CONTRACT — CORPORATION—SALES.

[Lucas Circuit Court,

February 11, 1898.]

King, Haynes and Parker, JJ.

#### * James M. Ashley, Jr., v. Edwin C. Walker.

1. Sale of Stock on Refusal of Vendee to Accept the Same.

In a contract for the sale of share of stock on refusal of the vendee to accept the stock, the vendor may sell the same for the best obtainable price, and if the proceeds of such sale are less than the amount named in such contract, together with the expense of sale, he may recover of the vendee such difference.

2. Such Sale to be Made within a Reasonable Time after Refusal by Vendee.

Such a sale shall be fairly made and within a reasonable time after the refusal of the vendee to accept the stock.

3. Whether made Within a Reasonable Time is a Question of Fact for the Jury.

Whether the time when such sale was made was within a reasonable time after the breach of the contract by the vendee is a question of fact to be submitted fo the jury, unless the undisputed facts and inferences reasonably drawn therefrom clearly show the time to be either reasonable or the contrary, when the question becomes one of law for the court.

*

This decision, as to length of time, is referred to with approval hy the same court in Va. Arsdale v. Brown, 8 Circ, Dec., 488, 491.

King, J.

This action was brought in the court of common pleas by Edwin C. Walker, against James M. Ashley, Jr., setting forth that the defendant, *286Asliley, on or about February 8, 1898, entered into an agreement in writing of which this is a copy:

> February 8, 1893.

> Mr. William S. Calhoun :

> Dear Sir : For value received you may deliver to me at any time within four (4) months from date two thousand shares (2000) Toledo, Ann Arbor & Nor. Mich, stock, at thirty-nine dollars a share. An indenture on back*

> (Signed) J. M. Ashley, Jr.

On the back of said paper is written the following:

> February 8, 1893.

> This put becomes operative and in full force and effect in blocks of 500 as the numbers of the certificates under this put are given to me and is good only for the certificates so enumerated to the full number of 2000 shares.

> (Signed) J. M. Ashley, Jr.

The petition also averred that subsequent to the execution of this put Calhoun had purchased one thousand shares of the stock of this railroad, within the period named in the contract, to-wit, four months, and that on April 26, 1893, he had duly tendered the stock to the defendant, who had declined to receive it and refused to pay for it. That thereafter the stock had been sold by him on account of defendant, at the best prices which could be obtained therefor which was very much less than the sum named in the contract, of $39 per share. That he had thereby sustained damages in the sum of $25,525.00, for which he asks judgment with interest thereon from April 26, 1893,

To this petition an answer was filed denying that on the day named the defendant entered into a contract with William S. Calhoun like the one set up in the petition, but admitting that a certain agreement had been made, without setting forth what it, was, but claiming that. the plaintiff should, on the trial, produce proof of his agreement. Then there were certain denials, denying that he purchased the stock which it was claimed he had purchased and denying that he had transferred his title in it to the plaintiff Fdwin C. Walker. Then there was a cross-petition.

This action came on for trial in the court of common pleas upon these issues, evidence was introduced, after which the court charged the jury to return a verdict for the plaintiff for the amount claimed in the petition. Motion for a new trial was made and overruled, and it is sought here to reverse the judgment rendered upon that verdict, because it is contrary to the law and the evidence and because it is alleged that the court committed error at the trial, in instructing the jury to return a verdict for the pláintiff.

The first reason assigned by counsel for plaintiff in error for the reversal of this judgment is: That the contract sued upon was not binding upon the plaintiff, but only binding — if on anybody — upon the defendant: in other words, that it is a unilateral contract. The agreement was that the defendant, within four months, was to pay $39 a share for 2000 shares of stock that should be furnished to him by Calhoun, but that Calhoun did not agree that he would furnish 2000 shares, or any other number of shares, within that time.

We do not look upon that contract with the view taken of it bv counsel for plaintiff in error. In the first place it will be borne in mind *287that the contract recites a consideration : “For a valuable consideration, I agree to take and pay for 2000 shares of this stock to be sold and delivered to me by Mr. Calhoun, if the same be delivered within four months and in blocks of not less than 500 shares at a time.” So that the contract itself imports a consideration for the option.

Again we think it would be binding when accepted; and that an acceptance is shown when the person named in the contract complied with its terms, had purchased and continued to offer to Mr. Ashley the stock named in the contract, or a part thereof, in blocks of not less than 500 shares.

A text book cited is Clark on Contracts, pages 168-9:

> “In such a case, however, according to better opinion, as we have seen in treating of offer and acceptance, the promisor is in the position of one who has made a continuing offer, which though it may be withdrawn before anything is done by the promisee, will become binding when it is accepted by him, either by giving the contemplated promise in return, or by doing the acts contemplated. In giving the promise or otherwise supplying the consideration, he supplies the element of mutuality. If, therefore, a person promises to sell such goods as another may order, or to sell land if another shall choose to buy it, and before his order is withdrawn-the other orders goods, or agrees to buy the land the promisor is bound to sell at the price named. ”

And one or two authorities I will briefly refer to: 70 N. Y., 202, is a case almost like the one before the court.

> “A contract whereby A., for a valuable consideration, agrees to purchase of B, gold coin at a specified price within a specified time, B having the option to deliver or not, is not upon its face a wager contract within the meaning of the statutory provision declaring such contracts void.”

They do not there discuss the question of mutuality, but they decide that the contract was binding upon the purchase and offer of the coin.

So in 71 N. Y., 420, is a case similar in point:

> “An agreement for a valuable consideration by A, to purchase from or sell to B., at the option of the latter, a certain number of shares of stock within a limited time at a specified price, is not, *per se*a gambling contract. An illegal intent will not be presumed; and in the absence of proof that the parties were merely speculating upon the fluctuations in the price of the stock without any intent that A should deliver or accept, but simply should pay difference, the contract is valid and may be enforced.”

In that case it seems that the objection was that it was a gambling contract. That objection is not urged to this contract. But the stock itself was to be sold provided that Calhoun should, within the time named, purchase and deliver, or tender to the purchaser, the stock in question, in the amounts named; so there is no element of gambling in the contract, and these authorities are to the effect that contracts precisely like it would be binding. No question was raised in tho-o cases that the contract was not mutual.

In the second place it is urged that the court in instructing the jury to return a verdict for the amount claimed in plaintiff's petition, established a rule of damages that is incorrect.

In effect the court held that the rule of damages in the case at bar was the amount of the difference between the price named in the contract and the amount which had been received for the stock upon a sale *288made by Calhoun, some days or weeks afterwards; and it is contended that the true rule should be the difference between the amount named in the contract and the value of the stock at the time and place when it was tendered or offered.

It appears plainly from the evidence that on the day when this stock was tendered in was worth substantially the price named in the contract —$39 per share. It appears also from the evidence — at least Mr. Calhoun, testifying for the plaintiff, says that he retained the stock in his possession until about May 19 — between the 19th and the 25th of May —(the tender being made on the 26th of April) and between the 19th and. 25th he sold this stock in the stock market in New York, at the Exchange, at public sale; that is, it was public to the persons who were members of the stock exchange, and that he obtained the best price that could be got on that day, which was about $11 or $11.50 per share, very much less than the price which ruled on the 26th of April; so that, if the measure of damages be that claimed by the plaintiff in error, the damages to be awarded to the plaintiff below would be scarcely more than nominal; while, if the rule adopted by the court below was correct, the rule of damages would be that upon which the jury found. Taking Mr. Calhoun’s testimony as a basis, there is no question but what the loss was correctly stated. We think the court below adopted the correct rule upon that subject, and I will refer briefly to two or three authorities upon that question :

The case in 70 N. Y., 13, is a case holding that rule of damages.

In 140 N. Y., 70, is another case. I read from the syllabus:.

> “ A vendor of personal property not delivered, has three remedies against the vendee in default: he may store the property for the buyer and sue for the purchase price ; he may sell the property as agent for the vendee and recover any deficiency resulting, or he may keep the property as his own and recover the difference between the contract and the market price at the time and place of delivery.”

In Benjamin on Sales (VI Ed., p. 774), the rule is stated thus

> “ The vendor’s remedy, after a resale made in the absence of an express reservation of that right, is *assumpsit*on the original contract, which was not rescinded by the resale. And in this action he may recover as damages the actual loss on the resale composed of the difference in price and expenses, or he may refuse to give credit for the proceeds oí the resale and claim the whole price, leaving the buyer to a counter-claim for damages of the resale.”

On page 775, in an “ American Note ” it is stated:

> “ The right of resale on the default of the buyer to make payment, and to recover the difference between the proceeds and the original contract price, is universally established in this country.” (Citing numerous authorities.)

> “ In such sales the vendor acts as agent for the vendee, as the title is not ordinarily retransferred to him by the mere default of the vendee in making the stipulated payment.”

Then among the authorities which are cited, are: 70 N. Y., 13; 21 Wis., 562, and others; citing numerous cases. These áuthorities say:

> “It is not necessary that the sale should have been made at the earliest possible moment after the default is known, even though the article be falling in market.”

> *289“ Notice to the buyer of the time and place of resale is usual, and is important as tending to prove the sale a fair one; but it is not absolutely necessary in all cases that such notice should have been given.”

> “If the resale be fairly made, especially if at public auction, the amount thus obtained is considered as a fair test of the market value, and the difference between the amount thus received and the original contract price is therefore the true standard of the vendor’s damages.”

And a case is cited in 18 Grattan, 785, which sustains the same general doctrine. These authorities would therefore bear out, we think,the rule held by the court below when it undertook to instruct the jury in this case that the measure of damages was the amount named in the plaintiffs petition ; but these authorities go a trifle further than that. Cases which I have referred to and did not read hold that if the vendor or promissor shall undertake to act as the agent of the vendee and resell the property, he must do so within a reasonable time; and it is held in one of these New York cases that a delay of two months was not unreasonable. In the case which I have referred to — 18 Grattan 785 — it was held that a delay of five months was not unreasonable.

The plaintiff in error, however, claims that that question should have been submitted to the jury, that it. was for their determination. We had occasion to discuss that question in the case of Gladwell v. Holcomb, et al., 7 Ohio Circuit Decisions, 369. In that opinion the American & English Encyclopedia of Daw is referred to, where it is said, on page 641, vol. 19:

> “ On principle it would appear that if a statute or any positive rule of law prescribes the doing of an act within a reasonable time, it is the province of the court in construing such law, to declare whether a given time is, within the intent or meaning of the law, a reasonable time. So in the interpretation of a written instrument specifying a reasonable time, the question what is such time, is one for the court to answer, after considering the terms of the instrument and the intent of the parties. But an important qualification to both of the above principles is to be noted. If the question as to what is a reasonable time is not resolved expressly or impliedly by the rule of law, or by the writing which is under consideration, so that the judge in deciding the question would have no legal ground, but merely his individual ideas to go upon; and especially if, in addition, the question depends in the individual case upon peculiar, numerous or complicated circumstances, — the reasonableness of the time becomes a question for the jury, whose province it is, rather than that of the judge, to say, in view of all the facts of the case, whether or not the time in question is reasonable in the sense of being in accordance with the course of business and the ordinary transactions of life. It has, however, been said that the time in question may be so short or so long that the court will declare it, as a matter of law, to be reasonable or unreasonable.”

And under the latter proposition there is cited in the Encyclopedia quite a number of cases which seem to sustain the doctrine there laid down. And in line with the proposition above as to submission to the jury, there are a great many cases cited in the Encyclopedia, and among them the case of Acton v. Knowles, 14 O. S., 18, which is the only one I care to refer to. This was a controversy between execution creditors, and the question was whether an officer holding an execution and levied upon the same had unreasonably delayed to sell the property so tha*. the *290creditor in that execution had thereby lost his priority. The court say, in the second proposition of the syllabi, (p. 18):

> “ The question whether the delay, if any, was reasonable or unreasonable, depends on all the circumstances surrounding the parties and the property seized in execution, and is, peculiarly, a question for the jury, under the instructions of the court.”

Now these authorities would seem, perhaps, to be opposed to the rule which was stated in the case cited by this court, but we think they are not: they only apply to different cases, as we undertake to say there, that we think it a proper rule where the time is clearly either reasonable or unreasonable, it is the duty of the court so to determine, just as it would be the duty of the court in action based upon negligence, said to be a mixed question of law and of fact and one peculiarly for the jury, yet where the acts were such that'any reasonable man would say that they were the exercise of ordinary care, it is the duty of the court to say so or where the acts were such that a reasonable-minded man would say it was negligence, it would be the duty of the court to say so, but in anjease of doubt or where minds might difier, it has been held by the Supreme Court that it is a question for the jury. In the Gladwell case before the court at that time, there was no question made that, if the rule of law was that reasonable time should be given, that that reasonable time had in that case been given — which was a notice to leave the premises— the contention being that the law was that the common law rule should prevail. The court held that the justice of the peace had not erred in saying that the time named (four months) was a reasonable time. But, in this case, the facts and circumstances are very different. In this case it appears that on the day when this tender was made this stock was substantially worth the price named in the contract. It fell on that day several dollars per share, and some days later it raised, and then again it fell and seemed to continue to fall until about the 19th or 20th of May it had fallen to about eleven dollars per share and then Mr. Calhoun put it upon the market and sold it, claiming here, as he does, that he sold it for Mr. Ashley, the defendant.

Now, we think whether that was done within a reasonable time or not, in view of all the circumstances of the cae, in view of the condition of the market, in view of the character of the stock, in view of what was the condition of the railroad of which this was the stock, that the whole question should have been submitted to the jury to determine whether that sale was made within a reasonable time. Again, it appears-in this evidence, by the testimony of Calhoun and of another individual who was present with him, that they made a tender of this stock on the 26th day of April and that Mr. Ashley refused to receive it; that on the-following day they returned with the stock and presented it to Mr. Ashley and he again refhsed to receive it. They do not either of them testify to-any conditions attached by Mr. Ashley to his refusal on either day. Their testimony was taken by deposition and they were not present at ^he trial. On the trial of the case Mr. Ashley testified that Calhoun tendered him the stock on the day named and he refused to receive it, claiming that it was the custom or rule of the stock exchange that he should have twenty-four hours within which to accept the stock — in other words — twenty-four hours within which to get ready to pay for it — that there was some conversation about it and the men went away. He took the numbers of the stock and thereupon followed them and they went directly to the stock exchange, to the floor thereof, and the same *291man who had offered him a thousand shares put up the thousand shares for sale and sold it immediately for $38.50 per share. That on the next day he came back with another thousand shares of stock. On cross-examination Mr. Ashlej^ says the stock brought to him on the second day was the same stock which was brought on the first day. It is not clear, that is from that testimony, that Mr. Ashley meant to say that he brought the same identical certificates on the second day that he brought him on the first day. We think that as it appears here that Mr. Calhoun himself was the owner of only a thousand shares, which he bought for the purpose of fulfilling his contract, that he must have kept his tender good and must have sold the identical stock in May that he tendered on the 26th of April. He could not tender this stock and then turn that over to the broker and tell him to sell it and then 'borrow some more stock and go back and make a new tender. It was suggested that it made no difference whether that was the same stock or not, but we think it does. If he were a general stock broker and had a large amount of this stock and he had offered Mr. Ashley a thousand shares and Mr.. Ashley had not accepted it and he had gone away and then sold perhaps the precise thousand shares, but had kept the tender good for a thousand; shares, perhaps it might make no difference;. but Mr. Calhoun was not a stock broker and he did not himself, individually, offer this stock for sale —it was offered by a stock broker, by an agent named Taylor, who had access to the floor of the stock exchange, and Mr. Calhoun was not in" that business. He had entered into these negotiations perhaps to make a little money and to help Mr. Ashley, so that if his thousand shares of stock was actually sold on the day he made that tender, he must stand by the price received for it. There is evidence to indicate that there was a dispute on this question, and that should have been submitted to the jury — therefore this judgment will be reversed and the case remanded for a new trial.

*C. S.*Ashley, for plaintiff in error.

*Scribner*& Waite, for defendant in error.