Court Opinion

ID: 9616651
Source: CourtListenerOpinion
Date Created: 2023-08-22 04:48:27.885697+00
Date Added: 2024-06-11T10:41:28.045109
License: Public Domain

Ness, Justice
(dissenting) :
Being convinced this transfer was a “sale” as opposed to a “gift”, I respectfully dissent.
This matter was before the Court in McLeod v. Sandy Island Corporation, et al., 260 S. C. 209, 195 S. E. (2d) 178 (1973). In that decision this Court held that the ninety-four (94) shares were, in fact, transferred the child, however, that the corporation, under the language of the stock limitation, had the right to show what effect, if any, the knowledge by the wife of the restriction had on the daughter’s right of ownership.
Thomas M. McLeod and his wife Marlene B. McLeod were divorced in Florida in 1970. Partial consideration for the settlement was ninety-four (94) shares of stock in Sandy Island Corporation which were transferred to their daughter, Michele McLeod. The ultimate question for our determination is whether the transfer was a “sale” within the meaning of the stock restriction or a “gift.” The definition of sale is found in S. C. Code § 62-2 of the Uniform Securities Act which reads, “(10) (a) ‘sale’ or ‘sell’ includes every contract of sale of, contract to sell, or disposition of, a security or interest in a security for value.” (Emphasis added). The key words here are “disposition of a — security for value.”
The transfer of the stock certificate to the appellant custodian was a disposition of the security, even if it did not *13constitute a “sale” in the common usage of the word. Was it a disposition for value? A valuable consideration may consist either in some right, interest, profit or benefit accruing to the one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other. Furman University v. Waller, et al., 124 S. C. 68, 117 S. E. 356 (1923); Jay Cee Fish Co. v. Cannarella, 279 F. Supp. 67 (S. C. 1968); 33 A. L. R. 615. The accrued benefit or consideration for which the respondent McLeod transferred the stock to his wife, the appellant, as custodian, was partially in lieu of payment of support for their child. If it was a true gift involving no consideration, there is no reason for it to be included in the settlement papers or the judge’s decree. It is more than coincidental that the transfer was provided for in the decree.
The fact that the consideration was the transfer of stock rather than a cash payment does not affect the value of the consideration for the delivery of the stock. Value is “a fair return in money, goods, services, etc., for something exchanged.” Webster’s New International Dictionary, Unabridged (2nd Ed.). Furthermore, I think the majority has mis-spent its reliance on the general doctrine that consideration is not present when one promises to perform an existing duty. That general maxim is not applicable to the facts of this case. By the settlement agreement the father’s duty to support his child was transposed from an abstract legal proposition to a definite arrangement whereby he obligated himself to comply with concrete conditions. This is adequate consideration to support enforcement of a contract and constitutes value. The settlement may be likened to an agreement resolving the amount of an unliquidated debt or to a third party beneficiary contract. Forman v. Forman, 17 N. Y. (2d) 274, 270 N. Y. S. (2d) 586, 217 N. E. (2d) 645 (1966); Smith v. Smith, 7 Ohio App. (2d) 4, 218 N. E. (2d) 473 (Ohio 1964) ; 34 A. L. R. (3d) 1357; see also Hayes v. Hayes, 65 Ga. App. 222, 15 S. E. (2d) 626 (1941) (duty of husband to support wife ade*14quate. consideration to enforce support agreement) ; Vol. 1A Corbin on Contracts, § 188, p. 167; Cf. Kennedy v. Badgett, 19 S. C. 591 (South Carolina Reports, Vol. 36, 1883).
Since a sale includes a disposition for value [by the definition in 62-2(10) (a) of the Code], it would seem axiomatic that one to whom a disposition is made - is a purchaser. See S. C. Code § 10.1-201(32) of the Uniform Commercial Code. This conclusion becomes irresistible when we consider that the only alternative to a sale is to denominate the transaction as a gift. At the time of the transfer the husband and wife were dealing at arms length, if not at dagger points. Apparently neither was willing to make any concession except as required by law and except for the purpose of settling their disputes peaceably without submitting their rights to the court. The child was to be in the mother’s custody and supported by the father. It is inescapable from the record that the father agreed to transfer this stock to the child as a part of the settlement with his wife and the wife agreed to accept this on behalf of the child in lieu of demanding increased support.
Here we have concurrent findings of the Master and the Judge to the effect that the transfer was a “sale”. We will not, under our line of cases, reverse this finding unless it is clearly against the preponderance of the evidence or based upon some error of law leading to an erroneous conclusion. Diamond Swimming Pool Co., Inc. v. Broome, 252 S. C. 379, 382, 166 S. E. (2d) 308. I do not think that this Court can logically say that the finding of the court below is against the clear preponderance of the evidence. It seems to me that this husband bought his peace in the divorce proceeding by transferring this stock, and the fact that it was part of the. agreement that the transfer be under the Gifts to Minors Act is entitled to little weight. It cannot be seriously argued that the husband would have given this stock to the child if the litigation had not been pending and, as heretofore stated, it is more than coincidental that' the *15gift-sale ends up in decree, having the sanction of the court and being enforceable as for contempt if the husband did not proceed with the transfer.
It is also clear to me that the company and/or the other stockholders have an interest in this stock, under the restrictive agreement, which the court should protect.
Under the circumstances of this case, I am unable to find support that the transfer of stock was actuated by a donative intent. As was stated in United States v. Davis, et al., 370 U. S. 65, 82 S. Ct. 1190, 1192, 8 L. Ed. (2d) 335 (1962):
“Any suggestion that the transaction in question was a gift is completely unrealistic. Property transferred pursuant to a negotiated settlement in return for the release of admittedly valuable rights is not a gift in any sense of the term.”
Therefore, it seems apparent to me that this transaction was a sale as opposed to a gift.
Independent of the nature of the transaction, the Plaintiff was not entitled to be recognized as the owner of the shares. All of the parties to the transfer restriction agreed that it was to cover any transfer of shares (§ 263, p. 66, §§ 300-301, 303, p. 75; § 325, p. 82, §§ 371-373, pp. 93-94). Furthermore, the mother as guardian of the child had knowledge of the restrictions (§ 261, p. 66; § 328. p. 82). See S. C. Code 10.8-204. Concurrent findings were made in this regard and the only defense is that the parol testimony should not have been allowed to alter the terms of the contract.
The majority opinion would hold this testimony inadmissible, however, the majority apparently overlooks the fact that the plaintiff was not a party to the contract between the stockholders and that the parol evidence rule does not apply as between the contracting parties and a stranger. City of Orangeburg v. Buford, et al., 227 S. C. 280, 87 S. E. (2d) 822 (1955); Wigmore, § 2466, p. 149 (3rd Ed.).
*16I would affirm the trial court as to the “sale” and hold that the plaintiff was not entitled to the relief she sought. The lower court ordered transfer of the stock for Fifty Thousand ($50,000.00) Dollars, but since the defendants did not counterclaim, the only determination should have been that the plaintiff was not entitled to have the stock certificate recorded under her name. I would remand the case to the lower court for the purpose of having it determined in equity, first, the time as of which the stock should be valued and, secondly, the value of the stock as of that time. Thereafter, the court should permit the defendants to exercise their option within an appropriate time and if such option be not exercised then the plaintiff may apply again to the court for an order directing the corporation to transfer the stock to her for the benefit of the child.
Littlejohn, J., concurs.