Opinion
August 24, 1951. Rehearing Denied November 6, 1951.
Appeal from the Circuit Court for Dade County, Vincent C. Giblin, J.
Loftin, Anderson, Scott, McCarthy Preston, Miami, for appellants.
Ward Ward and Blackwell, Walker Gray, Miami, for appellees.
February 8, 1950, C.B. King, John H. Gerken and M.F. Pafford by option contract in writing agreed to sell J. Bradley Streit a controlling interest in Maule Industries, Inc. of Miami, Florida. The contract was in the form of a letter addressed to J. Bradley Streit, it was accompanied by a $10,000 binder and was signed by appellees. March 9, 1950, appellees returned the binder to Streit and induced him to enter into a new contract. These contracts will hereinafter be referred to as the first and second contracts. The second contract provided for the purchase of a smaller amount of stock in Maule Industries, Inc. and carried the condition that said "stock will be voted by a voting trust the terms of which shall be along the lines discussed at tonights conference and shall be mutually agreeable to you and ourselves." It further recited that "the consideration for this agreement is the cancellation of agreement dated February 8, 1950 by J. Bradley Streit * *, which agreement has been canceled by separate instrument."
The terms of the voting trust having failed, the bill of complaint in this case was brought by the appellants as plaintiffs, praying that defendants be required to perform the first contract, or in the alternative, that they be required to perform the second contract. There was an answer to the bill in which the material allegations thereof were denied. It was also denied that plaintiffs were ever able to comply with either contract. Evidence was taken on the issues made by the bill and answer and on final hearing the chancellor dismissed the cause. This appeal is from the final decree.
Appellants contend that since appellees declined to enter into the voting trust agreement as provided in the second contract, they should now be required to perform the second contract without that condition or they should be required to perform the first contract. This contention is based on the theory that the consideration for the second contract failed and being so, appellants are entitled to have the first contract enforced.
The chancellor found that the first contract was complete and free from ambiguity. He also held that the first contract could not be modified or varied by the alleged contemporaneous parol agreement entered into by King and his associates to the effect that when the sale of the stock was completed they were to continue to control Maule Industries, Inc. The control of Maule Industries, Inc., was the nub of the controversy that induced the second contract and the release of defendants from their obligation under the first contract. The chancellor found that there was no fraud or overreaching in the procurement of the second contract and that no coercion or duress were practiced. Streit, he said was an intelligent, capable business man and released his enforceable right under the first contract by legitimate persuasion.
The pertinent part of the second contract to this controversy was "the understanding that the stock will be voted by a voting trust the terms of which shall be along the lines discussed at tonights conference and shall be mutually agreeable to you and ourselves", and the further condition that "the consideration for this agreement is the cancellation of the agreement dated February 8, 1950 by J. Bradley Streit * * * which agreement has been canceled by separate instrument." There can be no doubt that these provisions of the second contract were the considerations for releasing defendants from their obligation under the first contract. It follows that if the second contract is void for failure of consideration, the first contract should not have been canceled.
The evidence is in conflict as to what line the discussion took with reference to perfecting the voting trust. Streit and Wallace testified that it was understood that they were to be named as voting trustees while the defendants testified that they agreed to no such arrangement. Appellants contend that defendants acted in bad faith and did not intend to carry out the agreement, but the chancellor found against this contention. He found however, that because of their inability to come to an agreement on the terms of a voting trust, an essential condition of the contract was not met, and being so, it could not be enforced because to do so would require the court to make a contract for them which they failed to do.
Appellants contend that appellees refused to cooperate in setting up the voting trust and are now estopped to contend that it was not done. The object of the voting trust was to control the future administration of Maule Industries, Inc. Appellants are willing to take the stock with or without the voting trust. It appears from the evidence that the failure to agree on a voting trust grew out of the controversy as to whether appellants or appellees should have the controlling hand in the management of the corporation after appellants acquired their stock. It also appears that the voting trust was appellees' idea and they made no effort whatever to effectuate it after the second contract was made.
In upholding the second contract the chancellor relied on Gutlon v. Marcus, 165 Mass. 335, 43 N.E. 125, wherein the court held that when one acts in consideration of a conditional promise, if he gets the promise he gets all that he is entitled to by the act, and if, as events turn out, the condition is not satisfied and the promise calls for no performance, there is no failure of consideration. Scott v. Maragues Lumber Co., 202 Ala. 312, 80 So. 394. In the case at bar appellees agreed to sell appellants the stock provided that it be voted by a voting trust mutually agreeable to all parties. It is shown that appellants offered several plans for the formation of a voting trust but none of them were satisfactory to appellees who made no counter proposal or took any interest whatever in creating the voting trust.
We do not think appellees can come forward with a counter proposal that "shall be mutually agreeable to you and ourselves", secure the cancellation of the first contract on the strength of it, and when that is done become indifferent and refuse to lend themselves to creating the voting trust. I think when they act in this manner the consideration for the second contract fails and the appellants can revert to the enforcement of the first contract. The provision for the voting trust was incorporated in the second contract for the benefit of appellees. Appellants are indifferent about it but will take the stock with or without it.
We do not agree with the doctrine of Gutlon v. Marcus, supra, to the effect that when one acts on a conditional promise, if he gets the promise he gets all that he is entitled to by the act, and if, as events turn out, the condition is not satisfied and the promise calls for no performance, there is no failure of consideration. The facts are entirely different in the case at bar. The conditional promise is obvious. The appellees refuse to come up with their part of it or offer any aid to bring it about. It was the very pith of the second contract and since appellees decline to take any part in bringing it about, the consideration for the second contract has failed. In equity they certainly can claim no benefit from it.
Since this is the case the first contract is still in effect and subject to enforcement. If on the other hand, appellees persist in refusing to co-operate in setting up the voting trust they can claim no benefit from it and appellants may at their option proceed to enforce the second contract without the voting trust.
Reversed.
SEBRING, C.J., and THOMAS and HOBSON, JJ., concur.