Newberry Land Co. v. Newberry

Riely, J.,

delivered the opinion of the court.

The right of action in this case is not founded upon the sealed agreement of April 2, 1890, between the defendant in error and John E. Bison and his associates, but is for money paid under the agreement for a consideration that is alleged to have wholly failed. There can be no doubt that the action of assumpsit is the proper remedy for its recovery. Garber v. Armentrout, 32 Gratt, 235; and Buena Vista Co. v. McCandlish, 92 Va. 297.

The real question in the case is whether or not the plaintiff in error has shown a right to maintain the action.

Tin's court having refused to compel Bison and his associates specifically to perform the said agreement, and having also refused to rescind it, leaving the parties to their rights at law (Rison v. Newberry, 90 Va. 513), this suit was brought — not by them, but by the Newberry Land Company — to recover back from their vendor the money which they had paid to him.

The purchase of the land from Harman Newberry was made by Bison and bis associates in their own right, and not in the right of the plaintiff, or for its use or benefit. It was not then formed or chartered, and had no existence.

It appears that Bison and his associates bought a three-fourths interest in the land, which they expected to sell at a large profit to a company to be thereafter created for the purpose of developing it, and that their vendor agreed to sell to such company, upon the same terms that they should, the one-fourth interest remaining in him, but they never made nor contemplated any assignment or transfer of their contract of purchase to such company, nor a sale to it of their interest in the land at the price at which they bought it.

It does not appear from the minutes of the Newberrj- Land Company, nor in any other way, that it ever contracted to buy the interest of John E. Bison and others in the land, but, conceding, as is claimed for it, that it did buy their interest, it is not pretended that he and his associates assigned or transferred to the company their contract for the purchase of the three-fourths interest in the land, nor that they let the company take their interest at the price which they agreed to pay for it. They bought the three-fourths interest upon the basis of $70,000 for the whole land, but, according to their claim, put it into the company upon the basis of $210,000, just three times its cost, which fact is in itself conclusive that they bought the land in their own right, and solely for their own benefit and profit, and not for the plaintiff, and also that they did not assign nor transfer to it their contract for its purchase. The purchase was wholly made for themselves, and not at all for the Newberry Land Company.

Nor was the money that is sued for paid by the company or for it, but was wholly paid by Bison and his associates, and by one other person, in discharge of their obligation under the agreement of April 2, 1890, before the Newberry Land Company was chartered, or had any existence. The company was not in any manner or respect — directly or indirectly — a party to the contract with Newberry for the purchase of the threeTourths interest in the land. It acquired no right and incurred no liability under the agreement between Eison and his associates and New-berry, by assignment, transfer, adoption, or otherwise. It did not originally owe, nor subsequently become liable in any way for the money paid to Newberry; and Eison and the other persons who paid the money have not assigned or transferred to the company their right, if any they have, to recover it back.

Nor is anything shown in the record by which the company became entitled to such right by operation of law. The utmost that is shown in support of its claim to recover back the money is that Eison and his associates had an understanding among themselves, at the time they paid the money, that when the contemplated company should be chartered and organized they would accept its stock for the money so paid. No stock, however, was ever issued to them in adoption and ratification of such unilateral understanding, nor any agreement on the part of the company to do so shown. A mere understanding of this sort among Eison and his associates could not confer upon the company the right to recover back money which never belonged to it, that was not paid by it or for it, and which it never owed, nor became liable for.

Even if it had in fact paid the money, which is not the case, nor claimed to be so, the payment would have been for and on account of the liability of Eison and his associates, and not in discharge of any liability resting upon it, and such payment would not have given to it any right to the property through the contract of April 2, 1890, or to the money paid in discharge of any obligation under it upon the failure of the consideration for such payment. All right in such case to recover back the money so paid, in the event of a failure of the consideration, as well as all right to the property, if the contract was performed by the vendor, would have remained in his vendees, and not passed to or become vested in the company. If it acquired any right to the property, it was wholly under a new and independent contract, subsequently made, not with Newberry, but with Eison and his associates, and upon altogether different, terms. If it failed to get the land, because of the refusal of Newberry to perform his part of the contract with Eison and his associates, or of his inability to make to them a good title to the land, that would not entitle the company to the money paid by Eison and others to New-berry under their contract with him. That would be a matter wholly between it and them. Its recourse would be upon them, and not upon Newberry. No privity of contract whatever exists between it and Newberry relative to the land, or in respect to the money paid on account of its purchase by Eison and his associates.

It seems very plain to us that the Newberry Land Company, under the circumstances disclosed by the record, cannot maintain an action against Newberry for the recovery of the money paid to him by Eison and others under the contract of April 2, 1890. It is not the assignee, nor the beneficial owner, of any right they may have for its recovery.

The learned counsel for the plaintiff in error invoked in support of its right to maintain this action numerous cases in which it was held that subscriptions to a company, not in being when the subscriptions were made, but to be thereafter formed, could be recovered by it after it became a corporate body. It is not intended by anything herein said to question the authority of that line of decisions. Such subscriptions are in the nature of a continuing offer to the proposed company, which, upon acceptance by it after its formation, becomes, as to each subscriber, a contract between him and the corporation. Richelieu Hotel Co. v. Inter. M. E. Co., 33 Amer. St. R. 234; and Beach on Private Corp. sec. 512. But those decisions constitute no precedent for the maintenance of this action, which is not a suit by a corporation to recover a subscription made in contemplation of its formation, but an action to recover money, which never belonged to it, which was not paid by it or for it, or in discharge of any obligation for which it was liable, and without an assignment or transfer to it of the right of those to whom the money belonged, and who paid it, or for whom it was paid.

We find no error in the judgment of the Circuit Court, and the same must be affirmed.

Affirmed.