99 N.Y.S. 37 | N.Y. App. Div. | 1906
The plaintiff, a corporation, as party of the first part, entered into a contract under seal with the defendants Smith and Meldrum: - copartners, and a corporation styled “ Stillman & Hall, Limited,” as parties of the second' part, by which the parties of the second part agreed to cause to he formed a new corporation to take over the business, plant and good will of the party'of the first part. It is provided in the contract that in consideration of the Obligations entered into by _ the parties of the second part, the party of the first part will sell, assign, ' ánd transfer to the corporation to be formed all thepatents owned by it ■ for fireproofing of wood and' other substances in the United States of America, together, with the good will Of the business then being
It is unnecessary to refer ■ particularly to the averments of the answer or to the counterclaim therein set up except to say that no evidence was given of fraud or fraudulent representation on the part of the plaintiff as therein charged. It may also be remarked that the defense of illegality of the contract is not 'specifically pleaded; but as the case ivas tried-, that matter was considered germane to, the issues, the defendants insisting in motions duly made to dismiss the complaint that the contract was unenforcible and void and against public policy in that the plaintiff and the defendants had taken upon themselves the right. to. make a contract which provided that a Hew Jersey'corporation should be-organized, and in the scliemé “ all the details of that incorporation, not only as to the. amount of its capital stock but also as to the discretion of the - stockholders and of the. directors to pass upon the validity of the sale which it is intended to make of the patent rights and of the good will is taken away from them and lodged with the parties of the first and second parts ; ” in other words, that the contract precluded the hoard of directors of the proposed Hew Jersey corporation 11*0111 acting independently of the will of the plaintiff and of the defendants; and also took away from the directors of the hew corporation any.dis
ít appears in evidence given on the trial and is uncontradicted arid unquestioned that the stock of the Canada corporation was deposited with the plaintiff; that it had a market value above par down to December 12, 1901;. that there had beenv no depreciation of the market value at the end of April, 1902; that there was a
The refusal of the trial justice to grant a nqnsuit or to direct a verdict for the defendants was proper as to all the grounds upon . which those motions were made with the single exception of the last. The agreement between the parties was not unlawful or void as against public policy. The stipulation entered into by the defendants, and on which this action is brought, Was one made by them independently of a corresponding obligation assumed by the Still-man & Hall Company, Limited; but the whole contract was between private parties for the accomplishment of an object legitimate in itself. It provided, among other things* for the detail of a scheme or plan for the organization of a new corporation with a fixed capital stock, which stock was to be issued for properties and rights, and when issued to.be disposed of in a certain manner. The scheme is assailed on the ground that if perfected it would take, away from the stockholders and directors of the corporation any and all discretion in the exercise of their judgment respecting the adequacy of the consideration to be given in exchange for the shares. Our attention has been called in argument to certain provisions of law of the State of Hew Jersey, under which the contemplated new corporation was to be created, and by which provisions of law it is insisted the contract • must be condemned. But the law of Hew Jersey is neither pleaded nor proven, and what foreign law is, is a question of fact and not of law. (Genet v. D. & H. Canal Co., 163 N. Y. 173.) The parties of the second part to • the contract bound
In this case, from all that appears by the contract, it may well be that the parties intended to organize a corporation among themselves. At all events, that contract is. not necessarily void as being .against public policy, or for any other reason. ,The learned counsel for the appellants is entirely right in his contention, as an abstraction, that whenever a contract to form a corporation contemplates- as a necessary feature or concomitant of - the scheme of organization that the directors Of the corporation when formed are to-be deprived of
Concerning other grounds upon which the defendants’ motions to dismiss the complaint were based, it is sufficient to say that according to our understanding of the contract a good consideration for the engagement entered into by the defendants with- the plaintiff is shown. The plaintiff obligated itself to sell all its business and property, and if that sale were consummated the advantage to accrue to the defendants is apparent on the face of the contract. The plaintiff was bound to make the sale to the corporation ,if that corporation were formed within the time named in the agreement. Even if the contract could not be specifically enforced by a corporation dulv formed, the defendants would have their action for the breach if the plaintiff failed to perform. We think it is indisputable that the plaintiff’s change of position with respect to its own property and its obligation assumed under the contract with the defendants furnished a' consideration moving to the defendants. Mop is the contract void for uncertainty and indefiniteness. What each pai'ty
. We are-of tlie opinion, however, that it was .error to submit tips ’ cause to the jury on the question of the reasonableness of the time within which the plaintiff might enforce its claim on the defendants to purchase, the shares.' The defendants did not obligate themselves by the . terms of the "contract absolutely and in any event to come forward.'and ■ purchase the shares of the Electric Fireproofing Coin- • pany of Ganada which they liad deposited with the plaintiff." They were only required to purchase on demand of the plaintiff.' There . is" nothing in' the contract which prevented the plaintiff from"retaining the shaves if it desired to do so; On the failure of the defendants to perform their part of the contract within the stipulated time the shares were forfeited to the plaintiff. If it elected to,enforce the provision respecting a purchase, the contract, specifically required that it should make a demand and the' defendants could remain quiescent" until such demand was made. It seems-to have been assumed at the trial on both sides that- a demand unust be made within a reasonable tim'e; and that is undoubtedly the correct view. ■ None was made by the plaintiff ■until about sixteen months after its ■right to do so accrued. The trial judge left it to the jury to deter- ■ mine whether.it was made-within a reasonable time.. But the defendants .had moved to dismiss the complaint on the ground, among others,- that if the contract to buy the shares were to be enforced, it '■must be within a reasonable time'after default, which occurred in October, 1901; that no demand was made for .the purchase of the stock until February" 11, 1903; that, by the' testimony of Mr. ■Meldruin,. it was shown that for a period of seven months the-'stock was worth par-and that he knew of sales of such stock during that' time, one. at 107 and another at 105 and subsequently declined. ' This, we think, was sufficiently definite as 'a-' statement -of the proposition that tlie subject of - reas'onable "time was á -matter of law which it was the province of the trial justice to dispose .of. Where the facts are all- undisputed, the question of reasonable time is one of law. ( Wright v. Bank of the Metropolis, 110 N. Y. 237.) " It is true that all the facts and cir- ■
The judgment and order should be reversed and a new trial ordered, with costs to appellants to abide the event.
O’Brien, P. J., McLaughlin and Laughlin, JJ., concurred; Houghton, J., dissented.
Judgment and order reversed, new trial ordered,' costs to appellant to abide evént. Order filed.