JONES v. KENT

JONES v. KENT. N. Y. Court of Appeals; April, 1880. [Reversing 45 Super. Ct. (J. & S.) 66.] Sale oh Stock.—Agreement to share Advance. An agreement made on the sale of stock, that the transferee is to give the transferor a share of the advance, when sold, over the price the former paid to the latter, does not leave it wholly optional with the former and his representatives whether a sale shall be made or not. It is a rule of interpretation that a writing contains all that may fairly be implied from it. After the advance of the market value beyond the price fixed, and after the death of the transferee, his personal representatives cannot postpone the sale of the stock in their discretion. Where the transferee, in such a case, has exchanged part of the stock for bonds, he paying a bonus, the transferor is entitled, on the sale, to one-half the excess of the proceeds of the stock and bonds over the amount paid- on the original transfer and the bonus. Appeal from a judgment of the general term of the superior court of the city of New York, ¿firming a judgment of the special term, dismissing the complaint upon the merits. The action was brought by J. Wyman Jones against George L. Kent, administrator of E. Rockwell, deceased, and the St. Joseph Lead Company, to enforce an alleged trust in favor of plaintiff in certain stocks and bonds of the St. Joseph Lead Company, held by the defendant, Kent. The plaintiff, who was the president of the St. Joseph Lead Company, transferred to defendant Kent’s intestate, E. Rockwell, two thousand shares of the company’s stock. The transfer was in two lots, and in each instance Rockwell signed and delivered to the plaintiff a written instrument. In both cases the instruments were in the following form, “Receivedof J. W. Jones, by agreement, one thousand shares of St. Joe Lead Stock, for which I have paid him $3,000. The understanding is, that I am to give said Jones one-half of whatever price the same is sold for, when sold, over and above that sum.” Subsequently Rockwell, with the plaintiff’s assent, surrendered'to the company one hundred and forty shares of stock, and received its bonds in exchange. Rockwell died; and the defendant Kent was appointed as his administrator. The stock increased in value ; and before the suit was begun, became worth considerably more than $3,000. The Superior Court on the trial at a special term found that the transfer was an absolute sale, and not in trust, and held that the plaintiff could not compel a sale, and therefore dismissed the complaint on the merits. At general term, on appeal, the court was of opinion that the instrument expressed an absolute purchase and sale, free of any trust; and gave exclusive discretion or option to the buyer as to whether he would sell, and if so, when ; subject only to the obligation to pay over one-half any excess in case he should choose to sell, and should sell at an advance, citing Lorillard v. Silver (36 N. Y.) 578, as analogous, and distinguishing Wright v. Wood (57 Barb. 471), as a case where defendant paid nothing, and was required by the instrument to sell. They therefore affirmed the judgment (Reported in 45 Super. Ct. [J. & S] 66). The plaintiff thereupon appealed to this court. William Stanley (Knox & Jones, attorneys), for plaintiff, appellant. I. A sale of the stock at some time in the future was contemplated by the agreement (Lorillard v. Silver, 3 Trans. App. 143, 135; Wight v. Wood, 57 Barb. 471). II. Asale being contemplated, the law will imply a promise to perform (Booth v. Cleveland Mill Co., 74 N. Y. 21). III. To make Rockwell and his successors the sole judges of the time of sale would enable them to delay it indefinitely and wholly disregard plaintiff’s interest. IY. If Rockwell had a right to be the sole judge as to the time of sale, the right did not extend to his representatives (Willard Eq. 612). When one agrees to do acts, the utmost time allowable is during Ms natural life (Moore Executors of Moore, Coxe, 363). V. The plaintiff has a trust interest in the stock (Ripley v. Larmouth, 56 Barb. 21; Foote v. Foote, 58 Id. 258; Foote v. Bryant, 47 N. Y. 547; Willard Eq. 603; Perry on Trusts, §§ 125-168; Lewin on Trusts, 115, 117; Currie v. White, 45 N. Y. 822 ; Lorillard v. Silver, 3 Trans. App. 145), and may, after the lapse of a reasonable time, demand a sale (Perry on Trusts, 396; Wight v. Wood, 57 Barb. 471; 2 Parsons on Cont. 535; Wiswall v. McGowan, 2 Barb. 270; Farmers’ Loan & Trust Co. v. Hunt, 16 Id. 514; White v. Talmadge, 3 J. & S. 223; Howe v. Woodruff, 21 Wend. 640). VI. A finding of fact unsupported by evidence is an error of law, and reviewable by the Court of Appeals (Murray v. Harnay, 56 N. Y. 346; Pollock v. Pollock, 71 Id. 140), and that court cannot say that such finding was not controlling (Matthews v. Cox, 49 Id). VII. Even if the sale of the stock would ordinarily be a condition precedent, it is no defense, as Rockwell is dead, and the defendant refuses to perform it (Benj. on Sales, 452, 453; Wight v. Wood, 57 Barb. 471; Moore v. Moore, Coxe, 363). Geo. S. Hamlin (Porter, Lowery, Soren & Stone, attorneys), for respondent. I. There is no evidence to show a trust in plaintiff's favor. The contract neither expressly or impliedly creates a trust (Lorillard v. Silver, 36 N. Y. 578, 589). II. The contract imposes no obligation to sell (Lorillard v. Silver, 36 N. Y. 578, 579, 580; Wemple v. Stewart, 22 Barb. 154, 160; Moffatt v. Laurie, 15 C. B. 582, 593). III. The contract discloses an absolute sale (Lent v. Hodgman, 15 Barb. 274), and the trial court so found. IV. A sale was a condition precedent to the plaintiff’s right (Lorillard v. Silver, 36 N. Y. 578; Wight v. Wood, 57 Barb. 471; Childs v. Smith, 46 N. Y. 34; Moffatt v. Laurie, 15 C. B. 582). V. Even if there was a trust, it would not avail the plaintiff, as there is no finding a reasonable time has elapsed, or that the defendant has unreasonably refused to sell the stock (Lorillard v. Silver, 3 Trans. App. 147). VI. There was no error in exclusion of evidence (Best on Ev. § 255; Hollingham v. Head, 4 C. B. N. S. 338). Compare Monroe v. Peck, 8 Daly, 129; McArthur v. Wilder, 3 Barb. 66; Miller v. Livingston, 1 Cai. 349; Hadden v. Dimmick, 13 Abb. Pr. N. S. 135; rev’g 31 How. Pr. 196; Muzzy v. Whitney, 10 Johns. 236; Newell v. Wheeler, 2 Abb. Pr. N. S. 134; S. C., 4 Robt. 190; New York Ins. Co. v. Robinson, 1 Johns. 616; affi’g 2 Cai. 857; Franklin v. Robinson, 1 Johns. Ch. 157; Gallery v. Prindle, 14 Barb. 186; Morgan ®. Plumb, 9 Wend. 287; Kies v. Tift, 1 Cow. 298; Wood v. Young, 5 Wend. 620; Ogden v. Des Arts, 4 Duer, 375. [MAJORITY — Danforth, J.] Danforth, J. Two instruments similar in form lie at the bottom of this controversy. They are in these words : “Received of J. W. Jones by agreement one thousand shares of St. Joe Lead Stock, for which I have paid him $3,000. The understanding is that I am to give said Jones one-half of whatever price the same is sold for, when sold over and above that sum. “DatedNew York, June 19, 1866. “ E. Rockwell.” This is one ; the other is dated June 39. The plaintiff claims that they express or imply a trust. The defendant denies this, and by his answer alleges that they were executed in pursuance of a contract, by which the plaintiff “ sold to said E. Rockwell, two thousand shares of stock for the price mentioned in said receipts, to wit: For each one thousand shares respectively the sum of $3,000, and one-half of whatever price the same should be sold for, when sold 'over and above that sum ;” and the finding of the trial court sustains this view of defendant. There is evidence upon which the finding may stand, and the only substantial question upon this appeal is whether the plaintiff is entitled to have a sale of the stock made by the defendant. The answer must be found in the written agreements, interpreted in the light of the cardinal rule that a writing contains all that may fairly be implied from it (Potter v. Ontario & Livingston Mutual Ins. Co., 5 Hill, 147; Booth v. Mill, 74 N. Y. 15); and, thus read, I think it imports an obligation to sell, the performance of which the plaintiff may enforce. The first clause recites two facts, both past transactions. 1st. That Rockwell has received of Jones one thousand shares of stock ; and 3d. That Rockwell has paid him therefor $3,000. That something more was intended than a simple statement or declaration, and that the transaction which preceded and led to it included more elements than a delivery and receipt of stock, and payment therefor, is evident from the words “by agreement,” meaning through or in consequence of an agreement. The stock or money then was not the only consideration upon which the parties acted ; there was in addition an agreement moving the one party to pay the money, and the other to deliver the stock. If, however, there was nothing more, it would appear that the agreement embraced just that transaction, and the paper would stand as the record of its fulfillment. But in the second clause we find what the agreement really was. The words are those of Rockwell, an express agreement on his part, he having signed the paper ; and an implied agreement on Jones’ part from his acceptance of the money and the written instrument. It thus expresses the mind of the parties. “ The understanding” (that is, the agreement) “ is that I am to give said Jones one-half of whatever price the same is sold for, when sold over and above that sum.” Now here we have a promise, not voluntary, as of something thrown in, but forming part of the consideration on which Jones delivered or parted with the stock. It was an inducement to the trade, as much so as the promise to pay, or the payment of the $3,000, —a further promise to pay Jones the one-half of whatever price the stock is sold for over and above $3,000. So much is plain enough, and this construction accords with the agreement of the learned counsel of the respondent, as stated upon his printed points. He says, “ It acknowledges the receipt of the stock, and then states the price paid, and to be paid for it.” There is then no intention of a gift, but the expression of a promise upon good consideration. The time of performance is stated. It is, “when” or at the time that the stock is sold. It does not in words say that the stock shall be sold, but as Jones can have the price or consideration of his transfer from no other source, it seems manifest that both parties understand that the event should at some time happen (Telegraph, &c. Co. v. McLean, 8 L. R. Ch. App. Cas. 658; McIntyre v. Belcher, 14 C. B. N. S. 654). Thus only could the price be ascertained. One contingency was clearly in the minds oí the parties, the possibility of a sale at a price above $3,000. Until that came to pass, Jones could have no interest in a sale ; and whether a sale should be made prior to that time was optional with Rockwell. It is urged by the respondent that it was also for Rockwell alone to determine at what time after that event happened he should sell; that the exclusive right of property was in him, to be enjoyed according to his notions of his own interest or duty ; that Jones trusted to his judgment and discretion, and so long as he might exercise it, could not interfere. It might be conceded that the inability on the part of Jones continued during the life of Rockwell, so that, if at any time the stock went up, Rockwell might think it would go higher and prefer to wait; that he might do so, that Jones took this risk. It is not necessary to determine the soundness of this construction, for Rockwell is now dead, and the property unsold ; and because it is no longer in his power to comply with the terms of his agreement and bring about the event ón the happening of which his promise was to be performed, is the plaintiff to lose the consideration for which he bargained, or the fruition of it to be postponed, until the representatives of Rockwell may in the course of administration deem it proper or find it necessary to make a sale; or, that not occurring, until the heirs or distributees of Rockwell’s estate find it for their interest or pleasure to dispose of the stock and so fix a price ? This would be unreasonable, and migh t render it impossible for the plaintiff to avail himself of the advantage for which he contracted. The cases cited by the respondent are not in conflict with this .conclusion. Lorillard v. Silver (36 N. Y. 599) turned upon the question whether the defendant was bound to accept an offer for the property there involved ; it was held that he was not, and the ground upon which our judgment in the present case rests would lead to the same conclusion had the plaintiff come into court relying on a similar fact. In Wemple v. Stewart (22 Barb. 154), and Moffatt v. Louris (15 Com. B. 582), it was clearly optional with the party sought to be charged, to have the event happen or not, on which the liability depended; it might never happen. In the case before us, the undertaking in effect is that it shall happen. So far as the plaintiff seeks to recover for, or have an account of dividends or other income received by the defendant, from or on account of the stock, he must fail. The contract does not cover them. It appears, however, that by the plaintiffs’ consent, a certain quantity of the stock was exchanged for bonds of the same company, Rockwell paying therefor $600 of his own money. This money, in addition to the $6,000, should be restored to him from the avails of the stock and bonds when sold, and the bonds stand in place of the stock for which they were received. The judgment of general and special terms should be reversed and a new trial ordered, costs to abide the event. All the judges concurred, except Church, Ch. J., not voting. Rev’g 35 Barb, 132.