not have spared the corporation and its members and officers the years of struggle, anxiety, and financial risk through which they passed, and it is no answer now to point out the fact that those labors and risks have ultimately resulted in profit. If in the years 1904 or 1905 those efforts had proved unsuccessful, the defendant and its members might well have felt outraged, especially if, as was by no means impossible, such failure had been caused in whole or in part by the assertion or discovery of the hitherto unknown demand of Eisk-Kyle Company. Obviously if its conduct had been such that in 1904 or 1905 it was de — 260 — barred from asserting sueb an equity, no right to do so could thereafter be revived by the successful outcome of the defendant’s business. During those years Eisk-Kyle Company gave-no intimation of a purpose to assert any such demand, but allowed the defendant to organize and adjust its business under the difficulties and trials already suggested upon the basis that no such claim was to be made. In this situation, we-are satisfied, under the authorities above cited, that in October, 1907, Eisk-Kyle Company could not have been recognized by a court of conscience as a suitor either diligent or clean-handed; that before that time its conduct had been such as to make any claim in its favor against the defendant stale and inequitable, and that such court must have refused it the exertion of its extraordinary jurisdiction to arouse and create'the very general equity now asserted. Of course any claim by the plaintiff in the right of Eisk-Kyle Company is at least equally within the ban of this rule, and he cannot in good conscience be heard to assert it. By the Court. — Judgment reversed, and cause remanded' with directions to dismiss the complaint.