Case Name: William E. Wamsley, App'lt, v. H. L. Horton & Company, Limited, Resp't
Court: New York Supreme Court, General Term
Jurisdiction: New York
Decision Date: 1894-04
Citations: 59 N.Y. St. Rep. 373
Docket Number: 
Parties: William E. Wamsley, App’lt, v. H. L. Horton & Company, Limited, Resp’t.
Judges: 
Reporter: New York State Reporter
Volume: 59
Pages: 373–378

Head Matter:
William E. Wamsley, App’lt, v. H. L. Horton & Company, Limited, Resp’t.
(Supreme Court, General Term, First Department,
Filed April, 1894.)
1. Contract—Option—Validity.
A contract for the purchase of stock, which recites an arrangement in the nature of an option held by the vendor, is binding upon the vendee, though both parties knew that the option was unenforceable and that the vendor might not be able to deliver the stock which he contracted to sell.
2. Same—Impossible.
There is nothing, in such contract, which suggests that performance on the vendor’s part would be impossible.
3. Pleading—Demurrer.
Where a complaint in an action against a corporation alleges that defendant, for a valuable consideration, made, executed and delivered a contract, a demurrer necessarily admits such fact as alleged, though it may appear on the face of the pleading that the name of the corporation was signed to the contract by a director.
4. Same—Performance.
A general averment of performance on the plaintiff’s part is sufficient as against the objection that the complaint should have affirmatively alleged the truth of certain statements in the agreement, upon the substantial truth of which its validity was conditioned.
Appeal from order and interlocutory judgment sustaining demurrer to complaint. <
Alexander S. Bacon, for app’lt; John B. Dos Passos, for resp’t.

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 four thousand shares of one thousand dollars 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 defendants by which he bound himself to sell and deliver the four thousand shares of the Knapp, Stout & Co. Company, within a time specified to defendants, 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 nulify 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 & Company 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 were 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 impóssible. Pollock on. Contracts, 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 nó'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 intibrrect, 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 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 it the plaintiff makes such allegations as entitle him to prove full performance on the part of his assignors. It declares that plaintiff's assignor " 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 demurrer overruled, and defendant allowed to answer within twenty days, on payment of costs.
Van Brunt, P.J., concurs.