Opinion
No. 27658.
February 4, 1929.
ESTOPPEL. Corporate creditor, furnishing statement of balance due and accepting check therefor, was bound thereby as to persons subsequently securing control of corporation.
Where a corporation is trying to enlist additional capital in its enterprise, and its manager was seeking to sell his stock, and turned the management over to others, and requested of a creditor a statement of balance due on an account by him to the creditor, and such creditor furnishes a statement of the amount or balance due, and the corporation sends a check in payment of such account, stating in a letter accompanying such check, "enclosed herewith find check for one hundred thirty-nine dollars and nine cents, balance due on our account with you as per statement," and the creditor accepts and cashes such check, it is bound thereby, where persons buy stock and take control of such corporation on the faith of such statements.
APPEAL from circuit court of Lincoln county, HON. E.J. SIMMONS, Judge.
A.A. Cohn and R. Du Pont Thompson, for appellant.
According to appellant's statement to the appellee of November 1st, the balance due on the account was one hundred thirty-two dollars and nine cents exclusive of the interest. Nothing had been said about the amount of interest due by appellee and the appellant itself had forgotten to include its interest in its monthly statement. As above stated the appellee's only defense in this case is that it wrote the above letter to appellee and enclosed the check therewith and that the appellant in due course cashed said check. Appellee cites the following cases as authority for this position: Enochs v. Delta Cotton Oil Co., 139 Miss. 234, 104 So. 92; Greener Sons v. Cain Sons, 137 Miss. 33, 101 So. 859; Clayton v. Clark, 74 Miss. 499, 22 So. 189. In all of these cases in Mississippi, the element of an agreed account did not enter. The element of interest as distinguished from the principal did not enter. In the case now before the court the question of accord and satisfaction has no application, because there was no offer of settlement made and no meeting of the minds of the parties.
The appellee in this case also contends that the doctrine of estoppel should be applied for the reason that while the corporation was in the process of reorganization, the appellee as a corporation wrote to the appellant and inquired from it as to the amount of the account. The doctrine of estoppel could not apply under these circumstances, because the appellee, a corporation, wrote the letter and the appellant replied to the appellee. The appellee should have known the exact amount of the account just as well as the appellant. The appellee has suffered no damages as a result of the statement on the part of appellant. Conceding that it is possible that a stockholder would not have taken stock in a corporation had he received a statement from the appellant showing the amount of the indebtedness two hundred twenty-five dollars and sixty-three cents more than was shown by appellant's statement, still that is a matter existing between the stockholder and the appellant and not the appellee and the appellant.
The appellee does not contend that he had been damaged by virtue of this statement rendered by appellant and the agreed statement of facts does not show that any damages were suffered by the appellee. Therefore, the doctrine of estoppel will not be available to the appellee as a defense.
P.Z. and R.L. Jones, for appellee.
It is not denied that the appellant, at the time it received the check and cashed it, understood and knew that the defendant was tendering the check in full payment of all claims of the appellant against it. On the other hand, the letter, itself, states that the check is for "the balance due on our account with you." The statement in the letter, "as per statement of November 1st," was merely a reference to show that the amount of the check was correct, according to appellant's own books and statements. Appellant could not possibly have been misled by this statement in the letter into believing that appellee did not intend the check to be in full payment of all accounts, because the agreed statement of facts shows that no statements claiming any other amounts were ever mailed to appellee. The record shows that this was the only statement appellee had and the check was forwarded to cover "balance due on account with you," as per the only statement that was ever sent appellee. We mean by this, there was no statement showing that appellee owed anything else or any other sort of accounts, either for interest or anything else. Even the closing paragraph was sufficient to put appellant on inquiry. The letter, as a whole, would have advised any reasonable man that the check was intended by appellee to be in full payment of all debts, except debts contracted after November 1, 1924, and, as stated above, it is not denied by the record that appellant received and accepted the check in full payment of the account.
Long after the notes were past due, negotiations were started, looking to the sale of a large majority, if not all, of the stock in the Brookhaven Box Company; the proposed purchaser desired to know the amount of the indebtedness due appellant; inquiries were addressed to appellant to ascertain same; appellant gave the information; that the transfer of the stock was made after this information was obtained; and it is natural to suppose that the purchaser deducted from the agreed purchase price only enough to care for the amount of the indebtedness mentioned by appellant. At any rate, the statement of facts shows that "after such statement was rendered, the proposed purchaser consummated his deal with the former stockholder, and acquired a large and substantial interest in the business." It shows that the deal between the purchaser and seller of the stock was consummated. The proposition that we are not damaged is answered by the fact that the suit is filed. We have consummated our deal, relying upon appellant's statements, as shown by the agreed statement of facts and, if we are called upon now to pay to appellant additional money, we are damaged to the extent of that payment.
The appellant sued the appellee for two hundred twenty-five dollars and sixty-three cents, interest due upon certain notes given the appellant for deferred payments in a contract of purchase by the Brookhaven Box Company of certain machinery.
Appellee, defendant in the court below, pleaded the general issue, and gave notice under the same that it would prove during the summer of 1924 that the defendant was having its books and accounts inspected and examined with a view of interesting new capital in its business, and communicated with the plaintiff, appellant here, asking for a statement of the amount due and owing by the defendant to the plaintiff; that the plaintiff rendered a statement to the defendant, and the defendant then made an agreement with the plaintiff to liquidate the balance due and owing in weekly payments, and sent to the plaintiff from time to time on the first of each and every month payment upon the said note; that, under date of November 1, 1924, the plaintiff sent to the defendant a statement showing a balance of one hundred thirty-two dollars and nine cents due, and on the 30th day of November, 1924, defendant drew a check in favor of the plaintiff for one hundred thirty-two dollars and nine cents, and mailed it with a letter reading as follows:
"Enclosed herewith find check for one hundred thirty-two dollars and nine cents balance due on our account with you as per statement of November 1st. Thanking you for your kind indulgence in this matter, we are,
"Yours very truly, "Brookhaven Box Company, "By ____ President."
That this check was sent in full settlement of the debt due and owing to the plaintiff, and was accepted by the plaintiff; and that, therefore, the account was paid in full.
On the trial the parties agreed to waive a jury and try the case before the circuit judge on an agreed statement of facts in which it was agreed that the plaintiff and defendant executed the contract, a copy of which is filed as an exhibit to the declaration, dated September 14, 1922, which agreed facts read as follows:
"And it is hereby agreed that the plaintiff and the defendant executed a contract, copy of which is filed as an exhibit to this declaration, dated September 14, 1922, and that the defendant executed the notes, copies of which are filed herewith and made a part of this declaration, and bearing date, February 26, 1923.
"The amount claimed by the plaintiff is a balance due and owing by the defendant of two hundred and twenty-five and sixty-three one-hundredths dollars as shown by the itemized statement filed with the petition, and that if the plaintiff is entitled to recover there is a small amount of additional interest to be added.
"It is agreed that the Brookhaven Box Company is a corporation, and that it was a corporation on the date of the execution of the contract, and the notes sued upon, but that since the execution of the said contract and notes, there was a change in the management of the corporation, the then manager and stockholder selling his interest to another party.
"That at the time negotiations were going on about this sale and transfer, the proposed purchaser of stock in the corporation desired to know its debts and creditors, and communications were addressed to the complainant by the defendant asking for a statement of its account with the plaintiff, and a statement was rendered showing what the balance then amounted to and after such statement was rendered the proposed purchaser consummated his deal with the former stockholder, and acquired a large and substantial interest in the business.
"That after his purchase, as aforesaid, the company went under a new management, and application was made for leave to pay the balance on weekly payments.
"That the payments were so made, and statements were rendered by the plaintiff to the defendant from time to time and from month to month, showing the balance, and under date of November 1, 1924, the last statement was received by the defendant from the plaintiff showing a balance of one hundred thirty-two and nine one-hundredths dollars, and on or about the 30th day of November, 1924, the defendant mailed to the plaintiff a check in the sum of one hundred thirty-two and nine-one-hundredths dollars, being the balance shown on the itemized statement rendered by the plaintiff under date of November 1, 1924.
"That with the check for one hundred thirty-two and nine one-hundredths dollars was mailed and transmitted" letter above set out. The circuit judge found for the defendant.
The appellant contends that the finding was error, because the agreed statement of facts did not bring the case within the rules set out in the cases of Enochs v. Delta Cotton Oil Co., 139 Miss. 234, 104 So. 92; Greener Sons v. Cain Sons, 137 Miss. 33, 101 So. 859; Cooper v. Y. M.V.R. Co., 82 Miss. 634, 35 So. 162; Clayton v. Clark, 74 Miss. 499, 21 So. 565, 22 So. 189, 37 L.R.A. 771, 60 Am. St. Rep. 521. It will be noted from the agreed statement of facts that, at the time the statement above referred to was called for, the defendant was trying to interest new capital in its business, and that the manager then in charge of the defendant company made a trade with the present owners by which he sold his stock and retired from the management of the company, and that the new ownership and management bought on the faith of such statement. While it is true that the corporation is the same legal entity that it was before, yet, the management and stock sales being made on the faith of the statement, and the present owners having acted to their prejudice in the said matter, we think that they are entitled to be protected, and the appellant should suffer the loss, if there is any, rather than the defendant's new stockholders and management. It is unnecessary to now decide whether it would have been a complete settlement of the debt had there been no change of situation to the hurt of any one. It is a well-settled principle of law that, where one party has the means of protecting his interest by due diligence, and the other party has not an equal opportunity to protect himself from loss, in such case the loss will fall upon him whose negligence or mistake caused the injury. Under the peculiar facts in this record, we hold that the judgment of the circuit court was correct, and same will accordingly be affirmed.
Affirmed.