Kipp v. Laun

131 N.W. 418, 146 Wis. 591, 1911 Wisc. LEXIS 173

• Court: Wisconsin Supreme Court
• Decided: October 3, 1911
• Status: Published

Opinion

The following opinion was filed May 2, 1911:

TimliN, J.

The undisputed evidence and the findings of the circuit court established that the plaintiff, on and prior to September 9, 1909, was and for about thirty years had been engaged in the manufacture and sale of furniture and owned two desirable tracts of real estate, one vacant and the other occupied by the factory buildings. Since 1894 the plaintiff’s furniture business was carried on by him in the name of a corporation called the B. A. Kipp Company, and this company was an active, going concern and used and occupied the buildings on the plaintiff’s land above mentioned. Desiring to retire from business, the plaintiff authorized a real-estate agent to effect a sale of the plaintiff’s interest in this corporation, which was practically the whole thereof, and, if necessary, to sell and dispose of said real estate on •condition that the purchaser should also take the plaintiff’s interest in said manufacturing corporation. The findings further were to the effect that defendants were also engaged in the manufacture of furniture at Kiel, Wisconsin, and were introduced to the plaintiff and entered into negotiations with him relative to the purchase of the real estate aforesaid and the capital stock, good will, business, property, and assets of the said B. A. Kipp< Company. On September 9, 1909, these negotiations terminated in an entire and indivisible parol contract whereby for the sum of $82,000, payable $5,000 in cash, $15,000 on January. 1, 1910, and $62,000 in five years with interest at five per cent, per annum, to be evidenced by notes and secured, plaintiff sold to defendants the real estate above referred to and agreed tO' execute and deliver to them a land contract for the sale and conveyance thereof upon the payment of the said $15,000 on January 1, 1910, and sold all tbe property and assets of tbe B. A. Kipp Company exclusive of its bills and accounts receivable, and agreed to deliver on October 1, 1909, tbe entire issued and outstanding-capital stock of said company, all for tbe fair value of tbe stock in trade, merchandise, fixtures, property, and assets of tbe B. A. Kipp Company exclusive of its bills and accounts receivable. Tbe mode of payment for this corporate property, which was all personal property, was $5,000 on October 1, 1909, and $5,000 on tbe first of eacb and every succeeding month thereafter until tbe purchase price, being tbe fair value as aforesaid, should be all paid. September 11, 1909, this agreement was modified by providing that tbe $15,000 item should be paid as soon as tbe abstracts were examined, tbe land contract omitted, and a deed executed to tbe defendants, who thereupon would execute and deliver their promissory notes aggregating $62,000 secured by a mortgage on tbe real estate so conveyed. On this day an instrument called therein a receipt was executed' which acknowledged tbe receipt of $5,000 as part of tbe purchase money of tbe real estate (describing it), provided that $15,000 should be paid ■on September 16th and that the plaintiff should then execute and deliver to defendants a warranty deed, whereupon tbe latter were to give back mortgages. This receipt provided further that possession of all tbe real property be given to tbe defendants on October 1, 1909. (It does not mention the personal property at all nor bint at any existing contract regarding tbe latter property.) Tbe parties met on September 16th, and tbe defendants represented that they would carry out and perform tbe parol contract first mentioned, and relying on this tbe plaintiff, for tbe purpose of carrying out and performing on bis part tbe terms, provisions, and conditions of said oral contract, executed to tbe defendants a warranty deed of tbe lands. Tbe latter executed to the plaintiff tbe notes and mortgages. Tbe plaintiff released all interest due •on tbe deferred payments from September 16th to October 1st. Tbe defendants agreed that the B. A. Kipp Company should have the use and occupancy of the premises until October 1st, and the sale of said real estate and premises by plaintiff to defendants was conditioned on the purchase by defendants of the business, property, assets, and capital stock of the B. A. Kipp Company and their talcing and assuming the management and control of its business and affairs on October 1, 1909. The inducement offered plaintiff to sell and dispose of his real estate was the agreement of defendants to purchase and take over the B. A. Kipp Company, paying the plaintiff therefor an amount equaling the fair value of the merchandise, stock in trade, machinery, fixtures, equipment, property, ,and assets whatsoever of said company, excepting its bills and accounts receivable as the same appeared on October 1,. 1909. Both parties intended, that the purchase and sale of the real estate of plaintiff and of the business, property, and assets of the B. A. Kipp Company were commonly dependent upon each other, and that the sale by the plaintiff of the real estate to defendants was dependent upon the purchase by defendants -from plaintiff of the business, assets, and capital stock of the B. A. Kipp Company. Plaintiff went on and completed an inventory of the property, etc., of the B. A. Kipp Company and the valuation thereof and delivered the same to the defendants. Prior to this time defendants had entered upon the real estate and taken possession thereof and begun the erection of a factory building on the vacant portion thereof. On October 4, 1909, the plaintiff made a tender to the defendants, and again on November 1, 1909. Defendants refused to carry out the contract for the purchase of the personal property, while holding on to the real estate.

The defense was that the only contract entered into between plaintiff and defendants was that in writing called the receipt of 'September 11, 1909, wherein and whereby the plaintiff agreed to sell to the defendants and the defendants to buy for the sum of $82,000 said real estate. The findings of the trial court, it must be confessed, make a pretty formidable case against appellants, but they contend that the court erred in admitting and considering parol testimony to modify and change the terms and conditions of a written instrument and to establish this parol agreement, which to be valid was required by the statute of frauds to be in writing. Rejecting this parol evidence, they further contend there is not sufficient evidence to support the findings of the court. In this last proposition appellants are undoubtedly correct. But was the parol evidence properly admitted?- 'In an action to enforce specific performance of an oral contract taken out of the statute of frauds by part performance, proof of the oral contract as well as of the part performance is essential, notwithstanding the oral contract would be utterly void but for the part performance. In such case, where there is no writing, if the court should exclude evidence of the terms of the oral contract the part performance would be quite immaterial. But that is not the case here. The part performance here may have been not a part performance of the oral contract claimed by the plaintiff, but a part performance or entire performance of a separate and independent contract which had no legal connection with the alleged oral contract. It will be best to' consider the admissibility of the testimony under the rule excluding parol evidence before taking up the questions arising under the statute of frauds, for these are separate and distinct questions.

The rule that excludes parol evidence of oral agreements or stipulations when offered to add to, modify, or contradict a written contract is subject to some exceptions. Among these are the following: (1) If the writing is shown by competent evidence to have been a mere part of an entire oral contract, and the oral contract is not inconsistent with and does not contradict the writing, and the writing does not on its face plainly purport to contain the entire contract, then parol evidence of the oral contract is admissible. Cor-bett v. Joannes, 125 Wis. 370, 104 N. W. 69; Cuddy v. Foreman, 107 Wis. 519, 83 N. W. 1103; Mueller v. Cook, 126 Wis. 504, 105 N. W. 1054; Braun v. Wis. R. Co. 92 Wis. 245, 250, 66 N. W. 196. (2) Where there is a distinct contemporaneous parol agreement, and one of the parties seeks to make use of a written agreement for purposes inconsistent with the parol agreement and under such circumstances as to render such use fraudulent. Braun v. Wis. R. Co., supra, p. 250; Juilliard v. Chaffee, 92 N. Y. 529.

These exceptions are purposely stated narrowly because we are not here attempting to define their limits or set bounds to their operation, but merely to inquire whether the instant case is within these exceptions as here written. A case cannot be brought within the first exception by oral, evidence of the language used by the parties in their negotiations or in their alleged contract, where relief is not sought on the ground' of fraud or mistake and the parties stand upon the contract and do not seek a rescission or reformation. The boundary lines of the second exception are not yet well settled, but it includes a case where the pleading makes a claim that the written agreement is being made use of for purposes inconsistent with a parol agreement and under such circumstances as to render such use fraudulent. This is in the nature of a direct attack upon the use attempted to be made of the written instrument. The parol evidence to prove the contract established by the findings of the circuit court in the instant case was admissible under both these exceptions. (l) 'The writings which it is supposed to contradict, vary, or alter are an instrument executed and'dated on September 11, 1909, beginning with the words, “received of J. B. Laun and A. W. Dossier, both of Kiel, Wisconsin, the sum of $5,000,” but followed by contractual stipulations for the purchase and sale of real estate (describing it) and fixing the price and terms of payment, and signed by the plaintiff and defendants, and also a warranty deed or deeds made pursuant thereto. It is well settled law, however, that in the case of writings oral evidence may be given of extrinsic facts, conditions, and circumstances existing at the time of the writing and before and forming no part of the negotiations or of the language used by the parties in their alleged oral contract. Colt v. Paulson, 145 Wis. 214, 130 N. W. 55, and cases cited. It was in the instant case under this rule amply and fully shown that the real estate described in this contract of September 11, 1909, was in part a factory site covered with the factory and buildings occupied by the B. A. Kipp Company, a stock corporation, owned, except a few' qualification shares, by the vendor in said contract; that this corporation was a going concern, active in manufacturing and selling, and had been for many years; and that it was in possession of the land described in the contract 'off September 11th by permission of the vendor therein. It is also proven that Mr. Kipp was anxious to retire from this business, and that the business, material, and manufactured product of this active, going corporation were of large value. Mr. Kipp was desirous of selling the manufacturing business and not desirous of selling the real estate. The manufacturing plant sold by the contract of September 11th was well or admirably adapted to the business of the Kipp> manufacturing company, and the latter company had no real estate and no factory site of its own. The contract of September 11th made provision for turning over possession of this property to the defendants on October 1, 1909, nineteen days after the execution of the writing. There is no provision for the B. A. Kipp manufacturing company, whether it shall vacate the premises and discontinue its business or continue as the tenant of the new owner. There was no rent fixed. In short, the writing is entirely silent with reference to this large concern in possession and in operation and owned by the vendor in the land contract. It might be different if the vendor was not concerned in the manufacturing business. All this evidence is competent, and when offered it tends to show and forms a basis sufficient for tbe circuit court to decide as a preliminary question tbat tbe writing of September lltb did not apparently contain tbe whole contract between tbe plaintiff and defendants, but tbat some part of it relating to tbe B. A. Kipp Company, its surrender of possession or its continuance in possession, or its purchase by tbe vendees, was omitted. It is incredible tbat Mr. Kipp, so largely interested in this manufacturing company, would sell the manufacturing site in which it was in active operation and agree to. turn over possession in nineteen days, and make no provision whatever for tbe manufacturing company. So far as tbe deed or deeds given by tbe plaintiff to tbe defendants are concerned, such instruments present no difficulty in a case like this, because of tbe evidence mentioned and because they show on their face and from their intrinsic nature tbat they are for tbe purpose of transferring title and not for tbe purpose of containing all tbe stipulations and conditions of tbe contract pursuant to which such transfer was made. Butt v. Smith, 121 Wis. 566, 99 N. W. 328. The parol evidence was not admitted in tbe order stated, but tbat is no ground for reversal if tbe evidence was present and produced and might have been offered in tbe order aforesaid.

On tbe second exception it is alleged in tbe complaint in substance and in various forms tbat tbe real estate was sold to defendants as part of an agreement by which they were to buy also tbe personal property of tbe B. A. Kipp Company and assume tbe management and direction of its business. In reliance on tbe defendants’ purchase of tbe personal property plaintiff consented to and contracted to sell and did so sell and convey to said defendants said real estate. Having thus acquired tbe real estate, tbe defendants are attempting to repudiate tbat part of tbe contract which relates to tbe personal property, which was tbe main inducement for plaintiff to sell them tbe real estate and without which be would not bave sold it. If tbis is true, then defendants are using tbe instruments in writing relating to- tbe real estate for tbe purpose of excluding parol evidence of - tbe conditions on wbicb sucli writings were delivered. Tbis would be making sucb fraudulent use of these writings as to entitle tbe plaintiff to prove by parol evidence tbe real agreement.

Tbis situation is sufficiently covered-by tbe pleadings, taking tbe averments in tbe complaint together with tbe defense set up in the answer. On both exceptions, therefore, parol evidence was admissible notwithstanding tbe rule invoked by appellants. Having properly decided that tbe writing did not contain tbe whole contract between tbe parties, it then followed that tbe real transaction might be sifted to tbe bottom and all that was said and done by tbe parties with reference to tbe purchase and sale became admissible. We need not recite tbe evidence in detail. It is sufficient to- say that it fully supports tbe findings of tbe court below and that it appears that tbe plaintiff and defendants, having made by parol a contract for tbe purchase of tbe real estate, including tbe factory plant, for a fixed sum, and tbe purchase of all tbe property of tbe B. A. Kipp Company except its bills and accounts receivable, and all its shares of stock at a fair valuation on tbe actual property, proceeded to carry tbis out. When tbe parties bad arrived at a stage in tbe execution of tbis contract where- tbe defendants bad secured tbe deeds to tbe land, made tbe payments necessary, and executed the mortgages for the deferred payments and got possession of tbe real estate, they refused to carry out their agreement to buy from tbe plaintiff the personal property of tbis corporation.

It is true that tbe oral contract was void as to tbe real property under tbe statute of frauds relating to real estate (see. 2302, Stats. 1898) up to September 11, 1909, and, being entire and indivisible, was under this statute also invalid as to tbe personal property. Clark v. Davidson, 53 , 10 N. W. 384. It was also up to tbis time void under tbe statute of frauds relating to personal property (sec. 2308, Stats. 1898). But on September lltb by tbe execution and delivery of tbe so-called receipt; on September 16tb by tbe execution and delivery of tbe deeds and tbe payment of money; and on or about October 1st by tbe defendants entering into possession of tbe real estate and tbe plaintiff listing and inventorying tbe personal property, there-was, wben taken all together, such part performance of this; entire contract as to take tbe contract out of tbe operation of tbe statute of frauds. Tbe status quo wa.s altered to an extent that to then bold void- tbe unexecuted fraction of tbis entire contract would operate as a fraud upon tbe plaintiff, and tbe damage if any which tbe law could allow him would-be inadequate compensation. Henrikson v. Henrikson, 143 Wis. 314, 127 N. W. 962; Butterick P. Co. v. Rose, 141 Wis. 533, 124 N. W. 647; Paine v. Wilcox, 16 Wis. 202; Horn v. Ludington, 32 Wis. 73; Mulligan v. Albertz, 103 Wis. 140, 78 N. W. 1093.

It is next contended that the plaintiff has no equity to enforce specific performance because bis demand is in substance to recover a sum of money for breach of a contract. But tbe law seems to be that, in case tbe vendee might have specific performance for a similar breach on tbe part of tbe vendor, tbe doctrine of mutuality requires equity to give similar relief to tbe vendor on bis application. Tbis is a question on which there is some slight conflict of authority. But it is chiefly on tbis ground that tbe rule exists that specific performance may be bad at tbe suit of the vendor of land wherein tbe vendee is decreed to accept tbe deed and pay tbe purchase price. It was said in Gates v. Parmly, 93 Wis. 294, 306, 66 N. W. 253, 67 N. W. 739:

“Since tbe latter [tbe vendee] may, by a suit in equity, compel tbe execution and delivery of a deed of tbe premises, tbe vendor may also, by a similar equitable action, enforce the undertaking of tbe vendee, although the substantial part of his relief is the recovery of money.” Bumgardner v. Leavitt, 35 W. Va. 194, 13 S. E. 67, 12 L. R. A. 776.

There seems to be little doubt that under the facts found-in this ease the vendees would have been entitled to- specific performance. A stock of goods connected with an existing-business has an especial and peculiar válue in connection with the transfer of such business, so a contract to sell an entire-stock of goods or to sell an interest in a partnership has been specifically enforced. Raymond Syndicate v. Brown, 124 Fed. 80; Ralston v. Ihmsen, 204 Pa. St. 588, 54 Atl. 365. Where part of an entire contract relates to personal property,, and the rest to a subject matter such as land, over which the jurisdiction is ordinarily exercised, specific performance may be had of the contract as a whole, including the clause relating to personal property. Leach v. Fobes, 11 Gray, 506; Perin v. Megibben, 53 Fed. 86, 3 C. C. A. 443; Brown v. Smith, 109 Fed. 26; Jones v. Pease, 21 Wis. 644; Bartz v. Paff, 95 Wis. 95, 69 N. W. 297. The case of Jones v. Pease, sugra, is something like the instant case in that the contract included real and personal property and one of the items of' part performance was the execution and delivery of a deed.

It is next urged that the oral contract found by the court to have been made was too indefinite with respect to the price-to be paid for the personal property in question and with respect to the terms of payment to warrant a decree for specific performance thereof. This objection does not seem to be well taken. Meyer v. Jenkins, 80 Ark. 209, 96 S. W. 991; Estes v. Furlong, 59 Ill. 298; Lister A. C. Works v. Selby, 68 N. J. Eq. 271, 59 Atl. 247; Myers v. Metzger, 61 N. J. Eq. 522, 48 Atl. 1113; Hayes v. O’Brien, 149 Ill. 403, 37 N. E. 73; Union Pac. R. Co. v. C., R. I. & P. R. Co. 163 U. S. 564, 16 Sup. Ct. 1173; Coles v. Peck, 96 Ind. 333. To direct a valuation by a master in such a case does not conflict with the letter or spirit of the agreement. Coles v. Peck, supra. There is a distinction to be observed with ref-•erenc© to subordinate or incidental portions of an agreement and the whole body or purview of the contract. WTiere a ■contract is definite in the main features thereof and in most ■of its details, but one item is left in such condition that an inquiry of reasonable value or reasonable time for performance is essential, that will not defeat the whole contract or bar specific performance. Union Pac. R. Co. v. C., R. I. & P. R. Co. 163 U. S. 564, 16 Sup. Ct. 1173. This case in this respect is not within the rule of J. L. Gates L. Co. v. Ostrander, 124 Wis. 287, 102 N. W. 558; Eckel v. Bostwick, 88 Wis. 493, 60 N. W. 784; Schneider v. Reed, 123 Wis. 488, 101 N. W. 682; 36 Cyc. 587. It is rather within the rule of Cunningham v. Brown, 44 Wis. 72; Doctor v. Hellberg, 65 Wis. 415, 27 N. W. 176; Becker v. Holm, 89 Wis. 86, 61 N. W. 307; Inglis v. Fohey, 136 Wis. 28, 116 N. W. 857; 36 Cyc. 596.

We find no error in the proceedings taken by the court to preserve the property pending the litigation. Error is assigned because the trial court referred the question relating to the fair value of the personal property to a referee. The personal property purchased consisted of numerous items which in the nature of things must be inventoried and separately valued. It would be a very technical construction of •subd. 2 of sec. 2864, Stats. (1898), to hold that the ascertainment of what items were present on October 1st, what were :sold and disposed of since, and at what price, what items, if .any, attempted to be included in the inventory were since acquired; and what was the real value of each item, did not constitute taking an account necessary for the information of the court before judgment. “Taking an account of stock” is a very common expression used to denote the ascertainment and valuation of items in an inventory. We think the order ■of reference was within the authority conferred on the court hy subd. 2 of said section.

Appellants assign error on tbe failure of the circuit court to change tbe place of trial, but do not argue tbis in tbeir brief. We therefore overrule it without discussion.

We find no reversible error in tbe record and affirm tbe judgment.

By the Court. — Judgment affirmed.

A motion for a rehearing was denied October 3, 1911.