Opinion
No. 28366.
June 17, 1952.
APPEAL FROM THE CIRCUIT COURT, MADISON COUNTY, J. O. SWINK, J.
Roberts Roberts, Farmington, for appellants.
Henri Sursa, Melvin Englehart, Fredericktown, for respondent.
Separate suits to enforce payment of subscription agreements were instituted in the Circuit Court against each of the defendants (appellants herein) and by agreement of the parties the suits were consolidated.
Identical petitions, except for the dates and amounts of the subscription agreements, were filed in each case. The petitions alleged that plaintiff (respondent herein) desired to construct an addition to the Spalsbury-Steis Shoe Company factory located in Fredericktown, Missouri, for the purpose of increasing the production of shoes in said factory and thereby increase the amount of payroll expended in Fredericktown and the surrounding community; that in order to obtain funds with which to acquire the materials and employ the labor necessary to erect the addition to the said shoe factory, it was necessary to raise a large sum of money by public subscriptions and that it proceeded through its finance committee to obtain these subscriptions; that defendants executed and delivered to the plaintiff their separate subscription pledges, each in words and figures as follows:
"Fredericktown Chamber of Commerce Fredericktown, Missouri
"In consideration of the subscription made by others to do likewise I, the undersigned agree to pay unto the Finance Committee of the Fredericktown Chamber of Commerce, Fredericktown, Missouri, the sum of money appearing in figures opposite my signature hereto. The said sum to be paid within 90 days from date and the same to apply to a building fund amounting to $30,000.00 known as the Spalsbury-Steis Shoe Company Building Addition Fund; Provided, that in event the said $30,000.00 fund is not fully subscribed to this pledge becomes and is void and of no effect; and provided further that if payment is made of the sum shown opposite my name below and the said $30,000.00 fund is not fully raised or if for any reason the said Spalsbury-Steis Shoe Company building addition is not constructed, then I am to be refunded the full amount of the payment made, by the Finance Committee of the aforesaid Fredericktown Chamber of Commerce."
(The subscription of Paul Chaney dated July 20, 1949, was for the sum of $50.00, and that of Paul Wengler dated July 12, 1949, was for the sum of $75.00.)
The petitions further alleged that the entire amount of said fund ($30,000.00) was duly subscribed; that in reliance upon said subscriptions plaintiff proceeded to enter into a contract for the erection of said addition to said factory, and that said addition has been completed and that the Spalsbury-Steis Shoe Company assumed and took possession of said addition on or about the 1st day of January, 1950; that although demand for payment has been made, defendants steadfastly refuse to pay their respective subscription pledges.
The answers of the defendants admitted signing the subscriptions as alleged in plaintiff's petitions but asserted, among other things, that the subscriptions were null and void for the reason that plaintiff did not raise by subscription the sum of $30,000.
In support of its proof that $30,000 had been raised in subscriptions, respondent introduced Exhibits "C" and "D" and said exhibits were admitted in evidence by the trial court over the objection of appellants.
Robert Saling, secretary of the Fredericktown Chamber of Commerce, testified that he prepared Exhibit "C"; that it was a ledger record in which he entered under each subscriber's name the amount of his pledge; that it was his duty as secretary to keep a record of the pledges made by the various people and that he had each of the written pledges before him when he prepared Exhibit "C". He further testified that he thought all of the pledges had been paid except four. This record and his testimony showed that $26,694.30 was raised in subscription pledges identical in form and tenor with the pledges signed by the defendants.
B. A. Mueller testified that he was president of the Fredericktown Chamber of Commerce in 1949, and as such negotiated the instrument identified as Exhibit "D" which was an agreement by and between the plaintiff and the Spalsbury-Steis Shoe Company. The parts of Exhibit "D" pertinent to the issues in this case are as follows:
"Memorandum of Agreement
"This agreement made and entered into on this 16 day of November, 1949, by and between the Spalsbury-Steis Shoe Company of Fredericktown, Missouri, and the Fredericktown Chamber of Commerce.
"1. Whereas subscriptions have been made for the construction of an addition to the Spalsbury-Steis Shoe Company building located in Fredericktown, Missouri, by the citizens of Fredericktown, amounting to the sum of $26,694.30; and whereas the said construction has commenced;
"2. Therefore in consideration of the subscriptions made by the citizens of Fredericktown, Missouri, the Spalsbury-Steis Shoe Company hereby and herein agrees and pledges itself for the sum of $3,305.70 with the mutual understanding with the Fredericktown Chamber of Commerce that said sum of $3,305.70 so pledged will not be paid to the said Fredericktown Chamber of Commerce, unless the same is needed and then only to the extent so needed to complete the construction of the said addition.
* * * * * *
"5. The Fredericktown Chamber of Commerce agrees to meet all pledges made in respect to the foregoing subscription and to turn said sums over to a designated representative of the said Spalsbury-Steis Shoe Company, up to but not in excess of the amount needed to complete said addition.
"In witness whereof we hereunto set our hands in the City of Fredericktown, Missouri, on the date above written.
s/ Maurice Graham Representative Spalsbury-Steis Company
s/ B. A. Mueller Representative Chamber of Commerce
Fredericktown, Missouri." (Emphasis ours.)
Respondent's testimony also disclosed that the addition to the factory building had been completed and that the building cost approximately $23,000.
At the close of plaintiff's case defendants filed their motion to dismiss the petitions and gave as their reasons the following: 1. The plaintiff failed to prove that $30,000 was raised in pledges and/or subscriptions. 2. Plaintiff failed to show that the Spalsbury-Steis Shoe Company increased either the number of employees or the payroll. This motion was overruled by the trial court.
At the close of all the evidence plaintiff's motion for a directed verdict was sustained and judgment pursuant to the directed verdict was thereafter entered. Appellants contend the trial court erred in the following respects: 1. In admitting in evidence Exhibit "C." 2. In admitting in evidence Exhibit "D." 3. In overruling defendants' motion to dismiss. 4. In sustaining plaintiff's motion for a directed verdict.
Appellants, to sustain their contention that the trial court erred in admitting Exhibit "C," point out that the pledges from which Exhibit "C" was prepared were available and should have been brought into court. Nowhere throughout the record do appellants contend that the pledges entered in Exhibit "C" do not exist. They merely contend that a record of this kind was inadmissible, citing in support of their position the cases of Miller v. John Hancock Mutual Life Insurance Company, Mo.App., 155 S.W.2d 324, and Martin v. Martinous, Mo.App., 219 S.W.2d 667. In the case of Miller v. John Hancock Mutual Life Insurance Company, supra, a witness in a deposition read the contents of a record kept in the main office of the company at Boston, Massachusetts. The court held that this testimony was clearly inadmissible, pointing out that a witness cannot testify to the contents either of a record or of any written instrument, unless its absence be accounted for. In this same case the appellant sought to introduce an exhibit which was a transcript of the record of the policy in suit. The exhibit was held to be inadmissible because it was a copy of an original record. In the case of Martin v. Martinous, supra, the court held Exhibit 2 was inadmissible because it was a duplicate copy of an original record. Plaintiff testified that Exhibit 2 was not the original time book, but that he copied it from the original time book. Exhibit "C" in the case before us was not a copy of a record kept by respondent, but in our opinion, it was an original record made in the regular course of business and was respondent's method of keeping its accounts. This record is the equivalent of an account receivable record in ordinary industry. We hold that Exhibit "C" is a record that comes within the provisions of Section 490.680 RSMo 1949, V.A.M.S., and was admissible in evidence.
We will now consider appellants' assignment that the trial court erred in admitting in evidence Exhibit "D" contending that the liability of the subscriber under Exhibit "D" is not the same liability as that imposed upon the appellants by their subscription agreements. The liability under Exhibit "D" becomes enforceable only if the money is needed and then only to the extent needed to complete the construction of said addition. This obligation does not represent an unconditional obligation to pay as is found in the subscription agreements signed by appellants. Appellants in their subscriptions agreed to pay the sums of money appearing in figures opposite their signatures in consideration of the subscriptions made by others to do likewise. Except for the provision that $30,000 be subscribed, appellants' agreements were unconditional promises to pay. Exhibit "D" executed by the Spalsbury-Steis Company was conditioned on the money being needed. A condition in a subscription agreement that it shall not become binding until bona fide subscriptions to a stipulated amount have been secured does not require that all subscription instruments shall be exact counterparts of the original subscription paper, but it does require that the subscription instruments be of uniform tenor and have a common object. 50 Am.Jur., Subscriptions, § 20, page 792.
In 60 Corpus Juris, Subscriptions, § 35, page 966, it is said: "A subscription conditioned on other subscriptions to a certain amount requires that they shall be valid subscriptions and to the amount designated, on the same terms as that sued on, although the others need not be exact counterparts." (Emphasis ours.)
Respondent in its brief concedes that Exhibit "D" is in different terms than the subscriptions sued on, but refers us to a quotation from Elliott on Contracts, Vol. 2, § 1481, p. 752, wherein it is said: "Each subscription, when several, is an independent undertaking, and in no way affected by the terms of other subscriptions." This quotation appears under a discussion of joint and several liability under subscription contracts and we do not believe the author intended that the terms of the contract signed by other subscribers could be substantially different, especially when the provision for payment in the subscription agreement is made in consideration of other subscribers doing likewise.
Again in 60 Corpus Juris, Subscriptions, § 35, p. 967, we find that, "It is essential that there should be no conditions as to the liability of any of the subscribers not applicable to all." In the case of New York Exchange Co. v. De Wolf, 31 N.Y. 273, loc. cit. 281, 282, wherein a subscription agreement was sought to be enforced the court in quoting approvingly from another case said: "The essence of every agreement of this kind is, that there should be perfect equality among the subscribers as to the nature and extent of their respective liabilities for the several sums subscribed by them respectively. To have made this general subscription valid, so as to fill up the sum of subscriptions and contributions to the amount of $50,000, within the terms of the agreement, it should have been an absolute donation of the amount of the deficiency, to be paid at the same time as the other subscriptions, and no part of it to be restored or refunded to them upon any contingency or in any event, other than such as was common to the subscriptions of all other subscribers." (Emphasis ours.) To the same effect see Sigler v. R. W. Winstead Co., Ky., 125 S.W. 272. It is obvious from what has been said that the liability imposed by the terms of Exhibit "D" is not the same liability applicable to all the other subscribers and for this reason we find that the trial court erred in admitting Exhibit "D" was inadmissible in evidence we find that respondent has procured $26,694.30 in valid subscriptions. By the terms of the subscription contracts executed by appellants their pledges were to be void and of no effect in the event $30,000 was not raised in subscriptions. It is the contention of appellants that the raising of $30,000 in subscriptions was a condition precedent to be performed by respondent before appellants' subscription agreements were enforceable. Respondent reminds us that subscription agreements are favored in law as calculated to foster and encourage public and quasi-public enterprises; that as a matter of public policy, the courts are desirous that subscribers should not evade their deliberate promises of contribution, and their tendency, therefore, is to adopt such a rule as will sustain these subscriptions as a legal obligation; that doubtful questions are to be resolved against subscribers who seek to evade promised contributions. 50 Am.Jur., Subscriptions, § 2; 38 A.L.R. 850; Continental Co. of Lincoln v. Eilers, 134 Neb. 278, 278 N.W. 497.
Respondent also reminds us that the rule most generally advanced is that the consideration for the subscription is supplied where, upon the faith of the subscription moneys have been expended, liabilities incurred or work performed; that it is now established by the great weight of authority that if on the faith of its subscription to charitable or other public objects, before its withdrawal, the promisee expends money, incurs enforceable liabilities, or performs another act, in furtherance of the enterprise the promisor intended to promote, consideration for the subscription is supplied and it is thereby rendered valid, binding, and enforceable, although until so acted upon it stands as a mere offer revocable at the will of the donors. 50 Am.Jur., Subscriptions, secs. 10 and 11; Corbin on Contracts, Volume 1, § 198; 38 A.L.R. 851-852; School District of Kansas City v. Sheidley, 138 Mo. 672, loc.cit. 684-685, 40 S.W. 656, 37 L.R.A. 406.
The above is true where any condition precedent contained in the subscription has been performed before suit is filed.
We must also keep in mind that the general principles governing the performance of contracts apply to subscriptions, (50 Am.Jur., Subscriptions, § 23, p. 793,) and in an action to enforce a subscription agreement, the principle of the law of evidence which places upon the plaintiff in an action on a contract the burden of establishing the execution and existence of contracts alleged in his petition, as well as every other element of his cause of action, including his own performance in compliance with the contract alleged, and the defendant's breach of his obligation, is in general applicable. In case of a conditional subscription, the burden is on the party seeking to enforce the promise to show that the conditions have been complied with. 50 Am.Jr., Subscriptions, § 28, p. 796. In this same authority we find at § 19, pages 790 and 791, the following statement: "When a subscription is accepted upon stipulated conditions precedent, compliance with such conditions is required before the subscription will be binding, and the obligation of the subscriber is discharged if the condition is not performed * * *. When, however, the condition is performed, the subscription becomes absolute and although performance of conditions precedent is essential to make the subscription binding upon and enforceable against the subscriber, a literal compliance with the condition is not necessarily essential; as a general rule, a substantial compliance with those conditions upon the part of the promisee or payee is sufficient." To the same effect see 60 Corpus Juris, Subscriptions, §§ 29-30, pp. 963, 964; Restatement of the Law, Contracts, § 91, p. 111; Williston on Contracts, Rev.Ed. Vol. 1, § 112, p. 383; Missouri Pacific Railway Company v. Tygard, 84 Mo. 263, loc.cit. 268.
In St. Louis, Memphis Southeastern Railroad Company v. Houck, 120 Mo.App. 634, loc.cit. 648, 97 S.W. 963, loc.cit. 967, it was said: "A substantial compliance with the conditions of a subscription is what the law of this state requires in order that the liability of the subscriber may become fixed. * * * By `substantial compliance' we understand that, although the conditions of the subscription be deviated from in trifling particulars, which do not materially detract from the benefit the subscriber would derive from literal performance, but leave him substantially the benefit he expected, he is bound to pay."
The condition in the appellants' subscriptions provided that they shall not be bound until $30,000 was raised in subscriptions, and we are of the opinion that no liability can accrue until that amount has been subscribed. Nor do we agree that the raising of $26,694.30 in subscriptions is a substantial compliance with the condition to raise $30,000 in subscriptions. The difference of $3,305.70, in our opinion, is not a trifling sum. Even though prorated among the subscribers, according to the amount of each subscriber's pledge, it would not come within the maxim, de minimis non curat lex.
The respondent also contends that performance of this condition was unnecessary, because the main object of the subscription agreements, namely, the building of the factory addition, cost only $23,000 and, therefore, $30,000 was not needed. With this contention we cannot agree. In support of this position respondent has referred us to the following cases, Martin v. Creech, 58 Mo.App. 391; Eastern States Agricultural Industrial League v. Estate of Vail, 97 Vt. 495, 124 A. 568, 38 A.L.R. 845; and Hardin College v. Johnson, 221 Mo.App. 285, 3 S.W.2d 264. We have carefully examined these cases and have found them inapplicable, because of different facts and forms of subscription agreements.
Fully aware of the desire of courts to enforce subscription contracts, wherever possible, we must, nevertheless, rule that the subscription contracts sued on in this case are unenforceable, because of respondent's failure to comply with the condition requiring it to raise $30,000 in subscriptions.
There being no issue of fact to be passed upon by the jury, the trial court should have sustained defendants' motion to dismiss and erred in sustaining plaintiff's motion for a directed verdict.
For the reasons herein expressed the judgment against the appellants is reversed and the consolidated cause remanded with directions to the trial court to set aside the judgment against these appellants and to dismiss respondent's petitions and consolidated cause of action. It is so ordered.
BENNICK, P. J., and ANDERSON, J., concur.