Court Opinion

ID: 3524334
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:36:30.864138+00
Date Added: 2024-06-11T13:45:46.651802
License: Public Domain

The contract of July 9, 1903, is what it purports to be. Cupples sold and delivered *Page 517 
to Rogers eighty shares of the stock; Cupples reserved an option to re-purchase the stock on the condition stipulated, that is, when Rogers should cease to be in the employ of the company Cupples should have the option within ninety days thereafter to re-purchase the stock, but if, within ninety days, he should not exercise his option, on payment of the $8,000 note, the trustee would endorse and deliver the shares of stock to Rogers.
On the execution of this contract, the note was also executed and the shares delivered to Rogers who endorsed them to the trustee. Rogers from that time on was a director and voted his stock, and from that time on was, and still is, an employee and officer of the company. He was recognized during all these years as owner of this stock. He has never breached the contract. Cupples died January 6, 1912. He recognized Rogers's right to pay the note. He received payments on the note. Up to July, 1913, Rogers had paid on the principle of this note $6836.06. He tendered the trustee the balance, $1163.94, and all interest, and demanded the shares of stock, which were refused.
This contract brought Cupples and Rogers into close personal relations involving trust and confidence. The Supreme Court of the United States, in Arkansas Smelting Co. v. Belden Co.,127 U.S. 379, quoted the familiar phrase of Lord Denmann: "You have the right to the benefit you anticipated from the character, credit and substance of the party with whom you contract." The same court further said: "The rule upon this subject, as applicable to the case at bar, is well expressed in a recent English treatise: `Rights arising out of a contract cannot be transferred if they are coupled with liabilities, or if they involve a relation of personal confidence such that the party whose agreement conferred those rights must have intended them to be exercised only by him in whom he actually confided.'"
This being true, the option to re-purchase the stock was a personal right or privilege. The contract does *Page 518 
not stipulate that the heirs, executors, administrators or assigns of Cupples might re-purchase the stock if Rogers should quit the employment of the company. Had he quit its service on Cupples's death, it would not have been a breach of the contract, for the relation being personal, his contract did not oblige him to continue that relation with strangers to the contract. The option being personal, terminated with the death of Cupples. Rogers continued in the service, was recognized as a stockholder and voted his stock, was continuously elected a director and officer and at the institution of this suit, was and still is vice-president of the corporation.
Moreover, if Rogers had quit the service, Cupples might not have desired to re-purchase the stock. It might have depreciated or he might have been willing to part company with Rogers. Rogers did not agree to allow a stranger to exercise the option. Hence, when Rogers, after Cupples's death, tendered full payment of the note and demanded delivery of the stock, he was clearly within his rights and the court erred in cancelling the contract and declaring it forfeited.
Ownership of the stock, which was recognized for sixteen years, implies the right of sale. The only restriction on Rogers's ownership imposed by the contract was the option Cupples had to re-purchase in case Rogers quit the service. There is no stipulation that the contract would be forfeited if he contracted to sell his interest. By his payments on the note, he had a large beneficial interest in the stock. Forfeitures are abhorred. Neither in law nor in equity will a forfeiture be allowed unless the contract expressly so provides. The right to forfeit the contract because of an offer to sell cannot be found or read into the contract. Rogers's right to delivery of the stock was complete before he offered to sell it to Scudder. In my opinion the trial court erred in its judgment, and it should be reversed with directions to enter judgment for the appellants on payment of the balance due on the note. I therefore respectfully dissent from the learned opinion of the Commissioner. *Page 519