289 N.W. 158 | Mich. | 1939
On February 21, 1928, plaintiff was president and a stockholder in the Soo Machine Auto Company. The defendants were directors and salaried employees of the company. On that date, a contract was executed between plaintiff and two other stockholders as sellers and defendants as purchasers whereby plaintiff sold his stock in said corporation to defendants. The stock was deposited in escrow with the Central Savings Bank of Sault Ste. Marie, together with a copy of the sales contract, as provided therein. The contract contained the following provision:
"If and in the event the buyers shall fail to make any instalment payment on the date specified, the sellers may, at any time after any instalment payment is past due for 90 days, file a written request with said bank to return said stock to them, a copy of such request being at the same time served, personally or by mail, on the buyers, and each of them, and upon the performance of this condition the bank shall, after the expiration of 10 days from the filing and serving of such written request, return to the sellers said stock free and clear of any claim of title, ownership or lien of the buyers. In such event, and after said stock is so returned to the sellers, the sellers shall be entitled to keep and retain out of such sum or sums as may have been paid to them *273 under this agreement: first, any interest that may be due on a past due payment; second, any part of such payment or payments as are represented by interest in the foregoing schedule of payments; and third, any sum that may be necessary to compensate them for any loss in book value of their stock should such book value at the time of default be depreciated below the book value at the date of this agreement. It is further agreed, that after deducting the foregoing sums for interest and compensation for loss of book value of stock, from the payment or payments that may have been made to the sellers by the buyers, the balance, if any, shall be returned by the sellers to the Soo Machine Auto Company and shall be retained by the corporation, or be distributed among all of the stockholders (including all of the parties to this agreement) as their respective interest may appear and as may be directed by the then stockholders at a regular or special meeting."
Defendants defaulted in making the fourth instalment due under the terms of the contract, and this action was brought to recover the balance of the contract price in the sum of $6,687, with interest thereon, the stock of the other two sellers having been delivered to the purchasers.
The trial court entered judgment for plaintiff. Defendants take this appeal, claiming that inasmuch as the contract provided a remedy in the event of default by the purchasers, the remedy so provided is exclusive and that plaintiff had no right to bring an action at law for recovery of the balance of the purchase price. They also claim that because the stock had never been delivered to them, title thereto remains in plaintiff, and that plaintiff's only alternative remedy is an action for damages for failure to perform the contract.
Whether or not the remedy provided in the contract upon breach thereof by defendants is exclusive *274
depends upon the intention of the parties. In re Hale Desk Co.
(C.C.A.),
The intention of the parties, we believe, from a reading of the entire contract and a consideration of all the circumstances, was not that the remedy expressed for defendants' breach should be exclusive. Although defendant earnestly argues to the contrary, it is significant that the remedy provided upon breach is made available in permissive language by the use of the word "may," whereas other covenants expressed therein, creating obligations upon both parties, are imposed in mandatory language by the use of the word "shall." Typical of phrases appearing throughout the contract are: "the buyers shall pay;" "the stock so purchased * * * shall be deposited;" "annual instalments * * * shall be paid;" "said bank shall make distribution of such payments." The use of the word "shall" appears throughout the contract as the choice of the parties in imposing the obligations assumed thereunder with but few exceptions, one being the provision that in the event of default the sellers may pursue the remedy hereinbefore quoted. To us, the language used does not indicate an intent *275 to provide an exclusive remedy, and we find nothing elsewhere in the record to indicate that the parties intended a contrary result. The words used in the contract should be construed according to their ordinary meaning unless it is clear that a different meaning was intended, and we find nothing that would authorize us to construe the word may, used as aforesaid, as meaning shall.
As to the further claim that plaintiff cannot maintain an action for the balance of the contract price, defendants, inconsistently with their first position that the remedy provided in the contract is exclusive, contend that the action should be one for damages for breach of the contract, because title to the stock has not passed to them.
By the terms of the agreement, plaintiff agreed to sell and defendants to buy the stock for a stipulated sum, part of which was paid upon the execution of the contract and the balance to be paid in instalments, three of which were subsequently paid. As further provided, the shares were delivered to the Central Savings Bank, a depository selected by both parties, to be held pending completion of the instalment payments. Title had passed. Plaintiff is not relegated to an action for damages for breach of the contract.
Judgment affirmed, with costs to plaintiff.
BUTZEL, C.J., and WIEST, BUSHNELL, SHARPE, POTTER, NORTH, and McALLISTER, JJ., concurred. *276