Case Name: Albert S. Gallup, Plaintiff, v. Susie Price Sterling, E. K. Rossiter and George M. Pinney, Jr., as Executors of the Last Will and Testament of Theodore W. Sterling, Deceased, Defendants
Court: New York Supreme Court
Jurisdiction: New York
Decision Date: 1898-02
Citations: 22 Misc. 672
Docket Number: 
Parties: Albert S. Gallup, Plaintiff, v. Susie Price Sterling, E. K. Rossiter and George M. Pinney, Jr., as Executors of the Last Will and Testament of Theodore W. Sterling, Deceased, Defendants.
Judges: 
Reporter: New York Miscellaneous Reports
Volume: 22
Pages: 672–676

Head Matter:
Albert S. Gallup, Plaintiff, v. Susie Price Sterling, E. K. Rossiter and George M. Pinney, Jr., as Executors of the Last Will and Testament of Theodore W. Sterling, Deceased, Defendants.
(Supreme Court, New York Trial Term,
February, 1898.)
1. Sales — Action for the price — Contract making performance optional — Forfeit.
Where a contract for the sale of a block of stock, to be paid for at times and in amounts stated, also provides that, if the vendee fails to pay the sums specified in the manner specified, he shall forfeit his .stock, that it shall revert to the vendor, and that all claims against the vendee shall cease, no action for the price can be maintained ■ against him for his failure to perform fully, as he has an option whether he will take the stock and pay the balance due upon the contract, or allow the stock to be forfeited and revert to the vendor. 3.. Same — Tender.
A vendor cannot maintain an action for the price of stock where he is unable' to tender it, because it is pledged to third persons.
Motion for a new trial.
Latham E. Reed and Thaddeus B. Kenneson, for plaintiff.
Joseph H. Choate, for defendants.

Opinion:
Davy, J.
This action was commenced in 1890 against Theodore W. Sterling, and has since been revived against the present ' defendants, as his executors. The case came on for trial in December, 1897, and after counsel for the plaintiff had opened his case, the learned counsel for the defendants moved that the complaint be dismissed on the ground that it did not state facts sufficient to constitute a cause of action. The court granted the motion and took under consideration the plaintiff's motion for a new trial on all the grounds stated in section 999' of the Code of Civil Procedure. The rule is well settled that on a motion to dismiss the complaint on the ground that it does not state facts sufficient to constitute a cause of action, its allegations must be taken as true, and the sole question presented for the consideration of the court is whether it sufficiently states a cause of action. Tooker v. Arnoux, 76 N. Y. 397; Sheridan v. Jackson, 72 id. 170.
The action is upon a contract which was made between the plaintiff and Theodore W. Sterling. It states that the plaintiff is the owner of 850 shares of the capital stock of the Harrow Fabric Loom Company, of the city of Hew York, which the plaintiff has sold to Sterling for $15 per share, payable, as follows: One thousand dollars on the signing of the contract, and the further sum of $4,000 on or before three months from the date of the agreement; and it was further agreed that whenever the full sum of $5,000 and interest thereon shall have' been paid by Sterling, the plaintiff was to assign and deliver to him 250 shares of said stock. And in case Sterling failed to pay the $4,0.00 and interest within the time specified, then the $1,000 paid, and the said 250 shares of stock were to be forfeited. The agreement further recites that Lester & Kane hold 600 of the said 850 shares of said capital stock part security for the payment of the sum of $50,000 due from ; the company, which the plaintiff could not then deliver to Sterling. is further stipulated in the-contract that the remaining $7,750 shall be paid' in three installments, at one, three and six months with interest from the date that the sum of $50,000 due Lester & Kane shall have been paid. The agreement also provides that Should Sterling fail to pay the sums due from him at set forth in the contract he shall forfeit said stock, and the same shall revert the plaintiff, and all claims against the said Sterling shall cease."
In construing this agreement we must give effect to the intent .of the parties so far as such intent can be -collected from the whole instrument, and is consistent with the rules of law.. There is no mistaking the true meaning of the contract which is set forth in full in the complaint. The parties declare in language not capable of being misunderstood or misinterpreted that they have agreed that if Sterling shall fail to pay the $7,750, that title to the stock shall revert to the plaintiff and all claims against Sterling shall cease. " One of the rules of construction established is, that courts are to be governed by the intention of the parties, to be gathered from the language of the contract itself, and from the nature and circumstances of the case." Colwell v. Lawrence, 38 N. Y. 74; Cotheal v. Talmadge, 5 Seld. 554.
The contract, fairly construed, gives Sterling the option to determine whether he would take the stock and pay the balance due upon the contract, or allow it to be forfeited and revert to the plaintiff. There could be no.breach of contract if Sterling did all that .the contract required him to do, and if there was no breach, no action could be maintained for the contract price of the stock.
The plaintiff contends that the forfeiture and' reverter of the' stock provided for in the contract is in the nature of a penalty, and that the plaintiff has his election to resort to the'penalty, ór he can resort to any other remedy. The above rule does not apply to this contract because the agreement on the part of the plaintiff to accept the stock and- release Sterling is absolute, and an action against the defendants in any form cannot be maintained. - Sterling, by paying the $1,000 at the time the contract was executed, obtained the right to purchase 850 shares of the capital stock of the Narrow Fabric Loom Company, upon the payment of the sums agreed upon in the contract; whether he availed himself of this privilege or not was optional with him. He expressly stipulated, in case he did riot take the stock, it should be forfeited, and the title to the same, should revert to the plaintiff, and the plaintiff expressly agreed to accept the stock and to release Sterling from all claims upon the contract. The parties to this agreement had the right to insert such conditions therein as they might mutually agree upon or which they might consider necessary to protect their interests in the sale and purchase of the stock, and, when made, it must be -construed and enforced like - all other contracts, according to the -expressed understanding and intent of the parties making it.
It was held in Manvel v. Holdredge, 45 N. Y. 151, that where -the defendant, in consideration of the assignment to him by the •plaintiff of an interest in a patent, bound himself to pay the plaintiff $1,000 before the end of the next year or reassign the patent, the year having elapsed without payment, and the defendant having, at the time the money was demanded, offered to reassign the patent, no action would lié against him to recover the $1,000,. as there had been no breach of the contract. Allen, L, in speaking for the court, says: "By its terms he had the option during the whole year to pay the price, arid upon his - failure to do so within that time, the plaintiff's only remedy was to compel the reassignment, or in case of refusal, to recover whatever might be its value."
Talcing into view all the provisions of the contract, it is clear that Sterling had the option to pay the remaining $7,750 with the accumulated interest thereon and take the balance of the stock, or to allow it to be forfeited and revert to the plaintiff; and it is also clear that the plaintiff agreed to accept the stock in case it was forfeited, and to release Sterling from all the obligations of the con- . tract. This .action, therefore, cannot be maintained for the reason which. I have already indicated, that there has been no breach of the contract. Assuming, however, that there was a breach, the plaintiff, even then, could not maintain this action. The rule is that where the right of action depends upon a condition precedent, its performance must be averred in the complaint. There could be no breach of the agreement to pay the money until the stock had been tendered. While the stock remained pledged to Lester & Kane no title passed to Sterling and no legal tender could be made to him. He may have had an equitable interest in the stock which could only be made perfect by the payment of Lester & Kane's demand, which he was not required to do by the terms of the contract. Sterling had no such interest or title to the stock as could be reached by his creditors by levy and sale under execution. The stock had been assigned and pledged to Lester & Kane as security for the payment of the $50,000, and they could retain and sell it if their lien was not satisfied.
The rule is well settled that a contract of sale and purchase does not pass the title when anything remains to be done by the seller to ascertain the identity, quality, quantity or pride of the property. Burrows v. Whitaker, 71 N. Y. 296. The word " sold " in a contract of sale of chattels does not necessarily imply a change of title in the goods. Whether the contract changed the title to the stock, or only agreed to sell and deliver it thereafter, depends upon the whole of the language used in the contract. Anderson v. Read, 106 N. Y. 351.
No time was fixed for the payment of the $50,000 to Lester & Kane, at least so far as appears from the contract. It was problematical whether it ever would be paid! How was Sterling to know whether the stock had been reassigned unless he was notified by the plaintiff that it was in his possession, ready to be delivered upon the payment of the contract price. He was not bound to pay the price agreed upon for the stock without receiving it; and how can it be said that he refused to receive the stock and pay the money for it, when it never was tendered to him. The contract for the sale of the stock was executory, apd, until the stock was released from the lien of Lester & Kane, the title to it could not be transferred to Sterling. The acts of the parties, in the delivery of the stock and the payment of the money, were to be simultaneous. Neither could put the other in default, except by performance or tender of performance on his part, and a recovery cannot be had for nonperformance of the contract unless an actual performance or tender of performance is averred and proved by the party alleging a breach of the contract by the other. Lester v. Jewett, 11 N. Y. 453; Wheeler v. Garcia, 40 id. 589; Currie v. White, 45 id. 835; Sawyer v. Dean, 114 id. 477.
The plaintiff nowhere alleges, in his complaint, that he offered to transfer and deliver the stock upon the payment of the contract piice. Ability and readiness to deliver was a fact material to be averred by the. plaintiff in Ms complaint. Kein v. Tupper, 52 N. Y. 553.
It was held in Lester v. Jewett, 11 N. Y. 453, " when a party agrees in writing for value received to purchase stock at á future day at a price named, to entitle the vendor to recover upon such an agreement he must aver and prove tender and offer to transfer the stock to the purchaser."
In Hayden v. Demets, 53 N. Y. 428; Chief Judge Church,, in speaking for the. court, says: " The contract for the sale of the copper was executory. Although the plaintiff owned the specific copper sold, he also had other copper of the same quality, and until it was designated and set apart the title remained in Mm. Payment and delivery were to be simultaneous acts, and neither party could maintain an action against the other without perforan anee or tender of performance on his part." He also says: " The setting apart and tender gave them a right of property, in the copper, but not thé right of possession without payment." There is a broad distinction betwen this case and the cases cited by the learned counsel for the plaintiff in which the terms of the forfeiture were entirely different. The motion for a new trial, therefore, must'be denied, with $10 costs to the defendants.
Motion demed, with $10 costs to defendants.