Rawlings Manufacturing Co. v. Red Run Golf Club

189 N.W. 877, 220 Mich. 30, 1922 Mich. LEXIS 862
CourtMichigan Supreme Court
DecidedOctober 2, 1922
DocketDocket No. 52
StatusPublished
Cited by2 cases

This text of 189 N.W. 877 (Rawlings Manufacturing Co. v. Red Run Golf Club) is published on Counsel Stack Legal Research, covering Michigan Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Rawlings Manufacturing Co. v. Red Run Golf Club, 189 N.W. 877, 220 Mich. 30, 1922 Mich. LEXIS 862 (Mich. 1922).

Opinion

Steebe, J.

As assignee of one Richard Jackson, Jr., plaintiff recovered a verdict and judgment of $2,944.75 in the circuit court of Wayne county. Upon the trial the court at close of the testimony took a tentative verdict of the jury under the so-called Empson act with concluding instructions that if they found for plaintiff their verdict should be $2,500 with interest at 5 per cent, from April 22, 1916, and if for defendant, no cause of action. Following the verdict defendant moved for a judgment non obstante of no cause of action which was denied, and thereafter for a new trial which was denied and reasons therefor filed. Defendant’s assignments of error relied upon and argued are refusal of the court to enter judgment non obstante for defendant and to grant a new trial.

At the time this cause of action arose plaintiff’s assignee, Richard Jackson, Jr., was secretary of defendant. This claim upon which judgment was had [32]*32is for special services claimed to have been rendered by him under the following resolution adopted by defendant’s board of governors, or directors, on January 5,1916:

“Whereas, it having become imperative that some plan be adopted by which to raise sufficient funds to meet the obligations of the club, and
“Whereas, the further sale of bonds to members of the club seems improbable, and
“Whereas, there being $50,000 of bonds remaining of the $80,000 authorized and unsold, and
“Whereas; Mr. Richard Jackson, Jr., reports that he has assurances which will enable him to place said bonds at their par value if certain conditions obtain, now, therefore, it is
“Resolved: That the board of governors of the Red Run Golf Club hereby engage Mr. Richard Jackson, Jr., to secure purchasers for said $50,000 bonds and do hereby authorize and empower him to complete all necessary arrangements for the sale and delivery of said bonds.
“It being understood that the conditions under which Mr. Jackson is to act and which govern the sale of said bonds are as follows:
“The $50,000 bonds to be First Mortgage Class 'A’ bonds bearing interest at the rate of six per cent, per annum payable semi-annually on January 1st and July 1st.
“That the bonds already subscribed and paid for to be 1st Mortgage Class ‘B’ bonds bearing interest at the rate of six per cent, per annum payable semi-annually on January 1st and July 1st. * * *
“That the compensation of Mr. Richard Jackson, Jr., for selling said $50,000 bonds be 5%, such compensation to be due and payable when the full amount of $50,000 for the sale of said bonds be deposited to the credit of the club in the Security Trust Company.
“That the limit of time given Mr. Jackson to sell said bonds is two weeks from January 6, 1916.”

The Red Run Golf Club was organized and incorporated in April, 1914. Jackson was one of its first members and active in its organization. In that [33]*33connection a separate entity called the Red Run Realty Company purchased for club grounds and partly paid for a, suitable tract of 105 acres located near Detroit which it sold to defendant under a land contract.

Defendant’s income having proved wholly inadequate to meet its expenses and the deferred payments on its land contract, a bond issue of $80,000 was authorized in April, 1915, but it was unable to dispose of more than $27,000 worth of these bonds under the original project for floating the loan, although a committee was appointed for that purpose and the subject taken up at every meeting that year, and subscriptions of members solicited. None of the $27,000 worth subscribed for was issued but receipts were given for payments made by subscribers, some of whom paid only 10% down on their subscriptions.

The. financial condition of the club became critical and various expedients were discussed for floating the loan to meet pressing obligations and delinquent payments on its real estate. To that end the plan of bonding was modified to make the remaining portion of the authorized issue a first lien on its property, and otherwise more attractive by provisions in the resolution quoted from which it is unnecessary to dwell on.

As secretary of the club Jackson at first received for his services 10% commission on moneys taken in which was later changed to $200 per month. He testified that he was not satisfied with his compensation and told them as soon as “they could clean up the Realty Company,” in which he was interested, he wanted to get out, that he had devoted his entire time to the club and said of his services:

“My duties as secretary of the club were as greens keeper; I also had to do everything around the club that was supposed to belong to other people to do. In fact, I did all the work that was to be done around [34]*34there. It was partly my duty as secretary of the club to sell bonds.”

Of his efforts to sell bonds Jackson testified that he was active in soliciting members to subscribe under their first project to -float the $80,000 issue, and sold most of the $27,000 subscribed for, but the time came when they could dispose of no more. Mr. Walter E. Flanders, apparently a man of ample means, was during that time a member of the club, but not an officer nor active in its affairs. Jackson had, as he stated, secured his subscription for $1,000 worth of the bonds as a club member, but he had refused to be interested in it as a business matter or subscribe more under existing conditions.

The issue of bonds as originally proposed was manifestly unattractive as a business proposition. -This newly-organized golf club had bought on a land contract 105 acres of land near Detroit from the so-called Red Run Realty Company composed of three members who had bought and but partially paid for it. Without title to the land or other apparent resources even adequate to meet the running expenses of the club and no provision for a mortgage on what of value it may have had to secure the bonds, steps were taken and an effort made to issue and sell them.

When the directors met on January 5, 1916, the situation was discussed at length, the board being in session all day. Jackson gave the club assurances-that if the matter of bonding was readjusted and put in legal shape so the unsold bonds were made a first lien on its property he could secure a purchaser of the remaining $50,000 worth of bonds, for which service he wanted a commission if successful. The matter of his compensation met with some opposition, but when the resolution quoted from so providing was introduced by a member of the board named Porter it was adopted. Jackson testified that he made this [35]*35proposal after the board refused to accept the terms imposed by the Security Trust Company in a proposition he submitted.

On January 18, 1916, a meeting of the board was held at which a resolution was passed calling a special meeting of stockholders for February 2, 1916, to pass upon and legalize the bonding as proposed. Jackson testified he then reported to the board that he had sold to Mr. Flanders $50,000 worth of bonds, provided they were made a first mortgage series “A” with first lien over series “B” and all the then officers of the cluh would resign and let a new board be elected.

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Cite This Page — Counsel Stack

Bluebook (online)
189 N.W. 877, 220 Mich. 30, 1922 Mich. LEXIS 862, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rawlings-manufacturing-co-v-red-run-golf-club-mich-1922.