Court Opinion

ID: 8656459
Source: CourtListenerOpinion
Date Created: 2022-11-24 21:16:27.097699+00
Date Added: 2024-06-11T16:56:44.531797
License: Public Domain

FRICK, C. J.
I concur. There are four parties named in the contract of sale. Although all of the four were duly served with summons, only two of them appeared and defended the *552action. The two not appearing have, therefore, confessed the allegations of the complaint. In my judgment the two who have answered, however, have not interposed any legal defense to the complaint, except the limited defense that is contained in the general denial after having admitted the execution and delivery of the contract sued on.
From what appears in the record, it seems the district court considered only the contract sued on, and arrived at the conclusion that under it plaintiff had no cause of action. As I view it, that conclusion is clearly erroneous. To my mind, it is very clear that the four defendants named sold to the plaintiff twenty-two shares of the capital stock of the corporation named in the contract, which stock they owned in their individual right, for the sum of $2,100, of which the plaintiff paid $1,500 in cash, and- agreed to pay the remaining $600 within three months from the date of the contract of sale. The proof shows without dispute that the plaintiff paid the remaining $600 within the specified time, and repeatedly demanded either to have the stock delivered to him or that the defendants repay the money he had paid for the same. The defendants did neither; hence this action.
A defense is attempted to be based on certain stipulations of the contract. While it is a cardinal rule of construction that all of the stipulations of a contract must be given their usual and ordinary meaning and intended force and effect, yet it is also a well-recognized rule of construction that, in ease a stipulation in a contract merely expresses what the law implies, the stipulation will be given the force and effect only that is implied by law. The latter rule is manifestly applicable to some of the stipulations in the contract in question. For example: The statutes of this state provide what the rights of each stockholder are by making each share of corporate stock of the same class equivalent in power and right to every other share of stock. When the plaintiff, therefore, purchased the twenty-two shares of stock, his rights in the corporation were determined by law. It follows, therefore, that the provision of the contract, “that we acknowledge him as copartner to the extent of his shares from the twenty-fifth day of October, 1910, ’ ’ can be given no other effect than *553to fix tbe time when his property rights in the corporation began, providing the sale was consummated by a delivery of the stock to him and was transferred on the books of the corporation.
The other stipulation, "that he shall be responsible from that date for the losses and payments and that he shall be entitled to the profits,” is a matter entirely determined by law; that is, no one is actually a stockholder in a corporation, as against the corporation and as against the stockholders generally, unless he originally subscribes for stock, or unless he purchases it from some one other than the corporation, and the stock is delivered to him, and it is transferred on the books of the corporation. In this case the defendants sold to the plaintiff the twenty-two shares of stock, but they have failed and neglected to deliver the same to him. They have, therefore, breached their contract of sale, and thereby have prevented plaintiff from completing the relationship of stockholder and of enjoying the benefits, if any, of such relation. The legal rights of the plaintiff as against the defendants, therefore, are precisely the same as though the defendants had sold him any other personal property, had received the purchase price therefor, and had failed to deliver the property to him at the time stipulated, or upon demand if no time was stipulated.
Nor does the provision in the contract, "that we reserve the right to deliver him the shares,” affect the foregoing conclusions. If it be contended that it means something different from the meaning given it by Mr. Justice GrIDEON in his opinion, then it has no force or effect whatever, since it is clearly repugnant to every other provision of the contract, and manifestly contrary to the general intent and purpose of the parties in entering into the contract. In 2 Elliott on Contracts, after discussing the effect of repugnant stipulations and clauses in contracts, in section 1515 it is said:
“But while words or clauses in a contract apparently repugnant should be reconciled if it can be done by any reasonable construction, yet a proviso which is utterly repugnant to the body of the contract, and irreconcilable with a former clause and repugnant to the general purpose and intent of the contract, will be set aside or rejected; likewise a sub*554sequent clause, irreconcilable with a former clause and repugnant to the general purpose and intent of the contract, will be set aside or rejected.”
While courts long hesitate to enforce the rule above stated, yet where, as here, the effect of the subsequent clause would entirely nullify all that is before said in the contract, and would have the effect of giving the defendants both the contract price and the thing sold, but one conclusion is permissible, and that is that the latter clause must either be rejected or be given some subordinate effect.
In my judgment, as the record now stands, the plaintiff is clearly entitled to judgment as prayed for in the complaint.