No. 15633 | Cal. | Jan 7, 1898
Lead Opinion
The court below sustained a demurrer interposed by defendant Houghton to the complaint, and entered judgment dismissing the action, from which plaintiff appeals. The only question involved in the appeal is whether the complaint states a cause of action.
That thereupon said W. T. Sayward and the defendant Houghton entered into this agreement: That said Houghton should ad-i vanee the sum of fifty thousand dollars for the purchase of the stock from Loomis, and that Sayward should procure said stock to be transferred by Loomis to Houghton, the same to be held by Houghton for the benefit of Sayward, upon the trust and condition that the latter should, “on the tender by him to said Houghton, within six months, of the sum so to be advanced by said Houghton for the purchase of said stock from said Loomis as aforesaid, with interest thereon from the date of said advance to the date of said tender, together with five thousand ($5,000) dollars as a bonus to said Houghton, receive from said Houghton a transfer of all of said stock”; that in pursuance of said agreement the money was so advanced by Houghton, and Sayward, on March 24, 1887, procured said stock to be transferred and delivered by Loomis to Houghton,
The prayer is, among other things, that Houghton be declared to hold said stock in trust for plaintiff’s intestate, and that he be required to transfer and deliver the same to plaintiff as such administrator, upon the payment of the sum required under the terms of the contract.
We think the complaint states a cause of action and that the demurrer was improperly sustained. [Respondent construes the action as one purely for the specific performance of a contract which he contends is wholly lacking in mutuality; that while the complaint alleges a promise on his part to convey, it discloses no corresponding obligation upon the part of plaintiff’s intestate to purchase, but merely an option so to do, which could not have been enforced, and that therefore the contract alleged is one which equity will not enforce. But, assuming that the element of mutuality was lacking at the time the contract was entered into, it was supplied upon the offer of performance being made by plaintiff, since thereby the remedy to enforce it clearly became mutual. An original lack of mutuality in the right to specific performance will not preclude the enforcement of the contract where this want has been removed at the time the action is brought. (Thurber v. Meves, ante, p. 35, and cases there cited; Vassault v. Edwards, 43 Cal. 458" court="Cal." date_filed="1872-04-15" href="https://app.midpage.ai/document/vassault-v-edwards-5437683?utm_source=webapp" opinion_id="5437683">43 Cal. 458; Woodruff v. Woodruff, 44 N. J. Eq. 349.) The principle is well stated in the case last cited, where the objection was, as here, that the covenant sued on was lacking in mutuality, in that it gave complainant the right to purchase, but did not provide that he must do so.
“The chief justice says: Tt is true that there are exceptions to the rule that a court of equity will not perform unilateral contracts, as, for instance, in those cases where an agreement, which the statute of fraud requires to be in writing, has been signed by one of the parties only; or when the contract by its terms gives to one party a right to the performance which it does not confer upon the other, an example of which is exhibited in the instance of a lease for years which gives an option to the lessee of purchasing during the term. But it will be observed that when such contracts come to be enforced in equity they cease to be unilateral, for, upon the filing of the bill, the party who was before unbound puts himself under the obligation of the contract. By his own act he makes the contract mutual, and the other party is enabled to enforce it.’ ” Numerous other authorities might be cited in support of the same principle.
But we do not construe the action as being essentially one for the specific performance of the contract, except in so far as such relief is necessarily incidental to the enforcement of the plaintiff’s rights in the premises. The action is more in the nature of an action to enforce a trust arising in favor of plaintiff’s intestate to have the stock restored to him upon a compliance with the terms of the contract. Bespondent contends that no such trust aróse; that the transaction was in effect a purchase of the stock by him from Loomis, precisely as if it had been at sheriff’s sale or other public vendue, with a mere promise by him to hold it for the benefit of Sayward, for which promise there was no consideration; and, there being no fraud or deceit alleged, no en
There is no merit in the other objections to the sufficiency of the complaint. There is nothing in the nature of the contract rendering it obnoxious to the statute of frauds; nor is there anything in the objection that plaintiff cannot maintain the action— conceding that this question may be raised under the general demurrer. (Code Civ. Proc., sec. 1582; Knowles v. Murphy, 107 Cal. 111.) The case of Janes v. Throckmorton, 57 Cal. 387, does not negative the right of the administrator to maintain an action such as this. The offer or tender of payment was sufficient. Section 1500 of the Civil Code does not prescribe the mode of tender, but a method of “extinguishing” an obligation when that object is sought. (Knowles v. Murphy, supra.)
The judgment is reversed and cause remanded, with directions to overrule the demurrer.
Harrison, J., and Garoutte, J., concurred.
Hearing in Bank denied.
Upon the denial of the petition for a hearing in Bank, the following opinion was filed by Beatty, C. J., on the 7th of February, 1898:
Dissenting Opinion
I dissent from the order denying a rehearing of this case. As I construe the complaint it shows that Houghton purchased the stock for himself and merely gave plaintiff’s intestate an option to purchase it from him upon payment within six months of fifty thousand dollars, with interest,
For granting this option Houghton received a valuable consideration in being allowed at Sayward’s request, and for his con-: tingent benefit, to purchase the stock at a price below its real or -estimated value. This consideration was sufficient to support Houghton’s agreement granting the option, and Sayward’s election to purchase and offer to perform, if made at any time within six months, would have supplied the element of mutuality necessary to warrant a decree of specific performance, if in other respects the contract was enforceable.
But if the action is one for specific performance (and I can regard it in no other light), the most serious question arises out of the fact that the intestate did not during his lifetime make his election to purchase, and the plaintiff, as administrator, has assumed to make it for him. He has, in other words, without any authority, so far as appears, from heir or creditor or the probate court, undertaken to bind the estate to pay Houghton fifty thousand dollars, with interest, and a bonus of five thousand dollars more in exchange for his stock. And, unless he has given Houghton the right to claim so much out of the assets of the estate in preference to creditors and heirs, the option has not been exercised—the estate is not bound, and if the estate is not bound Houghton is not bound. There must be mutuality of obligation when the action is commenced. To hold, therefore, that this is a case for specific performance would be to hold that an administrator of his own motion can appropriate the assets of an estate to the performance of an agreement to purchase resting in the option of his intestate, a doctrine to which the court should hesitate to commit itself.
The point made by respondent that the agreement set out in the complaint is within the statute of frauds (Civ. Code, sec. 1739) does not arise upon the demurrer, because it does not appear from the complaint that the agreement was not in writing. If, however, it was merely oral, and was, as I construe it, merely an agreement to sell, it was within the statute.
Heither does the objection that plaintiff’s remedy is at law for