Court Opinion

ID: 6971950
Source: CourtListenerOpinion
Date Created: 2022-07-24 02:04:05.954533+00
Date Added: 2024-06-11T16:08:49.814262
License: Public Domain

Mr. Justice Hand delivered the opinion of the court: The Appellate Court having reversed the judgment of the trial court without remanding and without making a finding of facts, it will be presumed in this court that the Appellate Court found the facts the same as the trial court, and that it reversed the case upon questions of law which it deemed could not be cured upon another trial; that is, it held that the facts as found by it and by the trial court were not sufficient, in law, to sustain the cause of action. This court will therefore inquire whether the facts found in the record are sufficient to sustain the cause of action set out in the plaintiff’s declaration. Hayes v. Massachusetts Mutual Life Ins. Co. 125 Ill. 626; Busenbark v. Saul, 184 id. 343; Wood v. Mystic Circle, 212 id. 532. The first contention made by the defendants is, that the agreement to pay the plaintiffs at least $50 per share for four hundred shares of the capital stock of the Garden City Billiard Table Company at the expiration of five years from the date of the contract referred to in the statement of facts preceding this opinion, is in contravention of section 130 of the Criminal Code, which reads as follows: “Whoever contracts to have or give to himself or another the option to sell or buy, at a future time, any grain, or other commodity, stock of any railroad or other company, or gold, or forestalls the market by spreading false rumors to influence the price of commodities therein, or corners the market, or attempts to do so in relation to any of such commodities, shall be fined not less than $10 nor more than $1000, or confined in the county jail not exceeding one year, or both; and all contracts made in violation of this section shall be considered gambling contracts, and shall be void.” (Hurd’s Stat. 1903, p. 640.) And it is argued that the agreement to take and pay for said shares of stock is so qualified by the provision found in the contract, “that any one or more of said individuals comprising said party of the first part may have the option to retain his proportion, of said four hundred shares,” as to create only an option to sell said shares on the part of plaintiffs, which option, it-is said, by reason of the statute is rendered void. We do not agree with the construction placed upon said section of the statute by the defendants, but are of the opinion only contracts for options which are in the nature of gambling contracts fall within the prohibitions contained in said section. Pixley v. Boynton, 79 Ill. 351; Pearce v. Foote, 113 id. 228; Minnesota Lumber Co. v. Whitebreast Coal Co. 160 id. 85; Wolf v. National Bank of Illinois, 178 id. 85; Ubben v. Binnian, 182 id. 508; Loeb v. Stern, 198 id. 371; Osgood v. Skinner, 211 id. 229. It appears that the defendants purchased from the plaintiffs a controlling interest in the Garden City Billiard Table Company, and agreed with plaintiffs they would purchase the four hundred shares of stock retained by the plaintiffs at its face value, which it was agreed should not be less than $50 per share, at the expiration of five years from the date of the contract, if. the plaintiffs, or either of them, desired to sell their shares pf stock at that price at that time. There is nothing immoral or illegal in that feature of the contract or anything therein which partakes of the character of a gambling contract, and we see no reason why it should not be enforced if the plaintiffs, or either of them, accepted its provisions as to said unsold shares of stock at the expiration of the five years by offering to deliver to the defendants all of said stock or the part owned by either of the plaintiffs. True, the parties to whom the offer was made had the right to accept or reject the offer. Whén accepted, however, it became a binding contract, and such a contract as the courts will enforce. In Schlee y. Guckenheimer, 179 Ill. 593, it was held a provision in a contract by which the purchaser of a quantity of grain was given the privilege of purchasing a certain additional quantity at the same price if taken before a certain day in the future was not such a contract as was prohibited by said section of the statute. On page 598 it was said: “The offer to sell such a commodity at a specified price, if accepted by a specified time, does not constitute a violation of the statute. Its acceptance within that time is not prohibited or made a criminal offense, but is an every-day transaction necessary in carrying on business,” and the contract then under consideration was distinguished by the court from the contracts passed upon in the cases of Schneider v. Turner, 130 Ill. 28, and Pope v. Hanke, 155 id. 617. The provision in this contract that the defendants would take the balance of plaintiffs’ stock at the expiration of five years from the date of the contract, at not less than $50 per share, if the plaintiffs, or either of them, desired at that time to sell their stock, is found in a contract containing many other provisions, and doubtless was one of the considerations which moved the plaintiffs to part with a controlling interest in the corporation, and brings the case fairly within the principles announced in the cases of Wolf v. National Bank of Illinois, supra, Ubben v. Binnian, supra, and Osgood v. Skinner, supra, and distinguishes the contract from that class of contracts which have been held to be yicious, as amounting only to options which are in the nature of gambling contracts. It is next contended that the provision in the contract that the plaintiffs should hold the offices of president, secretary and treasurer of the Garden City Billiard Table Company for five years from the date of the contract at a salary of $2000 per annum each, is contrary to public policy and void. The contract was entered into by all the stockholders of the corporation, and while it might not have bound the board of directors afterwards elected, we think there is no reason in law why it should not be held to be binding upon the defendants and enforcible against them. The entire stock of the corporation was held by the plaintiffs, and in making a contract with the defendants whereby the latter were to obtain at once six-tenths of said stock, it was open to the parties to make any arrangements with regard to the management of the company mutually agreeable to them. The price to be paid for the stock was a matter to be determined by them, and by them only. They owned all the property represented by the stock, and the mere fact that it was represented by corporate stock could make no difference. No other person had any interest in it and no one else could complain. Instead of paying a different price than that agreed on for the stock not then to be transferred, it was mutually agreed that the plaintiffs should continue in their old official positions for five years, with an increase of salary. In Faulds v. Yates, 57 Ill. 416, it was objected that an agreement between certain persons owning a majority of the stock of a corporation that they would elect the directors and manage the business was against public policy. There were other stockholders, but they made no objection. The court upheld the agreement, and on page 420 said: “There was no fraud in the agreement which has been so bitterly assailed in the argument. There was nothing unlawful in it. There was nothing which necessarily affected the rights and interests of the minority. Three persons owning a majority of the stock had the unquestioned right to combine, and thus secure the board of directors and the management of the property. Corporations are governed by the republican principle that the whole are bound by the acts of the majority, when the acts conform to the law of their creation. The co-operation, then, of these parties in the election of the officers of the company, and their agreement not to buy or sell stock except for their joint benefit, cannot properly be characterized as dishonest and violative of the rights of others and in contravention of public policy. * * * The agreement complained of was entered into by Faulds and his partners. The shareholders.whom he is so solicitous to defend and protect have not complained. He cannot invoke their shield to fight imáginary wrongs. The transaction which he, through his counsel, denounces as fraudulent and nefarious was conceived and consummated by him as much as by his partners. Every motive which could influence a man for good should have prompted him to silence. If this combination was fraudulent and intended for bad purposes, the stockholders who are in a minority and who may have suffered have ample redress. We prefer to listen to them before any decision as to their wrongs.” This case was cited and approved in Higgins v. Lansingh, 154 Ill. 301. And in Lorillard v. Clyde, 86 N. Y. 384, a contract between competitors in water transportation was entered into, whereby they agreed to consolidate under the form of a corporation. The management of the business was given to Clyde & Co., who were to receive the usual commission on all freight earned, and they guaranteed to Lorillard a seven per cent dividend for seven years. When Lorillard sought his dividends he was met by the contention that the contract was illegal, because it was an attempt to provide in advance for the control of the corporate affairs for seven years and to withdraw such control from the trustees and stockholders. To such contention the court replied, “But it is to be observed that the agreement was between the parties. who were to contribute the entire capital,” and in the course of the opinion it was said: “I can see no objection, on the score of public policy, to an agreement between parties about to form a corporation, agreeing upon the general plan upon which it is to be organized and conducted, so long as nothing is provided for inconsistent with the provisions of the statute or immoral in itself,” and the court held the contract to be legal. It is suggested, by way of argument, that the stock is assignable, and that subsequent stockholders and" creditors may be affected by said agreement. At the time the contract was made there were no other stockholders, and the contract provided the then creditors of the corporation should be paid in full, and they were paid. As held in Faulds v. Yates, supra, it will be time enough to consider the rights of subsequent stockholders and creditors of the corporation when they are before us complaining. It is next contended that the trial court improperly excluded evidence tending to show defendants were stockholders in and that Bensinger was the president of the BrunswickBallce-Collender Company, a rival corporation in the manufacture of billiard tables and billiard supplies of the Garden City Billiard Table Company, and that the purchase of a controlling interest in the latter company by the defendants was made with a view to stifle competition in and regulate the output of billiard tables and billiard supplies, which avoided the contract. The Appellate Court held the trial court ruled properly upon the question of the admissibility of said evidence, otherwise the case would have been remanded to the trial court for a new trial, to the end such error might be rectified upon a new trial by the admission of such excluded evidence. Had the defendants desired to have the ruling of the Appellate Court reviewed upon the question of the admissibility of said evidence they should have assigned cross-errors in this court. This they failed to do. The question, therefore, of the correctness of the decision of the Appellate Court in approving the ruling of the trial court in excluding said evidence upon this record as it is framed is not open to review in this court. Columbia Theatre Co. v. Adsit, 211 Ill. 122. It is also contended that the trial court erred in refusing to hold that the stock of the Garden City Billiard Table Company was not fully paid stock, and for that reason the defendants were not bound, in law, to accept one hundred and ninety shares of stock and pay therefor at least the sum of $50 per share, even though Kantzler tendered the same to them at the expiration of five years from the date of the contract. The question of whether said stock was fully paid stock was a question of fact, which was determined by the trial court adversely to the defendants, and which question of fact was found the same way by the Appellate Court. That finding of fact by the trial and Appellate Courts is binding upon this court and cannot here be reviewed. From an examination of this record we are of the opinion the trial court properly ruled that the plaintiffs were entitled to recover for a breach of said contract in refusing to accept one hundred and ninety shares of said stock which were tendered to them by Kantzler at the expiration of five years from the date of said contract and pay therefor at the rate of $50 per share, and in refusing to pay to the said Kantzler the unpaid part of his salary as president of said Garden City Billiard Table Company from February 12, 1897, to April 18, 1898, and interest. The judgment of the Appellate Court will be reversed and the judgment of the circuit court will be affirmed. Judgment reversed. Mr. ChW Justice; Ricics, dissenting.