Stebbins v. Leowolf

| Mass. | Mar 15, 1849

Dewet, J.

The defendant alleges, that the contracts for the purchase of Harlaem Railroad stock, which are the sole ground of the claim in this action upon the defendant, were wholly illegal, being in violation of the statute of New York, in relation to stockjobbing. Rev. Sts. of N. Y. vol. i. p. 710.

A preliminary question was raised in. the argument of this case, though not particularly presented by any of the rulings of the presiding judge, at the trial before the jury, namely: whether, supposing the defence under this statute would be a good defence as between the vendor and vendee of the stock, the defendant can rely upon it as a defence to an action brought by the plaintiff, as the agent of the defendant, for money paid by him upon a contract entered into by reason of such agency. It is a sufficient answer, we think, to this suggestion, that the present case is one where it fully appears, that the plaintiff was a party to the original transaction; was conusant of all the facts, and of the objections to the validity of the contract entered into by him; and volunteered to pay the claims of the vendors of the stock, without any legal liability on his part. Under these circumstances, the plaintiff must be taken to have paid the money in his own wrong, if the contract he entered into was in fact an illegal one. The case of Ward v. Van Duzer, 2 Hall, 162" court="None" date_filed="1829-06-15" href="https://app.midpage.ai/document/j--w-g-ward-v-van-duzer-9298056?utm_source=webapp" opinion_id="9298056">2 Hall, 162, is very like the present, in that respect, and fully sustains the ground, that this defence is open to the defendant. Story’s Agency, § 346, is to the same effect.

The principal inquiry is, whether these contracts for the purchase of stock were illegal, under the provisions of the statutes of New York. Evidence was offered tending to show the purchase of stock of various individuals by the plaintiffs for the defendant. The evidence also tended to prove, that, at the time of making such contracts, the several vendors held in their names stock corresponding with or equal in amount to the stock which they had stipulated to transfer, within the period of sixty days, at the option of the buyer, as to the time. But, as was contended by the defendant, the evidence also tended to prove, that although the respective vendors held stock to the several amounts named in their contracts with the plaintiff; yet they were severally obliged, by force of previous contracts with other persons, to sell and deliver such stock to an amount much larger than the entire amount so held by-them. The defendant insists, that being thus under obligation by a previous contract to transfer all the stock which they possessed, they had no stock that could be the subject of a legal contract of sale on the 29th of November, 1843.

The case presents two questions for consideration : 1st, Are the contracts in evidence within the provisions of the stock-jobbing act of New York ? and, 2d, Upon whom is the burden of proof, to show that the vendors, at the time of making their contracts to sell and transfer stock at a future day, had stock which they might then legally contract to sell ?

1. As to the first point, is it enough, if it should be literally true, that the vendor at the time of the contract was possessed óf stock to the amount, which he then contracted to sell and transfer at a future day? Take the case of Parker and Whitehead, who held one hundred shares of the Harlaem Railroad stock, on the day of making their contract with the defendant’s agent. Suppose it were shown, that, on the day of making the contract, they then had outstanding two other contracts previously made, each for the sale and delivery of one hundred shares of Harlaem Railroad stock, “to be transferred at any time in sixty days at buyer’s option.” Was it competent for Parker and Whitehead to make a third contract to sell one hundred shares, having for its basis no other stock than the same one hundred shares ? Does the possession of one hundred shares of the Harlaem Railroad stock authorize the owner to make sales of such stock to an indefinite amount, provided each sale be in itself for an amount less than the stock so held by the vendor ? If this be so, then, it is obvious, that the spirit and purpose of the statute may be easily defeated. An owner of stock may thus be competent to make sales to an indefinite amount, upon the basis of holding a very limited number of shares of stock ; as the ownership of a hundred shares may furnish a capital adequate to trade upon to the amount of a thousand, provided the contracts therefor be for amounts not exceeding severally one hundred shares each. Such a construction would clearly defeat the great purposes of the statute. As it seems to us, the proper construction of the statute is, that the vendor must hold the stock, which he contracts to sell at a future day, free from other liabilities and obligations, that have already exhausted it as the basis of a contract for a sale and delivery thereof.

2. The next question is, upon whom is the burden of proof, to show that the vendors, at the time of making the contracts, had the shares of stock to the amount stipulated to be sold, and that such shares were so held by them, as to authorize them to contract for a sale and delivery thereof at a future day ?

If this was a contract in writing, promising to pay a certain sum of money, and the promise was of a character, which imported a consideration on the face of it, so that the proof of the contract would of itself make a prima facie case, there is no doubt, that, if the defendant would avail himself of any secret taint which rendered the contract illegal, as, for example, if the defendant, in an action upon a note of hand, alleges usury, or sets up in defence, that the note was given for a gaming debt, the burden of proof rests upon the party who relies upon such defence. But the present case differs from the one just stated. The plaintiff, in this case, must show a legal contract, binding upon the vendor and vendee, with relation to these shares, before he can establish a prima facie case. He proposes, then, in the first instance, to show an agreement by the one party to sell, and by the other to buy, certain shares of Harlaem Railroad stock, to be transferred at a future day. But evidence to this extent shows no valid contract. The law requires, that the vendor should be the owner of the stock he stipulates to transfer, at the time he makes such contract, and this fact he is bound to prove. It is an element, essential to the validity of the contract, and one without which the contract could not be enforced against the plaintiff, as the purchaser, or the plaintiff us agent have any claim against the defendant as his principal.

3. Another ruling, to which an exception was taken, at the trial, was, “ that if the contract for a portion of the shares matured on Sunday, the vendee had the whole of the Monday following, in which to perform his contract; and that as o the shares purchased on the 1st of December, 1841, they naving been purchased on a credit of sixty days, and the last pf the sixty days falling on Sunday, the present action was prematurely commenced on the following Monday.” This pplies to only a portion of the shares embraced in the contracts of sale, but is deemed important, inasmuch as it is said to apply to all those shares, which, in the view we have taken of the law, can be considered as so held and possessed by the vendors, as to be the subject of a legal contract of sale and transfer at a future day.

This contract was entered into in the state of New York, was made by parties resident there, and to be performed there, and is therefore peculiarly to be governed by the rules of law of that state.

There has not been an entire uniformity in the various judicial tribunals, in their decisions, as to the time of performance of a contract, when the day of maturity on the face of the contract falls on a Sunday. But it is enough for the present purpose, that the law of the state of New York, upon this point, has become well settled. In the case of Salter v. Burt, 20 Wend. 205" court="N.Y. Sup. Ct." date_filed="1838-10-15" href="https://app.midpage.ai/document/salter-v-burt-5515178?utm_source=webapp" opinion_id="5515178">20 Wend. 205, it was held, that “when the day of the performance of contracts other than instruments upon which days of grace are allowed, falls on Sunday, that day is not counted, and a compliance with the stipulation of the contract on the next day (Monday) is deemed in law a performance.” Such seems to be the rule of law in New York as to contracts. As to the computation of time, when a statute declares that an act shall be done within a certain number of days, and the last of these days falls on a Sunday, a different rule has prevailed. Ex parte Dodge, 7 Cow. 147. The case of Alderman v. Phelps, 15 Mass. 225" court="Mass." date_filed="1818-09-15" href="https://app.midpage.ai/document/alderman-vphelps-6404741?utm_source=webapp" opinion_id="6404741">15 Mass. 225, is to the same effect. As to so much of the claim of the plaintiffs, as has its foundation in the contract made on the 1st of December, 1841, this action was prematurely brought, and for that reason, if for no other, the plaintiffs cannot recover for money paid on that contract.

4. The only remaining inquiry is, whether the plaintiff offered the necessary and proper evidence of the fact, that the various vendors of the stock, the subject of these contracts; had the same in their possession as owners, and as the subject of such sale by them at the time of making these contracts. Upon that point, the evidence was very loose and uncertain ; so much so, that under the rule we have stated, as to the burden of proof, we suppose there was no question as to the character of the evidence.

The rules of law having been correctly stated at the trial, before the jury, the verdict, which was for the defendant, must be sustained.

Judgment on the verdict.