Case Name: William E. Wamsley, Appellant, v. H. L. Horton & Company, Limited, Respondent
Court: New York Supreme Court, General Term
Jurisdiction: New York
Decision Date: 1894-04
Citations: 84 N.Y. Sup. Ct. 317
Docket Number: 
Parties: William E. Wamsley, Appellant, v. H. L. Horton & Company, Limited, Respondent.
Judges: Yan Brunt, P. <L, concurred.
Reporter: Supreme Court Reports (Hun)
Volume: 84
Pages: 317–324

Head Matter:
William E. Wamsley, Appellant, v. H. L. Horton & Company, Limited, Respondent.
Contract to sell what the vendor does not own — test as to intention — a recital in a contract of a non-enforcible option does not nullify the contract.
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, but • among the exceptions to such rule are agreements to sell something which at the time belongs to the buyer, or to sell property which cannot be the subject of private ownership.
The usual test as to whether there was an intent to contract is 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. (O’Brien, J., dissenting.)
In an action brought to recover damages caused by a failure to perform an agreement, it appeared that the plaintiff’s assignor had entered into an agreement with a firm by which the latter, in behalf of the stockholders of a corporation,, undertook to give the former an option for the purchase of all the stock of such corporation which the former in terms accepted. This writing was not enforcible by or against either party, one of the parties reserving the right to terminate it at pleasure and the other not being bound thereby.
Thereafter the plaintiff’s assignor entered into an agreement with the defendant, by which he bound himself to sell and deliver the stock of such corporation within a specified time to the defendant, who in turn agreed to form a corporation and take the stock at an agreed price therefor. The attempted option was recited in the second agreement which was under seal and recited a money consideration.
Held, that the recital of the attempted option did not operate to nullify that which otherwise would have been a perfectly valid agreement. (O’Brien, J., dissenting.)
Appeal by tbe plaintiff, William E. Wamsley, from an interlocutory judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of New York on the 24th day of November, 1893, upon the decision of the court rendered at the New York Special Term, and also from an order made at the New York Special Term and entered in' said clerk’s office on the 11th day of November, 1893, sustaining the defendant’s demurrer to the complaint.
Alexander 8. Bacon, for the appellant.
John Ii. Dos Bassos, for the respondent.

Opinion:
Parker, J.:
Plaintiff's assignor, Planders, and Stout & Douglass executed a writing in which the latter, in behalf of ail the stockholders of The Knapp, Stout & Oo. 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 enforcible 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 enforcible, entered into an agreement with the defendant by which he bound himself to sell and deliver the 4,000 shares of The Knapp, Stout & Oo. 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 & Oo. 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 enforcibie.
It has been said in a tentative way that the onxy 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 liave 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 io 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 ruie 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. (Pollock on Cont. 318-382.)
There was nothing in this cpntiact 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 which 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 had 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 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 should 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 assignor. It declares that plaintiff's assignor " performed all the obligations of 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.
Yan Brunt, P. <L, concurred.