Anderson Carriage Co. v. Pungs

96 N.W. 563, 134 Mich. 474, 1903 Mich. LEXIS 667
Michigan Supreme Court·Decided September 30, 1903·No. Docket No. 23·Published·Cited by 4 cases

Opinion

Moore, J.

This is a suit in assumpsit, brought by the Anderson Carriage Company, a Michigan corporation, against William A. Pungs. The plaintiff recovered a verdict for $17,970.24. The defendant has brought the case here by writ of error.

Prior to February 12, 1897, the Anderson Manufacturing Company was a corporation located in the city of Detroit. The Michigan Railway Supply Company was also a corporation located in the city of Detroit. On February 12, 1897, the two companies were consolidated, and all of their property and assets were conveyed to a new company, known as the Pungs-Anderson Manufacturing Company. On the 29th day of May, 1899, the name of the consolidated company was changed to the Anderson Carriage Company, the plaintiff herein.

It is the claim of the plaintiff that the negotiations which brought about the consolidation of these companies were conducted by Anderson and Locke, representing the Anderson Manufacturing Company, and Pungs, representing the Michigan Railway Supply Company; that in [476]*476these negotiations Pungs represented that the earning capacity of his company, the Michigan Railway Supply Company, was equal to 10 per cent, of its capital stock, which he represented to be $400,000; that there were two departments to the plant of the Michigan Railway Supply Company, viz., the department in which nuts and washers were manufactured, and the department in which brake-beams were manufactured; that the brake-beam department constituted much the larger portion of its business, and yielded 70 per cent, or 75 per cent, of its annual earnings; that the brake-beam department was so related to the nut and washer department that it was impracticable to continue the running of the latter in case the company was compelled to close the former department, for the reason that the nuts and washers so manufactured were made from the iron scrap of the brake-beam department; that the brake-beams were made solely for the American Brake-Beam Company of Chicago, and this constituted the entire .business of the brake-beam department. In December, 1897, the American Brake-Beam Company canceled its contract with the Pungs-Anderson Manufacturing Company. It is claimed the Michigan Railway Supply Company was taken into the consolidation upon the representation that it could be relied upon to yield more than 50 per cent, of the earnings of the consolidated company, and its stockholders received in exchange for their holdings stock of the consolidated company to the amount of $100,000, while the stockholders of the Anderson Manufacturing Company received consolidated company’s stock to the amount of $70,000 only.

It is claimed that in January, 1898, Anderson and Locke, in their own behalf and as officers of the PungsAnderson Manufacturing Company, informed Pungs they intended forthwith to sever their connection, both individually and as officers of said company, and intended to place their holdings upon the market, and dispose of them as best they could; and, as officers of the company, they notified Pungs that the Pungs-Anderson Manufacturing [477]*477Company was crippled to such an extent by the loss of the brake-beam business that, as such officers, they would immediately urge a disposition of the assets of said company in whatever way might seem practicable, and, as officers of said company, would do all in their power towards winding up the affairs of said Pungs-Anderson Manufacturing Company; that Pungs admitted the seriousness of the situation, and his responsibility for it, and endeavored to induce Anderson and Locke to refrain from taking the steps which they had determined upon, and said that the department.for manufacturing brake-beams would not have to be closed and cease operating because of the American Brake-Beam Company’s discontinuing doing any further business with them, and that, on the contrary, he (Pungs) was procuring and was about to procure letters patent upon improvements in brake-beams, which patents he represented to be of great value, and that the Pungs-Anderson Manufacturing Company, by using these patents, could continue to manufacture brake-beams, and make large profits out of its brake-beam department ; and Pungs promised to turn over and assign to the Pungs-Anderson Manufacturing Company these patents to make good the loss which it had suffered from the failure of the brake-beam business.

It is claimed Anderson and Locke promised and agreed to continue their connection with the company and to retain their holdings of stock in the same, and, as officers representing said company, promised and agreed with Pungs to withhold urging a disposition of the company’s assets, and, as said officers, promised and agreed to refrain from doing anything towards winding up the affairs of said company, or taking any steps towards changing the policy of the company in any manner whatsoever on account of the crisis which the company then was facing; that Pungs, in consideration of the promises of Anderson and Locke, promised and agreed to and with them, as officers of the corporation, to transfer and assign to the Pungs-Anderson Manufacturing Company, for its own [478]*478use and benefit, such valuable patents for improvements upon brake-beams as would enable the company to carry on its brake-beam business at a large profit; that, in pursuance of this agreement, the company, with the knowledge of Pungs, and under his direction, and at his request, made expenditures of at least $400 in manufacturing patterns, in purchasing tools and raw materials, and employment of labor, etc., for the purpose of putting into practical working order the said patents for improvements in brake-beams; that Mr. Pungs obtained the patents in June, 1898, and April, 1899, and that, instead of turning them over to the plaintiff, as he agreed to do, he sold them to the American Brake-Beam Company of Chicago for$10,000. In the agreement by which the American Brake-Beam Company agreed to pay Pungs $10,000, Pungs not only turned over the patents to the Brake-Beam Company, but also promised and agreed not to engage in the brake-beam business in any way, shape, or form at any place within the United States of America, its territories, or the District of Columbia, and that he would not be connected with any company manufacturing or selling brake-beams in the United States, either as officer, employé, or shareholder (Chicago Railway Equipment Company alone excepted), at any time during the period covered by said letters_ patent.

It is claimed that, by reason of Pungs’ breach of his contract, the Anderson Carriage Company was compelled to abandon the manufacture of brake-beams, nuts, and washers, which constituted the entire business of what had been the Michigan Railway Supply Company prior to the consolidation. On the part of Pungs it was denied any such agreement was made.

It is claimed the court erred in refusing to • give the following request:

“ That the plaintiff is not entitled to recover in this cause on the theory that the defendant promised to make good to the plaintiff the loss, if any, which it sustained by reason of the fact that the American Brake-Beam Com[479]*479pany did not enter into a new contract with the plaintiff after the expiration of the contract from January 1, 1897, to January 1, 1898, offered in evidence, and marked ‘ Exhibit G,’ since the declaration does not allege any agreement on that theory, and since damages for breach of such agreement, if such agreement was made, cannot be recovered under the common counts annexed to the special count in the declaration in this cause.”

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Anderson Carriage Co. v. Pungs, 96 N.W. 563, 134 Mich. 474, 1903 Mich. LEXIS 667 (Mich. 1903).

96 N.W. 563 (Anderson Carriage Co. v. Pungs) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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