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Liddell v. Smith

DECEMBER 28, 1965.




Appeal from the Circuit Court of Wayne County, No. 62-2024; the Hon. RANDALL S. QUINDRY, Judge, presiding. Decree affirmed in part, reversed in part, and cause remanded with directions. GOLDENHERSH, J.

November 1, 1965. Modified opinion,

This is one of a number of cases arising from a transaction involving several parcels of land in Wayne County.

Prior to August 1959, plaintiff, Harold Liddell, and one James Castle had an option to buy 960 acres of raw land which had never been cleared for agricultural purposes. They agreed with the defendant, Noel Smith, hereafter called Smith, that if he would furnish the money to buy the land they would clear it and prepare it for cultivation, and thereafter Castle would manage the agricultural operations.

On August 20, 1959, plaintiff, Smith and Castle, entered into a written agreement with Midwest Construction Ltd., hereafter referred to as Midwest, a corporation owned and controlled by Smith, which provided that plaintiff, Smith and Castle would organize a corporation to be known as Sherwood Land Company, hereafter referred to as Sherwood; that Sherwood would take title to the 960-acre tract above referred to; that plaintiff, Smith and Castle would clear the land and prepare it for sowing at a cost not to exceed $50 per acre; that Midwest would lend Sherwood the money with which to buy the land and pay for the preparation and clearing, and that Sherwood would execute a mortgage on the real estate and a chattel mortgage on the crops to secure the loan from Midwest.

On the same date, August 20, 1959, plaintiff, Smith and Castle entered into a written agreement which provided that plaintiff and Castle would clear the land and thereafter farm it, that Smith would use his abilities and energies to obtain necessary financing, in consideration of which services he was to be relieved of all responsibilities connected with clearing or farming the land.

The parties proceeded to organize Sherwood, each taking one-third of its capital stock. Smith became president of Sherwood, Castle its secretary and plaintiff its vice-president. The land was purchased and title taken in Sherwood.

Plaintiff and Castle organized a corporation known as Pawnee Construction Corporation, hereafter called Pawnee, and Pawnee proceeded with the land clearance project. After a part of the work was completed, Castle withdrew from the agreement. The record is not clear as to the precise basis of withdrawal but it appears that Castle withdrew some equipment which had been his capital contribution to Pawnee, and assigned to Smith his stock in Sherwood.

On May 23, 1960, Sherwood and Pawnee entered into a written agreement in which it is stated that in compliance with the earlier oral agreement between the parties, Pawnee had cleared approximately 400 acres of land, that Pawnee was to receive $20 per acre for clearing the land of timber and brush; and $30 per acre for removal of debris, and the plowing and discing of the land. It provided that Pawnee would keep certain equipment on the job at all times, weather permitting, and would complete the work as rapidly as possible. The agreement further provided that the 400 acres already cleared were to serve as a model for the project, and any disagreement as to whether the work was properly performed was to be resolved by comparing the area in dispute with the completed 400-acre tract.

On September 1, 1960, Smith wrote plaintiff a letter wherein he stated that Pawnee had entered into an agreement with Sherwood, that as of the date of the letter Pawnee had not performed the work required to be done under the terms of the agreement, that 150 shares of Sherwood's capital stock formerly owned by Castle had been assigned to him, that in consideration of plaintiff's completing the work which Pawnee was to have performed, Smith would assign 75 shares of Sherwood stock to plaintiff. As of the date of the letter, there were issued and outstanding 450 shares of Sherwood stock, of which plaintiff owned 150 shares.

The work proceeded through 1960, and the greater part of 1961. Apparently plaintiff and Smith enjoyed an amicable relationship, and in July of 1961, Sherwood entered into an agreement to purchase 320 acres of land which will hereafter be referred to as the Peyton land.

In addition to the work performed by plaintiff on the land clearing project, he employed other individuals and "traded out" portions of the work with one Bill O'Daniels, a dragline operator. In November of 1961 differences arose between Smith and plaintiff, and plaintiff moved his equipment off the job. The nature of the disputes and the evidence pertinent thereto will be discussed herein to the extent essential to this opinion.

On March 9, 1962, plaintiff filed suit in Circuit Court of Wayne County. In one count of the complaint directed against Sherwood, plaintiff alleged the organization of Sherwood, the agreement to clear the land for $50 per acre, Pawnee's failure to perform, and further alleged that he and Smith agreed that in consideration of plaintiff's completing the clearing work he was to receive one-half of Castle's stock and the sum of $12,500. He further alleged that, in addition to the work of clearing the land, he was to construct roadways, dams and levees on the 960-acre tract, for which he was to be paid the going rate for that type of work. Plaintiff alleged the performance of all of the work required of him and prays judgment in the amount of $50,000.

In a second count, directed against defendants, Sherwood and Smith, plaintiff alleged that the stock in Sherwood is unique and of peculiar value to plaintiff, that the transfer to him of one-half of the shares (75) formerly owned by Castle will give him equal voice with defendant, Smith, in the control of Sherwood and prays that defendant, Smith, be directed to assign the shares to plaintiff, and defendant, Sherwood, be ordered to transfer the record ownership of said shares to plaintiff.

In a third count, plaintiff alleged that Sherwood executed a mortgage on the 960 acres to defendant, Midwest, that Midwest knew of and consented to plaintiff's performing work on the 960 acres; that in addition thereto plaintiff had performed 150 hours of work of the value of $20 per hour on the Peyton tract, that said parcels were considered a single tract for all purposes by all the parties, and prayed that the court decree that plaintiff have a mechanic's lien on said parcels, prayed for the ...

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