Case ID: ohio-st_92/html/0044-01.html
Source: Caselaw Access Project
Author: {"author": "Jones, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The Davis Laundry & Cleaning Co. v. Whitmore.
    
      Contracts — Sale' of corporation — Memorandum is offer to purchase, when — Acceptance, mutual obligations and consideration — Time not essence of contract — Formal stock transfer unnecessary, when — Statute of frauds — Sale of corporate stock — Writing necessary, when — Section 8384 (1), General Code — Partial delivery of stock and operation of plant — Justify finding of acceptance, when.
    
    The Ideal Laundry Company was a corporation capitalized át 250 shares of the par value of $100 each, of which plaintiff owned 126 shares, the balance outstanding in the names of other parties.
    The defendant laundry company, doing a kindred business and desiring to purchase all the shares, executed on January 11, 1910, to the plaintiff the following memorandum of agreement: “We agree to purchase 126 shares of Ideal Laundry stock for $5500.00, and the balance of 124 shares at $50.00 per share, from F. C. Whitmore. (Signed) , The Davis Laundry Company, Per. E. W. Sloan. 1-11-10.” This memorandum was not signed by Whitmore. No time was fixed for the delivery of these shares, and it was verbally agreed that delivery should be made at a local bank and that the buyer should assist in obtaining the outstanding shares. On February 21, 1910, the seller had deposited in the bank his own 126 shares and had obtained 116 of those outstanding, at which time he notified the defendant of this fact, and that the remaining 8 shares would be delivered in a very short time. On January 31, 1910, the buyer took possession of the plant^and asséts of The Ideal Laundry Co. and operated the same for a period of two weeks. On February 28, 1910, the seller had secured the entire 250 shares and deposited them with the local bank for delivery and so notified the buyer. On February 16, 1910, the buyer yielded possession and repudiated the contract. Held:
    
    1. The written memorandum was an offer to purchase the entire 250 shares of stock, and stipulated the price per share.
    2. That, upon acceptance, the obligations became mutual, and the promise of one furnished a consideration for the promise of the oth?r,
    
      3. The written offer, not having stipulated the time when the stock should he delivered, time did not become the essence of the contract, but the seller had a reasonable time to procure the outstanding stock.
    4. Transfer upon the corporate books was not necessary; tender or offer to deliver the stock properly indorsed for transfer by the ov/ner, either in blank or to the defendant, was sufficient.
    5. A contract relating to the sale of corporate stock of the value named, falls within the statute of frauds relating to the sale of personal property. Such contract is one for the disposal of goods within the meaning of Section 8384 (1), General Code, and is required to be in writing and signed by the parties to be charged.
    6. The delivery of the 242 shares of stock to the National Bank of Commerce, accompanied by defendant’s possession and operation of the plant for a period of two weeks, was evidence justifying a jury in finding that this was an acceptance under the verbal contract, and took the case out of the statute above mentioned.
    (No. 14512
    Decided May 4, 1915.)
    Error to the Court of Appeals of Cuyahoga county.
    In the court of. common pleas the plaintiff, Whit-more, brought an action against The Davis Laundry & Cleaning Company, a corporation, for damages alleged to have been sustained by the refusal of the defendant to carry out its contract for the purchase of stock in The Ideal Laundry Company, another corporation engaged in a business kindred to the defendant company. ' The petition alleges that the capital stock of The Ideal Laundry Company consisted of 250 shares of the par value of $100 each; that on January 11, 1910, the defendant entered into a written contract with plaintiff whereby defendant was to purchase 12$ shares of the stock of The Ideal Laundry Company for $5,500, which stock was owned by the plaintiff, and further agreed to purchase the remaining 124 shares of stock at the price of $50 per share; that the written contract did not provide any time within which said shares of stock were to be delivered, nor was there a place of delivery provided therein, but it was verbally agreed by the contracting parties that the stock should be delivered to and deposited in The National Bank of Commerce at Lorain, Ohio; that the 124 shares of stock were owned by various individuals in various parts of the country, which would require some time for plaintiff to obtain and have the same delivered, all of which was known to the defendant; that on February 1, 1910, in addition to the delivery and deposit at the bank of his own 126 shares, he had procured the delivery and deposit at the bank of 116 shares out of the remaining 124 shares of stock of said company; that of the remaining 8 shares 3 were owned by one Daniels, residing at Orlando, Florida, and 5 were owned by one Truby, residing in Chicago, Illinois; that on February 21, 1910, plaintiff notified the defendant of the deposit and delivery at said bank of all but 8 shares of the total number of shares of stock outstanding; that during this time defendant assisted plaintiff, by correspondence and otherwise, in the procurement of the delivery and deposit of these shares. Plaintiff further stated that on the 28th day of February, 1910, all of the 250 shares of stock were then delivered to and on deposit in said Bank of Commerce, of which fact the defendant was notified in writing; that on the 31st day of January, 1910, “and on the understanding between plaintiff and defendant as to the acquirement of the capital stock of said The Ideal Laundry Company, defendant went into possession of all the property and assets of said The Ideal Laundry Company and began operating said plant under the name of The Davis Laundry & Cleaning Company and continued in such possession and operation to and until the 16th day of February, 1910.” . Plaintiff alleged demand for payment of said shares of stock and the defendant refused to pay for the same, and he asked judgment for the purchase price.
    The defendant in its answer admitted the execution and delivery to plaintiff of a written agreement, which is as follows:
    “We agree to purchase 126 shares of Ideal Laundry stock for $5500.00, and the balance of 124 shares at $50.00 per share, from F. C. Whit-more. (Signed) The Davis Laundry Company, Per.-E. W. Sloan. 1-11-10.”
    After admitting the corporate existence of the two laundry companies and that the entire capital stock of The Ideal Laundry Company consisted of 250 shares, the defendant denied, generally, every other allegation in the petition, and alleged affirmatively that there was no consideration for the written memorandum.
    On the trial, in amplification of the facts pleaded, counsel for the plaintiff stated to the jury that it was the understanding of the contracting parties that if plaintiff could procure within 15 or 20 shares of the 126 outstanding shares that would be all that The Davis Laundry & Cleaning Company would require. He also stated that it was agreed that the stock should be deposited at the Bank of Commerce, which should hold it until the money was paid by the defendant; that the written agreement did not itself provide for the time or place where the stock should be delivered; that the defendant, on February IS or 17, áfter some two weeks’ possession and operation of the Ideal Laundry plant, withdrew from the contract and repudiated it and ordered their manager, who was in charge, to leave it, although informed at that time that the 8 outstanding shares would be available for delivery within a few days. As a part of his statement to the court and jury he said that he would offer in evidence the following letter, dated February 16, 1910, addressed by one of the officials of the company to the plaintiff:
    . “We wish to call your attention to the fact that over two months has elapsed since we agreed to purchase all of the shares of stock in The Ideal Laundry Company from you.
    “While the time was not fixed in the memorandum of agreement within which the stock should be delivered, we think that more than a reasonable time for delivery of this stock has elapsed, and this company is therefore now unwilling to purchase the stock of The Ideal Laundry Company as you have not tendered a delivery to us of all of the stock within a reasonable time.
    “Whatever possession has been taken by us of the property and business at Lorain, we wish to notify you that we now give up any such possession to you and the stockholders of The Ideal Laundry Company.”
    At the conclusion of this statement, acting under authority of Cornell v. Morrison, 87 Ohio St., 215, counsel for the defendant challenged the sufficiency of the statements made, and on motion of the defendant the case was withdrawn from the jury and judgment rendered against the plaintiff.
    Error was taken to the court of appeals, which reversed the judgment of the court of common pleas, and we are now asked to reverse the judgment of the court of appeals and affirm that of the common pleas court.
    
      Messrs. Howell, Roberts & Duncan, for plaintiff in error.
    
      Messrs. Cook, McGowan & Foote, for defendant in error.
   Jones, J.

The question presented by this record is whether plaintiff, upon the allegations of his petition and under the statements made by him in open court, stated sufficient facts upon which his case could go to the jury.

It would seem that the court of common pleas, in the colloquy that took place between the court and the counsel for plaintiff below, took the view that plaintiff could not recover because the written agreement did not bind the plaintiff to convey the stock to the defendant or fix the time and place for the delivery of the same. It is conceded by the record that the plaintiff did not sign the memorandum of agreement. The statement of counsel that he expected to prove a verbal arrangement by which the contract would be satisfied by the delivery of all but 15 or 20 of the outstanding 124 shares was wholly irrelevant. In this regard the memorandum is clear and definite and called for the delivery not only of the' 126 shares of stock owned by the plaintiff but the full balance of the 124 shares outstanding, and any statement made by counsel tending to show that a less number of shares would satisfy this obligation would be incompetent as proof upon the trial. Had the contracting parties, by memorandum, provided that the time or place of delivery should be made the essence of the contract it would have to be complied with. In the absence of stipulation, the time of delivery must be held to mean that delivery could be made of the stock within a reasonable time, and the place of delivery should be at the office of defendant.

It is contended by plaintiff in error that the contract is invalid because of a lack of both mutuality and consideration. The promise of the defendant to buy and the agreement of the plaintiff to deliver furnish that necessary consideration, one for the other. Under a memorandum of this character, so long as the contract remained executory and not accepted, the defendant had a right to withdraw the offer. However, after an acceptance the contractual obligations became mutual.

The chief contention of the plaintiff in error in this case is that there is a lack of mutuality because of the Ohio statute of frauds relating to the sale of personal property; that since the plaintiff did not sign the written memorandum as the person to be charged, there was no obligation upon his part to procure the stock, and that there was a lack of mutuality because, while the defendant was bound the plaintiff was not.

Section 8384 (1), General Code, provides: “A contract to sell or a sale of any goods or choses in action of the value of twenty-five hundred dollars or upwards shall not be enforceable by action unless the buyer shall accept part of the goods or choses in action so contracted to be sold, or sold, and actually receive them, * * * unless some note or memorandum in writing of the contract or sale be signed by the party to be charged or his agent in that behalf. * * *

“(3). There is an acceptance of goods within the meaning of this section when the buyer, either before or after delivery of the goods, expresses by words or conduct his assent to becoming the owner of those specific goods.”

Inasmuch as the plaintiff below did not sign the memorandum of agreement but verbally agreed to sell shares of corporate stock of more than the value of $2,500, it is not open to question but that the undertaking on his part fell within the statute of frauds relating to sales of personal property.

That sales of corporate ■ stock fall within the meaning of “goods, wares or merchandise” has been sustained by the weight of authority in the different jurisdictions of this country. 20 Cyc., page 244, and authorities cited.

These authorities all recognize the fact that sales of shares of stock in corporations have become such a large part of the commerce of this country that they must be. held to be included in the terms of “goods, wares and merchandise,” and by force of our own.statute, Section 8456 (1), General Code, “goods” are defined to “include all chattels personal other than things in action and money.”

The record in this case discloses that the buyer, through its officers, took charge of the kindred laundry company, its plant and all its assets, and operated the same for a period of about two weeks’ time or more; that while in the possession and operation of this plant, and at the time they repudiated the contract of purchase, they had knowledge of the fact that all but 8 of the 250 shares of stock were in the possession of the bank ready for delivery and that the remaining 8 shares would be available in a very short time.

Section 8384 (1), General Code, supra, provides that, verbal contracts “shall not be enforceable by action unless the buyer shall accept part of the goods or choses in action so contracted to be sold.” Subdivision 3 of that section provides that, “There is an acceptance of goods within the meaning of this section when the buyer, either before or after delivery of the goods, expresses by words or conduct his assent to becoming the owner of those specific goods.”

Under the facts stated it was for the jury to determine whether or not the acts and conduct of the defendant in the possession and operation of the plant were of such character as to show an acceptance under the contract of 242 shares of stock that had been deposited with the National Bank of Commerce for delivery to the defendant.

In the case of Ford v. Howgate, 106 Me., 517, a case similar in character came up for review. In that case the syllabus is: “A contract to sell corporate stock was taken outside the statute of frauds by the buyer entering upon the management of the corporate business as an owner.”

The question in that case was whether the possession by the defendant was sufficient to show an acceptance of the contract for the sale of unissued stock in a corporation. The evidence showed that the defendant went into the company’s shop and assisted in the business of the corporation for ten days. The court held that such possession was evidence justifying a finding that the contract had become executed, the court saying in the opinion: “And what more significant act could the defendant have done to evidence his ownership of the shares, and to show that the contract was executed, than to enter into the management of the business of the corporation as owner?”

In the absence of time stipulated in the agreement for the delivery of shares of stock, the plaintiff had a right to a reasonable time to procure such delivery. By its letter of February 16, 1910, the defendant undertook to say that they had waited a reasonable time for the delivery of this stock and repudiated the agreement. The question whether the time was a reasonable one or otherwise, at the time of repudiation, was a fact to be determined by the jury under all the circumstances of the case.

Plaintiff in error also contends that there is no allegation in the pleading or statement tending to show that the shares were properly indorsed and ready for transfer or that an offer was made to transfer them on the books of the corporation.

Section 8673-1, General Code, provides that title to shares of corporate stocks shall be transferred by delivery of the certificate indorsed in blank or to a specific person. Though the section was adopted subsequent to this transaction, it simply carried into statute law the legal principle theretofore prevailing; and if it appears upon the trial that these shares were so indorsed and ready for delivery the plaintiff has complied with all the requirements in that respect.

In view of what is said the contention that the place of delivery should have been designated in the memorandum, becomes academic. By reason of acceptance under a verbal arrangement, the place of delivery could likewise be agreed upon verbally. The place of delivery agreed upon was the Bank of Commerce, and the obligation to pay was concurrent with the obligation to deliver at that bank.

The allegation in the petition that all of said 250 shares of stock on February 10, 1910, were delivered to the Bank of Commerce in accordance with the provisions of the contract, was sufficient to sustain the sufficiency of that pleading.

The judgment of the court of appeals is affirmed and the case remanded to the common pleas court for further proceedings.

Judgment affirmed.

Nichols, C. J., Johnson, Donahue, Wanamaker, Newman and Matthias, JJ., concur.