Potter v. Crocker , 248 Mass. 327 ( 1924 )

Carroll, J.

The defendant agreed in writing with the plaintiff and others, in consideration of their allowing her “ peaceably [to] acquire the Iowa Groups Mines,” then mortgaged to the defendant, that she would form a new corporation and take over the mines; and promised to “ see to it that when sufficient funds are raised by the said corporation to be formed for the unwatering, equipping and developing the said Gold Hill & Iowa Groups Mines,” certain sums would be paid the plaintiff and others. It was also agreed that the sum of $150,000 “ shall be deemed the maximum amount sufficient for unwatering, equipping and developing ” the mines; that the sums payable to the plaintiff and others should be due and payable when enough money was “ raised for the unwatering, equipping and developing ” of the mines, or as soon as $150,000 was raised for this purpose. The agreement further provided that the defendant “ hereby guarantees that the new corporation to be organized, . . . shall pay to the said parties of the second part the . . . sums to which they are respectively entitled, ... as soon as the said new corporation, shall have been organized and the aforesaid sufficient funds for the unwatering, equipping and developing of said mines,” or the sum of $150,000 had been “ raised and obtained; ” and if the new corporation failed to pay the sums mentioned in the agreement, the defendant agreed to make these payments “ within six months after the said new corporation shall have been organized,” and money enough for the purpose already mentioned, or the sum of $150,000 for this purpose “ shall have been raised and obtained.”

Pursuant to the agreement a new corporation was formed January 3, 1907. Between that time and October 1, 1912, various sums amounting to $148,921.58 were secured. Of this amount $53,196.20 was received from bullion, the cost of mining the same being $143,057. The expenses during this period were $161,755.66, and on October 1, 1912, the company’s debts amounted to $56,728.24. On October 5, 1912, the stockholders were notified by the directors that the company was badly in debt, and that one Estabrook was ready to take over the mines under certain conditions. The plaintiff received this notice and sent her proxy, which was voted at the stockholders’ meeting ratifying the action of the board of directors who had accepted the Estabrook contract. From October 1, 1912, to August 4, 1914, under Estabrook’s management there was produced in bullion $75,578, the expenses being $111,357.08. It was agreed that the mine was entirely unwatered in February, 1910.

The sum of $2,100 to be paid the plaintiff under the contract has not been paid to her, either by the defendant or by the corporation.

Assuming but not deciding, that the promise of the defendant was an original promise and not a mere guaranty, the defendant’s agreement was to pay the sum stipulated when sufficient funds were “ raised ” by the new corporation for the “ unwatering, equipping and developing of said mines.” The sum of $150,000 was never raised or obtained for this purpose according to the terms of the contract, and it was not shown that a sum sufficient for the purpose was ever obtained in the manner contemplated by the contract. The contract provided that the plaintiff was to be paid when the money was raised or obtained. This meant that money adequate in amount, but not exceeding $150,000 was to be collected or acquired, by the sale of the stock of the corporation, or by loans or other obligations of the company, or by operating the mines at a profit, so that it would be available for the purpose from the net profits of the undertaking.

As we construe the contract, it did not mean that the plaintiff could demand the sum named, when, by operating the mine at a loss, this amount was realized. The money expended in connection with the operation was more than $160,000, and the receipts from the sale of stock and from the mortgage were $83,367.50. The money received from bullion was $53,196.20, but the cost of mining this was $143,057.- There was no evidence that money sufficient in amount to accomplish the purpose was ever raised in the manner or from the source intended. The total amount received by the corporation from all sources, including the sale of bullion, was less than $150,000. It amounted to $148,921.58, and the expenses during that period greatly exceeded the receipts, so that on October 1, 1912, the corporation had an indebtedness of $56,728.24.

The plaintiff contends that the bullion obtained from the mine must be considered as money so raised, irrespective of the cost of mining. The agreement specified that funds were to be “ raised and obtained; ” and until this was done the plaintiff could not recover against the defendant. The bullion did not exceed in amount $53,196.20 and cannot be considered as a part of the fund raised. Deducting the expenses, there was no money available from the sale of bullion.

The plaintiff further contends that, in ascertaining the funds secured, to the sum of $148,921.58, being the total amount received by the corporation to October 1, 1912, without deducting the expenses, should be added the sum of $50,000, which Estabrook advanced to the corporation while it was under his management. After the corporation passed to the control of Estabrook, under the agreement of the stockholders, including the plaintiff, the original contract was at an end. The plaintiff could not thereafter rely on the funds advanced under this new and different contract with a third person, to show a breach of the plaintiff’s contract with the defendant. The evidence offered by the plaintiff that the money expended in obtaining ore from the mine had been procured for its development, was inadmissible. The contract was in writing. Waldstein v. Dooskin, 220 Mass. 232.

As the plaintiff cannot recover, for the reason that the funds necessary for the unwatering, equipping and developing of the mine have not been “ raised or obtained,” as provided in the contract, we have not thought it necessary to consider the question of the plaintiff’s waiver of the original contract by entering into the contract with Estabrook. Judgment is to be entered for the defendant.

So ordered.