ANDREW L. MAGEE v. MERCANTILE-COMMERCE BANK & TRUST COMPANY, Appellant
124 S. W. (2d) 1121
Division One
February 8, 1939
PER CURIAM: —The foregoing opinion by BRADLEY, C., is adopted as the opinion of the court. All the judges concur.
Thompson, Mitchell, Thompson & Young, C. P. Berry and Ronald J. Foulis for appellant.
We adopt plaintiff‘s statement of the transaction, without use of quotation marks. (Quotation marks show plaintiff‘s quotations from the record.) Plaintiff Magee had “done business” with defendant since 1900 and had accumulated in its bank a savings account of “about $14,000.” Magee had “never speculated in bonds.” On July
Riley took Magee “down to the bond department,” and while Magee “sat outside the rail,” Riley went into Maestre‘s office. After a lapse of “аbout 5 minutes,” Riley brought Maestre to Magee and “introduced him as the manager” saying, “He will explain anything you want to know.” Magee said to Maestre, “Mr. Riley here says he will buy these bonds back. What will you pay me for these bonds—for example I am paying a premium on most of these bonds. Will you buy them back and pay the premium on them?” Maestre said to Magee, “No, I can‘t sаy as to that,” and produced a book and attempted to explain “about fluctuations in the market.” Magee testified, “It was Greek to me,” and so he said to Maestre, “I am not interested in that book or anything else. What I am interested in is these bonds and my money invested in them. Will you buy these bonds back at par? . . . I told him I was not interested in the book, but I was interested in the money, аs it represented my life‘s savings, and I had to be careful. I knew a little about bonds having a fluctuating value. I never had any experience prior to these. I understood what fluctuation meant when he said the value would fluctuate; what he was referring to was the premium.” Maestre, answering Magee‘s question whether the bank would buy the bonds back at par said to him, ”Yes we will. Any time yоu bring these bonds in here and you want to sell them we will buy them back at par from you, or any other bonds that you buy here.” Riley was present, and “he gave me the nod when Mr. Maestre agreed to buy them back at par any time I chose to sell them.” “Mr. Riley said they ‘were just the same as cash and any time you want to sell them we will take them back.‘” Riley “had not turned the bonds over to me
On May 23, 1928, Magee secured a $14,000 90-day loan from the bank and as collateral gave the bank all of the bonds purchased on July 3, 1923, except $3000 in road bonds whiсh had been cashed in by him when they fell due, and other bonds purchased from the bank at later dates, the total par value of all of which was $16,000. (Magee owned bonds of the total par value of $25,000, all of which he had purchased from defendant.) This loan was renewed for three months on August 21, 1928, and subsequently twice renewed for the same period on November 21, 1928, and February 19, 1929. During all of this time Magee had no information “whether the market value of any of these bonds had started down.” Prior to the day the loan became due, Magee went to the bank and talked with Mr. Powers, vice president of the bank, and “asked him to renew the loan for me and he refused.” Magee then offered Powers “the whole $25,000 worth I had as collateral to rеnew that loan of $14,000, and he refused.” Shortly afterward, on May 18, 1929, Magee went to his safe deposit box and secured the bonds which were there and took them upstairs to Powers, who, at the time, had on his desk the bonds Magee had put up as collateral. Magee “placed (all of) them on Mr. Powers’ desk,” and “said, ‘I want you to buy these bonds back at par value as рer your agreement,‘” and Mr. Powers, said ‘No, I will not.’ Then I said, ‘Well, the only way out of this is for the court to decide this case.’ He said, ‘All right, go to it. I won‘t take them.’ ” On the same day, May 18, 1929, Magee went to the First National Bank with “the $25,000 in bonds and put that up as security for a loan of $14,000.” The loan was granted and the loan previously made to Magee by Mercantile-Commerce Bank and Trust Cоmpany was repaid to it by him on that day. This action was instituted on June 13, 1933. Maestre denied that there was any agreement made to repurchase bonds at par. He said that the bank did repurchase bonds from customers at market or actual value at any time.
The above italicized statement, alleged to have been made by Maestre, is the basis of this suit. Defendant‘s answer contained a general denial; it further stated that, even if such an agreement was
This agreement; that “we will buy them back at par from you any time . . . you want to sell them,” was the granting of a resale option to plaintiff. [See Lane v. Nunn, 211 Mo. App. 280, 243 S. W. 427; Suhre v. Busch, 343 Mo. 170, 120 S. W. (2d) 47; Brooks v. Trustee Co. (Wash.), 136 Pac. 1152, 50 L. R. A. (N. S.) 594 (there classified as an option to rescind).] The nature of such an option (like an option to repurchase) is a continuing offer; that is, it amounts to a continuing offer to buy at the price named within the time specified. [Suhre v. Busch, supra; Lively v. Tabor, 341 Mo. 352, 107 S. W. (2d) 62, 111 A. L. R. 976.] Such a continuing offer, if based upon sufficient consideration, is irrevocable and a binding option for whatever period is designated. [American Law Institute Restatement of Contracts, sec. 46.] Unquestionably, as plaintiff says, there was sufficient consideration (because the granting of the option was а condition of and part of plaintiff‘s agreement to purchase) to make this offer (or option) irrevocable. [Suhre v. Busch, supra; 60 A. L. R. 232 note.] The decisive question is: How long this offer to buy at par continued; or, within what time plaintiff was required to make his acceptance? (There is no question here raised that the manner of acceptance was by demand and tender or as to when such tender was made.) Defendant contends that, even if suit was not required within the five-year limitation period, an acceptance of such an oral option must be made by demand within that time.
Plaintiff says: “The contemporaneous parol contract to repurchase the bonds was a continuing one, categoric and unqualified, entitling plaintiff to demand performance at any time, and accordingly, the time within which he was entitled to demand performance was not limited to the period fixed by the Statute of Limitations or to what might be considered a reasonable time.” Plaintiff further says: “Assuming that it was necessary for plaintiff to demand a performance of the contemporaneous рarol contract to repurchase the bonds within a reasonable time . . . the contract was entered by the parties with a clear intent to postpone a demand for performance indefinitely, and, accordingly, there is no arbitrary rule of law which required that a demand should have been made within the period fixed by the Statute of Limitations or held thаt such period was the extent of what might be considered a reasonable time.”
Options which fix no time have been held void either for indefiniteness or as perpetuities. [James on Option Contracts, secs. 218-222;
Plaintiff relies on Jameson v. Jameson, 72 Mo. 640, and Cruse v. Eslinger (Mo. App.), 235 S. W. 496. In the Jameson case, there was a written agreement to pay $600 with six per cent interest from a certain date. This agreement recited: “The condition of the above obligation is such; that if the above named Elizabeth Jameson shall demand аny or all of the above during her natural life, it shall be due and payable according to the tenor of the above; that in case of her death before any or all of the above shall be liquidated, it shall remain with me and my heirs forever as may portion of her estate.” The court pointed out that “the payment is unequivocally conditioned upon demаnd made at any time during the life of the payee;” and that “if not so made, it was not to be paid at all, but to be forever retained by the payor.” The court held “that it was the evident purpose and intention, both of the payor and payee, that there should be delay in making the demand, and the limit to the delay, as agreed upon by the parties, was the lifetime оf the payee.” Such a written agreement whereby one party was to become the absolute owner of money, for which the other got nothing, and which specifically gave the real owner the right to demand it at any time during her lifetime, is very different from this case where a purchase of securities was made at market value and no time was specifiсally designated for the exercise of an oral option to compel a repurchase at a fixed price. Cruse v. Eslinger must be considered as a case similar to that of an option for resale on termination of employment, which should, perhaps, be ruled on different grounds than a case between a vendor and purchaser not having any othеr relation between them. [See notes, 48 A. L. R. 625; 66 A. L. R. 1182; see, also,
Plaintiff cites Grotte v. Rachman (Neb.), 207 N. W. 204. In that case, the court uphеld an acceptance of an oral resale option by demand made three and a half years after plaintiff purchased the stock. Apparently this was within the limitation period applicable to oral contracts. [2 Wood on Limitations, 1629.] The question of the necessity of a demand within that period is not discussed and cases so holding are not noticed. The court did say that “the length of time elapsing between the time of sale and the demand of the purchase price and interest is immaterial, except as it may be considered with other evidence in determining the good faith and intention of the parties.” This case does not follow the rule that such an option, which fails to fix a definite time, will be construed to mean within a reasonable time; and it also implies that such a right would be good in perpetuity. We cannot so hold. Plaintiff further cites cases, such as Vickrey v. Maier (Cal.), 129 Pac. 273, which hold that “peculiar circumstances affecting the question” may warrant the court in refusing to follow the general rule that “a time coincident with the Statute of Limitations will be deemed reasonablе.” Of course, there might be special circumstances which would require either lengthening or shortening the statutory period in determining the question of a reasonable time. [See Fuchs v. Meyer (Wis.), 227 N. W. 265; Andrews v. Andrews (Minn.), 212 N. W. 408, 51 A. L. R. 542.]
This is not a case where a corporation was selling its own stock so that every dollar received became a part of its capital funds, and so that the value depended upon the success of the vendor‘s own enterprise. [See Fuchs v. Meyer, supra.] There is no claim of fraud, misrepresentation or concealment which is the distinguishing feature of many such cases, and under such circumstances our limitation period is extended. [
The judgment is reversed. Ferguson and Bradley, CC., concur.
PER CURIAM:—The foregoing opinion by HYDE, C., is adopted as the opinion of the court. All the judges concur.