190 Ind. 308 | Ind. | 1921
— This was an action by the appellee to recover damages for the breach by appellants of an oral
The complaint alleged that the O. H. Keller Chair Company had a paid-up common capital stock of $60,000, divided into shares of $100 each, and of these appellee owned $52,300, his wife, Ada McGuffin, $100, Oscar F. Cole, $100, and Andrew Jackson; $7,500, and that said Ada W. McGuffin also owned $1,700 of preferred stock in the corporation, being all there was of it; and that after the appellee and the other three stockholders, as the first parties, and appellants as the second parties, had executed a written option contract, giving to appellants the privilege of acquiring a half interest in the corporation by subscribing or purchasing and paying for, at par, an amount of stock equal to the sum in which the value of the tangible property of the corporation, as shown by an inventory, should exceed the amount of the corporation debts, and that after the inventory had been taken, and had disclosed that the tangible assets were $33,676.46, and that the debts owing to others than appellee and his wife amounted to $26,100, and after the parties to said option contract had examined the statement and inventory above mentioned, said defendants thereupon did not act upon the written option, but orally agreed with said first parties that if the first parties would surrender to said company all of its common capital stock then owned by
The complaint alleged that appellee and his fellow stockholders thereafter notified appellants that they were ready and willing to surrender to the company all of the common stock in excess of $7,675.46, and appellee offered to and notified appellants that he was ready and willing to cancel all debts which the company owed him, and appellee’s wife notified them that she was ready and willing and offered to surrender to the company the preferred stock held by her, and all the first parties were ready and willing to do and perform all things agreed to be done and performed by them in carrying out said agreement, and so notified the defendants, and at all times have been ready, and now are ready, and willing to carry out their part of the agreement, “but that the defendants (appellants) at all times * * . * have refused and still refuse to carry out their part of said contract and agreement or any part thereof, and notified the plaintiffs and all the other of said first parties and they would not carry out the same.” It further alleged that the appellants procured certain creditors of said company to bring suit to collect their demands and for a receiver, and then promised and agreed with appellee “and all other of said first parties” that they would cause a receiver to be appointed, and that while the receivership was pending appellants would carry out their agreement to so purchase the stock, and thereafter would cause the receiver to be discharged.
A demurrer to the complaint on the alleged grounds that there was a defect of parties plaintiff, in that the other three alleged holders of stock who j oined appellee in making the contract pleaded should be joined, and that the complaint did not state facts sufficient to constitute a cause of action, was filed by each of the appellants, but was overruled and appellants excepted. An answer of denial was filed and the cause was submitted to a jury. After numerous exceptions to the admission of items of evidence had been reserved, as well as many exceptions to the giving and refusal of instructions, the jury returned a verdict in favor of the appellee for $9,863.63, on which judgment was rendered. Appellants each separately moved for a new trial, specifying as errors the admission of each of such items of evidence, the giving of each of twelve instructions, and the refusal to give each of six instructions requested by appellants. The motion was overruled and appellants excepted, and have each assigned as error
The objection first urged against the complaint is, that it counts upon an oral contract for the sale of capital stock of a corporation of value greatly exceeding $50. And it is urged that the statute (§7469 Burns 1914, §4910 R. S. 1881) controls which declares that “no contract for the sale of any goods, for the price of fifty dollars or more shall be valid,” where none of the property is received and no part payment is made, “unless some note or memorandum in writing of the bargain be made, and signed,” etc. Many authorities support this contention. 25 R. C. L. 616, §230; 20 Cyc 244; 4 Thompson, Corporations (2d ed.) §4116; 2 Cook, Corporations (7th ed.) §339.
An examination of the cases cited in support of the proposition, and of the laws of the states in which they were decided, shows that many of them are based upon statutes which expressly require that sales of “personal property” or of “things in action” for a designated price shall be evidenced by a writing, as well as all such sales of “goods.” Tomkins v. Sheehan (1899), 158 N. Y. 617, 53 N. E. 502; §1739 Cal. Civil Code; §6009 Idaho Rev. Code; 1 Colorado Mills Ann. Stat., §2025; Franklin v. Motoa, etc., Co. (1907), 158 Fed. 941, 86 C. C. A. 145, 16 L. R. A. (N. S.) 381, 14 Ann. Cas. 302; Snow Storm Mining Co. v. Johnson (1911), 186 Fed. 745, 751, 108 C. C. A. 615; Spear v. Bach (1892), 82 Wis. 192, 52 N. W. 97; Southern, etc., Trust Co. v. Cole (1852), 4 Fla. 359, 378; Massachusetts Acts 1908, Ch. 237, §4; Connecticut Gen. Stat. 1902, §1090, (1918, §6131) ; De Nunzio v. De Nunzio (1916), 90 Conn. 342, 97 Atl. 323; Laundry, etc., Co. v. Whitmer (1915), 92 Ohio St. 44, 51, 110 N. E. 518, Ann. Cas. 1917C 988; §2308 Wisconsin Stat. 1913; §857 S. D. Rev. Code 1919. But many cases have directly decided that such statutes
Some courts have held that shares of stock not yet issued are “goods,” and that contracts for the sale of such stock are within the Statute of Frauds. Hightower v. Ansley, supra; Seaman v. Sweat (1918), 22 Ga. App. 92, 95 S. E. 378; Hewson v. Peterman Mfg. Co. (1913), 76 Wash. 600, 602, 136 Pac. 1158, 51 L. R. A. (N. S.) 398, Ann. Cas. 1915D 346.
Though many courts, including some which have held that shares of stock are “goods,” declare that unissued stock is not, and that a subscription for stock or a contract to purchase stock not yet issued need not be in writing if the statute does not mention “things in action,” nor “personal property,” but only enumerates “goods, wares and merchandise.” Meehan v. Sharp (1890), 151 Mass. 564, 24 N. E. 907; Peninsula Leasing Co. v. Cody (1910), 161 Mich. 604, 126 N. W. 1053; Clapp v. Gilt Edge, etc., Co. (1913), 33 S. D. 123, 144 N. W. 721; Clement v. Rowe (1914), 33 S. D. 499, 146 N. W. 700; Gadsden v. Lance (1841), 1 McMullen’s Eq. (S. C.) 87, 37 Am. Dec. 548; Webb v. Baltimore, etc., R. Co. (1893), 77 Md. 92, 26 Atl. 113, 39 Am. St. 396; Colfax Hotel Co. v. Lyon (1886), 69 Iowa 683, 29 N. W. 780; Rogers v. Burr (1898), 105 Ga. 432, 31 S. E. 438,
While other courts have argued that there is no difference between stock already issued and unissued shares merely subscribed for or agreed to be subscribed for in the future. Hewson v. Peterman Mfg. Co., supra.
The courts of England for more than eighty years past, following the decision, in 1839, of the case of Humble v. Mitchell (1839), 11 Ad. & El. 205, have uniformly held that the words “goods, wares and merchandise,” as used in Stat. 29 Car. 2, ch. 3 (1677), commonly called the English Statute of Frauds, does not embrace shares of stock in corporations, because they are “mere choses in action incapable of delivery,” and therefore that sales of such shares are not within the statute. 25 R. C. L. 616, §230; 20 Cyc 244; 29 Am. and Eng. Ency. Law (2d ed.) 961; 7 Am. and Eng. Ann. Cas. 930 (note) ; 19 L. R. A. (N. S.) 874 (note).
But in America there never has been a reported decision of a court of last resort, of which we have knowledge, holding that sales of stock that has been actually issued are not within the statute. Besides the courts which have held that unissued shares of stock merely subscribed for or to be subscribed for in the future are not within the statute, others have decided that contracts for the sale and transfer of mere debts and evidences of debt, such as accounts and promissory notes, are not within the statute. And some of the courts, in announcing their decisions as to sales of notes and other debts, and some in declaring the rule as to stock not yet issued, have referred to the English decisions, and used dicta to the effect that contracts for the sale of shares of stock are not within the statute. Vawter v. Griffin (1872), 40 Ind. 593, 602; Whittemore v. Gibbs (1852), 24 N. H. 484; Webb v. Baltimore, etc., R. Co., supra;
The appellee cites and relies upon Vawter v. Griffin, supra, as deciding that a contract for the sale of shares of the capital stock of a corporation need not be in writing. The question before the court in that case was, whether or not an alleged oral agreement between the plaintiff and the principal and surety on a note that, for a consideration, an open account due from the plaintiff to such surety should be applied as a payment on the note and accepted by the plaintiff in discharge of the note pro tanto, was binding and could be established by parol evidence. The decision of the court that it,was binding and could be so established was summed up by the court as follows: “We are very clearly of the opinion that contracts for the sale of evidences of debt and things in action are not within the seventh section of our statute of frauds.” Vawter v. Griffin, supra.
But by way of argument, before reaching this conclusion, Judge Buskirk said that, having borrowed our Statute of Frauds from the English statute, we may very properly adopt and be governed by the construction placed thereon by the English courts and text-writers, and that “it is well settled in England that contracts for the sale of shares or stocks, notes, checks, bonds, and evidences of value are not within the seventeenth section of the statute of Charles II” — citing numerous English authorities. Vawter v. Griffin, supra.
The other cases cited by appellee are clearly distinguishable from the case at bar, one of them applying to a contract which had been fully performed by the plaintiff, and which, as the court said, did not relate to a sale of anything at any price and had no reference to shares of stock at all; and the other being an action by an agent for a commission for negotiating a sale, in which the court said that, “were it conceded that the
In a recent case decided by the Appellate Court of Indiana the appellant had contracted in writing, duly signed by himself, that for a consideration which he thereafter received he would purchase certain shares of stock from the appellee at a price fixed, if notified by a certain date. In an action on this contract the trial court instructed the jury that the contract, being for the sale of shares of stock for a price in excess of $50, was under the Statute of Frauds required to be in writing, and could not be varied by parol. A judgment awarding damages for breach of the written contract was affirmed, and the court, after reviewing the authorities, said that the overwhelming weight of authorities supported the rule declared by the instructions given, and declined to follow the dictum in Vawter v. Griffin, supra. Culp v. Holbrook (1920), 76 Ind. App. 272, 129 N. E. 278, 280.
The alleged contract sued on purported to bind the appellee and his associates, for a consideration named, greatly in excess of $50, to convey to the O. H. Keller Chair Company $52,324.54 par value of the common stock of said company, and $1,700 par value of its preferred stock, and to bind appellants to purchase certain shares of that stock for the price of $7,675.46 to be paid by appellants. The complaint was clearly insufficient for lack of an allegation that the contract was in writing.
Appellee and his wife and two other persons are referred to throughout the complaint as the “first parties.” The alleged contract sued on stipulated that the “first parties would surrender to said
There was no stipulation as to how many shares any one or another of the “first parties” should turn over to the corporation, nor how many each or either should retain, nor that each or any of them should receive a stipulated part of the consideration. Neither did the alleged contract stipulate that each separately owned shares in which the others had no interest, nor what proportion of the shares each owned. All of the four joined in an agreement to turn back to the corporation all the outstanding common stock but $7,675.46 par value, being a total of $52,324.54 par value to be so turned back, or about seven-eighths of all the stock. This would call for 523 (and a fraction) shares of $100 each to be turned over to the corporation.
The complaint alleges that each of the four “first parties” owned separate shares in unequal amounts of the common stock, and that two of them owned only one share each. And in addition to the surrender by the four “first parties” of said amount of common stock, one of them (appellee’s wife), who is alleged to have owned a single share of common stock, was bound by the contract to surrender preferred stock of the par value of $1,700 which belonged to her, and there was no special provision as to what consideration she should receive for it.
If the provisions of the contract made it clear just
But where the parties have jointly stipulated for a single consideration, without any provision as to how it is to be distributed among or enjoyed by them, when received, for. which they have engaged jointly to surrender a gross amount of capital stock, the court will not undertake to say, from facts outside of the contract, that one of the joint contracting parties is entitled to a specified share of the damages recoverable for breach of the contract, and to adjudge that share to him separately, when the other parties who joined in the contract are not before the court. Larsen v. Groeschel (1884), 98 Ind. 160, 162.
If two or more parties to a contract will have a common interest in the damages to be recovered for its breach, and their respective interests in severalty are not fixed and determined by the contract, but
must be determined from a consideration of their respective interests in and relations to the subject-matter of the contract as established by proof, they must join as plaintiffs. §§263, 270 Burns 1914, §§262, 269 R. S. 1881; Tate v. Ohio, etc., R. Co. (1858), 10 Ind. 174, 71 Am. Dec. 309; Young v. Board (1865), 25 Ind. 295, 299, 300; Larsen v. Groeschel, supra; Judy v. Jester (1912), 53 Ind. App. 74, 85, 100 N. E. 15; Cressler v. Brewer (1916), 186 Ind. 185, 114 N. E. 449;
And the mere fact that appellee alleged that he owned a certain proportion of the common stock and was to have a like proportion of the agreed consideration, and therefore sustained that proportion of the alleged damages for breach of the contract, will not enable a court to so adjudge without having before it the parties who joined him in executing the contract, where the contract itself merely bound him and his coparties jointly to convey a specified amount of stock to the corporation and bound defendants to purchase a certain amount of that stock and to pay a single gross sum of money for it, but where such contract did not suggest that any of the parties had a separate interest in the stock to be so assigned, nor in the consideration to be received, nor what appellee’s share of such consideration would be. The complaint was insufficient by reason of a defect of parties plaintiff.
The complaint does not allege full performance by the plaintiff and the other “first parties.” And as the oral contract is not alleged to have provided that performance by the appellants should precede the acts stipulated to be done by appellee and his co-parties, nor to have fixed a time within which appellants should perform the contract, averments of a tender of performance by plaintiffs, before bringing suit, were necessary to make the complaint good. The allegations of such a tender and demand are far from satisfactory, and if sufficient to withstand a demurrer would only be so by reason of what is implied from the alleged refusal of appellants when “notified” that the other parties to the contract were ready -and willing to perform on their part. The complaint would clearly be
Since the issues must be changed before the case is tried again, we do not deem it necessary to consider the questions arising upon the motion for a new trial, and as to them we decide nothing, except as they are embraced by what has been said.
For the error in overruling the demurrer to the complaint the judgment is reversed, and the cause is remanded for further proceedings not inconsistent with this opinion.