153 F. 169 | 2d Cir. | 1907
We are unable to agree with the referee in thinking that the agreement, as expressed in the correspondence, amounted to an absolute purchase from the Educational Company of $5,000 of its preferred stock, the consideration being a reduction of its indebtedness to the Perkins-Goodwin Company to that amount, which purchase was fully consummated by the delivery of the stock. We are also of the opinion that the referee erred in construing the agreement to sell the entire amount of preferred stock and" to redeem the $5,000 taken by the Perkins-Goodwin Company as the personal undertaking of Mr. Boocock.
On the contrary we think that, read in the light of the surrounding circumstances, the correspondence clearly establishes an agreement for an extension of credit for eighteen months with the stock as collateral security.
Our reasons for this conclusion may be epitomized as follows:
First. The stock was taken solely as an accommodation to the new company to enable it to get a successful start.
Second. The Perkins-Goodwin Company had been solicited and had declined to take stock in the new company in payment of the indebtedness, or otherwise.
Fourth. It is true that the letter of April 10 was addressed to Mr. Boocock personally, for the reason that the new company had not then been organized. Subsequently Mr. Boocock became its present and general manager. The actual agreement was between the two corporations and the action of the Educational Company in delivering the stock was an acceptance of the terms stated in the letter of April 10 and a ratification thereof.
The transaction has all the attributes of a pledge. The Educational Company was to have eighteen months in which to pay its debt on condition that it transferred $5,000 stock as collateral and redeemed it within that time. The debt was not paid; the time of payment was extended but the obligation to pay remained.
The use of the words “and redeem within eighteen months the preferred stock and bonus” is inconsistent with the theory of an absolute sale.
“To redeem is defined as to purchase hack; to regain possession by payment of a stipulated price; to repurchase; to regain, as mortgage property, by paying what is due; to receive hack by paying the obligation.” 24 Am. and Eng. Encyclopedia (2d Ed.) p. 21-i.
One member of the court is inclined to the opinion that the evidence tends to establish a conditional sale rather than a pledge, hut as the same result, though by different methods, must be reached whichever theory is adopted, he concurs in the result.
The order is reversed with costs and the matter is remanded to the District Court with instructions to allow the claim of the appellant in full.