Case Name: Zohrlaut, Appellant, vs. Mengelberg, Respondent
Court: Wisconsin Supreme Court
Jurisdiction: Wisconsin
Decision Date: 1911-01-31
Citations: 144 Wis. 564
Docket Number: 
Parties: Zohrlaut, Appellant, vs. Mengelberg, Respondent.
Judges: Timlin, J., took no part.
Reporter: Wisconsin Reports
Volume: 144
Pages: 564–602

Head Matter:
Zohrlaut, Appellant, vs. Mengelberg, Respondent.
November 17, 1909 —
January 11, 1910.
October 29, 1910 —
January 31, 1911.
Contracts: Construction: Corporations: Sale of shares: Appeal: Af-firmance on equal division of justices: Judgment: Opening case for further defense.
Plaintiff agreed in writing to sell to defendant on November 30, 1899, “twenty-five shares of the five hundred shares of the capital stock” of a corporation at the hook value at that date, payment to he secured by defendant’s notes with the stock as collateral, and that if at any time defendant should cease to be a director and officer of the corporation plaintiff would repurchase said twenty-five shares at the book value at the time of repurchase, deducting any amount unpaid on the notes. Five hundred shares were then outstanding, of the par value of $1,000 each, being the full authorized capital stock of the company. Afterwards a certificate for 174 shares was canceled, so that the outstanding capital stock was $326,000. On November 30 the books showed that on the basis of $500,000 the shares were worth about ten or twelve per cent, above par, and on the basis of $326,000 were worth about forty or fifty per cent, above par. Thereafter the parties made a new contract by which plaintiff agreed to employ defendant at a salary for five years as a director and officer of the company and, “in accordance with the terms of the” previous agreement, to sell to defendant twenty-five shares of the capital stock of the company at par, accepting defendant’s note in payment as before provided. Accordingly twenty-five shares were sold and delivered by plaintiff to defendant, and defendant gave therefor his note for $25,000, with the stock as collateral security. After the five-year term of service defendant ceased to be a director and officer of the company. Plaintiff brought this action upon defendant’s note. Defendant counterclaimed for the book value of the twenty-five shares of stock at the time he ceased to be director, and recovered judgment for the excess of such value over the amount due on the note. On appeal, upon the foregoing and other facts, the question being whether the agreement should be construed as being for the sale of a one-twentieth interest only in the corporation, so that after the reduction of the outstanding stock to 326 shares the sale was of one twentieth of that number only, this court at first decided against such construction (Marshall. and Kebwin, JJ., dissenting), hut afterwards, on a rehearing, divided equally — Winslow, C. J., and Babnes and Vinje, JJ., adhering to the former opinion, Mabshall, Siebeckeb, and Keb-win, JJ., holding the contrary view, and Timlin, J., taking no part; and the judgment of the trial court was therefore affirmed.
Per Mabshall, Siebeckeb, and Kebwin, JJ., it is suggested that this court has power and, under the circumstances, ought to send the cause hack to the trial court with authority, in discretion and upon proper terms, to open the case so as to permit plaintiff to interpose an equitable defense to the counterclaim.
Appeal from a judgment of the circuit court for Milwaukee county: J. 0. Ludwig, Circuit Judge.
Affirmed.
The Herman Zohrlaut Leather Company was incorporated in 1891 under the laws of Wisconsin and with an authorized capital stock of $500,000. Prior to the incorporation of the company Herman Zohrlaut had been engaged for many years in the tannery business, which the corporation was organized to carry on, and had been the principal if not the sole owner 'of such business. The corporation was practically a family affair. Prior to June 19, 1899, Herman Zohrlaut had never transferred to the corporation the real estate, machinery, and buildings used in connection with the business. The value of these three items of property, as shown on the balance sheet of the corporation for November 30, 1899, was $508,885.01. It appears that an appraisal of the buildings and factories had been made by the American Appraisal Company, which ■did not agree with the book values, but was in excess thereof. Entries were made in the books of account under date of November 30th to make the book values of these properties correspond with the values placed thereon by the appraisal company. On the other hand, the real estate values as carried on the books were somewhat reduced. These changes resulted in increasing the book value of these items of property $857.16. It further appeared that the corporation was a large borrower, •and that in the statement which it made to banks as a basis for credit the real estate, buildings, and machinery were listed as part of the assets of the corporation.
On June 19, 1899, a meeting of tlie stockholders of the company was held at its office, and minutes were made of what transpired at such meeting, which minutes were subsequently changed, as will he hereafter indicated. It appeared from such minutes that Herman Zohrlaut was given permission to sell his stock in the corporation to Edward Zohrlaut^ and it was further provided that the hooks of subscription of the capital stock of the company be opened and kept open long enough to receive subscriptions to the amount of the unsold stock, to wit, the sum of $174,000, and the board of directors was authorized to issue such stock in its discretion. The directors were authorized and empowered to purchase from Herman Zohrlaut the tannery, real estate, property, buildings, and machinery for the sum of $500,000, to be paid for by issuing to said Herman Zohrlaut $174,000 of the capital stock of the company and the balance in cash, upon his conveying said property by warranty deed to the corporation. At a meeting of the directors of the corporation held immediately thereafter a motion was carried to the effect that the purchase of the tannery property, pursuant to the resolution of the stockholders passed at their meeting, be ratified, and the vice-president and secretary were authorized to issue to Herman Zohrlaut, in payment of the purchase referred to in said resolution, the sum of $500,000, of which sum $174,000 was to be paid by the issue of the capital stock of the company to that amount, and the balance in cash.
It is, fairly apparent from the testimony that the company’s financial condition at this time was such that it could with difficulty, if at all, make the cash payment. A warranty deed of the real estate, buildings, and machinery in question, bearing date January 1, 1899, was executed by Herman Zohrlaut and wife to Edward Zohrlaut as grantee. This deed appears to have been acknowledged as to Herman Zohrlaut on June 19 and as to his wife on July 5, 1899.
Tlie next meeting of tlie board of directors of the corporation was held on August 18th. The entries relating to what transpired at that meeting were substantially changed, as were the entries relating to the meeting of June 19th. The original entries noted the fact that the sale of the property from Herman Zohrlaut to the corporation, as contemplated by previous resolutions, had been consummated, but it was discovered that the deed was made by Herman Zohrlaut to Edward Zohrlaut instead of to the company, and recited that it was thereupon agreed that Edward and his wife should quitclaim to the company. Edward Zohrlaut and wife did in fact execute a quitclaim deed to the corporation of the property conveyed to him by his father, such deed bearing date August 16, 1899.
The stock book of the corporation shows that on June 18, 1899, a certificate for 1J4 shares of the capital stock was made out to Herman Zohrlaut, he signing it as president, and that such certificate remained in existence until September 14, 1899, at which time the court found that it was canceled. Entries had also been made in the books of the corporation showing that the outstanding capital stock thereof was. $500,000, in lieu of the $326,000 that had been outstanding prior to the issue of the last-named certificate. Whether there had been any delivery to or acceptance by Herman Zohr-laut of the certificate in question, as part payment of the purchase price of the property sold, there is no dispute that the cash part of the payment never was paid. The referee and the court found that, concurrently with the stockholders'” meeting of June 19th, Edward Zohrlaut purchased from his father the latter’s entire holdings in the corporation, and also purchased from him the property covered by the warranty deed dated July 1st, and that such deed was executed and delivered in pursuance of such agreement to purchase,, and not for the purpose of carrying out the alleged agreement with, the corporation, and that no mistake had been made in naming Edward Zdhrlaut as grantee in such deed instead of the corporation.
Under date of August 22, 1899, the following contract was made and entered into between the plaintiff and defendant:
' “Edward Zdhrlaut, president of the Herman Zohrlaut Leather Company, and Rudolf Mengelberg agree to the following:
“(1) As soon as the books of the Herman Zohrlaut Leather Company are closed for the year ending November 30, 1899, Edward ZohrlaMt sells to Rudolf Mengelberg twenty-five shares of the five hundred shares of the capital stock of the Herman Zohrlaut Leather Company at a price based on the showing of the Herman Zohrlaut Leather Company’s books on November 30, 1899.
“(2) Rudolf Mengelberg secures the payment of said shares by his notes. These notes shall bear interest at the rate of four per cent, per annum, provided that the yearly dividend earned and declared on said shares be larger than the yearly interest due on said notes. If the yearly dividend earned and declared on said shares be less than the yearly interest due on said notes, then the notes shall earn said' dividend in place of interest for such year. Such stock to be held by said Zohrlaut as collateral for the payment of such notes.
“(3) All money earned and declared as yearly dividends on said shares in excess of the yearly interest due on said notes shall be applied towards paying off the principal of said notes.
“(4) If at any time Rudolf Mengelberg should not be reelected as director and officer of the Herman Zohrlaut Leather Company, or for other unforeseen reasons be compelled to resign his position, Edward Zohrlaut agrees to purchase from Rudolf Mengelberg said twenty-five shares at a price based on the showing of the Herman Zohrlaut Leather Company’s books at that time, deducting therefrom any unpaid principal and interest on such notes.”
An informal meeting was held in the office of the legal ad'viser of the corporation on October 4, 1899, at which meeting plaintiff and defendant were present. The plaintiff at that time held a large majority of the capital stock of the corporation and habitually represented some of the other stockholders by proxy, and it was found by the referee and by the court that the proceedings taken at such meeting amounted to corporate action, and that at such meeting it was concluded to reduce the outstanding capital stock of the corporation from $500,000 to $326,000, and to cancel the certificate of stock issued to Herman Zohrlaut for $174,000, and to transfer such sum to the surplus account of the company instead of carrying it as a stock liability. It was also found that it was agreed at said meeting that the minutes of the two former meetings should be changed in so far as it might be necessary to meet the situation, and changes were made therein either by the attorney for the corporation or by his clerk.
The minutes of the meeting of June 19th were changed so as to show that, instead of partial consideration for the purchase of real estate, buildings, and machinery being the issuance of $174,000 of the capital stock of the corporation, such consideration was the cancellation of the indebtedness, amounting to $48,415.84, against Edward Zohrlaut. A pencil mark was drawn through the portion of the resolution providing for the issuance of $174,000 of the capital stock to Herman Zohrlaut, and in lieu thereof the vice-president and secretary were authorized to cancel the $48,415.84 account against Edward Zohrland in consideration of his conveying the tannery property to the corporation, and in further consideration of the company’s assuming payment of interest on the note or notes of Edward Zohrlaut to Herman Zohrlaut. It appeared at this time that Edward Zohrlaut had purchased the stock of Herman Zohrlaut in the company, and had given his note to Herman Zohrlaut for $100,000 in whole or partial payment therefor.
The minutes of the meeting of August 18th were changed so as to strike out the recital therein that it was discovered that the deed given by Herman Zokrlaut to Edward ZohrlauH was given by mistake and tkat it was intended tkat tke corporation skould be named as grantee therein.
At tke time tke meeting of October 4th was held one share-of stock in tke corporation was assigned to tke defendant and he was elected a director of tke company and began kis employment on or about tkat date. On November 30, 1899, tke books of tke company showed tkat this stock, on tke basis of' an issue of $500,000, was worth approximately ten or twelve-per cent, above par. On tke basis of outstanding stock to the-amount of $326,000 tke books showed tke stock to be worth, some forty or fifty per cent, above par. Tke balance sheet of November 30th showed an outstanding liability in tke way of a credit on open account to Herman Zokrlaut of nearly $40,000. This amount thereafter was charged off without, any payment, and tke surplus of tke company was correspondingly increased. Suck balance sheet also showed a surplus, after deducting profit and loss account, of substantially $57,000.
Tke referee found tkat tke certificate for 174 shares of tke capital stock of tke corporation had in fact never been issued, but tkat, if it had, suck certificate was assigned to tke plaintiff by kis father, and was surrendered for cancellation by tke plaintiff and was canceled, and tkat suck surrender and cancellation was ratified by tke corporation; and tke 'court confirmed suck finding.
Tke balance sheet taken from tke books of the corporation under date of November 30tk showed an outstanding stock liability of $500,000 and a surplus amounting to $57,143.92. On tke same day this surplus was increased $213,774.98 by entries made in tke books by defendant, making theHotal surplus, after suck changes were made> $270,918.90. Tke referee and tke court found tkat suck changes, were made at the suggestion of tke plaintiff and with kis knowledge and consent. Suck increase was made by reducing tke stock liability $174,000 and crediting such amount to surplus, by charging-off an outstanding account in favor of Herman Zohrlaut-amounting to $38,917.22 and crediting such amount to surplus, and by making a net increase of $857.76 in the book value of the real estate, buildings, and machinery, which sum. was likewise credited to surplus.
Thereafter the following contract was entered into between the parties:
“The following is the agreement made and concluded by and between Edward Zohrlaut and Rudolf Mengelberg, both of the city of Milwaukee, county of Milwaukee, and state of Wisconsin, this first day of December, A. D. 1899.
“Witnesseth, that the said Zohrlaut agrees to employ the said Mengelberg for the term of five (5) years from January 1, 1900, as one of the directors and such officer as the board of directors shall during said term by vote determine, of the Herman Zohrlaut Leather Co., at the following salary,, namely: for the year 1900 at the rate of four thousand (4,000) dollars per annum; for the year 1901 at the rate of forty-five hundred (4,500) dollars per annum; for the years 1902, 1903, and 1904 at the rate of five thousand (5,000) dollars, per annum; such salary payable in monthly instalments at-the end of each month during said term.
“And the said Zohrlaut further agrees in accordance with the terms of the agreement entered into between the parties heretofore on August 21, 1899, to sell to said Mengelberg-twenty-five (25) shares of the capital stock of said Herman Zohrlaut Leather Company at par, accepting in lieu of cash the note or notes of said Mengelberg for the term of five (5) years from this date with interest at four (4) per cent, per annum, payable in the manner and in accordance with said agreement.
“And the said Mengelberg does hereby on his part agree to-devote his entire time, skill, ability, and energy to the utmost, of his power for the use and benefit of said Herman Zohrlaut Leather Co.; and that he will not, during the term aforesaid,, engage in, or carry on, or become interested in any other business except his employment by said company in the capacity hereinbefore mentioned and at the salary aforesaid; and he further agrees to comply with the agreement dated August 21, 1899, aforesaid, on his part to be performed, and that he will not sell, hypothecate, nor pledge the said stock, or any interest therein, to any person or persons without the written consent of the said Zohrlaut first had and obtained.”
The testimony showed and it was found that this contract was in fact executed some time after January 1, 1900.
The defendant continued in the employ of the corporation ■under said contract until December 31, 1904, at which time his services were dispensed with. During the period of defendant’s employment no dividends had been declared, and the net surplus of the company had been reduced in the sum •of $43,700.89. Not all of this reduction, however, was due to losses in the business during this time, if. in fact any of it was. Some bad accounts had been charged off; some interest had been paid by the corporation for plaintiff; and an account ■of the corporation against the plaintiff had been canceled.
When the defendant left the employ of the plaintiff he took with him the stock which he had purchased, and which the •contract provided should be left with the plaintiff as collateral security for the payment of the note given in pursuance of the terms of the contract, and plaintiff was obliged to commence an action of replevin to recover the possession of such stock. Thereafter the plaintiff brought this action to recover from the defendant the sum of $25,000 alleged to be due upon the note. The defendant counterclaimed in the action for the amount of the book value of his stock, as of December 31, 1904, over and above the sum of $25,000 due on the note. The trial of the action resulted in an affirmative judgment in favor of the defendant for $14,312.50 damages, together with interest and costs, from which judgment this appeal is taken.
Eor the appellant there was a brief by Nath. Pereles & Sons, attorneys, and Quarles, Spence & Quarles and Gliclcs-man, Gold &. Corrigan, of counsel, and oral argument by W. L. Gold and T. W. Spence.
Eor tbe respondent there was a brief by Winlcler, Flounders, Bottvm & Fawsett, and oral argument by J. Q. Flanders and G. F. Fawsett.

Opinion:
Tbe following opinion was filed January 11, 1910:
BaeNes, J.
There is ample evidence in tbe record to support tbe finding of tbe referee to tbe effect that if tbe stock certificate for $174,000 bad ever been issued it was surrendered and canceled prior to December 1, 1899. Whether there was any valuable consideration to support such a transaction is more debatable. Tbe argument of defendant's counsel, that tbe cancellation of a debt amounting to about $48,000 and tbe assumption of certain interest obligations by tbe corporation constituted a good consideration, is not convincing in. view of tbe fact that tbe plaintiff turned over $326,000 worth of other property to tbe corporation and assumed an indebtedness to bis father of over $38,000, for which no consideration was paid except tbe settlement of tbe account referred to and tbe interest agreement. However, tbe question is not particularly material. Tbe plaintiff might make a donation of' a portion of bis stock to tbe corporation in this case if be saw fit, and tbe important fact is that be did surrender tbe stock and that it ceased to be a corporate liability on tbe date named.
'We find little in tbe way of evidence, or of inference to be drawn therefrom, to justify tbe contention that defendant took a decaying business and built it up. Tbe evidence fails-to show insolvency or anything approaching it when tbe defendant bought in, and it is difficult to discover wherein, after bis five-year term of service, be left tbe business in much better condition than be found it. Tbe only thing to indicate that be found nominal book assets and left actual ones is tbe fact that some bad accounts were charged off tbe books, but tbe amount was inconsiderable, and tbe net assets declined some $43,000 during tbe period of bis service. Tbe charging •off of tbe account standing on tbe books against tbe plaintiff, •and tbe assumption by tbe corporation of interest charges on tbe individual debt of tbe plaintiff, affected tbe showing made by tbe business while defendant bad charge of it, but, considering its magnitude, about all that can be said for it is that it held its own.
It seems clear that when tbe parties made tbe contract of August 22d, by which plaintiff agreed, on tbe happening of a certain contingency, to repurchase tbe stock which defendant agreed to buy, tbe parties contemplated that if tbe business proved to be profitable and tbe surplus was increased by legitimate earnings during tbe term of defendant's employment, tbe latter should be paid bis pro raía share of tbe increase, and that if loss resulted be should suffer his pro rata share of such loss. Tbe net surplus of tbe corporation was increased on November 30, 1899, $213,774.98 by entries made in tbe books of account. This increase did not add a single dollar to tbe financial strength of tbe corporation, unless tbe wiping out of tbe account of $38,917.22 in favor of Herman Zohr-laut reduced its indebtedness to that extent, and it is not at all certain that Mr. Zohrlaut ever agreed to forego bis claim against tbe corporation for this sum. It seems highly improbable that tbe plaintiff understandingly signed tbe agreement of December 1st with a full realization of tbe consequences that might result from such action. Tbe defendant paid par for $25,000 of the capital stock of tbe company. Had be been taken ill with some malady that would prevent bis performing tbe work required of him by tbe contract, tbe next day after its execution, be would be entitled to recover from tbe plaintiff not only tbe purchase price, but also about $17,000 in addition thereto. His heirs might do tbe same bad be died. Tbe recovery at such time would have amounted to about $2,700 more than tbe damages awarded in this action, because tbe book value of tbe stock bad declined over $43,000 in tbe meantime. Tbe improbability of a party making such a contract, as well as tbe manifest inequity of it, .'has led the court to scrutinize with great care the two written •contracts, as well as the evidence in the case, to ascertain whether relief could not be afforded to the plaintiff against a .judgment founded upon what appears to have been ah improvident contract.
The only rational explanation of how this contract of De•cember 1st came to be made is suggested by the referee in his -decision, where he expresses the belief that when the second •contract was signed the parties ovérlooked the fact that the :stoek liability of the corporation, as shown on its books, had been reduced $174,000 between the dates of the two contracts, and that neither realized that in the meantime the book value •of the stock had been enhanced over forty per cent. It seems to us that this conclusion is correct, at least as to the plaintiff, •and that the contrary finding made by the referee is incorrect.
In order to properly construe a contract susceptible of more than one construction, the court should place itself as nearly as it may in the position of the parties who made it, by considering the surrounding facts and circumstances, the nature 'of the subject matter, the relation of the parties to the contract, and the objects sought to be accomplished thereby. 2 Page, Cont. § 1123; Mayer v. Goldberg, 116 Wis. 96, 92 N. W. 556, and cases cited. When the language used in a -contract is susceptible of more than one meaning, it is essential that the court should understand the conditions that existed when the contract was made, in order to adopt that construction which would express the true intent and meaning -of the parties.
However, it is the duty of courts "simply to enforce contracts, unexceptionable on other grounds, precisely as the par-lies have made them, instead of making new contracts for them to meet the emergencies of a particular case, or to avoid some supposed inconvenience or hardship arising from the •natural import of the written engagement. And the written Instrument furnishes the best possible evidence of the inten tion, and determines the liabilities of tbe parties." Heath v. Van Cott, 9 Wis. 516, 522.
"In construing a contract it must be observed that, while the office of judicial construction is to give effect to the intention of the parties, and that words and sentences should be so construed as to subserve such intention, this does not mean that violence may be done to the words the parties see fit to employ, but only that it is the duty of courts to look at the whole and every part of the contract, and to give that construction to it which will make it effectual to carry out the real intention of the parties so far as the words they see fit to employ will permit, without doing violence to the rules of language or the rules of law." Braun v. Wis. R. Co. 92 Wis. 245, 247, 66 N. W. 196, 197.
And in construing contracts the courts "cannot give effect to the intention, however manifest, which plainly violates the rules of language or of law." Mississippi River L. Co. v. Wheelihan, 94 Wis. 96, 98, 68 N. W. 878, 879; 2 Parsons, Cont. 494. '
Words may not be added to a contract unless obviously implied. ' Where the language used is not ambiguous the apparent import of the words must govern. .Where the words used! are of uncertain meaning, within certain limitations, that construction should be adopted which will best effectuate the intention; but words should not be constructively put into a contract that are not there. Mississippi River L. Co. v. Wheelihan, supra. When plain language is used in such a-connection as to leave no room to say reasonably that the parties may have intended either of two meanings, the apparent import of the words as generally understood must govern. Thurston v. Burnett & B. D. F. M. F. Ins. Co. 98 Wis. 476, 479, 74 N. W. 131; Wells v. M. & St. P. R. Co. 30 Wis. 605; 1 Story, Cont. (5th ed.) § 780.
In speaking of an improvident provision made in a conveyance this court in another case said:
"But so long as the parties saw fit to insert in the grant plain words of limitation, pointing to particular instruments for measuring the water, we must hold to such plain meaning,. and not, for the purpose of relieving parties from difficulties which were not properly provided against at the proper time, put words into the grant by construction. That would be a violation of rules of law by judicial construction, and courts are not permitted to do that." Appleton P. & P. Co. v. Kimberly & C. Co. 100 Wis. 195, 201, 75 N. W. 889, 891.
In answer to the contention of counsel that testimony of the circumstances surrounding and leading up to the making of a written contract are always admissible for the purpose of putting the court in the position of the parties at the time the contract was made, this court has said:
"Not so! Where there is no ambiguity in the contract, either in its literal sense or when it is applied to the subject thereof, it must speak for itself entirely unaided by extrinsic matters. Where such ambiguity does exist, then evidence of the circumstances under which the contract was made is proper to enable the court in the light thereof to read the instrument in the sense the parties intended, if that can be done without violence to the rules of language or of law." Johnson v. Pugh, 110 Wis. 167, 170, 85 N. W. 641, 642.
Parties cannot use terms with a fixed and certain meaning and then disclaim such meaning; at least not without reformation of the contract. Murphey v. Weil, 92 Wis. 467, 473, 66 N. W. 532.
Under cover of construction a court cannot reform a written contract to make it express the real intention of the parties, which, by mistake, is not expressed in the words thereof. Robbins v. Rollins, 127 U. S. 622, 8 Sup. Ct. 1339; Te Poel v. Shutt, 57 Neb. 592, 78 N. W. 288; Sinclair v. Hicks, 116 N. C. 606, 21 S. E. 395; 2 Page, Cont. § 1130. Courts of equity may reform contracts for mistake or fraud when the modicum of proof required by the established rules of law is furnished to warrant reformation. Braun v. Wis. R. Co. 92 Wis. 245, 248, 66 N. W. 196, and cases cited.
Applying the foregoing rules of law to the facts in this case, is the plaintiff entitled to relief ? His contention is that the contract of August -22d provided for a sale of twenty-five of tbe five hundred shares of the capital stock of the corporation, or a one-twentieth interest therein, and that for the purposes of this case the subsequent contract should also be treated as a sale of a one-twentieth interest in the corporation, and that the decrease in the capitalization of the company in the interim between the execution of the preliminary and final contracts should not be held to affect the rights of the parties.
It must be remembered, however, that the plaintiff, by the contract dated December 1st, did sell and convey to the defendant, subject to his lien to secure the payment of the purchase money, twenty-five shares of the capital stock of the company as it then was, without any reference being made in the contract to the fact that any particular fractional interest in the corporation was sold, and that nothing was done by the plaintiff for a period of more than five years thereafter to indicate that he had in fact intended to sell but a one-twentieth interest instead of the much greater interest that he did in fact sell. No implication can be drawn from the contract that it was intended to sell any other or different interest from that expressly provided for. By said contract the plaintiff agreed, "in accordance with the terms of the agreement entered into between the parties heretofore on August 21, 1899 [meaning, no doubt, August 22d], to sell to said Mengelberg twenty-five (25) shares of the capital stock of said Herman Zohrlaut Leather Company at par." This provision can only be held to mean that the twenty-five shares of stock provided for in the former contract were to be sold by plaintiff to defendant. It cannot mean that the provisions of the former contract as to price should govern, because the parties specifically stated otherwise. If the amount of stock remained unchanged, the plaintiff would be entitled under the preliminary contract to receive about $2/700 above par for the stock sold, on the basis of any calculation, and over $2,000 more than that sum if there had been no change made in the stock liability of tbe company, and if tbe other entries on tbe books under date of November 30th were taken into account. Tbe contract of August 22d called for tbe sale of twenty-five shares of stock, and by tbe contract of December 1st that number of shares were sold and transferred to tbe defendant; and, without doing violence to tbe language used by tbe parties in making their contract, we fail to see bow we can bold that a smaller number of shares were sold, or bow we can say that a settlement should be made on any other basis than that provided by tbe parties themselves in their contract.
We are impressed with tbe belief that tbe evidence and tbe reasonable inferences to be drawn therefrom satisfactorily show that plaintiff mistakenly either sold a greater amount of stock than be would have sold bad be comprehended tbe effect of tbe book entries of November 30th, or that be sold tbe amount of stock which he did at a less price than be would have sold it bad be realized tbe extent to which tbe book value of tbe stock bad been so suddenly and so materially enhanced. It may be that, bad be seasonably applied to a court of equity for a reformation of tbe contract, be would have been entitled to relief. Tbe plaintiff, however, has brought an action at law on tbe note given in payment for tbe stock, and, if relief is given at all, it must be by a construction of tbe contract, which is not permissible as it stands. In other words, we see no escape from tbe conclusion that by tbe terms of tbe written contract tbe plaintiff did, on December 1st, sell twenty-five shares of tbe capital stock of tbe corporation, and obligated himself to repurchase it in tbe event of a certain contingency arising, and which did arise in this case, and to purchase tbe stock at its book value at tbe time tbe contingency arose.
We do not think tbe defendant bad done anything to forfeit bis right to insist that tbe plaintiff purchase bis stock under tbe terms and conditions provided in tbe contract between tbe parties. Neither do we think any error was committed in refusing to allow interest on tbe note sued upon. No divi- lends were declared by the corporation after defendant purchased the stock, and the contract of August 22d, which was referred to in the one later made, clearly provided that interest should not be charged in excess of the dividends declared.
The evidence offered was directed to the book value of the stock of the corporation on December 1, 1904. The defendant continued in the employ of the company until January 1, 1905. It is argued that the evidence offered did not establish the book value of the stock of the corporation as of the proper date. The date of December 1st was selected, presumably, because the corporation closed its books on that date. The variance in time between the two dates is slight, and it is highly improbable that there was any substantial difference between the value of the assets between December 1st and January 1st, or that the assets were less on the latter date than on the former. The books were within the immediate control of the plaintiff, and if any substantial difference existed it might readily have been shown by him. Technically the plaintiff was entitled to recover on the basis of the book value of the stock on January 1st. But we think the evidence offered substantially proved that value, and that no good purpose would be served by prolonging this litigation in order to determine whether there was a slight variation in the surplus of the company between these two dates.
By the Court. — Judgment affirmed.
Timlin, J., took no part.
A motion by the appellant for a rehearing was granted on April 5, 1910, and the cause was again argued on October 29, 1910.
For the appellant there was a brief by Nath. Pereles & Sons, attorneys, and Quarles, Spence & Quarles and Glicksman, Gold & Corrigan, of counsel, and a separate brief by T. W. Spence, of counsel; and the cause was argued orally by Mr. IF. L. Gold and Mr. Spence.
Eor tbe respondent there was a brief by 'Winkler, Flanders, Bottum & Fawsett, and oral argument by James 0. Flanders.
Tbe following opinion was filed November 15, 1910:
Pee CuexaM.
A motion for a rehearing was granted in this case and tbe same has been reargued. Chief Justice WiNslow and Justices BaeNes and Vietje are agreed that tbe former decision was correct. Justices Marshall, Sie-becKee, and KeewiN reach a contrary conclusion. Justice TimliN, having been of counsel in the case, did not sit. This situation results in an affirmance of the judgment.
By the Oourt. — Judgment affirmed.
The following opinion was filed November 19, 1910: