LEONE C. FINNELL, APPELLANT, v. LEO EDWIN BROMBERG, RESPONDENT.
No. 4580
Supreme Court of Nevada
May 2, 1963
381 P.2d 221
By the Court, BADT, C. J.:
This аppeal requires a determination of the rights and obligations of the parties under an option from Finnell to Bromberg for the purchase of certain corporate stock owned by the former. The trial court found that Bromberg had notified Finnell of his exercise of the option to purchase the stock and tendered the option price thereof,
The option was in the following words:
“The undersigned hereby grant to Leo Edwin Bromberg the option to purchase the corporate stock hereinafter referred to on the following terms and conditions:
“1. The option covers the stock of Barnhart Morrow Consolidated represented by Certificate No. TB558 for 45,000 shares, Certificate No. TB559 for 61,060 2/3 shares, Certificate No. TB560 for 10,000 shares.
“2. The option can be exercised only after March 1, 1959 and before June 23, 1959 by notice in writing and tender of the purchase price in the form of cashier‘s check or money order.
“3. The purchase price of said shares shall be 60 cents per share for shares represented by Certificate Nos. TB559 and TB560 and 75 cents per share for shares represented by Certificate No. TB558.
“4. In consideration of this option the undersigned acknowledges receipt of the sum of $5,000.00 which sum represents consideration for this option and is not to be deemed as part of the purchase price for said stock.
“Dated: 2 January 1959
“/s/ Mrs. Imogene C. Wilson
“/s/ Mrs. Florence C. Jones
“/s/ Mrs. Leone C. Finnell”
On May 20, 1959, Bromberg sent the following telegram to Finnell and her sisters, the other two optioners.1
“I HEREBY EXERCISE OPTION TO PURCHASE BARNHART-MORROW CONSOLIDATED CERTIFICATE NO. TB558 FOR 45,000 SHARES AT 75 cents PER
SHARE, NO. TB559 FOR 61,060 2/3 SHARES AT 60 cents PER SHARE AND NO. TB560 FOR 10,000 SHARES AT 60 cents PER SHARE, FOR A TOTAL CONSIDERATION OF $76,386.40. PLEASE DEPOSIT SAID CERTIFICATES EVIDENCING SAID NUMBER OF SHARES WITH THE BANK OF AMERICA, WILSHIRE SWEETZER BRANCH, 6507 WILSHIRE BOULEVARD, LOS ANGELES 48, CALIFORNIA, ESCROW NO. 9748, AND BANK OF AMERICA WILL MAKE PAYMENT FOR SAID SHARES IMMEDIATELY UPON RECEIPT FROM YOU. BANK OF AMERICA WILL MAIL YOU ESCROW INSTRUCTIONS FOR SIGNATURE TODAY. KINDEST PERSONAL REGARDS.”
On the same date he wrote Mrs. Finnell at her Reno address and Mrs. Jones and Mrs. Wilson at their respective Los Angeles addresses, in virtuаlly the same words and figures contained in the telegram.
On the same date the Bank of America, Los Angeles, wrote Finnell at Reno as follows:
“We enclose a copy of escrow Instructions for your signature. When we are in receipt of this Instruction signed by all parties and the Stock certificates listed therein, we will present the Certificate and proceed as per Instruction.
“If the cashier‘s check in the amount of $76,386.40 is to be divided between Imogene C. Wilson, Florence C. Jones and Leone C. Finnell in this escrow, we will require written instructions signed by all three as to the exact amount of the checks to be issued to each party, otherwise we will issue one check in the amount of $76,386.40 payable to the order of all three. A self-addressed envelope is enclosed for your convenience in returning the signed escrow instruction to this office.”
The escrow instructions referred to contained, first, some two pages of printed matter holding the bank harmless against everything “except gross negligence or willful misconduct,” and authorized the bank, in the event of any controversy between the parties or with any third person, to await the settlement thereof by
It is then provided that Bromberg deposit a $25,000 note payable to Capital Factors and 38,500 shares of Barnhart Morrow stock (furnished by Barnhart Morrow), “whereupon Capital Factors will have no further interest in this escrow.”
The bank is then to hold the residue of the stock until it has received $85,000 with orders for stock per a written form attached and such sum is to be used for payment by the banks of bills in accordance with an attached list, and Barnhart Morrow is to deposit its note for $85,000 for delivery to Bromberg when payment of the bills has been made. The escrow may then be closed.
The form attached to the escrow instructions whereby subscribers to Barnhart Morrow stock deposit their money, provided that all such funds “be held by you until the entire block of shares to be sold through this escrow has been so deposited as set forth in the escrow instructions.”
The parties entered into a stipulation as to the facts, including the following:
“On or about January 2, 1959, plaintiff and defendant entered into an option agreement * * *. Under this agreement defendant gave to plaintiff an option to purchase 71,060 2/3 shares of the stock of Barnhart Morrow Consolidated at the price of sixty cents a share. The option could be exercised between March 1, 1959, and June 23, 1959. Plaintiff paid defendant and her two sisters $5,000.00 for said option.
“On or about May 20, 1959, plaintiff had caused to be deposited in escrow with the Bank of America, Wilshire-Sweetzer Branch, in Los Angeles $76,386.40. * * * From this amount $42,636.40 was to be paid to defendant when she deposited in the escrow the stock called for by the option.
“On or аbout May 20, 1959, plaintiff wired and wrote to defendant, advised her of his exercise of the option, that the bank would make payment to her immediately upon the receipt of the shares and that the bank would send escrow instructions for her signature. By letter dated the same day the bank sent the escrow instructions to defendant.
“On May 20, 1959, the market price of the stock was $2.00 per share. * * * * *
“After March 31 and prior to May 20, a Mr. Turnbull told defendant that she did not need to deliver the stock.
“There is some conflict in the testimony as to telephone calls concerning the delivery of the stock by defendant. Portions of that testimony were:
“Mr. Talis testified:
“‘I callеd her person to person. I believe she was here in Reno, and I said I was Mr. Bromberg, and I said I had understood that she said she would deliver the stock today, Monday [June 1, 1959], during banking hours and since it hadn‘t arrived I was calling her in an effort to try and find out when the stock would arrive. Her answer to this was — I will try to describe it as closely as I can, that she was going to deliver the stock except that she was waiting to find out from Mr. Bromberg — or me, I presume she thought I was Mr. Bromberg — if she could deliver the stock without signing the escrow agreement. She definitely was not going to sign it. I told her arrangements had been made at the Bank of America that they would accept the stoсk without her signature on the escrow agreement, and they would give her her check. She said under those conditions she would be down to the bank tomorrow with her sister — do you want me to continue?
“‘Q Yes.
“‘A At the end of the business day the following day, the stock had not arrived and I called Mrs. Finnell again long distance. I said it was Mr. Bromberg‘s office calling; the stock did not arrive; when did she plan on bringing it down. At that point she said she had received advice that her option agreement was illegal and that she wasn‘t bound by it and didn‘t have to deliver the stock. I asked who gave her that advice, was it an attorney. She said, “That‘s my business. That is advice I had and the advice I have taken, and I am not going to deliver the stock.“’
“Plaintiff testified:
“‘A Mrs. Finnell did not want to sign the escrow instructions. She did not want to become a party to the escrow. * * *
“‘Q What else did she tell you?
“‘A She also told me she would deliver the stock on the following Monday, her sister had the stock, it would be delivered the following Monday to the bank to pick up the money.
“‘Q But she said she didn‘t want to sign the escrow instructions?
“‘A That is right. I told her it was not necessary for her to sign the escrow instructions.’
“Defendant testified:
“‘Q And what did you say then with reference to the escrow instructions?
“‘A I told this man that called me the reason why we didn‘t want to sign the escrow papers.
“‘Q Then you were subsequently informed that you didn‘t have to sign them?
“‘A He told us he would present us a check without our putting the stock in escrow.
“‘Q Well, didn‘t he tell you he had made arrangements with the bank so the stock would be put in escrow without your signing the instructions?
“‘A No, he did not.’
“Defendant testified that she did not receive the letter from the bank until May 28th or 29th. Plaintiff disputes this. * * * * *”
“It is further stipulated and agreed that the Court may consider the matter on the record and briefs, make its Findings of Fact and Conclusions of Law and enter its decree.”
The trial court found, in part, as follows:
“II On January 2, 1959, in consideration of the payment to her of $5,000.00 by plaintiff, defendant Finnell at Los Angeles, California, granted, in writing, to plaintiff, the right and option to purchase from her 71,060 2/3 shares of said capital stock at the price of sixty cents per share, said option to be exercised after March 1, 1959, and prior to June 23, 1959.
“III On May 20, 1959, plaintiff had caused to be deposited in escrow with Bank of America, Wilshire-Sweetzer Branch, Los Angeles, California, the sum of $76,386.40, with instructions to pay the same by cashier‘s check to defendant Finnell, and Imogene C. Wilson and Florence C. Jones, upon receiving from them said stock certificates, together with an additional certificate held by the said Imogene C. Wilson and Florence C. Jones. Of said amount, $42,636.40 was due to defendant Finnell for her said shares.
“IV On May 20, 1959, plaintiff, by telegram and letter, notified defendant Finnell, and Imogene C. Wilson and Florenсe C. Jones that he exercised said option and that upon deposit of said stock certificates with said escrow holder it would immediately make payment to her therefor.
“V After the said exercise of the option defendant Finnell told plaintiff‘s agent that she would not sign the proposed escrow instructions and was told by him and by plaintiff that she did not need to do so and that if she would deliver the stock certificates to the escrow holder she would be paid therefor.
“The next day she told said agent that she had received advice that the option agreement was illegal, that she was not bound by it and did not have to deliver the stock.3”
“At no time prior to June 11, 1959 did defendant specify the form or mode of tender that she would accept. * * * * *
“VII From and including May 20, 1959, to and including May 25, 1959, the market value of said stock was $2.00 per share. From and including May 26, 1959, to and including May 29, 1959, the market value thereof was from $1.80 to $1.90 per share.
“VIII That the difference between the option price of said stock of sixty cents per share and the market value thereof of $2.00 per share is $99,484.93.”
Although Finnell has not filed or included in her brief any definite specification of errors, the grounds of her appeal are, we think, made clear.
1. Appellant states: “The primary question is whether or not Bromberg legally exercised the option by setting up the bank escrow.” Finnell‘s contention is that this was not a proper or legal exercise of the option. It is apparent from what follows that the escrow here referred to by Finnell is the escrow set up by the bank‘s written instructions heretofore discussed in some detail. Finnell discusses these instructions at great length, indicating that they brought in new parties to the transaction, with complications of money being furnished by other people through the purchase of stock and relieving the bank from the necessity of making any distribution whatsoever until all the stock was paid for and the mоney appropriated to the purposes discussed in the written instructions. Although not necessary to our decision, a careful study of such escrow instructions shows that Finnell had nothing to fear from this source. The instructions clearly declared that upon deposit of the stock, the money would be immediately paid, and Finnell would have no further interest in the escrow.
Finnell contends that an option must be unequivocally accepted according to its terms in order to constitute a legal and binding acceptance. Many authorities are cited
Whether with or without justification, Finnell absolutely refused to sign the escrow instructions; and it is true that the indications in Bromberg‘s letter and telegram and the bank‘s letter that her signing of such еscrow instructions would be required.
Talis testified, and the court found in accordance therewith, that upon Finnell‘s refusal to sign the escrow instructions he advised her that it was unnecessary for her to do so, that the money was at the bank, and that upon presentation of the stock certificate, cashier‘s check would be delivered to her. Much space is devoted in Finnell‘s brief to the contention that this was a modification of the option and that as the acceptance of the option was required to be in writing, so was any modification. We need not enter into this discussion. The gist of the situation is that on May 20, 1959, Bromberg definitely notified Finnell of the exercise of the option, that the money was at the bank (which fact is conceded),
This court took the same view in Milner v. Dudrey, 77 Nev. 256, 362 P.2d 439. The optionee gave notice of exercise of her option to purchase in words less certain than the notice of election in the present case. The option in Milner required: “If the survivor shall elect to purchase * * * such notice оf election shall be given in writing * * * within fifteen days * * * and shall tender therewith a good faith deposit of not less than $10,000.00.” The notice of election recited, “I am advised that a deposit of $10,000.00 will be made forthwith at the First National Bank * * *.” This court held, first, “An option is exercised by the giving of an unconditional notice that the holder does elect to exercise it. (citing authorities) * * * In this case the letter * * * with the statement that $10,000 was being deposited, certainly indicated the intent to be bound by this notice
So we have the written exercise of the option on May 20, 1959, and the tender of the money on the same date. The time in which the option could be exercised and the tender made was after March 1, 1959, and before June 23, 1959.
Even without consideration of the fact that Bromberg had up to June 23, 1959, to make the tender, we consider Milner v. Dudrey, supra, direct authority for holding that the option had been duly exercised and a tender properly made. Accord: Killam v. Tenney, 229 Or. 134, 366 P.2d 739, 746; Bonde v. Weber, 6 Ill.2d 365, 128 N.E.2d 883, 888, 889; H. M. R., Inc. v. Boeckenhauer, 24 Ill.2d 65, 179 N.E.2d 613, 615.
It should be noted that Finnell contends not only that the written escrow instructions submitted to her by the bank for her signature with the information that the money was on deposit and would be paid immediately
2. A tender is excused where the vendor has repudiated the contract. H. M. R., Inc. v. Boeckenhauer, supra, and cases therein cited. As stated in 17 C.J.S., Contracts § 472, at 973: “Where a party bound by an executory contract repudiates his obligation before the time for performance, the promisee has, according to the great weight of authority, an option to treat the contract as ended so far as further performance is concerned, and to maintain an action at once for the damages occasioned by such anticipatory breach.”
This leads us to the question discussed at length by both parties whether or not Finnell repudiated the contract at a time when Bromberg still had some three weeks to make his tender. We have referred to the court‘s finding that Finnell told Bromberg‘s agent that she had received advice that the option contract was illegal, and that she was not bound by it and would not have to deliver the stock; and to the testimony that Finnell said that she had taken such advice and was not going to deliver the stock. This, in our opinion, is a classic example of an anticipatory breach, although the parties discuss it under the proposition of whether or not there was a repudiation. Mrs. Finnell denied this and asserted that she had only refused to sign the formal escrow instructions. This direct contradiction was, as noted, resolved by the trial court.
3. However, appellant contends that, as the case was originally tried before Judge A. J. Maestretti who died before deciding it and then, by stipulation of the parties, was submitted to Judge John W. Barrett upon the testimony taken before Judge Maestretti, our rule, uniformly
In Garaventa v. Gardella, 63 Nev. 304, 309–313, 169 P.2d 540, 543–545, it was urged, under an exactly similar situation, that “we should reexamine the entire case, determine for ourselves the weight оf the evidence and credibility of the witnesses, and draw our own conclusions.” That is what we are urged to do here. The question was discussed at length under our constitutional provisions for original jurisdiction in the district court and appellate jurisdiction only in this court. We there said: “In our opinion the correct rule is that even where the evidence was all in writing, the trial court‘s findings will not be set aside unless clearly or manifestly against the weight of the evidence, or without any reasonable support therein. Of the numerous authorities sustaining this rule, we cite but a few which give the reasons for their holdings. * * * * *
“The conclusion we have reached in the forеgoing discussion is based squarely upon the ground that in cases like the present this court has no power or jurisdiction to weigh the evidence without regard to the findings of the trial court, but can only consider the evidence for the purpose of determining whether there was any substantial evidence to support such findings, and whether the conclusions reached by the lower court were clearly wrong.”
We again considered the question in Sisson v. Sisson, 77 Nev. 478, 367 P.2d 98, and adhered to Garaventa. Finnell claims that the testimony on which Bromberg relies is incredible, but we do not find it so.
It was not until June 2, 1959, that Finnell repudiated the contract. Up to that date Bromberg was willing to accept the stock. He kept importuning Mrs. Finnell, as late as June 1 and June 2, 1959, to deliver it to the bank. He did not consider that there was a breach on May 20 or May 25 or at any time until June 2. He commenced his action on June 11. The only real basis for fixing the damage would be the value of the stock on June 2, 1959.
MCNAMEE, J., concurs.
THOMPSON, J., concurring:
This case was presented to the lower court and here on the proposition that Finnell‘s breach of the option contract occurred when she failed to deliver her stock into escrow at the Los Angeles bank within a reasonable time after Bromberg had exercised his option to purchase. On May 20, 1959 Bromberg gave written notice of election to exercise his power of acceptance and also made a tender of thе purchase price through escrow. Nothing remained for him to do, assuming that his tender of the purchase price through escrow was a proper tender. The legal battle was waged below and here over this point, i.e., whether the tender of payment through escrow was legally sufficient. I agree with my colleagues that it was. The escrow instructions are clear that, upon deposit of the stock, the money would be immediately paid and Finnell would have no further interest in the escrow. This fact alone distinguishes this case from McCall v. Carlson, 63 Nev. 390, 172 P.2d 171, so heavily relied on by appellant. As to Finnell, the escrow arrangement here proposed amounted to no more than a request that she deliver the stock to the bank as Bromberg‘s agent, rather than to Bromberg directly. No conditions were imposed to give cause for complaint that Bromberg had not met the terms of the option contract. Accordingly, I find no impropriety in using the market value of the stock on May 25, 1959 for the purpose of computing damages. It was Finnell‘s duty to deliver the stock within a reasonable time after May 20, 1959. Thus, I am not prepared to state, on this record, that the trial court erred in deciding that five days was a reasonable time to require Finnell‘s performance. Therefore, I would affirm the judgment below without remand for a limited new trial.
Thus it is manifest that the distinction between the two possible theories of recovery (each being supported by the record) may affect the amount of damages to which Bromberg is entitled. The market value of the stock fluctuated during May 1959. Its value on June 2, 1959 (the date to be used for fixing damages if the