Childs agt. Smith. The facts found by the referee, and his conclusions of law, are as follows: First. That on the 18th day of April, 1869, the plaintiff was the owner of a farm of about one hundred and fifty acres, situated on Union Avenue, about two miles east of Saratoga Springs, in the county of Saratoga. Second. That said farm was then incumbered by two mortgages amounting in the whole, including interest to that date, to the sum of about $10,000. Third. That about fitty acres of said farm was muck and clay land, which the parties to this action then supposed was valuable for the purpose of manufacturing brick and peat therefrom. Fourth. That on the said 18th day of April, 1869, the said plaintiff sold and conveyed to the defendant, the above mentioned farm, excepting about four acres therefrom, that the same were conveyed subject to the said two mortgages. Fifth. That the agreement between the said parties, and under which the conveyance was made, was in substance as follows: The plaintiff to sell the said farm of one hundred and fifty acres, to the defendant for the price or sum of $20,000, to be paid by the defendant as follows: The defendant to assume and pay the two mortgages for $10,000; two thousand dollars to be deducted or allowed for the four acres reserved by the plaintiff; the palintiff to have one fourth or a one fourth interest in the above mentioned fifty acres of clay and peat land, for which he was to allow five thousand dollars on said purchase price; and the remaining sum of three thousand dollars to be paid by the defendant to the plaintiff in cash; as follows: one thousand dollars at or within a few days from the time of delivering the deed, and the remaining sum of two thousand dollars when the brick and peat company, (which the said parties then proposed to form,) should be organized. The said parties to form a company upon the said fifty acres of the clay and Childs agt. Smith. peat land, with a capital of $150,000. The company to reserve seventy thousand dollars of the stock for working capital, the remainder of the stock to be divided as follows: one fourth part, $20,000, to belong to the plaintiff; one half $40,000, to belong to the defendant, and the other one fourth part $20,000, when the company was organized, plaintiff was to take and pay the defendant therefor, the sum of $5,000. The plaintiff stating to the defendant at the time, that he believed that if the interest was paid on the said two mortgages, which would be due about the 1st of July then next, the mortgages could remain, and he, the plaintiff, would see the mortgagees and endeavor to have them remain, if such interest was paid; but there was no agreement by the plaintiff to procure any extension of said mortgages or either of them. Sixth. That upon the delivery of said deed, and on the said 18th day of April, 1867, the defendant took possession of the said farm and leased the same for farm purposes, reserving the right to use the said fifty acres of clay and peat lands for the purpose of developing the same. Seventh. That upon receiving the said deed, or soon thereafter, the defendant made and delivered to the plaintiff his promissory note, payable at bank for $300, and on or about the 16th day of August, 1867, the defendant delivered to the plaintiff two acceptances for $350 each, one due in sixty days from date, and the other in ninety days from date, thus making the one thousand dollars that was to be paid by the defendant to the plaintiff on the delivery of said deed. Eighth. That immediately after the said deed was delivered to the said defendant by the said plaintiff, the plaintiff, defendant and one William B. Laithe executed and acknowledged articles of incorporation (under the statute of the state of New York, in relation to the formation of corporations for manufacturing, mechanical and chemical purposes,) for the purpose of organizing a brick and peat company or Childs agt. Smith. the said fifty acres of clay and peat land, as contemplated by said agreement. That such articles of incorporation were drawn up by the defendant, bearing date, April 29, 1867, and were duly acknowledged, before the proper officer, on the 3d day of May, 1867, that the amount of capital stock of said company mentioned in said articles, was one hundred and fifty thousand dollars. Ninth. That upon signing said articles of incorporation. and on the 30th day of April, 1867, the said plaintiff, defendant and William B. Laithe assumed to act as a corporation and met as such, electing officers and making provision for procuring or perfecting the title in the said fifty acres to the company; and at such meeting, defendant was elected president of said company; the plaintiff was elected vice president, and the said William B. Laithe was elected secretary and treasurer, and the defendant proposed rules and by-laws for the government of said corporation, which were adopted, and with the certificate of incorporation, and other proceedings were entered by direction of defendant in a book procured and used as the record book of said corporation. Action was also taken at said meeting in relation to completing the grounds and yards on said fifty acres, and procuring machines for the purpose of manufacturing, as soon as the company should decide what machine they would use for that place. Tenth. The said articles of incorporation were never filed in the secretary of state's office, neither was a copy or duplicate made or filed in the clerk's office of the county of Saratoga; but the same by the directon of the defendant were delivered to said William B. Laithe to be filed in the secretary of state's office. Eleventh. The defendant neglected to pay the interest on said mortgages when the same became due in July 1867, and the said mortgages were foreclosed by a sale of the mortgaged premises, and were purchased under said sale by John C. Hulbert, Esq., of Saratoga Springs, who is now the Childs agt. Smith. owner thereof. That said sale embraces the said fifty acres of clay and peat land. The foreclosure was commenced soon after the 1st of July, 1867, and the premises were sold in the fall of 1867. Twelfth. That after the foreclosure and sale of said premises under said mortgages, nothing more was done in relation to the organization of said corporation, and the same was abandoned. Thirteenth. That the said defendant Smith, has not paid to the plaintiff the said sum of two thousand dollars or any part thereof. Fourteenth. That the $20,000 of stock which by said agreement was to be taken by the plaintiff and five thousand paid thereof, was taken by the said William B. Laithe. Fifteenth. That the brick and peat company as proposed to be formed by the parties hereto, was formed as between them and the said Laithe, and as regards third persons, and the same became and was a coporation defacto, and was so formed as between the parties hereto; that the contingency upon which the said two thousand dollars was to become payable, had happened before the commencement of this action. Conclusions of Law.-I find as a conclusions of law that the defendant is indebted to the plaintiff in this action, in the sum of two thousand dollars, with interest thereon from the 1st day of July, 1867, amounting in the whole to the sum of two thousand two hundred and fifty-three dollars and ninety-one cents. That the same is due and was due at the time of the commencement of this action. I therefore, direct judgment to be entered in favor of said plaintiff and against the said defendant, for the sum of two thousand two hundred and fifty-three dollars and ninety-one cents, together with costs and disbursements to be adjusted. J. C. HULBERT, for plaintiff. Childs agt. Smith. By the court, POTTER J.-If the learned referee has correctly found the facts in this case, I have found myself entirely unable to sustain his conclusion of law, that the defendant is indebted to the plaintiff in the sum of $2,000, with interest from the 1st day of July, 1867. He finds that an oral agreement between the parties, that this sum of $2,000 was to become due from the defendant to the plaintiff, when the brick and peat company, (which the said parties then in April, 1867, proposed to form,) should be organized, and in the same paragraph, he also finds, that when the said company was organized, the plaintiff was to take one fourth of the stock, over and above the working capital, and over and above the amount that was to be received in part payment of the farm, and to pay the defendant therefor, the sum of $5,000. By this finding, these two sums of money to wit $2,000 from defendant to plaintiff, and $5,000 from plaintiff to defendant, became due at the same identical period of time. It is the simplest logic that proves, that if at a given period the plaintiff became liable to pay to the defendant the sum of $5,000, that the latter could not at that monent be legally indebted to the former, but the reverse. There is nothing in the fourteenth finding of fact, that the plaintiff's portion of stock and the money to be paid therefor, was assumed to be paid by William B. Laithe, that releases the plaintiff from his liability to the defendant. No fact is anywhere found that the defendant agreed to any release of the plaintiff or change of liability of the plaintiff to him; the only legal inference is, that the defendant consented, that Laithe should own and pay plaintiff for such stock, and what is more inexplicable still to my mind, is, that these two cross liabilities of the parties can be created by the same oral agreement, relate to the same transaction, and equally depend upon the consummation of an enterprise for their existence as liabilities, from the one to the other and upon the same moment of time, to wit, upon the organization |