McGowin v. Dickson

62 So. 685 | Ala. | 1913

Lead Opinion

de GRAFFENRIED, J.

The complaint as originally filed, and as it was amended before judgment was rendered thereon, has been by the reporter above set out. The complaint without the italicized portions is the original complaint, and is the only complaint which was ever served upon the defendant. The complaint with the italicized portions is the complaint as it existed after it was amended, and is the complaint upon which the judgment was rendered by default against the defendant.

1. Section 5301 of the Code of 1907 provides that “The summons must be executed by the sheriff or other officer in any county, by leaving a copy of the summons and complaint with the defendant, which fact he must return with the process.” The following is the only indorsement of the sheriff upon the original complaint in '¿this case: “Rec’d Sep. 7th, 1912, & on Sep. 9th, 1912, I served a copy of the within complaint on W. T. MeGowin/ [Signed] T. T. Palmer, Sheriff, by M. 1. Goldsmith, D. S.”

It is contended by appellant — defendant in the court below — that the above return does not show a legal service of the summons and complaint, and that therefore, as there has been no legal service, the trial court was powerless to enter up a valid judgment by default against the defendant. The statute says that the process may be executed by “leaving a copy * * * with the defendant,” and as the above return only, shows that the sheriff “served a copy” on the defendant, the defendant is of the opinion that the return does not show that he was legally served with the process. Says the defendant, for aught this court may know from the above return, the sheriff may have served the defendant by reading a copy of the summons and complaint to the defendant, instead of by leaving a copy with him, as required by the statute. In this contention we are not able to agree with appellant. The above return of the sheriff shows with sufficient certainty that he left a copy of the summons and complaint with the defendant. — Walker v. State, 52 Ala. 192.

2. The defendant did not appear in the case and when the day arrived for the trial of his case he made default. Thereupon the plaintiff, by leave of the court, amended his complaint, as indicated by the italicized words in the complaint above set out. No notice of any sort was given the defendant of this amendment, and on said day judgment by default was taken in said cause for the amount sued for in the complaint, and the interest. The judgment was rendered without the execution of a writ of inquiry.

3. It is contended by appellant that the cause of action set up in the original complaint is the breach of an executory — not an executed — contract of sale, and that therefore, if the plaintiff was entitled to recover anything of the defendant under the original complaint, the only thing he was entitled to recover was the damages which the plaintiff suffered by reason of the breach by the defendant of said executory contract. In other words, the appellant contends that on the case as made by the original complaint the measure of the plaintiff’s damages was the difference between the price which the defendant contracted to pay for the stock and the market value of the stock at the time and place of delivery, with interest, and that the plaintiff was not entitled to recover the full purchase price of said stock less the payment of $600, which the defendant had made thereon. There was no demurrer to the original complaint, and in passing upon this question the allegations of the complaint are not to be construed by us with exactness against the plaintiff, but with liberality towards him, but not Avith such degree of liberality as to give to the complaint a strained construction in the plaintiff’s favor. So construing the complaint, the question is not without some difficulty, but, so construed,_ we think that the original complaint shows with reasonable certainty that it was brought by the plaintiff to recover the balance due him on the purchase price on an executed contract of sale made by him of the stock in question to the defendant. A man who owns a part of the capital stock of a corporation holds the certificates merely as evidence of his ownership of the stock. As between the parties, a mere delivery of a certificate of the 'capital stock of a corporation, without more, is sufficient to pass the title of the stock from the vendor into the vendee if such delivery, was intended to operate as a transfer of the title to the stock from the vendor to the vendee. — Duke v. Cahawba Nav. Co., 10 Ala. 82, 44 Am. Dec. 472; Angell & Ames on Corporations (11th Ed.) § 564, p. 600.

In the instant case the particular 33 shares of stock which were the subject of sale were not, simply 33 unascertained shares of the stock of the English Carriage Company. The particular 33 shares covered by the agreement were as definitely ascertained by the agreement as if they had been a wellknown horse specially bargained for, with his price agreed upon and a part of the purchase money paid. The 33 shares of stock were the 33 shares which W. T. McGowin, on the 27th day of February, 1912, sold and delivered to A. E. Dickson for the sum of $5,940. While each share of the capital stock of the English Carriage Company was similar in all respects to every other share, the fact that a particular 33 shares of said stock were specificially made the subject of the agreement has its influence upon the question as to whether the transaction between the plaintiff and the defendant was an executed sale or only an executory agreement for a sale. A wholesale merchant might have 1,000 bolts of domestic identically similar in all respects. He might agree to sell to a retail merchant 100 bolts of that domestic at an agreed price, and the retail merchant might pay down 10 per cent, of the purchase money. If this contract was never executed it might be, with reason, asserted that only an executory agreement existed between the parties. If, however, when the trade was made a specific 100 bolts of that domestic had been segregated from the thousand bolts, and the negotiations had been confined to that particular 100 bolts and the price had been agreed upon, and one-tenth of the purchase price had been paid, then although the seller was left in possession of the goods, an entirely different question would be presented. “Where there is a sale of goods generally, no property in them passes till delivery, because until then the very goods sold are not ascertained. But when, by the contract itself, the vendor appropriates to the vendee a specific chattel, and the latter thereby agrees to take that specific chattel, and to pay the stipulated price, the parties are in the same situation as they would be after a delivery of goods in pursuance of a general contract. The very appropriation of the chattel is equivalent to delivery by the vendor, and the assent of the vendee to take the specific chattel and to pay the price is equivalent to his accepting possession. The effect of the contract, therefore, is to vest the property in the bargainee.”— Benjamin on Sales (7th Ed. [Bennett’s]), § 315, p. 268. “In Gilmour v. Supple, Sir Creswell Cresswell, in giving an elaborate judgment of the Privy Council says: ‘By the law of England, by a contract for the sale of specific ascertained goods, the property immediately vests in the buyer, and a right to the price in the seller, unless it can be shown that such Aims not the intention of the parties.’ ” — Id., § 317, p. 269.

It therefore seems apparent that the original complaint counted upon an executed contract of sale, and that the breach of the contract therein set up Avas simply the failure of the defendant, in accordance with his agreement, to pay the balance of the purchase money. Under the allegations of the original complaint the plaintiff was entitled to recover the amount AAdiich the defendant had agreed to pay him for his stock, less the $600 paid thereon, and the interest. Under the allegations of the complaint as amended the amount of the plaintiff’s damages Avas the same amount — no more and no less — that he was entitled to recover under the allegations of the original complaint. The defendant suffered no injury by the allowance of the amendment, and on that account cannot be heard to complain.

4. Section 5325 of the Code of 1907 provides as folIoavs : “In actions upon penal bonds or other writings, for the nonperformance of any covenant or agreement contained therein, the plaintiff may assign such breaches as he may deem proper, and verdict and judgment may be rendered for the plaintiff for such of the breaches as he may prove; and if judgment be rendered for the plaintiff by default or nil dicit, a writ of inquiry of damages must be awarded. Judgment shall in no case exceed principal and interest due on the instrument.”

A writ of inquiry is a writ Avhich issues after judgment by default has been entered upon an unliquidated claim, and directs the jury “to inquire into the amount of plaintiff’s demand, and assess his damages.” — 40 Cyc. p. 2867, note. The damages growing out of the class of suits contemplated by the above statute are unliquielated damages, and for that reason it is necessary, and the statute requires, that a jury assess them.

Section 5356 of the Code of 1907 is as follows: “In all actions founded on any instrument of writing, ascertaining the plaintiff’s demand, if judgment by default, nil dicit, or on demurrer, be rendered for the plaintiff, such judgment may be entered up by the clerk, under the direction of the court, without the intervention of a jury; and the clerk must compute the interest, and, in case of a bill of exchange, the damages, if any be due thereon.”

The above statute dispenses with the necessity of a writ of inquiry in cases covered by it because the damages in such suits are liquidated — fixed by the contract sued on — and the intervention of a jury in such cases would be useless. In the instant case the writing ascertained the exact amount of the plaintiff’s demand.

While, if the defendant had appeared in court and pleaded the general issue, the plaintiff would have been required to prove the execution and delivery of the Avritten contract set up in the complaint, and would also have been required to prove, as a condition precedent to a recovery, that the defendant bought the stock as alleged in the complaint, all this proof became unnecessary Avhen judgment by default Avas rendered; and, as the Avriting set up in the complaint fixed with pertainty the amount of the judgment to Avhich the plaintiff Avas entitled, in this particular case a Avrit of inquiry would have performed a useless ceremony. The judgment by default fixed the right of the plaintiff to recoArer. The writing fixed the exact amount AAdiich the plaintiff was entitled to recover. The trial court therefore committed no error, for which the judgment in this case should be reversed, because of the fact that it failed to require a jury, under a writ of inquiry, to ascertain the amount of the plaintiffs damages.

The judgment of the court below is affirmed.

Affirmed.

All the Justices concur, except Dowdell, C. J., not sitting.

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Rehearing

ON REHEARING.

de GRAFFENRIED, J.

1. In the above opinion we called specific attention to the following: First, that the stock, the subject of the sale, was in existence when the sale was made; second, that the stock, the subject of the sale, was specifically identified to the same extent as if it had been a well-lmoion horsej third, that the exact price of the particular stock was fixed by the parties when the sale was agreed upon; fourth, that a part of the purchase price was paid in cash. The above being true, the contract of sale was an executed, not an executory, contract. The seller, so long as he retained- possession of the stock, had a lien upon the stock for the unpaid purchase money, but he also had his right of action therefor.

“The sale of a specific chattel on credit, though that credit may be limited to a definite period, transfers the property in the goods to the vendee, giving the vendor a right of action for the price, and a lien upon the goods, if they remain in his possession, till that price be paid.” The above quotation is taken from the language of Lord Denman, C. J., in the leading case of Martindale v. Smith, 41 Eng. Common Law Reports (1 Adolph & Ellis, N. S.) 593; s. c., 1 Q. B. 395. In that case ¡reference is made to the case of Tarling v. Baxter, 6 B. & C. 360, in which the same principle is announced. “Where there is a sale of goods generally, no property in them passes until delivery, because until then the very goods sold are not ascertained; but where, by the contract itself, the vendor appropriates to the vendee a specific chattel-, and the latter thereby agrees to take that specific. chattel, and to pay the stipulated price, the parties are then in the same situation as they toould be after a delivery of goods in pursuance of a general contract.” Parke, J., in Dixon, et al. v. Yates, Kaye, Bond, and Proctor, 5 B. & Ad. 313. The above quotations from Martindale v. Smith, supra, and Dixon, et al. v. Yates, Yayne, Bond, and Proctor, supra, completely cover this case. They speak in plain language the law, and show, conclusively, that, in a case presenting the facts of the instant case, a tender on the part of the vendor is not a necessary prerequisite to a suit by him for the purchase price. — Benjamin on Sales (7th [Bennett’s] Ed.) 791.

“The principle at common law is that the goods have become the property of the buyer, and that the vendor has agreed to take for them the buyer’s promise to pay the price. If, then, the buyer fail to pay, the vendor’s remedy is limited to an action for the breach of that promise; the damages for the breach being the amount of the price promised, to which may be added interest.” —Benjamin on Sales, supra.

“It is said that when the contract of sale is complete, and the vendee does not take away the goods, the vendor may recover the price in indebitatus assumpsit, as the law does not require therefor that complete delivery or that actual receipt which would be necessary to defeat the vendor’s lien for the price, or his right of stoppage in transitu, or which would be required to take the case out of the statute of frauds. And more recently it has been declared that there may be a bargain and sale of goods sufficient to transfer the title, and thus to support an action for goods bargained and sold, without any such delivery as will amount to a transfer of possession.” — Newniark on Sales, § 223.

“There may he a bargain and sale of goods sufficient to transfer title, and thus to support an action for goods bargained and sold, without any such delivery as Avill amount to a transfer of possession. The former is quite consistent with the vendor’s retaining a lien for the price, and thus retaining possession till the price is paid.” — Frazier v. Simmons, 139 Mass. 531, 2 N. E. 112.

“Thus Avhen the contract of sale is complete, and the vendee does not take away the goods, the vendor may recover the price in indebitatus assumpsit. The law does not require that complete delivery, that actual receipt of the goods, which will be necessary to defeat the vendor’s lien for the price, or his right of stoppage in transitu, or Avhich would be required to take the case out of the statute of frauds.” — Morse v. Sherman, 106 Mass. 430.

It seems clear that when there has been a sale of a specific chattel, and the title has passed from the seller to the buyer, then unless the seller, by the terms of the contract of sale, is under a duty to the buyer to deliver possession to the buyer at some place other than the place of business of the seller, it is the duty of the buyer to call for the article at the place of business of the seller and there pay for it and accept it. If he fails to do so, then the seller may bring his action against the buyer for goods bargained and sold. At common law there Avas much technical, difference between an action for goods bargained and sold and an action for goods sold and delivered, and the distinctions Avhich the common-law judges drew between the two forms of action, and Avhich they so thoroughly understood, have led to confusion, at times, in courts where a different or a less exacting system of pleading obtains. Courts, we 1 hink, sometimes have attempted to apply — or have actually applied — -principles applicable only to an action for goods sold and delivered to an action for goods bargained and sold, and have thus brought about confusion as to ivhen an action may by a seller be brought against a buyer for the price of goods sold before the actual receipt by the buyer of the goods. If A. goes into the store of B. and select a particular hat and agrees to pay B. $8 for it, and pays B. $1 down on it, then the hat at once becomes the property of A. If A. leaves the hat with B. and promises to come back and get it, but fails to.do so, B. owes A. no further duty, with reference to the hat, except to keep it for him. B. is under no duty to take the hat to the house of A. and tender the hat to him. If A. fails to come for the hat, then B. may bring his action for goods bargained and sold, for the balance due on the hat. If, on the other hand, when A. buys the hat and pays B. a dollar down on it, the understanding is that B. is to send the hat to the house of A. and there deliver it and receive the balance of the money, then, while the title passes, B. does not become entitled to his money, or his action for goods bargained and sold, until he carries the hat to A.’s house and there tenders the hat to A. and demands his money. In such a case B.’s complaint against A. for goods bargained and sold must allege a tender by B. of the hat under the terms of the contract. Under the above facts, if B. had sued A. for goods sold and delivered, a common-law judge would not have permitted him to recover, because he would have held that there had been no delivery. The same judge, however, would have permitted a recovery in an action for goods bargained and sold.

While the distinctions drawn by common-law courts were sometimes narrow, they were founded upon reason. These judges stood close to the fountains of justice, and when the form of action was appropriate, these judges required no allegation in a complaint which reason did not support. They only required that a tender of the specific article sold should be alleged in a complaint for goods bargained and sold, when the contract of sale contemplated that after the sale the seller should deliver the article to the buyer at the buyer’s residence, or at some place other than the seller’s place of business. When the form of the action was for goods sold and delivered, then, unless a delivery was shown, no recovery could be had, for in such form of action, as is said in Noy’s Maxims, quoted approvingly by Benjamin in his work on Sales (4th Amer. Ed.) § 314: “If I sell my horse for money I may keep him until I am paid, but I cannot have an action of debt until he be delivered, yet the property of the horse is by the bargain in the bargainee or buyer.” When, however, the form of the action was for goods bargained and sold, then the rule that “the sale of a specific chattel on credit, though that credit may be limited to a definite period, transfers the property in the goods to the vendee, giving the vendor a right of action for the price, and a lien upon the goods, if they remain in his possession, till that price be paid,” which we have above quoted in the language of Lord Denman in Martindale v. Smith, supra, was applicable, and was applied by the courts. Of course, if the contract of sale required the plaintiff to carry the article to the defendant and make a delivery of it at some point other than the plaintiff’s place of business, then it was necessary for the plaintiff to show in his complaint that he had made a tender of the article, and that the defendant had failed to receive and pay for it, or show some reason why a tender had not been made. — 2 Mechem on Sales, § 1674.

2. “In respect of the place of delivery, where no place is agreed npon by the parties, it is the general rule that the articles sold are to be delivered at the place where they are at the time of the sale. The store of the merchant, the shop of the manufacturer or mechanic, and the farm or granary of the farmer, etc., must be the place where the demand and delivery are to be made when the contract is silent as to the place.” — 2 Mechem on Sales, § 1124.

In the original opinion we pointed out that a mere delivery of the certificate of the capital stock of a corporation is sufficient to pass the legal title from the vendor to the vendee if such delivery is intended to operate as a transfer of the title to the stock from the vendor to the vendee. This proposition was announced in Duke v. Cahawba Nav. Co., 10 Ala. 82, 44 Am. Dec. 472, and has repeatedly been upheld by the later decisions of this court. — Fisher v. Jones, 82 Ala. 117, 3 South. 13; Campbell v. Woodstock Iron Co., 83 Ala. 351, 3 South. 369; Thompson v. Hudgins, 116 Ala. 93, 22 South. 632. In other words, it is the settled law of this state that in order to pass the legal title and ownership of stock in a corporation from one person to another, no more formality is required than is required in the transfer of title to any other sort of personal property from one person to another. — Thompson v. Hudgins, supra. Such stock is a mere chattel the title to which may pass by delivery merely, just as the title to any other chattel may pass by delivery merely.

The above being true, the original complaint, given a reasonable construction favorable to the plaintiff, as it should in this proceeding be construed, is a declaration for the price of chattels bargained and sold. It not only shows a bargain and sale, but it shows a demand for the price with an offer, not only to deliver the stock, but it goes further than that, it shows that the plaintiff has offered to transfer and assign said stock to the defendant. The complaint, as originally filed, was sufficient to support a judgment, but it may have been subject to demurrer because of its failure to allege that the plaintiff was still willing to deliver and to transfer and assign to the defendant the said stock. This demurrable defect the amendment was intended to supply, and did in fact supply. In other words, the original complaint was for the price of goods bargained and sold, and so is the complaint as amended.

Construing the allegations of the complaint both as originally filed, and as amended, favorably towards the plaintiff, as it is our duty to do, the complaint in its original and amended form is sufficient to support a judgment by default for the price of goods bargained and sold, and it is the settled law of this state when “a complaint is sufficient to support a judgment, a motion to set aside the judgment will not be granted, although the complaint may have been subject to demurrer properly filed.”- — O’Neal v. Simonton, 109 Ala. 167, 19 South. 412; Gordon v. Hood, Minor, 122; Turnipseed v. Burton, 4 Ala. App. 612, 58 South. 959.

3. Undoubtedly the rule, as stated by Mr. Cook in his work on Corporations (volume 1 [6th Ed.], 335), that “a person who is under contract to sell and deliver shares of stock may fulfill the obligation on his part by tendering to the vendee certificates of stock, duly indorsed by himself, and containing a power of attorney authorizing the vendee to obtain a registry of the transfer on the corporate books” meets the requirements of the laws of practically all the states.

In the instant case the stock was already sold, and the plaintiff was only under the obligation to deliver, and in his complaint he alleges' that he was ready and willing to “transfer and assign” the stock to the plaintiff, and that he had offered to do so. Under the. terms of the sale of stock in the instant case it was the duty of the defendant, after the plaintiff had made demand upon him for the purchase price of the stock and had offered to transfer and deliver the stock to him, to call on the plaintiff for the stock.

Mr. Thompson, in his work on Corporations (volume 4 [2d Ed.], § 4110) lays it down as a general rule that “an action cannot be maintained for the price of stock where there has been no repudiation of the contract unless a valid tender is made and kept good.” He says, however, in the very next section (viz., § 4111) : “Title to stock may vest short of full payment and delivery where that, is the intent of the parties to the contract. It has been held, under a provision in a contract for the sale of stock, to be paid for at a certain time, that the title passed to the purchaser at the time of the contract, though there was a separate agreement that the seller should retain the certificate as security for the price — ■ and he cites the case of Sherwood v. Graham, 106 Minn. 542, 118 N. W. 1011, in Avhich a recovery was had upon an executed contract of sale of stock, although no stock was ever delivered because, under the terms of the sale, no delivery was to be had until the purchase money was paid. In fact the sale of stock in a corporation in this state is like the sale of any other chattel, and is to be governed by the same rules as the sale of any chattel, viz., by the contract which is made by the parties themselves.

4. Many of our states have independent statutory regulations of their own governing the manner in which the title to stock in corporations may be transferred. In many stock transactions the regulations of boards of trade have entered into them and formed a part of them. It cannot, therefore, be expected that all of the decisions of courts of last resort upon the subject above discussed will be found to be uniform, or that a rule declared in one state has necessarily any application to a sale of stock in another state. The law of this state is as we have above declared it to be; and, so far as the particular transaction under discussion is concerned, the contract between the parties has the same degree of finality, and is governed by the same rules as would have governed it if the defendant, when he paid to the plaintiff the cash installment, had made to the plaintiff a promissory note, payable on demand, for the balance of the purchase price of the stock, and had left the stock in the possession of the plaintiff pending the payment of said note.

5. Confessedly the defendant owes the plaintiff the money for which the judgment in this case was rendered. The plaintiff confesses that the defendant owns the stock, and that he holds the stock for him. The defendant, upon the payment of the purchase money, will become entitled to demand of and receive from the plaintiff the stock to which the defendant already holds the legal title and the possession of which the plaintiff holds for the defendant.

What injury, in a legal sense, therefore, occurred to the defendant when the complaint in this case was amended we are unable to discover. In fact the amendment was but an assurance to the court and to the defendant that, when the judgment was taken, the plaintiff still held the stock for the defendant, and operated as an assurance to the court and the defendant that the plaintiff set up no claim to the legal title to the) stock, and that upon the payment of the judgment he could demand it of and receive it from the plaintiff.

The application for a rehearing is overruled.

Case Details

Case Name: McGowin v. Dickson

Court Name: Supreme Court of Alabama

Date Published: May 15, 1913

Citation: 62 So. 685

Court Abbreviation: Ala.