177 A.D. 143 | N.Y. App. Div. | 1917
Lead Opinion
The pleadings are an amended complaint, separate answers by the appellants and replies to defenses relating to the validity and enforcibility of the alleged contract on which the action is based as affected by the non-payment of the stamp tax imposed
This is a suit in equity for the specific performance of an agreement in writing made by the appellant, William Horsley, on the 8th day of February, 1913. The plaintiff claims the right to enforce the agreement by virtue of certain assignments. He alleges that in the month of February, 1913, one Selznick, mentioned in the agreement, duly assigned all his right, title and interest, therein to one Burt, who in the same month duly assigned all his right, title and interest therein to the plaintiff. The agreement is as follows:
“In consideration of $1.00 receipt whereof is hereby acknowledged, William Horsley, of Hew York City, agrees to sell to Lewis J. Selznick, of Hew York City, 500 shares of common and 500 shares of preferred capital stock of the Universal Film Manufacturing Company, a Hew York corporation, par value of said shares being $100 each, for the sum of $40,000, on the following terms and conditions: $10,000 in cash to be paid on Monday, February 10th, on the payment of which he is to receive 125 shares of the preferred and 125 shares of the common. The balance of the payments to be paid $1,000 monthly by the execution of collateral notes of $1,000 each payable monthly with six per cent (6%) and have thereto attached 25 shares of the stock. The said notes to be deposited at any bank or trust company that may be agreed upon between the said William Horsley and Lewis J. Selznick.
“ In witness whereof the parties hereto have hereunto set their hands and seals this eighth day of February, 1913, in the presence of Witness E. H. Underhill.
“ WILLIAM HORSLEY.”
The motions for judgment on the pleadings present the questions as to whether the complaint shows a valid contract enforcible in equity as between William Horsley and Selznick, and if so, whether it is enforcible at the instance of the plaintiff.
Moreover, the plaintiff, I think, fails to show that Selznick became bound by the agreement, which at most was an option
For these reasons and regardless of the other questions that have . been argued I am of opinion that the plaintiff fails to show a cause of action for specific performance. It follows that the orders appealed from must be reversed, with separate bills of costs on the separate appeals, and each motion for judgment on the pleadings granted, with ten dollars costs.
Scott, Dowling and Davis, JJ., concurred; Smith, J., dissented.
Since amd. by Laws of 1913, chap. 779.—[Rep.
Dissenting Opinion
The first objection made by the defendants is that the agreement signed by Horsley lacks mutuality of obligation and remedy, and being merely a unilateral contract is incapable of specific performance in favor of either party. There was no obligation, say the defendants, upon the part of Selznick to purchase the stock or to pay the purchase price or to be bound in any manner. The written agreement contains simply the promise of Horsley to sell the stock at a certain price with no promise whatsoever on the part of Selznick. That the amount of consideration is immaterial is well settled. (36 Cyc.
It is apparent from reading the definitions given the word “Option” (see “Words and Phrases,” tit. “Option”) that the same is used in two distinct senses. Sometimes it merely refers to a revocable offer, in other connections it means an offer the terms of which have been incorporated into a valid and enforcible contract, and it is always necessary to determine in which sense the court intends it.' With this distinction in mind, it is possible to distinguish the cases on which defendants chiefly
There are cases in other jurisdictions very similar to this where the question of mutuality has been raised and decided in favor of the one seeking performance. Thus, in Ross v. Parks (93 Ala. 153; 8 So. Rep. 368) it was held that where the owner of land signs an agreement to convey it to a purchaser if the latter will pay $200 at a given time, the expressed consideration of the contract being fifty cents, the election of the purchaser to treat the contract as binding, and to enforce it, gives it such mutuality as will support a suit for specific performance, although the purchaser did not sign the agreement. And on a similar state of facts, it was said, in Johnston v. Trippe (33 Fed. Rep. 530, 536): “Does such a contract indeed lack mutuality ? The seller, for fair consideration, agrees to give the proposed purchaser a certain fixed time in which to make the contract mutual, by acceptance of the offer to sell. If he accepts within the specified time, both parties are fully bound * * *. I see no reason why a court of equity should not enforce such a contract. On the contrary, it seems to me it would be inequitable to refuse its enforcement. I am clear, therefore, that this case does not come within the class where lack of mutuality will prevent enforcement of the contract, and that it does come within a well-recognized exception to that rule, of optional sales upon fair consideration.”
Nor do I conceive that it can matter whether performance is here demanded by Selznick or by his assignee. Upon the failure of Horsley to transfer the stock at the time and place agreed upon, Selznick had the clear right to appeal to the law to compel Horsley to perform his contract. The assignee here offers in the complaint to pay in cash the full consideration of
These contracts are not uncommon in the commercial world, and I apprehend it would be a great surprise to find that they are not enforcible either in the hands of the original contractee or his assignee. Selznick in this case stands upon the same right as does a lessee with an option to purchase. As Mr. Justice Carr says in his concurring opinion in the Carney Case (supra): “It is quite common to find such option agreements in leases. It would be going very far to hold that such agreements in leases are not enforcible in equity. If such is to be held, then the holding would be quite contrary to the common understanding of the parties.”
The case of Genevetz v. Feiering (136 App. Div. 736) holds no other rule. In that case the only consideration for the vendor’s promise to sell was the vendee’s promise to purchase. An assignee of the vendee who has not assumed his assignor’s obligation to purchase was there held not entitled to specific performance for lack of mutuality. But here the consideration of Horsley’s promise to sell was not Selznick’s promise, but a valuable consideration paid'at the time. Selznick made no promise to buy and yet within the authorities because he gave a valuable consideration to Horsley for the option he could compel specific performance. Horsley has just as much claim on Selznick’s assignee as upon Selznick, and specific performance should not be denied the assignee, therefore, if allowed to the assignor. If a lease contain an option to purchase, that option may give to the lease its greatest value. If the lease be assigned by the tenant the landlord has the same claim against the assignee as against the original tenant. In neither case is there a promise to purchase. The assignee would seem to have, therefore, an equal right with the tenant to demand specific performance of the promise contained in the option.
We come now to the second question, whether the failure to affix and cancel stock transfer stamps to the writing pleaded, or to pay any transfer tax thereon, constitutes a defense to the action. It is not necessary again to review at length the meaning to be given section 270 of the Tax Law (Consol. Laws,
I think that the orders appealed from should be affirmed, with costs.
Orders reversed, with separate bills of costs on the separate appeals, and motions for judgment granted, with ten dollars costs.
Since amd. by Laws of 1918, chap. 779.— [Rep.