Court Opinion

ID: 4730178
Source: CourtListenerOpinion
Date Created: 2021-08-12 02:55:07.549056+00
Date Added: 2024-06-11T08:08:00.019215
License: Public Domain

Chadwick, J.
(dissenting) — The majority has made an exceedingly difficult case out of what seems to me to be a very simple one. Taking the contract as a whole, its meaning is plain, and there can be no doubt that the judgment of the lower court is right. Brown was, or at least played the part of what is known as, a “promoter”; one who puts an enterprise in motion and grabs what he can as it passes by. So far as the record shows, he was without means. He had contracted to purchase certain mining property, and had agreed to pay Bullock & Bullock $32,000, the remainder of the purchase price, at the times mentioned in the contract exhibited in the majority opinion. To meet this engagement he followed the usual custom of promoters. He organized a *668corporation, and into this he induced his friends Robbins et al. to put $5,000, and caused the company to assume his debt of $32,000.
The tripartite agreement provides that, in consideration of the grant of 35,000 shares of stock, Brown and his associates would pay the $32,000. They had no present means with which to meet this obligation; and Brown further agreed that, in case he and his associates failed to pay the purchase price of the property, and the other parties did, that they should have the 35,000 shares and 50,000 shares of their individual stock which Brown and Brynton caused to be deposited in the Exchange National Bank to insure its delivery. When it is considered that, at the time the contract was made, Robbins et al. were paying 25 cents per share for the stock, it is not unreasonable — in fact, it is the natural deduction from the premise — that, in the event they were called upon to pay out the $32,000 to protect the property, they should receive an amount of stock which in some degree would approximate the amount of money they had advanced. The agreement was not a nudum pactum; for Brown, notwithstanding the fact that the company had assumed his debt, was to be relieved of his obligation. It was still his debt so far as Bullock & Bullock were concerned. The assumption that Robbins et al. would receive the 50,000 shares in any event whether they paid the purchase price or not, and that the stipulation therefore operates as a forfeiture, may be disposed of in two ways:
First, Brown had a right to assume that Robbins et al. would pay the $32,000 which, notwithstanding the argument of the writer of the majority opinion, furnished the basis of their right to the 50,000 shares. They had paid all that had been put into the company, and Brown made his contract on the theory that they were able to pay the purchase pi'ice, and would pay it in case he did not do so. But this point, and it is this point on which the majority opinion turns, is not in the case. The fact is, they did pay it, and *669the premise of the court’s opinion could only be based upon the proposition that they were claiming the 50,000 shares without having paid the $32,000.
Second, there can be no forfeiture. It is fundamental that a forfeiture cannot occur unless a party is deprived of something. He must have something to forfeit. Brown had nothing to give up; his stock represented nothing; he had not put a dollar in the company; his interest was a chimerical hope that he might induce others to pay the purchase price, and thus clear and possibly make the remainder of his “promoter’s stock” of some value; or if none was left he could step out with hope deferred but without loss of money. The agreement to surrender the 50,000 shares was by way of compensation to Robbins et al. in the event they were forced to pay the purchase price of the property to protect the investment of $5,000 which Brown had induced; and was not, and should not, under the facts of this case, be tortured into a penalty. If the stock of the company were the inducement of the contract,, it is only fair to presume that Robbins et al. would, as business men, have taken it up at 25 cents per share rather than assume the risk of paying nearly a dollar a share. This the decision of the court binds them to do.
Robbins et al. knew nothing of plaintiff’s claim that Brown’s stock had been assigned to him, and should not therefore be bound by any deals between Brown and plaintiff. I know of no rule of law or equity, or even good morals, that would preserve to Brown or his assignee an equity in a property into which he had induced his friends to invest, when, in order to protect their original investment, they were compelled to secure the title to the property which he had guaranteed and without which their original investment would be a total loss.
The result of our decision is that Brown, who put in nothing and even failed to secure title to the property, takes out of his investment of nothing and the breach of his contract *67010,000 shares of stock. The 35,000 and the 50,000 shares represent, and in. law is, pro rata, the property itself, and the men who pay for the property should receive the stock; otherwise they have paid for something they have not received. I therefore dissent.
Fullerton, J., concurs with Chadwick, J.