Stewart v. Pierce

89 N.W. 234, 116 Iowa 733

• Court: Supreme Court of Iowa
• Decided: February 14, 1902
• Status: Published

Opinion

Sherwin, T. —

3 We will first consider the appeal from the order granting the temporary injunction. A motion to dismiss this appeal was filed, and was submitted with the case. The ground upon which the motion is based is that the appeal was waived by proceeding to trial in the main case, and because the final decree dissolved the temporary writ as to the employment of the plaintiff. If the issues and the evidence that were presented to Judge Prouty upon which his ord'er was of course based were the same in all respects as those upon which Judge Holmes based his final decree, a much stronger reason would exist why this motion should be sustained, for it might then -be said that the defendants, by invoking the judgment of the court on this particular question, had waived the appeal taken from the preliminary order. But such is not the situation, for after that order was mad'e a material change was made in the issues presented by the plaintiff, and the case as thus changed was heard and determined finally. As the main case comes to us upon appeals by both sides, the question that is here presented might be therein determined as well as elsewhere, but we do not deem this a sufficient reason for’ dismissing the former appeal. The motion is therefore overruled.

4 I. The principal contention on this first appeal is that the court had no power or authority to make an order in the form of a preliminary injunction continuing the plaintiff in the employment of the Homestead Company, and this is the question that we shall consider in this connection. • The corporate existence of the-Homestead Company expired by limitation op or. about the-first day of July, 1900. By reference to the second clause-of the contract of January 8, 1895, it will be seen that it provides for the employment of both Stewart and Pierce-from January 1, 1895, to the first of July, 1900, at the agreed annual salary of $3,000 each. On the sixth of July,. 1900, the defendant Pierce, who was then acting as business manager, and who then claimed to be the owner of three-fourths of the Homestead stock and three-fourths of" the Pierce-Wallace stock, sent out a circular in the name-of the Homestead Company advising the patrons of the paper that the plaintiff, Stewart, was no longer connected with its advertising department, and other solicitors were-placed- in the territory formerly occupied by him, and he involuntarily ceased work in that capacity. The preliminary order restrained the defendant Pierce-, “both personally and as acting for or in the name of or jointly with others, * * * * from in any manner interfering with the plaintiff in his work as advertising ¡solicitor for said Homestead Company under the same terms and. conditions under which he carried on and conducted' the same, with all the rights and incident to the deschaxge of those duties as performed and enjoyed by him prior to July 1, 1900, including the use of railroad transportation as theretofore.” It is clear that the language of the order above given does not purport to protect any of the rights- of the plaintiff as a stockholder, officer, or director of the Homestead Company. It is purely an order restoring him to his old position as an employe thereof, with all the rights and benefits connected therewith. The order will bear no other construction, and it is as broad as. the facts would justify, for the record does not show any interference with the plaintiff’s rights as a stockholder in the Homestead Company. The question, then, is narrowed down to the single proposition whether a court of equity has the power to renew a contract of employment, or to make a new one for the parties. This is the sole question involved here, ■as we view it. That the court has no such power we believe is elementary, and is the uniform holding of the courts. The contract made with the Homestead Company in 1895 ■only provided for the plaintiff’s employment until July 1, 1900, and that time had expired. It is also well settled that courts will not require specific performance of existing contracts for personal services, at least where full compensation in damages may be recovered. The plaintiff could not have been compelled to continue in the employ cf the Homestead Company under the contract in question before its life expired. If he had seen fit to leave the service of the company, it would have been left to an ¡action for damages therefor. Pomeroy, Contract, sections 162-165; Campbell v. Potter, 147 Ill. 576 (35 N. E. Rep. 364); Pingle v. Connor, 66 Mich. 187 (33 N. W. Rep. 385) ; Grimmer v. Carlton, 93 Cal. 189 (28 Pac. Rep. 1043, 27 Am. St. Rep. 171); Wakeham v. Barker, 82 Cal. 46 (22 Pac. Rep. 1131) ; Richmond v. Railroad Co., 33 Iowa, 422.

6 II. It is insisted, however, that, as the contract between the plaintiff and Pierce provided for equal control of the property and for equal service, the court was justified in continuing the plaintiff’s contract of employment. But we cannot see that this situation, if true, would justify the order. The fact that both were owners' of an equal amount of the stock of the Homestead Company would certainly not in itself entitle tbe plaintiff to employment by tbe company at any time. After tbe expiration of his contract he is in no better situation than any other stockholder without a contract. It is further argued that the order was proper because the entire matter was in the hands of the court, and, such being the case, the court had full control over the property. But this is not so-. The suit between the parties was pending, it is true, but the court had not taken ■charge of the property by any officer appointed for that purpose. It had only gone to the extent of directing what ■should and what should not be done by the defendants in the management thereof, in order to protect the plaintiff’s rights. The property itself was in no" way or sense under the control of the court, nor were the officers of the Homestead Company or its affairs under its control and management. The order restoring the plaintiff to the employment of the company cannot be sustained.

’7 HI. The controlling question in the main case is the ’interest of the plaintiff in the stock of the Homested Company and in the Pierce-Wallace Publishing Company. He claims that under the contract.of January 8, 1895, as amended or enlarged by the letters of February 22, 1896, and March 2, 1896, he became the owner of one-•half of the stock of both companies as soon as the Wallace interest was obtained, while the' defendant asserts that the contract of January, 1895, did not contemplate the purchase of any of the stock by Stewart, but by the Homestead Company, and that Stewart acquired no right to this stock under this contract. Further, that the letters referred to, which are set out below, do not help the original contract in this respect, because too indefinite and uncertain; and that in themselves they do not constitute a eonfract supporting the plaintiff’s claim. The letter of February 22d, written by the plaintiff to the defendant, is as follows: “My suggestion to you for a fair division between us, in case we can buy it, of tbe cost of Mr. Wallace’s interest in the Homestead Company, Pieree-Wallace Company, and the entire lot purchased by you and him of the bank, and on which the Homestead Building stands, is as follows. And to state it cléarly, I must assume that the Pierce-Wallace Company be dissolved', and that its property, which consists only of the entire stock of the Wis. Parmer and the Live S. Indicator and 118 shares of the Homestead stock, shall be divided equally between you and Mr. Wallace. The figures given are intended to be by way of illustration, rather than a correct statement of the cost of the property. Suppose, then, that we can buy half .the stock of the Wis. Parmer and Indicator and 60 shares of Homestead stock and half the interest in the real estate from Mr. Wallace, free of all liens (except the mortgage on the real estate of $10,000), for $20,000, and that you have paid for half the stock in the Wis. Parmer and Indicator $7,000, and for or on half interest in the real estate $1,200, then the total cost to us of this property, which is to be divided equally between us, would be $28,200, of which I would pay to Mr. Wallace $14,000, and you would pay to him $5,900. If we could buy Mr. Wallace’s entire interest for $12,000, and you have already paid $8,200, that would make the entire cost to us, $20,200, of which I would pay to Mr. Wallace $10,100, and you would pay to him $1,900. It might make the matter clearer to assume that you would purchase Mr. Wallace’s entire interest, and pay him for it, and that I would buy the half interest of you, and pay you one-half of all you had paid for the Wisconsin Parmer, L. S. Indicator, 60 shares of the Homestead stock, and the lot bought of the bank on which the Homestead building stands. My intent is,— and yours the same, as I understand it, — starting at the point where we each owned $7,000 of the Homestead' stock (counting the stock owned by Mr. Dunning and Lucas as yours), to calculate the cost of the entire plant subsequently purchased, Wis. Parmer, Indicator, Wallace’s Homestead stock, and the real estate, — and each pay half of it. I think this covers the entire ground, and accords with all our previous arrangements. If it meets your views, please let me know, when you have considered it. I find that I cannot make clear and concise statements of the matter without assuming that the Pierce-Wallace Co. be dissolved, but it does not follow necessarily that it must be dissolved in order to carry this out. If there is anything that should be omitted or added to this to make it clear and cover the ground, please let me know.” In answer to this letter the defendant Pierce wrote as follows: “Mr. Stewart: Your letter with reference to basis of settlement between you and me,' in case we, or either of us, should succeed in buying Mr. Wallace’s stock, duly received. I think we both understand the matter alike, so far as the general principle on which the matter is to be settled is concerned. There is some difference in our figures, however. You put the amount of our equity in the lot at $1,200 each. It should be $1,250 each. As to the price of the Indicator and Parmer, my understanding is that we are to count our settlement just the amount of money that has been put into the two' properties; in other words, just what they have cost us, whether that amount be $12,000 or $13,000 or $15,000, more or less.” The plaintiff relies on the written contract as completed by these two letters. Mr. Wallace was a thorn in the flesh of both of these parties when the original contract was entered into and when these letters were written, and it is the undisputed evidence that it was the purpose of both to buy his entire interest in the Homestead Company and in the Pierce-Wallace Company, so that both properties, with all that properly belonged thereto, would be under their absolute control; and this was finally accomplished. It is true, as contended by the appellant, that the contract as completed is not as definite and certain as it might easily have been made; but, when read in the light of the circumstances surrounding the parties at the time, and in connection with the practical construction given it by the parties themselves, there can be little doubt as to their intention. It is well settled by the authorities that in case of doubt as to the intent of the parties to a contract “the interpretation which the parties by their acts under their contract have practically given it will have weight, and it may be controlling.” Bishop, Contracts, section 412; Pollock, Contract-392. The Wallace interest in the properties in controversy was in fact purchased as provided for in the contract, anid the acts of both Stewart and Pierce subsequent to the purchase and until difficulties arose between them clearly indicate the mutual understanding that they were half owners, each, of all the property which was the ■subject of the contract. On this theory and on.it alone, can the acts and declarations of the parties, both written and oral, be reconciled. It is conceded that the contract provides for . the purchase of the Pierce-Wallace Publishing Company stock by the Plomestead Company. The latter company would, if appellant’s contention be true, also become the owner of a part of its own stock; and on this theory of the case, if Stewart was to- be an equal owner with Pierce of the Homestead property, he would be entitled to 30 shares of its stock in addition to that already held by him, which was 70 shares. .We are firmly convinced that the parties intended by their contract to ’ become equal owners of the stock in controversy, and that this intention was carried out by both until the plaintiff had paid nearly all that was due from him for his share therein; that he is the owner of one-half of the stock of the Homestead Company and of one-half of the stock of the Bierce-Wallace Publishing Company, which includes also the Wisconsin Farmer and Live Stock Indicator.

8 IV. That part of the contract which provides for the permanent employment of Stewart and Pierce is not, in our judgment, absolutely void. It is possible that it was voidable at the instance of some of the stockholders of the Homestead Company, and for the purposes of this case such conclusions may be conceded. Kerr, Fraud & Mistake, 48; Pearsoll v. Chapin, 44 Pa. 9; Brightman v. Bates, 175 Mass. 105 (55 N. E. Rep. 809); 3 Thompson, Corporations, section 4017. Buthowever this may be, it does not appear to us to be controlling, because that part of the contract has been fully executed, and we are not now asked to enforce it in any way so far as this branch of the case is concerned. Planters’ Bank of Tennessee v. Union Bank of Louisiana, 16 Wall. 483 (21 L. Ed. 473) ; Armstrong v. Bank, 133 U. S. 433 (10 Sup. Ct. Rep. 450, 33 L. Ed. 747); Manchester & L. R. R. v. Concord R. R., 68 N. H. 132 20 Atl. Rep. 383, 9 L. R. A., 689, 49 Am. St. Rep. 582.) The contract in question is separable, and only the coneededly valid part thereof is sought to be enforced. That this may be done is well settled. Osgood v. Bander, 75 Iowa, 550.

V. The defendants’ contention that the contract in question was abandoned by the joint agreement of the parties hereto with Wallace in 1897 is not sustained by the record. That agreement was for the sale to Stewart and Pierce of the Wallace holdings in the Homestead Company and in the Pierce-Wallace Publishing Company. It does not purport to be a contract between Stewart and Pierce. It is true that some of its language is not in exact harmony with the claim made for the contract between these two parties; but they were then dealing with Wallace, and it was not necessary that their contract with him embody the specific terms of their own. The principal thought running through it is that the interest of Wallace shall be sold to these parties, and while it may in some respects change the details of their agreement as originally made, it does not, in our judgment, show an abandonment of the previous contract, or appear inconsistent therewith in its controlling features.

9 VI. Section 1629 of tire Code provides “that corporations whose charters expire by limitation • * "' * may nevertheless continue to act for the purpose of wdnding up their affairs.” This provision of the Code does not, in our judgment, preclude the winding up of the affairs of a corporation whose charter has expired by a court of equity. Its evident purpose is to permit the closing of corporate business by the duly-constituted managers thereof, when it may be done in the usual course of business; in other words, it refers to an amicable settlement of corporate affairs. , If it shall appear to a court of equity that it should take charge , of such business, this statute does not stand in the way of its so doing. Where the charter has expired by limitation, and there are “violent internal dissensions in the corporation,” as in this case, we see no reason why a court of equity may not take charge of its property for the protection of all stockholders, and the winding up of the concern. Cook, Stock, Stockholder & Corporation Law (2d Ed.), section 68-1; Morawetz, Private Corporation (2d Ed.), section 281.° While the courts will ordinarily leave the affairs of a corporation in the hands of those duly elected to manage it, and where it appears necessary to appoint a temporary receiver, will discontinue such receivership as soon as possible, it by no means follows that, where the charter has expired, and it is the duty of its officers to close the corporate business as soon as possible, and they have no other power under the statute, a court of equity may not, at the instance of a shareholder, upon proper showing, wind up the affairs of the corporation. See, in this connection Mason v. Mining Co., 133 U. S. 50 (10 Sup. Ct. Rep. 224, 33 L. Ed. 524.)

10 VII. The real estate in question was in fact the property of the Homestead Company, though the title stood in the names of Stewart and Pierce, and it was properly included in the order for the sale of the Homestead property.

12 VIII. The Pierce-Wallace Publishing Company is a corporation entirely distinct from the Homestead Company. It was at the time of the purchase thereof by Stewart and Pierce the owner of the Wisconsin Earmer and the Live Stock Indicator. The trial court ordered the sale of the Pierce-Wallace Publishing Company property, including the property of the two last named concems; and this, we think, should not be done. Each Corporation is a distinct and separate legal entity, as much so as are individuals. The Pierce-Wallace Publishing Company has still several years of life under its charter. That a court of equity has no power to dissolve or end the existence of this corporation at the instance of a stockholder thereof is too well settled to require the citation of authorities in support of the proposition. The property of the corporation is also entirely distinct from the property in the shares of stock issued by it, and the stockholders are not the owners of its property as individuals. Van Allen v. Assessors, 70 U. S. 584 (18 L. Ed. 229); Button v. Hoffman, 61 Wis. 20 (20 N. W. Rep. 667, 50 Am. Rep. 131) ; Bank v. Construction Co. 97 Ga. 1 (25 S. E. Rep. 326, 33 L. R. A. 800); Mason v. Finch, 28 Mich. 282 ; Humphreys v. McKissock, 140 U. S. 304 (11 Sup. Ct. Rep. 779, 35 L. Ed. 473). As we understand the record, there is no claim, even, that the Homestead Company owned the stock of the Pierce-Wallace Publishing-Company; but if it did, the stock itself only”could be sold, and not the property of the corporation, however much or however little there may be of it, for a sale of the property would practically work a dissolution of the corporation at the instance of some of its stockholders. The property of the Pierce-Wallace Publishing Company, including the Wisconsin Parmer and the Live Stock Indicator, should not have been ordered sold, and the decree is modified in this respect.

IX. The accounting of the trial court is substantiallv correct, and will not be disturbed.

13 X. Finding, as we do, that Stewart is the owner of one-half of the stock of the Homestead Company and one-half of the stock of the Pierce-Wallace Publishing Company, the order of the court restraining the defendants Pierce, Dunning, and Lucas from voting more than one-half of said stock is right.

14 XI.- The defendant Pierce has filed in this court a motion, and in the trial court a petition, for a new trial based on the ground of newly-discovered evidence. He also asks a continuance here until his petition below can be disposed of. The statute authorizing the filing of a petition for anewtrial applies only to' a new trial in the court below. We have no original jurisdiction to hear and determine cases either in law or in equity. If we were to consider petitions for a new trial here, and consider the newly-discovered evidence brought directly and originally before us, we would be acting as a court with jurisdiction to hear and determine questions of law and the evidence without the intervention of a trial court, and we think such action would be in direct violation of the statute both in letter and in spirit. ‘ There-is, perhaps, some reason why a continuance of a cause should be granted here pending a petition for a new trial in the‘court below, and it is difficult to establish a rule which shall be adhered to in all cases. The principal thing to be said in favor of the continuance is that the entire case may be presented to the court at the same time, and by so doing relieve the court of the necessity of twice investigating the records presented, as must necessarily be the result in many cases. On the other hand, to grant a continuance in all cases of this kind would result in great delay, and in possible injury to the party not asking the delay. Here the motion for a continuance was submitted with the case, .evidently with the thought of settling the point of practice, and we are inclined to hold that motions of this character should be disposed of independently of the case. This will avoid delay, and lighten the work of the court as much as any other procedure except an agreement by the parties covering the matter.

The motion for a continuance and the motion for a new trial are overruled. The order continuing the plaintiff in the employ of the Homestead Company is reversed. The decree in the main case is aeeirmed on the plaintiff’s appeal, and modieied and aeeirmed on the defendants’ appeal as herein indicated.