Court Opinion

ID: 5470009
Source: CourtListenerOpinion
Date Created: 2022-01-09 20:32:05.511527+00
Date Added: 2024-06-11T08:33:16.202029
License: Public Domain

By the court, Leonard, P. J.
The defendants authorized George H. White, their president and William H. Lee, a trustee to sell four thousand shares of the stock of the company for $2.50 per share, the par value being $10. White received from the plaintiff $1,750, on the 23d of August, 1864, and signed a receipt for that sum from the plaintiff in full of seven hundred shares of the capital stock of the company, the receipt to be exchanged for certificates of stock on presentation to the secretary.
White signed the receipt for J. G. Williams, treasurer; this is a valid contract on the face of it binding the company to deliver the stock for which the plaintiff’s money was received.
It is said that public policy will not permit an incorporated company to sell its own shares for less than par. The facts are not before the court to raise the question mentioned. It has not been made to appear how the company acquired the stock. It may have been issued for property and acquired subsequently by the company; or it may have been forfeited stock for the non-payment of the subscription price. It cannot be inferred in favor of the defendants, that the stock had not been fully paid up and afterwards acquired by the company. If it were otherwise, I am unable to perceive any rule of public policy that requires the court to relieve tl e defendants from a contract otherwise without objection bin<-y ing it to the delivery.of shares in its capital for a price below its par value. The contest in this case relates to the nondelivery of two hundred shares, a portion of the number mentioned in the contract. The company delivered to the plain*335tiff certificates for five hundred shares admitting the validity of the contract only to that extent. When-the receipt was signed by the president of the company the plaintiff stated that he had agreed with Mr. Lee to take two hundred shares from him in addition to the five hundred which he had agreed before that time verbally with the president, to take and pay for at the price named. He stated to White that Lee had agreed that he should have two hundred shares of the stock which the company were offering to dispose of through the agency of White and Lee. It appeared that Lee was absent from the city of New York when the business was transacted and White relying upon the truth of this statement received the money of the plaintiff and signed the obligation of August 23d, binding the company to deliver the additional two hundred shares claimed by the plaintiff. Lee was a witness on the trial as well as the plantiff, and testified that he had not made any agreement to sell the two hundred shares to the plaintiff. Upon his return he had informed the officers of the company that he had not made any such agreement as had been claimed by the plaintiff, and insisted that the shares so claimed had been taken by and belonged to him the said Lee. The defendants accepted his version of the matter and issued the shares in controversy to Mr. Lee. It is quite clear from an examination of the evidence that there was no valid contract between Lee, either in his individual capacity or acting as the trustee and agent of the company, and the plaintiff for the purchase and sale of the shares in question.
There was no contract in writing signed by the parties or either of them, and nothing paid or received on account. As between Lee and the plaintiff the contract was nudum pactum and in no way obligatory upon either party.
The statement made by the plaintiff to White upon which he procured the contract for the additional 200 shares of stock, was without foundation and ought not to have been made. It may be that there had been a conversation between.Lee and the plaintiff to the effect stated by *336the .plaintiff, and the plaintiff may not have intended a fraud upon any one, .but that does riot strengthen the case on his-part, although -it may have the effect of relieving him from the charge of misrepresentation with a fraudulent intent. The agreement was signed by White under a mistake at least as to the fact of a sale made by Lee, and that mistake occurred by the erroneous statement of the plaintiff The contract for that reason was not binding upon the company so far as it related to the two hundred shares. The defendants were willing to rescind and tender to the plaintiff the money received from, him, but he declined it. The judgment rendered is,for $6,948.64 damages, for the non-, delivery of the two hundred shares at the highest market rate between the time when the plaintiff demanded certificates therefor and the day of trial, waiving the specific delivery of the shares,- this judgment for money damages instead of the shares, is claimed by the plaintiff upon the ground that the defendants having issued certificates for the said shares to Lee had rendered themselves incapable of specifically performing the contract by delivering the shares to the plaintiff. The-rule stated is correct, but the fact has not been shown to exist as claimed. There is no proof that the defendants had no other shares for which they could lawfully issue certificates to the plaintiff if they were under an obligation to do so. In my opinion the j udgment should be reversed, and a new trial be had before the same referee, with costs to abide the event.
Judgment reversed and new trial granted.