Case Name: WAMSLEY v. H. L. HORTON & CO., Limited
Court: New York Supreme Court, General Term
Jurisdiction: New York
Decision Date: 1894-04-13
Citations: 28 N.Y.S. 423
Docket Number: 
Parties: WAMSLEY v. H. L. HORTON & CO., Limited.
Judges: 
Reporter: West's New York Supplement
Volume: 28
Pages: 423–428

Head Matter:
(77 Hun, 317.)
WAMSLEY v. H. L. HORTON & CO., Limited.
(Supreme Court, General Term, First Department.
April 13, 1894.)
1. Sale—Title or Seller—Option.
A contract of sale is not void because the seller’s only interest in the subject-matter is an unenforceable option to purchase, given to him by the owner. O’Brien, J., dissenting.
2. Action on Contract—Pleading.
Where a complaint alleges that defendant, for a valuable consideration, made, executed, and delivered the contract sued on, a demurrer cannot be sustained on the ground that defendant, a corporation, is not bound by the contract, inasmuch as its name appears to have been signed by a director, since the demurrer admits that defendant executed the contract.
Appeal from special term, New York county.
Action by William E. Wamsley against H. L. Horton & Co., Limited, to recover damages for breach of a written contract. From an order sustaining a demurrer to the complaint, plaintiff appeals. Reversed.
For former reports, see 23 N. Y. Supp. 85, and 24 N. Y. Supp. 1142.
Argued before VAN BRUNT, P. J., and O’BRIEN and PARKER, JJ.
Alexander S. Bacon, for appellant.
John R. Dos Passos, for respondent.

Opinion:
PARKER, J.
Plaintiff's assignor, Flanders, and Stout & Douglass executed a writing, in which the latter, in behalf of all the stockholders of the Knapp, Stout & Co. Company, pretended to give to the former an option for the purchase of all the stock of the corporation, aggregating 4,000 shares of $1,000 each, which he in terms accepted. This writing, which for convenience will be called an "option," was not enforceable by either party. Stout & Douglass reserved therein the right to terminate the option at any time if dissatisfied with the progress of Flanders in his negotiations for a sale, while Flanders was in no way bound by it. But Flanders,
apparently confident that the option was enforceable, entered into an agreement with the defendant by which he bound himself to sell and deliver the 4,000 shares of the Knapp, Stout & Co. Company, within a time specified, to defendant, who in turn agreed to form a corporation to take the stock, and pay the agreed price therefor, in the event that the representations of Flanders as to the gross and net income of the business and value of assets should be verified by them in the manner, provided in the agreement. This plaintiff, as assignee of Flanders, seeks through this action to recover against the defendants because of their failure to perform the agreement. The validity of the agreement is now challenged. It is urged that the recital of the alleged option between Flanders and Stout & Douglass, which was in reality of.no effect, operated to nullify that which otherwise would have been a perfectly valid agreement. This . harmful and unintended result, it is said, comes from the fact that by the appearance of the option in the contract H. L. Horton & Co. were apprised that Flanders was not the owner of the stock, and that the option under which he expected to be able to procure it was not enforceable. It has been said in a tentative way that the only consideration for the agreement was the option, and, that being void, the agreement was without support in that respect. But there is nothing in the suggestion. The agreement is under seal, and beyond that expressly recites a money consideration. We have, then, to meet the suggestion that, as both parties to the contract must be presumed to have known that Flanders could not have enforced the option, and therefore might not be able to deliver the stock which he contracted to sell, neither of them was bound by the agreement. No authority for such a proposition is cited, and it is difficult to conceive of any principle of law relating to contracts which tends to support it. It is a general rule of law that a man may contract for the sale of a specific thing which is not his own at the time. Among the exceptions to the rule are agreements to sell something which at the time belongs to the buyer, or property which cannot be the subject of private ownership at all, such as public buildings, or a ship in the navy. Performance of such an agreement is impossible, either by law or in itself, and therefore it becomes void. The ground on which it is put is that the impossible nature of the promise shows that there was no real intention of contracting, and therefore no real agreement; the usual test being, not whether the thing contracted to be done is absolutely impossible, but whether reasonable men in the position of the parties must treat it as impossible. Pol. Cont. 378-382. There was nothing in this contract which suggests that performance on Flanders' part would be impossible, or that the parties so understood it, and therefore had no intention of contracting; or that would authorize the court to treat it as a contract impossible of performance. On the contrary, the option indicated that performance by Flanders would be possible, and if, for any reason, it should have turned out otherwise, the validity of the contract would not have been affected, the remedy of the other party being an action for damages because of the breach.
It is further urged in support of the order sustaining the demurrer that the defendant is not bound by the contract pleaded, inasmuch as the name of the corporation appears to have been signed by a director. This position is not well taken, because the complaint alleges that the defendant, for a valuable consideration, made, executed, and delivered a contract to Flanders, and the demurrer necessarily admits the fact to be as alleged. Respondent makes the further point that the contract pleaded provides that, "if such statements [meaning statements vouched for by Flanders in the agreement] be substantially incorrect, this agreement shall cease and determine, and be of no effect," and insists that plaintiff has not alleged that the statements were substantially true and correct. Without passing on the question whether plaintiff should bear the burden of establishing the truth of the "statements" in view of that provision of the contract wherein the purchaser . covenanted to send an expert, within five weeks, to examine the books of the Knapp, Stout & Co. Company, and the promise of the seller that, if the examination of the books and assets by the expert should not determine his statements to be substantially correct, then the vendee to have the right to decline to proceed further in the matter, we cite a paragraph in the complaint which the respondent has apparently overlooked, in which the plaintiff makes such allegations as entitle him to prove full performance on the part of his assignors. It declares that plaintiff's assignee "performed all the obligations of the said contract on his part, and was at all times able, ready, and willing to carry out all the conditions thereof, and frequently offered to do so."
The order sustaining the demurrer and the interlocutory judgment entered thereon should be reversed, with costs; the demxirrer overrxxled; and defendant allowed to answer within 20 days on payment of costs.
YAK BRUNT, P. J., concurs.