Case ID: ny-super-ct_26/html/0420-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court, Monell, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Charles Spear, plaintiff and respondent, vs. Julius Hart, defendant and appellant.
    1. Under an allegation in a complaint that on a certain day the plaintiff and defendant entered into an agreement, signed by the defendant, setting forth its terms,-and an admission in the answer, that the defendant “ signed and executed a contract for the sale, ,&c. as alleged in the complaint;" no further proof of a contract is necessary. Its introduction on the trial becomes, therefore, supererogatory.
    2. If, in such case, the plaintiff rested his case without producing any written agreement, no question could arise, under the statute of frauds. The averment that the parties had made an agreement, was a sufficient averment of a valid contract.
    3. The statute of frauds does not require that both parties should sign one paper containing the contract; but only that each party must subscribe it. The subscription may be upon two separate papers, by the parties separately.
    3. Upon a sale of stock, deliverable at a future day, at the option of the seller, a dividend declared before the sale, but not payable until after the day fixed for the delivery of the stock, belongs to the seller, and does not pass to the buyer, under the contract.
    5. Custom may be incorporated into a contract, and become a part of it, where it appears, on its face or by its nature, to have been the intention of the parties that it should be, and when it can fairly be inferred therefrom that the parties contracted with reference to it.
    6. So custom may control or vary the meaning of words, and, when long established, may add to the terms of a contract. But under a contract to sell 100 shares of stock, a custom that something more passes to the purchaser, cannot he allowed. It would he an addition to the agreement, and not merely an explanation or interpretation of it.
    (Before Barbour, Monell and McCunn, JJ.)
    Heard November 16, 1865;
    decided December 30, 1865.
    Appeal from a judgment entered upon the report of a referee.
    
      The action was to recover damages for a breach of contract to deliver 100 shares of the stock of the Chicago and Rock Island Railroad Company, deliverable, at seller’s option, in ten days. The contract was made March 28, 1865, and matured on the 7th of April, on which day the plaintiff demanded the stock of the defendant. The latter refused to deliver. On the 23d of March, the railroad company declared a dividend of five per cent, payable on the 10th of April, and closed their transfer books on the 31st of March.
    A motion was made for a nonsuit, which was denied, and the defendant excepted. The referee gave judgment for the plaintiff for the difference between the contract price and the value of the stock on the day the stock was demanded, and also for the five per cent dividend. The defendant excepted to the recovery of the dividend.
    E. P. Clark, for the appellant.
    I. The contract not being signed by .both parties to it, is within the statute of frauds, and void, and a nonsuit should have been granted. (Justice v. Lang, 2 Rob. 333. See also opin. of Hoyt, J. in the case of Dykers v. Townsend, 24 N. Y. Rep. 59; Brabin v. Hyde, 32 id. 519.) To avoid this objection, apparently so fatal, the counsel for the plaintiff relies upon chap. 134 of the Session Laws of 1858, which, in sub- « stance, provides that “ no contract for the sale or transfer of stock shall be void for the want of consideration, or because the vendor, at the time of making such contract, is not the owner or possessor of the stock sold.” This statute, the learned counsel claims, dispenses with the necessity of a consideration in stock contracts, and that the reason why this court decided, in Justice v. Lang, that a contract is not binding unless signed by both parties, was because of want of consideration. Therefore, such decision has no application to the contract in suit.
    1. If it can be said that the act does away with the necessity of a consideration in that class of contracts, it is void as an act against equity, justice and natural principles. It virtually takes A.’s property and gives it to B. without consideration. Such an act is contrary to first principles of right'. When an act of the legislature violates the natural, unalienable rights of man, the same is void, even though there is nothing in the organic law that forbids it. (4 Hill, 156. 18 Wend: 56. Vattel, b. 1, ch. 4, § 51. Lock’s works, vol. 5, ch. 11, p. 416. And see the opinion of Justice Chase, in the case of Colder v. Bull, 3 Dallas, 386 ; 16 N. Y. Bep. 374, 393.)
    
      2. If it is held that the act is valid, and dispenses with a consideration, there is no pretense that it undertakes to except stock contracts from the application of the statute of frauds. Such contracts must be in writing, and signed by the parties to it, the same as any other contract. The court, in Justice v. Lang, did not rest its decision (that a contract not signed by both parties was void) upon the sole ground of a want of consideration. It also held it void because it was within the statute of frauds ; that the statute of frauds required both parties to sign it; and a contract executed by only one party was an incomplete and unfinished contract. (See Brabin v.Hyde, 32 N. Y. Rep. 519.) The language of the statute is : “ signed by the parties (not party) to be charged.”
    II. The learned referee committed an error in including in the measure of damages the five per cent dividend declared and paid before the stock was (by the terms of the contract) to be delivered. The contract was an executory one—not a sale in presentí—-and all the increase or accretions of the chattel belonged to the vendor. The defendant would have performed all the conditions and complied with all the covenants of his contract, had he (on the day when the delivery was to have been made) tendered to the plaintiff 100 shares of the Rock Island Railroad Company stock, unaccompanied with the dividends. The custom of brokers cannot change the law on that subject. (Wheeler v. Newbuold, 16 N. Y. Rep. 392. Dykers v. Allen, 7 Hill, 497. 25 Wend. 673. 8 N. Y. Rep. 190.)
    
      
      A. J. Vanderpoel, for the respondent.
    I. The motion for a nonsuit was properly overruled.
    1. The answer admitted the contract, so that it was not necessary to show that there was a written contract, under the statute of frauds.
    2. But it was not necessary that the contract for the sale of stock should be subscribed by the purchaser, to comply with the provisions of the statute of frauds. (Fenly v. Stewart, 5 Sandf. 101. Worrall v. Munn, 1 Seld. 229, 246. Roget v. Merritt, 2 Caines, 117. 2 Parsons on Contracts, 1st ed. 290. Davis v. Shields, 26 Wend. 341.)
    3. The contract on its face showed sufficient consideration ; but if it did not, the act of 1858, (eh. 134, p.' 251,) says the contract shall not be void, nor voidable, for want of any consideration.
    4. It was not necessary that the plaintiff should prove that he was ready and willing, and had the ability, to perform on the 7th of April, The defendant declared, when demand was made, his inability to perform the contract. (Crist v. Armour, 34 Barb. 378.)
    5. The evidence established the readiness, and willingness, and ability to pay. The money was tendered so soon as the defendant intimated an ability to deliver. On the 7th he said he could not, but would on the next day. • He said he could not give it; the following day was Sunday, and on Monday, the 10th, the tender was formally made.
    II. The correct rule of damages was adopted. It was the difference in value between the contract price and the price on the 7th of April. He refused to give us the advance subsequent to April 7.
    III. The plaintiff bought the stock and was entitled to the dividend, if the contract was performed. It formed, therefore, a part of the damages necessary to indemnify him for his loss.
   By the Court, Monell, J.

The motion for a nonsuit, "on the ground that the contract was void as being within the statute of frauds, was properly overruled»

The complaint alleged that “ on the 28th of Match, 1865, the plaintiff and defendant entered into an agreement, signed by the defendant, whereby," &c., and the answer admitted-that he (the defendant) signed and executed a contract for the sale, &c. as alleged in the complaint.” Under this allegation and admission, no further proof of a contract was necessary, and its Introduction on the trial was superogatory. It was -sufficiently admitted by the answer, and the plaintiff could safely have rested his case, without producing the written "agreement. In that case no question could have arisen under the statute of frauds. The averment that the parties had made ah agreement, was a sufficient averment of a valid contract.

• But the introduction, at the trial, of the paper signed by the defendant only, did not help the defendant to raise the question. There is no averment in the answer that the contract was not signed by both parties, nor was there any proof, on the trial, that the plaintiff had not signed and delivered a similar -paper to the defendant. The statute does not require that both parties shall sign one paper containing the contract, but each party must subscribe, and the subscription may be upon separate papers. An offer and acceptance, and bought and sold notes, are familiar illustrations of this species of contract. The seller signs a paper stating that he has sold to the purchaser, and the purchaser signs another paper, stating that he has bought of the seller. Such contracts are not affected by the statute of frauds.

From any thing appearing to the contrary, the paper introduced in evidence was not a “sold note,” the “bought note ” being in the defendant’s possession.

We think,-however, the referee erred in allowing the dividend as part of the damages. It had been declared before the sale, and, although .not payable until after the day fixed for the delivery of the stock,'belonged to the defendant, and did not pass to the plaintiff under the contract. Dividends are not afl. incident to stock, so as to pass with the" stock. Unlike interest,- they are not earned by the money represented in the stock, but by the corporation.; and are divided among the shareholders, and may he sold or assigned without parting with the stock.

Some evidence was admitted of a custom of brokers, by which dividends, declared but not paid, belong to the purchaser. I do not think such a custom could alter well settled principles applicable to the law of contracts.

Custom may be incorporated with a contract and become a part of it, where it appears to have been the intention of the parties that it should be, and where it can fairly be inferred that the parties contracted with reference to it. So custom may control or vary the meaning of words ; and when long established, may add to the terms of a contract. But under' a contract to sell 100 shares of stock, a custom that something more passes to the purchaser, cannot be allowed. It varies the agreement by adding to it, and it would not be merely an explanation or interpretation of it.

The cases of Dykers v. Allen, (7 Hill, 497;) Bowen v. Newell, (8 N. Y. Rep. 190,) and Wheeler v. Newbold, (16 N. Y. Rep. 392,) are authorities against the admissibility of such a custom.

The judgment must be reversed, and a new trial ordered, with costs to the appellant to abide the event; unless the plaintiff stipulates in writing, within ten days from the entry of this order, to deduct from the judgment $507.36, being the amount of the dividend, and interest thereon. Upon so stipulating, the judgment, as reduced, to be affirmed, but without costs.