National Pole Treating Co. v. Gilkey , 182 Minn. 21 ( 1930 )

I dissent. A reading of the record is convincing to my mind that under the long established practice of this court the findings of fact should be sustained since they are amply supported by the evidence.

Mr. Gilkey secured the approval of the Great Northern Railway to the proposed contract in the middle of June, 1926, when he and Mr. Backus were in New York negotiating for the purchase of the National Pole Company. The telegram conveying the information was shown Mr. Backus there. The contract was executed and delivered July 7, 1926. About that time and continuing thereafter until in September, the controversies between Mr. Backus and the minority stockholders in the Northern Tie Treating Company as to the terms upon which that company should be merged in the plaintiff company were continued. Mr. Junell's testimony carries conviction, is clear, and uncontradicted that during those entire negotiations, when the values of the Northern Tie Treating Company's properties and good will were discussed, including the contracts it had with the Great Northern Railway and the Soo Railway for treating at its New Brighton plant, there was no suggestion by Mr. Backus or anyone else that the contract in controversy was the property of the Northern Tie Treating Company. It is not conceivable that, in the long drawn out negotiations and discussions regarding the terms on which the Northern Tie Treating Company should go into a merger with plaintiff, Mr. Backus could fail to assert that this ten-year contract was a part of the assets, were it true that Mr. Gilkey had acted as agent for the Northern Tie Treating Company in procuring this contract for it.

During their long continued friendly business relations Mr. Backus and Mr. Gilkey assisted one another even though both were not financially interested in the venture. Mr. Gilkey served without pay and without having any pecuniary interest as director in many of the many corporations owned and controlled by Mr. Backus. Each was engaged in many business enterprises, either individually, in partnership, or corporations where the other had no pecuniary interest. Mr. Backus was the sole owner of the International Lumber Company. Neither drew any salary from the Northern Tie Treating Company, and it was well understood that Mr. Gilkey devoted part of his time to other interests and to the partnership of Pendleton Gilkey. Pendleton Gilkey as a copartnership owned and controlled corporations and did business in which Mr. Backus and his corporations had no share. What more natural than that such close business associates should be mutually helpful in individual enterprises even though there was no purpose that the same was for a common or joint ownership. Mr. Backus knew that Pendleton Gilkey were financially unable to share in the purchase of the National Pole Company, yet Mr. Gilkey was the one who suggested the purchase to Mr. Backus and went to New York with the latter to aid in the negotiations. Mr. Backus in the fall of 1926 and during the first part of 1927 knew that Pendleton Gilkey were expending money in carrying out the contract here involved. They expended over $75,000 for equipment and payroll. Neither Mr. Backus nor plaintiff contributed thereto. The contract seemed of no interest to Mr. Backus until the last part of 1927.

It is said Mr. Gilkey is flatly contradicted by Mr. Costello and Mr. Kenney, superintendents of the Great Northern Railway Company, upon important propositions; but the version of Mr. Gilkey sounds reasonable to me, and the trial court could well conclude that the persons named placed a wrong meaning upon the language used by Mr. Gilkey. And it may be said that Mr. Backus upon a vital point was flatly contradicted by both Mr. Pendleton and Mr. Gilkey. There is no need here to refer to the inferences the trial court could rightfully draw from the manner, the terms, and the price upon which Mr. Backus procured the National Pole Company's and Kirkpatrick's interests and merged the same in plaintiff. It is quite clear to me that he did not do so on the basis that he had procured them as agent for the Northern Tie Treating Company and for its benefit; for if he had, the price paid would have been the price that the company would have been charged with. It was not so handled.

A legal obstacle also seems to be in the way of plaintiff. It claims through the Northern Tie Treating Company. The latter company was not in the business of acquiring or obtaining leases of treating plants. Its board of directors had never authorized Mr. Gilkey to act for it. Assume that Messrs. Backus and Gilkey together did obtain this contract, and assume that it proved to be an unprofitable or losing venture, could they jointly or separately force the corporation to take it off their hands?

I do not think any court would come to their rescue.

It is true, individuals now do business in the name of corporations without observing the usual formalities which the law requires to evidence corporate action. But the Northern Tie Treating Company was not a one- or two-man corporation. There were quite a few stockholders; and it seems to me what Mr. Backus claims was to be accomplished by Mr. Gilkey required some corporate authority here not in evidence.

However, the evidence, in my opinion, fully justified the findings of fact which the trial court made, and the conclusion of law inevitably follows that plaintiff is entitled to no relief.

The order should be affirmed.