Weldon v. Degan

150 P. 1184, 86 Wash. 442
CourtWashington Supreme Court
DecidedAugust 4, 1915
DocketNo. 11999
StatusPublished
Cited by10 cases

This text of 150 P. 1184 (Weldon v. Degan) is published on Counsel Stack Legal Research, covering Washington Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Weldon v. Degan, 150 P. 1184, 86 Wash. 442 (Wash. 1915).

Opinion

Chadwick, J.

The plaintiffs and the defendant Charles Degan, after some preliminary negotiations, met at the city of Chicago, Illinois, on the 18th day of September, 1911, and signed the writing following:

“It is hereby agreed and understood by the signatories of this document that a corporation will be formed on or about the first day of May, 1912, with a proposed capital of 80M. to be contributed equally by the signers hereto, for the purpose of manufacturing shoes. It is further understood that each signer holds himself firmly bound to the others to consummate this corporation, and in default of completing the [443]*443agreement and declining to become a member of the corporation, as above agreed, forfeits to the steadfast signatories the sum of twenty-five hundred dollars. In witness hereunto we set our hands and seal this 18th day of September, 1911.”

In March, 1912, the defendant Degan notified the plaintiffs that he would not become associated with them in the suggested enterprise. A formal demand was made upon him, and upon his refusal, this action was brought to recover the sum of $2,500 as liquidated damages.

It is the theory of the plaintiffs that the contract is binding under the maxim, Id certu/m, est quod certwm, reddi potest. Plaintiffs alleged in their complaint, and accordingly submitted testimony to prove, that it was understood, at the time the writing was executed, that the place of business of the corporation was to be Milwaukee, Wisconsin; that each of the parties would be directors of the company; that the capital stock of the corporation would be $100 per share. Two of the plaintiffs testified to actual damages. One of them sold his home in the state of Texas and arranged to move to the city of Milwaukee, and he actually paid out the sum of $250 making preparations for the new venture. The other expended about $300 for the same purpose. They also proved that defendant was a man of long experience and influence in the shoe manufacturing business, and that his services would have been of great value to the proposed concern.

When the plaintiffs had rested their case, the court sustained a motion for a nonsuit, upon the theory that the writing was not a contract, in that it was too indefinite and uncertain in its terms to warrant a recovery. From the judgment entered upon the motion, plaintiffs have appealed.

Upon the main question, counsel submit a number of authorities to sustain the proposition that,

“An agreement cannot be held uncertain if the courts can see what the parties intended and enforce the same. An agreement drawn up by illiterate persons will not be held [444]*444uncertain, if it is possible for the court to ascertain their meaning. Absolute certainty is not required. That is certain which may be rendered certain.” 9 Cyc. 250.

It is said that the words “organize” and “organization,” when used with reference to an agreement to form a corporation, mean and include all of the incidents pertaining to the organization of such corporation, including the names and number of directors, the names of the officers, the division of the capital stock, the adoption of by-laws, as well as all. other incidents necessary to endow the legal entity with a capacity to transact the business for which it was created; the words “form” and “consummate” are declared to be words of equivalent meaning, and under this rule and the maxim relied on, it was competent for the plaintiffs to allege and prove that it was the intention of the parties to do business at Milwaukee; that each of them were to be directors, and the other items pertaining to the organization to which we have referred. To sustain this proposition, plaintiffs put their principal reliance upon the cases of Electric Fireproofing Co. v. Smith, 99 N. Y. Supp. 37; Childs v. Smith, 55 Barb. (N. Y.) 45; Kirschmann v. Lediard & Ree, 61 Barb. 573, and certain Wisconsin cases, being Kipp v. Laun, 146 Wis. 591, 131 N. W. 418; Inglis v. Fohey, 136 Wis. 28, 116 N. W. 857, and Becker v. Holm, 89 Wis. 86, 61 N. W. 307, in which other cases relied on are cited.

It would serve no purpose for us to review in detail all of these authorities. It is enough to say that the cases most in point are the three New York cases. These were cases where a party having a salable thing entered into a contract with other parties to form a corporation, the parties of the second part assuming the burden of perfecting the organization, giving the plaintiff a certain number of shares of the capital stock. It would seem to us that the conclusion would necessarily follow, upon suit brought by the party having the salable thing to recover damages for breach of contract, that he would be entitled to recover, and that defendants [445]*445would not be heard to say that the contract could not be enforced because all of the details attending the formation of the corporation were not set out in the agreement, for, by the terms of the engagement, he would have nothing to do with the detail of organization.

This is a case between parties having the same interest and the same relation to the proposed concern. The contract is lacking in everything other than the purpose of the organization, the amount of capital stock, and the proportion in which it was to be contributed. There is nothing in its terms that would bind a minority of the number signing the writing to the organization of a corporation under the laws of any particular state, if he were unwilling and refused to consent thereto or to any other detail that was omitted.

The place where a corporation is organized is, or may be, a matter of great importance, for it is a matter of common knowledge, of which courts may take judicial notice, that the laws of the various states vary widely in defining the rights and liabilities of stockholders. They likewise differ in providing for the number and responsibilities of trustees or directors. In some of the states there is no personal liability attaching to a subscriber to the capital stock of a corporation. In others a subscriber is liable upon his subscription. In some there is a double liability.

It seems to us that the agreement is not sufficiently definite in its terms to be binding upon any one of the parties to the extent that they could be called upon to pay damages to the other parties, either actual or liquidated. In the case of Rudiger v. Coleman, 98 N. Y. Supp. 461, there was an agreement that

“A corporation shall be formed for the purpose of quarrying and selling granite, and the execution of contracts in which granite is used, consisting of all the parties hereto, in accordance with a certificate and. by-laws, a copy of which by-laws is hereto annexed.”

[446]*446An action was brought for specific performance. It was held:

“The judgment cannot be sustained. It is not within the province of equity jurisdiction to compel the specific performance of a contract to form a corporation under the circumstances disclosed by this case. The parties were unable to agree upon the terms for the formation of such corporation, and are now hostile and unfriendly. Annexed to the agreement there is a proposed set of by-laws, but they contain little, if anything, showing the terms and details of the proposed incorporation.

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Cite This Page — Counsel Stack

Bluebook (online)
150 P. 1184, 86 Wash. 442, Counsel Stack Legal Research, https://law.counselstack.com/opinion/weldon-v-degan-wash-1915.