Case Name: Beyrich v. Liebler et al.
Court: New York Supreme Court General Term
Jurisdiction: New York
Decision Date: 1888-12-13
Citations: 3 N.Y.S. 293
Docket Number: 
Parties: Beyrich v. Liebler et al.
Judges: 
Reporter: West's New York Supplement
Volume: 3
Pages: 293–296

Head Matter:
Beyrich v. Liebler et al.
(Supreme Court, General Term, Second Department.
December 13, 1888.)
■Corporations—Contract to Issue Stock—Charter.
Defendants agreed to form a joint-stock company with a capital stock of $10,000, in 400 shares, of $35 each; “ that said company shall immediately, and not later than 10 days after its incorporation, issue 393 additional shares, of $35 each, which shares shall be considered * * * as paid up in full, and which shall be given and turned over free of charge” to plaintiff, in consideration for which plaintiff was to give the company an exclusive license to manufacture under his patent during its full term. Meld, that it was defendants’ duty to frame a charter broad enough to authorize the issue of stock for the additional 393 shares, and it was no excuse for failure to deliver such stock that the charter did not authorize its issue.
Appeal from circuit court, Kings county.
This was an action brought by Richard W. Beyrich against Nathan Ballin •and Theodore A. Liebler, Jr., to recover damages for breach of a contract to deliver shares of corporate stock. Ballin died pending the action. The contract was made between defendants of the first part, and plaintiff and one John J. G. C. Schmidt of the second part, and is as follows:
“Whereas, the aforesaid Beyrich and Schmidt are each the sole owners of •one undivided one-half interest in a United States patent for an improvement in waist patterns, the patent being dated October 6, 1885, and numbered •327,725; and whereas, said Ballin and Liebler being desirous of manufacturing said patterns and kindred articles, and are about to organize a company for that purpose, to be incorporated under chapter 611, Laws of 1875, of the ■state of New York, and acts amendatory thereof: Now, therefore, it is •agreed by and between the parties hereto as follows: * * * The said Ballin and Liebler hereby agree and bind themselves to duly form a joint¡stoek company, under the act hereinbefore mentioned, whose business it shall be to manufacture and sell paper patterns, charts and kindred articles, under •aforesaid patent, or otherwise; and said Ballin and Liebler further agree and bind themselves that they will cause said company to do and act towards said Beyrich and Schmidt as hereinafter stated, namely, said company shall 'be formed and incorporated forthwith, and not later than December 1, 1885, with a capital stock of ten (10) thousand dollars, in four hundred shares of •twenty-five dollars each. * * * it is agreed that said company shall immediately, and not later than ten (10) days after its incorporation, issue three hundred and ninety-two (392) additional shares, of twenty-five dollars each, which shares shall be understood and considered by said company as paid up in full, and which shall be given and turned over free of charge to said Richard W. Beyrich, of Brooklyn. It is further agreed that the said company shall, as one of the considerations of this contract, pay unto said John J. G. 0. Schmidt, of New York city, a royalty for each chart or pattern manufactured and sold by them under this patent, as follows: One (1) cent for each Manilla paper pattern, or of similar value, and one-half (J) of one cent for each tissue paper pattern, or of similar value; such royalty to be paid on the .last day of each month. Said company shall also employ said Schmidt as clerk in the company’s business from 1st November, 1885, to 31st October,. 1886, at a salary not less than fifteen (15) dollars per week. It is further' agreed, and expressly stipulated, that the sole license specified hereinafter shall become null and void if from the 1st of January, 1887, the total of royalties to be paid to said Schmidt should not amount for the year 1887, and, every year thereafter, to at least twelve hundred (1,200) dollars per annum.. It is also expressly stipulated and agreed that the hereinafter specified license shall only be given to said company under the condition that said company shall bind itself never to sell, relicense, transfer, or part with said license or-part thereof, except by the written consent of both said R. W. Beyrich and J.. J. G. C. Schmidt. In consideration of the performance of the above conditions, the party of the second part, said Beyrich and Schmidt, do hereby agree-that they will duly license, by an instrument in writing, the said company to solely manufacture, etc., under said patent, or any reissue, renewal, or extension thereof, for the full term of the patent, and that they will give this-sole control of the patent to the said company immediately after its lawfuh incorporation. * * * ”
The court held that the contract by defendants to issue the additional shares-to plaintiff was illegal, and without consideration, and dismissed the complaint. Plaintiff appeals.
Argued before Barnard, P. J., and Dyicman and Pratt, JJ.
L. A. Fuller, for appellant. Smith & Bowman, for respondent.

Opinion:
Barnard, P. J.
The agreement upon which this action is based is perfectly fair, and was intended by the parties to it to be performed. The evidence is clear that it has not been performed, and the only question is whether the non-performance is excused in any legal way. The plaintiff and one Schmidt owned a patent-right for an improvement in waist-patterns. Tliedefendants Liebler and Ballin were desirous of manufacturing under this= patent, and to that end the patent owners and the defendants entered into» the agreement set out in the complaint. The owners of the patent by this-agreement severed their interests, and were to be paid in different ways for-an exclusive right to use the patent. Schmidt was to be employed by a company to be formed for the manufacture, and paid a weekly sum, and also waste have a royalty on the manufactured article sold. The plaintiff was to have-a certain amount of stock in the new company. The article of agreement provided that a joint-stock company should be formed by the defendants,, "with a capital stock of ten thousand dollars, in four hundred shares of' twenty-five dollars each." This agreement further provides "that said company shall immediately, and not later than ten days after its incorporation, issue three hundred and ninety-two additional shares, of twenty-five dollars-each, which shares shall be understood and considered by said company as-paid up in full, and which shall be given and turned over free of charge to-said Richard W. Beyrich, of Brooklyn." This agreement called for an incorporation which could issue stock legally, not only for the $10,000, but also-for the $9,800 to Beyrich. The spirit of the agreement is plain. A company should be formed with the right to issue stock for $10,000 cash, andt $9,800 for a patent-right, under which the company is to manufacture. There-is no other fair conclusion. There is not the least evidence of fraud, or of ai desire to influence capital beyond cash, or the value of cash, in property needed,, and, indeed, essential, to the corporation purposes. The defendants, therefore,, failed to perform the agreement with plaintiff when they failed to deliver this-stock called for by the agreement. The framing of the charter of the company was their act, and it is no defense if they did not frame it broad enough to perform their contract. The judgment should be reversed, and a new trial granted, costs to abide event.
Dykhan, J., concurs.