Farmers' Co-Operative Elevator v. Sturgis & Sons , 226 Mich. 437 ( 1924 )

The decree entered in the circuit must be reversed and the bill dismissed. What was said by a director of plaintiff at the meeting of the stockholders, when defendant Lucene Sturgis was present, about the purchase eliminating competition, and not then and there denied by defendant Lucene Sturgis, did not constitute contract relations, curtail power of plaintiff's directors in subsequent negotiations, or prevent defendant Lucene Sturgis from refusing to contract to remain out of business. But it is insisted that, with this understanding on the part of the stockholders, it was a fraud upon the corporation to enter into contract without an obligation on the part of the defendants to refrain from engaging in like business at Fowler. Fraud by whom? Not by defendant Lucene Sturgis, for until the contract was made he was not bound. If it was a fraud, in point of law (a question we do not determine), for the directors to proceed and make a contract contrary to the understanding of the stockholders, then plaintiff, if it has any remedy at all, has mistaken its remedy in filing this bill. The contract was with Lucene Sturgis as sole owner and the deed and bill of sale were given by him. The evidence fails to show that Marion Sturgis and Howard Sturgis, sons of Lucene, were interested as partners in Sturgis Sons, and the circuit judge was right in denying injunctive relief as to them.

The committee of directors, representing plaintiff in negotiating the contract, fully understood that the contract, as finally prepared, did not restrain defendants from engaging in the same business at Fowler, and so did the board of directors in ratifying such tentative contract and in making payment thereunder. The talk that defendant Lucene Sturgis might move away from Fowler never became an engagement that he would do so, and we are satisfied plaintiff's officers relied on the 300 stockholders of the company to command the trade rather than on the defendant's moving away. Later, when plaintiff made further payment and received a deed and bill of sale, both instruments expressly saved defendant Lucene Sturgis the right to continue in business at Fowler.

The purchase of the good will of the business did not carry an engagement by defendant Lucene Sturgis to refrain from like business, or prevent him from doing so, and the committee representing plaintiff in preparing the tentative contract were so informed by their attorney and also by the attorney for defendants. This is an injunctive bill based on affirmance of the contract. The written contract warrants no injunctive relief. The evidence fails to show any ground for reforming the contract. The mistake made by plaintiff's officers was in not securing an engagement from defendant that he would refrain from engaging in a competing business. This mistake cannot be rectified. In the absence of an agreement to keep out of business defendant Lucene Sturgis could re-engage in the same business at Fowler. No reason appearing for reforming the contract, the contract, as executed, bars parol evidence enlarging its terms.Davis v. Steingass, 215 Mich. 57; Frischkorn Real Estate Co. v.Hoskins, ante, 30.

Bill dismissed, with costs to defendants.

CLARK, C.J., and McDONALD, BIRD, SHARPE, MOORE, STEERE, and FELLOWS, JJ., concurred.