One who owns all the stock of a manufacturing corporation that has no creditors virtually owns all its property. The plaintiff owned all the stock of the defendant company and ran the business as if it were his own. Having paid all debts of the company except one secured by mortgage, the plaintiff agreed with C and others to sell the mill to them for a stated sum above the mortgage, which they were to assume, and also all personal property and supplies connected with the mill and suitable for use therein, at their fair market value. As a better way of carrying out the sale, the plaintiff, at the suggestion of C, transferred to him and his nominees all the capital stock of the company, whereupon, after C's election as treasurer and general manager, he agreed with the plaintiff in writing, in the name of the company and with the approval of all its directors, that it would take at a fair market value "all mill supplies that are suitable and now in the mill," the same to be "looked over" by the mill superintendent and a representative of the plaintiff. In a suit on this agreement it was held: — 1. That this instrument was properly regarded as a contract of the corporation, and for which there was a sufficient consideration; that even if the legal title to the personal property was already in the company, it was proper for it to repay to the plaintiff such amount as he had expended from his own funds in buying the supplies and in paying the company's debts; and that this result was accomplished, in effect, by the transaction in question. 2. That under these circumstances, the statement made by the plaintiff in good faith to C, that he owned the personal property, was of no importance, even if technically untrue. 3. That evidence of the written or oral statements of the plaintiff to C and others was properly received, not for the purpose of altering or varying the written contract of purchase, but as tending to show the real ground upon which he claimed to own the mill supplies, and also his good faith from the beginning to the end of his connection with the defendant company. 4. That the buyer did not have the sole right to determine what supplies were "suitable"; and that if the parties did not agree upon that point it became a question of fact for the trial court or for the jury.
A witness testified that the amount claimed for the supplies by the plaintiff was their fair market value, as near as one could determine that, assuming that they were new. Held that it was within the discretion of the trial judge to admit this testimony, subject to the production of proof that the supplies were in fact new.
HALL, J.
Although in the writing which is the basis of this action, J. Eugene Cochrane speaks in the first person, the trial court properly held the written instrument to be a contract of the defendant. By its terms the company was to receive and pay for the goods. It is signed, "Danielsonville Cotton Co., J. Eugene Cochrane, Treas." It is found that Cochrane was a director and the treasurer of the company, and the answer admits that he was its general manager. The directors fully understood this agreement, and that the company was to pay the plaintiff, and with such understanding the defendant received the goods.
There was a sufficient consideration for the promise to pay for the mill supplies in question. Even if the company, at the time of the written agreement, had the legal title to this personal property, it could make a valid promise to pay the market value of them to one to whom it was justly due, and to whom the company was justly indebted. Before the agreement of April 26th, 1901, was executed, Cochrane, the defendant's treasurer and manager, had learned that the plaintiff was the owner of all the stock of the company, and therefore, in the absence of any company creditors, virtually the owner of all the property of the company. Cochrane, at first, negotiated for the purchase of the property itself from the plaintiff, as the owner of it. Although he may not have been informed of all the details of the manner in which the plaintiff had conducted the business while he owned the stock, yet when it was arranged that there should be a transfer of the stock to the Cochranes instead of a transfer of the property itself, and that the company should continue in existence under the management of the Cochranes, J. Eugene Cochrane was informed and fully understood that the plaintiff's financial relations with the company were such, or, upon payment by the plaintiff of all the debts of the company, would be such, that the plaintiff would be entitled to be paid a fair value for the suitable mill supplies on hand. The plaintiff, in effect, claimed that he had used his own funds in purchasing these supplies, and that upon the payment by him of all outstanding claims against the company they should be regarded as his individual property and paid for as such. Just how much of his private funds the plaintiff had expended in the purchase of these goods and in the payment of the debts of the company is not found. Apparently all the parties were satisfied that it was sufficient to justify his claim that he had individually purchased these supplies, and it does not appear that such conclusion was incorrect. If the plaintiff had in effect paid for these supplies with his private funds, and had not been repaid what he had so expended, it was immaterial whether, when the agreement in question was made, the title to the supplies was in the plaintiff or in the company. If the plaintiff owned them the company could lawfully purchase them of him. If the company owned them it could lawfully agree to pay the just claim which the plaintiff had against it, for the money he had individually expended in buying the supplies and in paying the company's debts. The agreement of the defendant to pay the value of the supplies may be regarded as a settlement by the plaintiff and the company of the former's claim against the latter. It was a valid agreement.
The agreement is not to be construed as a promise by the defendant to pay for only such supplies as it should decide were suitable. The words of the agreement are "supplies, etc., that are suitable and now at the mill." The plaintiff had the same voice as the defendant in deciding what supplies were suitable. They were to be "looked over" by the defendant's superintendent and a representative of the plaintiff. The agreement contains no provision for deciding the question of suitability in the event of a disagreement of these two persons. It was a proper question to be decided by the trial court.
The facts show no fraud upon the part of the plaintiff. The finding is that his statements to Cochrane were made in good faith. It was of no consequence if he was mistaken in saying that he owned the supplies, if in fact the company was indebted to him to the amount of their value, for money expended by him individually in paying for them.
It was within the discretion of the trial court to admit the testimony of the witness Briefly that the value of the supplies, assuming they were new, was fairly stated in the list submitted to him, the plaintiff's attorney having stated to the court that it would be proved that the articles were in fact new.
We find no error in the other rulings of the court complained of. It is unnecessary to discuss them separately. Generally the facts permitted to be proved against the defendant's objection, as above set forth, tended to show the real ground of the plaintiff's claimed ownership of the supplies, and that he had acted in good faith. None of this evidence was admitted for the purpose of in any way altering or modifying the written agreement between the plaintiff and defendant.
The requests for corrections of the finding are denied.