Gray v. Bonnell

JAMES, J.

On the seventh day of May, 1908, the intervenor, who is the only appellant herein, entered into a contract with plaintiff and defendant Bonnell, the design of intervenor being to obtain the services of Gray and Bonnell in the promotion of a corporation which was to be organized for the purpose of placing on the market a spring tire for use on automobiles and other vehicles, of which intervenor was the inventor. The written agreement, after providing for the organization of the corporation, set forth terms under which Gray and Bonnell were to take charge of the selling of the shares of the capital* stock of that corporation as fiscal agents thereof, and fixed their compensation at fifty per cent of the amount to be received from such sales. As additional compensation to be received by Gray and Bonnell, the written agreement signed by the three parties to this action provided that

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four hundred thousand shares of stock, which were to be issued to Magney, should be placed in escrow until January 1, 1909, “or until such time as that the said company shall, through the sale of stock by parties of the second part (Gray and Bonnell) or through the conducting of its business, be on a good financial basis,” and that Magney would transfer and assign one hundred thousand shares of such stock to Gray and Bonnell when the term of the escrow had expired. The corporation was duly organized and Gray and Bonnell entered upon the work of making sales of its stock and did sell a large number of its shares. In December, 1908, Bonnell made a written demand upon Magney, which recited the substance of the agreement respecting the delivery of the one hundred thousand shares of stock to Bonnell and Gray, and demanded that Magney comply with that agreement. Magney objected to releasing the stock from the escrow, but finally did deliver it to Bonnell and entered into another agreement with Bonnell, whereby Bonnell on his own part, and also on the part of plaintiff Gray, agreed, in consideration that Magney would deliver fifty shares of stock in addition to the one hundred thousand, that the one hundred thousand shares of stock might remain in escrow for a further period of time and until the first day of September, 1909. Gray was not a party to this agreement, and at the time it was made there were no unsettled accounts between himself and Bonnell, except that pertaining to this block of one hundred thousand shares of stock of which each was entitled to receive one-half. Gray objected to this latter escrow agreement and demanded of Bonnell that he deliver him the stock which he had received, and upon that demand being met with a refusal, brought this action against Bonnell and the Spring Tire Company to obtain the stock to which he was entitled. This action was commenced on the twentieth day of August, 1909. The Spring Tire Company made appearance, and, upon its application, the action was dismissed as to it, and Magney was allowed to file a complaint in intervention. In this complaint he alleged that Bonnell and Gray had failed to fulfill the obligations of the first contract made with them and sought to enforce rescission thereof. On his behalf it was also claimed that the contract made with Bonnell, requiring that the one hundred thousand shares of stock be held in escrow until the first day of September, 1909,