Case ID: misc_40/html/0107-01.html
Source: Caselaw Access Project
Author: {"author": "Clarke, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

William E. Nichols and David B. Helm, Composing the Firm of William E. Nichols & Co., Plaintiffs, v. George C. Clark, Louis C. Clark, David Crawford Clark, George Blagden, Jr., and Donald G. Geddes, Composing the Firm of Clark, Dodge & Co., Defendants.
    (Supreme Court, New York Trial Term,
    February, 1903.)
    Statute of Frauds — Acceptance and receipt of shares of stock — Delivery.
    Transaction in shares of stock are within the Statute of Frauds. An oral contract by which stock brokers sell and agree to deliver three days later forty shares of a stock, which they then have, is void under the statute and not enforeible by the buyer where there was no note or memorandum of tbe contract, nor at the time of the-making of it any payment of any part of the price, or any delivery actual or constructive — an act necessary to an acceptance and receipt by the buyer.
    Action for damages.
    James R. Ely, for plaintiffs.
    Shearman & Sterling (John A. Garver, of counsel), for defendants.
   Clarke, J.

Action to recover damages for a breach of contract, for the purchase and sale of forty shares of stock of the Mercantile National Bank. Motion to dismiss the complaint upon the opening upon the ground that the alleged contract was void under the Statute of Frauds. Upon this motion the facts must be conceded to be true as follows: Plaintiffs are stockbrokers, not. members o'f any stock exchange. Defendants are stockbrokers and members of the New York Stock Exchange. On the 22d of August, 1902, one of the employees bf plaintiffs had a conversation over the telephone with an employee of the defendants, in which he asked what price defendants were putting on Mercantile National Bank stock. Defendants answered 328. Plaintiffs replied: “All right; we will take forty shares at 328.” Defendants said: “We will send that stock into you .to-day.” Plaintiffs replied: “Wait a minute; we do not want it cash; we would rather have it Monday regular.” Defendants said: “All right, Nichols; we will carry this stock until Monday if you will pay the interest,” and plaintiffs replied: “All right, that is satisfactory to us.” Subsequently plaintiffs sent an employee with a comparison ticket to defendants to make a comparison, with respect to said transaction, but defendants refused to compare, claiming there had been a mistake and that they had never sold plaintiffs said stock. The particulars of said mistake are immaterial to this discussion. None of the stock was physically delivered. On the twenty-fifth of August plaintiffs made a demand for forty shares and tendered $13,126.56 in payment therefor, being the purchase price for said shares at $328 a share, together with interest from the twenty-second day of August to the twenty-fifth thereof, inclasive, said last date being the Monday referred to in said conversation. Defendants refused to deliver the stock and to accept the money tendered. Plaintiffs having sold forty shares of Mercantile Bank stock after the making of the contract to purchase from defendants, to make their contract good subsequently and on the twenty-seventh of August purchased forty shares at $360, the lowest price it could then be bought, and seek here to recover the difference, $1,273.44, as their damages. It stands conceded that no part of the purchase price was paid at the time of the making of the contract, that no note or memorandum in writing signed by the party to be charged was made, and that no part of the stock was physically delivered. Plaintiffs claim that the transaction was not within the statute in that there was a constructive delivery. It is well settled in this State that transactions in shares of stock are within the Statute of Frauds. Hinchman v. Lincoln, 124 U. S. 38, and cases therein cited. Therefore, no note or memorandum in writing having been made and no part of the purchase price having been paid, the inquiry is confined to whether the buyer “ accepted and received” said shares — that is, did the defendants deliver the same to the buyer? The case cited in the Supreme Court of the United States was on appeal from the United States Circuit Court in this district, involved the interpretation of the ¡New York statute, and cited and followed the ¡New York eases. In that case there had been an actual manual delivery of the stock into the hands of a third person to be delivered to the purchaser on payment of the purchase consideration. The following propositions were cited with approval: “To satisfy the statute there must be a delivery by the vendor with an intention of vesting the right of possession in the vendee, and there must be an actual acceptance by the latter with the intent of taking possession as owner. It can only be satisfied by something done subsequent to the sale unequivocally indicating the mutual intentions of the parties. Mere words are not sufficient. The acts of the parties must be of such a character as to unequivocally place the property within the power and under the exclusive dominion of the buyer. This is the doctrine of those cases that have carried the principle of constructive delivery to the utmost limit. So long as the seller preserves his control over the goods so as to retain his lien, he prevents the vendee from accepting and receiving them as his own within the meaning of the statute. The test for determining whether there has been an actual receipt by the purchaser has been to inquire whether the vendor has lost his lien. Receipt implies delivery and it is plain that so long as vendor has not delivered there can be no actual receipt by vendee.” In the. case at bar there was no sale of any specific forty shares. All that the defendants had to do was to be ready to deliver on the twenty-fifth any forty shares of said bank stock. Though they had forty shares in their possession on the twenty-second, in the meanwhile they retained them and might have sold or pledged those forty, provided they produced the same number on the delivery day. The price not having been paid they retained with the possession their lien. They did no acts subsequent to the sale showing a change of ownership — quite the contrary. “Mere words are not enough,” and there were no words, even. They refused to-compare; they said they had not sold; they declared they would not deliver. What subsequent acts or words can be tortured' into proof of change of possession, there being no actual change hy fact or word, or entry, even? There was a contract for a future delivery on a day fixed of forty shares of stock at $328, plus interest. That is a contract clearly within the statute, and as there was no payment, no note or memorandum, no delivery, and, therefore, no receipt and acceptance, said contract was void. Complaint dismissed. Motion for a new trial denied; thirty days’ stay and thirty days to make a case.

Judgment accordingly.