Case Name: JOY v. PAGEL
Court: Michigan Supreme Court
Jurisdiction: Michigan
Decision Date: 1939-02-02
Citations: 287 Mich. 453
Docket Number: Docket No. 42, Calendar No. 40,151
Parties: JOY v. PAGEL.
Judges: Wiest, Potter, and McAllister, JJ., concurred with North, J.
Reporter: Michigan Reports
Volume: 287
Pages: 453–465

Head Matter:
JOY v. PAGEL.
1. Frauds, Statute of — Single Transaction — Agreement to Repurchase! Stock.
Whether or not transaction whereby plaintiff’s assignor made an advancement to a corporation and defendants, officers of corporation to which advancement was made, agreed to repurchase certificate of stock at an increased price on or before a certain later date, was a “single transaction” as that term is used in ascertaining whether statute of frauds is applicable, must be determined in the light of facts by which it is surrounded (2 Comp. Laws 1929, § 9443).
2. Same — Part Performance.
Transaction whereby, in return for advancement made by plaintiff ’s assignor to corporation of which defendants were officers, latter agreed to repurchase stock certificate at later date at an increased price held, a single transaction which was partially performed by delivery of the stoek certificate, and, where there was a writing containing defendants’ agreement to repurchase, signed by them, the statute of frauds was fully complied with (2 Comp. Laws 1929, § 9443).
3. Same — Corporations—Officers’ Personal Agreement to Repurchase.
Where a party induced to advance money to a corporation under an agreement by the officers to repurchase the stock delivered to the lender, the officers’ agreement is a part of the original undertaking and is not within the statute of frauds and is enforceable even though oral (2 Comp. Laws 1929, § 9443).
Bushnell, Sharpe, and Chandler, JJ., dissenting.
Appeal from Wayne; Brennan (Vincent M.), J.
Submitted October 12, 1938.
(Docket No. 42, Calendar No. 40,151.)
Decided February 2, 1939.
Rebearing denied March 10, 1939.
Assumpsit by William M. Joy, as assignee of Universal Securities Trust, against Benjamin S. Pagel, Olin Finney and F. Langdon Hnbbard for sums dne on a stock transaction. Judgment for plaintiff. Defendants appeal.
Affirmed.
G. Leslie Field, for plaintiff.
Lucking, Van Auken & Sprague, for defendants.

Opinion:
North, J.
Upon this record, as I view it, the judgment entered in the circuit court should be affirmed. I think the trial judge was right in holding that each of the four transactions out of which this litigation arises was a "single transaction." In his opinion Mr. Justice Sharpe holds that in each there were two separate transactions; and citing some authorities, he holds that because it was not a single transaction, plaintiff is barred of recovery under the statute of frauds.
Obviously there can be no hard and fast rule because of which it must be said that every transaction of this character is a "single transaction" or is not. Instead the character in this respect of each transaction should be determined in the light of the facts by which it is surrounded. The facts in the instant case in brief are as follows: Defendants sought to obtain money of plaintiff's assignor for the benefit of a corporation of which defendants were stockholders and officers. The transactions out of which this litigation arises are of the same character as the transactions through which these same defendants secured funds from the First Income Trading' Corporation, with which plaintiff herein was closely identified. Unquestionably the transactions with the First Income Trading Corporation were on the basis of individual liability of these defendants who were at that time advised that the various transac tions would not be closed on the basis of the financial responsibility of the Tire Guard Company. While there is some dispute in the testimony in the instant case, there seems to be little room for doubt that the transactions on which plaintiff bases his right to recover were closed on the strength of the individual liability of defendants and that they were well aware of that fact. Defendants signed the written memoranda of the part of the transactions which plaintiff now seeks to enforce. In consideration of these undertakings plaintiff's assignor paid to the corporation the amounts fixed as the purchase price of the stock of the corporation which stock defendants agreed in writing to purchase from plaintiff's assignor. On this record it would be absurd to assert that any portion of these respective transactions would have been consummated if defendants as individuals had not bound themselves to the undertaking evidenced by the written memoranda. The fair and seemingly necessary conclusion sustained by this record is that a portion of the consideration which induced plaintiff's assignor to part with its money was defendants ' written agreements to purchase the stock from plaintiff's assignor, and in three of the four transactions such purchase was to be at an increased price. The result in each instance was a single transaction of a tri-lateral character. The proven facts negative the conclusion that one portion of the respective transactions was wholly independent of the other. In such a ease justice should not be defeated by resort to the inapplicable theory that incident to each of these four dealings there were two separate and independent transactions.
There was part performance of each of these four contractual transactions, and further, in the con summation of each there was a memorandum in writing signed by defendants which sufficiently recited the part of the undertaking which they obligated themselves to perform. Thus there was full compliance with the requirements of the statute of frauds, the pertinent provision of which reads:
"A contract to sell or a sale of any goods or choses in action of the value of one hundred dollars or upwards shall not be enforceable by action, unless the buyer shall accept part of the goods or choses in action so contracted to be sold or sold, and actually receive the same, or give something in earnest to bind the contract, or in part payment, or unless some note or memorandum in writing of the contract or sale be signed by the party to be charged, or his agent in that behalf." 2 Comp. Laws 1929, § 9443 (Stat. Ann. § 19.244).
We should be more concerned with reaching a right result than in following decisions from other jurisdictions which, at least as applied to the instant case, seem not to be sound. While plaintiff relies upon Beverly v. Richards, 255 Mich. 508, it should be noted that decision therein did not turn upon the question of law now before us. But the following aspect of the Beverly Case is somewhat persuasive. Therein the defendant sold stock of a corporation in which he was interested both as a stockholder and creditor; and incident to such sale he orally agreed if the corporation did not pay certain specified dividends "he would pay the same, and she (the purchaser) could have her money back any time she wanted it." The case was decided on other grounds, but there is no intimation in the opinion that in the absence of other grounds of defense, plaintiff could not have recovered on defendant's agreement to purchase from plaintiff the stock of the corporation which he sold to her. On this phase of the Beverly Case, Justice Wiest who wrote for the court said:
"There is no merit in defendant's claim of want of consideration for the promise to repurchase the stock. Authorities are to the effect that, where one sells stock and promises the purchaser to repurchase, the transaction is single and there is a sufficient consideration to take the promise out of the statute of frauds.
"Defendant claims that the purchase was made of the corporation, and, therefore, no consideration passed to him. If defendant made the promise in order to induce the purchase that he might obtain the money for stock held by him (as collateral to a loan to the corporation), the consideration was present, and the fact that the issue was by the company out of stock held by him (as collateral) and the money came to him made the promise binding*. ' '
The following is a holding from one of the New York courts:
"A promise by the directors of a corporation, in order to induce a woman to purchase from the corporation a number of its shares of stock, that in the event of the corporation not declaring an eight per cent, annual dividend on the stock they would pay to her semi-annually, as long as the corporation should exist, such an amount of money as might be necessary to malee up the eight per cent, dividends on the stock, is not a promise to answer for the debt, default or miscarriage of the corporation, and is not within the statute of frauds. The payment by the promisee of the purchase price of the stock furnishes a good consideration for the directors' promise." Crook v. Scott (syllabus), 65 App. Div. 139 (72 N. Y. Supp. 516).
"If an officer of a corporation orally promises a prospective purchaser of the corporate stock to repay the purchase price at any time and the purchaser acts upon the promise, the agreement is an original contract, and is not within the statute of frauds." Trenholm v. Kloepper (syllabus), 88 Neb. 236 (129 N. W. 436).
"Where a party is induced to purchase stock in a corporation under the promise and agreement by the president, director, and stockholder of the corporation that at any time he wanted his money back he would pay it to him with interest, it is an original undertaking." Fischer v. Bashwitz (syllabus), 152 Okla. 231 (5 Pac. [2] 356).
"An agreement on the part of the seller of securities, or on the part of the broker of the purchaser, to buy back the securities from the purchaser at a later date if the purchaser should become dissatisfied with them or for any other reason, is not within the scope of the statute of frauds, and is enforceable even though oral. The original sale and the agreement to repurchase are regarded as an entire contract and not as two separate and independent ones, the latter being in effect an agreement to rescind the former. The statute, therefore, is inapplicable. This is true whether the agreement to repurchase is made by the seller of the stock or by a broker who has purchased it on behalf of his customer and has no interest in the sale except as broker. ' ' Meyer's Stock Brokers and Stock Exchanges (1st Ed.) p. 246.
The above quoted text is sustained by the following cases cited by the author: Johnston v. Trash, 116 N. Y. 136 (22 N. E. 377, 5 L. R. A. 630, 15 Am. St. Rep. 394); Fitzpatrick v. Woodruff, 96 N. Y. 561. Counsel for appellants are of the opinion that the two cited cases are in conflict with Gainsburg v. Bachrack, 241 App. Div. 28 (270 N. Y. Supp. 727); affirmed 266 N. Y. 468 (195 N. E. 158). In this we cannot agree. Instead, in the later case the New York court quoted from Morse v. Douglass, 112 App. Div. 798 (99 N. Y. Supp. 392), the following:
"If there was but a single agreement involved in the whole transaction the statute does not apply. If, on the other hand, there were two separate and distinct contracts — one, that, the plaintiff would buy the stock from the principal who the defendant represented, and the other, that the defendant would buy the stock back from the plaintiff at any time he became dissatisfied concerning it and refund him the money — then the statute would apply. ' '
Under the record in the Gainsburg Case the New York court found there were two separate and distinct contracts, and therefore the statute of frauds barred recovery; but under the facts in the Johnston Case (as in the instant case) there was only one transaction and recovery was not barred by the statute. In the Johnston Case the court said:
"When an agent, by an oral contract, sells and delivers the goods of a disclosed principal, his personal oral warranty of quality is not a contract independent of the contract of sale, but is a part of it, and one consideration is sufficient to support the sale and warranty. The oral contract of the defendants, that they would purchase for the plaintiff in the market at market rates the bonds for the usual compensation, and in case he should thereafter become dissatisfied with the bonds, that they would, on demand, take them off his hands at what they cost him, was a single contract."
I am in accord with Mr. Justice Sharpe that under the record in the instant case the agreements to purchase this stock from plaintiff's assignor were the individual agreements of appellants. And for the reason above indicated these agreements should be held to be binding and enforceable. Judgment to that effect entered in the circuit court is affirmed, with costs to appellee.
Wiest, Potter, and McAllister, JJ., concurred with North, J.