Hoag v. Kuiken

207 P. 646, 111 Kan. 630, 1922 Kan. LEXIS 307

• Court: Supreme Court of Kansas
• Decided: June 10, 1922
• Docket: No. 23,578
• Status: Published

Opinions

The opinion of the court was delivered by

Marshall, J.:

The plaintiffs sued to compel the specific performance of a contract for the sale of shares of stock in a bank; to have defendants Ben Kuiken and R. D. Rose decreed the holders in trust of a number of shares of the stock for the use and benefit of the plaintiffs; and, if it were impossible to compel specific performance of the sale of-the shares of stock in the bank, to recover damages for the failure of the defendants to comply with the contract. Judgment was rendered in favor of the plaintiffs for $300 damages, and the defendants appeal.

Findings of fact and conclusions of law were made by the court. The findings of fact showed that defendants Ben Kuiken, R. D. Rose, Charles Thompson, John Denton, and William Bechtold were stockholders and directors of defendant, The Ionia State Bank of Ionia, Kansas; that they owned a majority of the stock in the bank; that the plaintiffs began the organization of another bank to be established in Ionia; that negotiations resulted and a contract was entered into between the plaintiffs and defendants Ben Kuiken, R. D. Rose, Charles Thompson, John Denton, and William Bechtold by which they agreed to increase the capital stock of the Ionia State Bank from $10,000 to $20,000, to sell to each of the plaintiffs twenty shares of stock at the price of $125 a share, to increase the number of the directors of the bank from five to seven, and to elect two of the plaintiffs to the board of directors. Findings of fact numbered 16,17,18, and 19 were as follows:

“16. That the defendants stated at the time of the entering into said oral contract and their understanding was that it was not to be binding unless it was satisfactory to and approved by all of the stockholders of the bank.

“17. It was further understood by and between plaintiffs and defendants that defendants would in good faith try to procure the consent of the stockholders to the terms of said agreement.

“18. That defendants did pursuant to said agreement call a stockholders’ meeting for April first, 1919, at the defendant bank, and immediately set about in good faith to procure the consent of the stockholders to the oral agreement of the directors of said bank with plaintiffs.

“19. That the defendant Denton never was favorable to the agreement with plaintiffs and that the other stockholders of the bank, not defendants herein, immediately began to oppose the proposed action of the defendants, and many of the depositors and customers of said bank expressed themselves as opposed to the plaintiffs’ procuring so large a block of stock and some of them threatened to withdraw their deposits and business from the defendant bank if the proposed deal was consummated.”

The court further found that when the stockholders met, it was unanimously determined to increase the capital stock of the Ionia State Bank to $20,000 and that it was also unanimously determined not to sell twenty shares of the new stock to each of the plaintiffs and not to sell more than five shares to any one person.

The contract was not violated by the defendants. It provided that “it was not to be binding unless it was satisfactory to and approved by all of the stockholders of the bank”; the contract was not satisfactory to all the stockholders; some of them objected to it; neither was it approved by all of them.

The defendants voted not to sell twenty shares of stock to each of the plaintiffs. The plaintiffs argue that by thus voting, the defendants violated their contract. That puts a wrong interpretation on it. The defendants held a majority of the stock and could have voted to increase that stock and to sell to each of the plaintiffs twenty shares; but, their contract was not to sell to the plaintiffs unless it was satisfactory to all the stockholders. When the defendants learned that the contract was objected to by some of the stockholders and that they disapproved it, the defendants were released from all obligation to the plaintiffs under it. There was no binding contract until it was approved by all the stockholders.

(Filed July 8, 1922.)

The judgment is reversed, and the trial court is directed to enter judgment for the defendants.