Court Opinion

ID: 9864504
Source: CourtListenerOpinion
Date Created: 2023-09-25 13:37:49.238929+00
Date Added: 2024-06-11T12:14:27.332918
License: Public Domain

THE COURT.
Appellant has petitioned for a rehearing in the above-entitled cause after decision rendered by this court affirming the judgment of the lower court.
The material facts involved in the controversy clearly appear in the former opinion, and need not here be reiterated. In that opinion it was said: “It seems to us that treating the indorsement as an indivisible part of the contract, defendant lost none of his rights by not giving the notice contemplated in the indorsement, and that considering all the facts of this ease and the facts upon which the Vance case was decided, the latter case is here applicable.” This language, it is claimed, lends itself to some confusion, and petitioner herein takes the position that by the Vance and Harney eases the option on the back of the duplicate must be regarded as a part of the contract (and those cases so hold), binding upon both parties, though said option was never communicated to petitioner, that thereupon it became the duty of Merz, if he desired to terminate this relationship, to so notify the corporation within the ten months specified in the said option, and that, therefore, the court is in error if it intends to say that Merz need not so notify the appellant corporation within the said time.
Even conceding that this contention of petitioner is correct, we are of the opinion, after a very careful re-examination of the record, that petitioner is not entitled to a rehearing, and that the result reached by the trial court was a correct one.
It is to be remembered that upon being solicited for a subscription by appellant’s agent, Avery, Merz declined to enter into any agreement unless he was given a ten months’ option to return his stock and receive his money back. It is at once apparent that the negotiations between Avery and Merz constituted at least one of two things; either they amounted to an offer from the company through its agent to Merz or constituted an offer from Merz to the company.
If the former be the true aspect in which to view the transaction, then we should indeed have a similar condition to that existing in the Vance and Harney cases; namely, that Avery, *421as agent, had authority to enter into the contract, as modified by the option, and that, therefore, said contract was completed, and Merz made a stockholder, upon the signing of said contract. Viewing the case in this light there would be no question but that Merz would have to exercise his option of returning his stock within the period stipulated in said option; that is, ten months from the date of the signing of the contract, and that not having done so, he has no standing in court.
But appellant overlooks the effect of Merz’s testimony as to the negotiations, which is the only evidence upon this phase of the case. Merz was asked: “Q. Now, just state to the court what was said by Mr. Avery with regard to the acceptance or nonacceptance of this contract, and what, if anything, Avery was going to do with this contract—whether or not he was to submit it to the company, as was stated.” And his answer was: “A. He stated that it was customary to make a payment on this, these subscription agreements for stock, and I refused to make that, and he says, ‘Well, I will send this whole thing in and they can accept it or reject it as they see fit,’ and I says, ‘All right, with that I will sign it.’ ” This shows clearly that in taking the contract, Avery did not purport to act with authority to bind the company or to assume the responsibility of accepting for the company a subscription on the conditions imposed by Merz, but that both parties understood that Merz’s proposition was an offer to be submitted to appellant for such action as it might take. Therein does this case differ substantially from the Vance and Harney cases, where the offer came from the agent acting and purporting to act within the apparent scope of his authority. And in this connection it is now settled that where the proposition or offer does not come from the corporation, but from the subscriber, the subscription must be accepted by the corporation. Appellant then argues that “it has been repeatedly held that the subscription is accepted by the corporation when it makes an entry thereof in its books, spends money on the faith of it, or otherwise treats the subscription as being accepted. (Clark and Marshall on Private Corporations, sec. 439b, p. 1366.) ” Even assuming this to be a correct statement of the law of this state, it has no application here, for the very obvious reason that the offer or proposition of Merz was never submitted to appellant. The entry upon its stock *422book, which it is claimed constitutes an acceptance, was of the original proposition made by Avery to Merz, minus the option feature, and was not the proposition submitted by Merz and intended by him to be submitted to appellant. Merz’s proposition, as already pointed out, was fraudulently retained by Avery. Obviously, then, no contract was entered into. The corporation, because of its agent’s fraud, received and thereupon accepted a proposition essentially different from that submitted by Merz, a proposition that had previously been refused by him. No mutual rights were ever created, and so none could be lost. Viewed in this light, it ,is,a sound conclusion that Merz lost no rights by not giving the notice contemplated in the indorsement.
Whatever is said in our former opinion regarding the application of the Vance and Harney cases-to the instant case must likewise be understood in the light of what is here said. There is nothing at all inharmonious between those cases and this.
The petition for rehearing is denied.
A petitiori to have the cause heard in the supreme court, after judgment in the district court of appeal, was denied by the supreme court on January 24,1918.