Ida Hamilton Crook, Respondent, v. John C. Scott, Appellant, Impleaded with Edward R. Dunham

Ida Hamilton Crook, Respondent, v. John C. Scott, Appellant, Impleaded with Edward R. Dunham. A promise, in consideration that a party will buy stock, to pay an amount which with the dividend, will equal eight per cent — it is not icithin the Statute of Frauds — it has a good, consideration — effect of a failure in an action thereon to allege that the purchaser continued to own the stock. A promise by the directors of a corporation, in order to induce a woman to purchase from the corporation a number of its shares of stock, that in the event of the corporation not declaring an eight per cent annual dividend on the stock they would pay to her semi-annually, as long as the corporation should exist, such an amount of money as might he necessary to make up the eight per cent dividends on the stock, is not a promise to answer for the debt, default or miscarriage of the corporation, and is not within the Statute of Frauds. The payment by the promisee of the purchase price of the stock furnishes a good consideration for the directors’ promise. The- fact that the complaint, in an action brought by the purchaser of the stock against the directors to enforce such promise, fails to allege that the plaintiff was the owner of the stock during the period for which she claimed to recover dividends does not require the dismissal of the complaint where the complaint alleges the purchase of the stock by the plaintiff, and the defendants do not deny this allegation nor allege or prove that she ever parted with such ownership, especially where the plaintiff produces the certificate of stock upon the trial. Appeal by the defendant, John C. Scott, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 19th day of February, 1901, upon the verdict of a jury, and also from an order entered in said clerk’s office on the 21st day of February, 1901, denying the said defendant’s motion for a new trial made upon the minutes. James Ii. Rogers, for the appellant. Frank Barker, for the respondent. [MAJORITY — Ingraham, J.:] Ingraham, J.: The plaintiff seeks to enforce an agreement evidenced by a letter to her signed by the defendants. There is no serious dispute as to the facts. It appears that the defendants were directors and officers of a corporation known as the Weehawlcen Wharf Company, of which the plaintiff’s husband appears to have been also a director. The corporation, having some of its stock for sale, requested the plaintiff’s husband to purchase it. After some negotiations, the plaintiff’s husband stated that he had $25,000 belonging to the plaintiff; and it was agreed that he should purchase the stock for her, upon condition that the defendants would guarantee that the plaintiff would receive yearly dividends at the rate of eight per cent upon the stock, and in the event that such dividend was not paid by the corporation the defendants would make up any deficiency personally. Upon this agreement, the plaintiff’s husband acted for the plaintiff, purchased the stock and received the letter addressed to the plaintiff signed by the defendants, containing the terms of the agreement that had been made. This letter is dated February 13, 1895, and is as follows : “ Mrs. Ida Hamilton Crook : “Dear Madam.— We herewith confirm the verbal agreement which we made with you this day, with reference to the purchase on your part of two hundred and fifty (250) shares of the Weehawken Wharf Co.’s preferred stock at $100 per share. The agreement between us is as follows: That in the event of the said Weehawlcen Wharf Co. not declaring eight per cent dividend in each year on said stock, we agree jointly and severally to pay you in cash semiannually on or before the 15th day of January and the 15th day of July of each year so long as'said corporation shall exist such an amount of money as may be necessary to make up the eight per cent dividends on the above-mentioned stock, and we do hereby bind onr heirs, executors and administrators to the performance of this contract. “Tours truly, “ JOHN C. SCOTT, . “ E. R. DUNHAM. “ Witness, “ J. D. Kurtz Crook.” After this letter was executed and delivered the stock was paid for by three checks of a firm of which the plaintiff’s husband was a member, aggregating $25,000, one drawn to the order of Louis S. Scott, treasurer, one to the order of John C. Scott, and one to the order of the defendant Dunham; and these checks appear to have been indorsed over to the company and received by it. The defendant Dunham did not appear to defend. The defendant Scott was examined as a witness on the trial. He disputed the terms of the original agreement between the plaintiff’s husband and himself, but admitted the signing of the letter and the payment of the money for the stock after the execution and delivery of the letter before referred to. It is not disputed but that the corporation failed to pay dividends for the- year 1898, and it is to recover the amount of eight per cent dividends upon the stock for that year that this action is brought. . The complaint alleges the agreement and that, relying thereon, • the plaintiff purchased the stock and paid therefor to the corporation the sum of $25,000, but contains no allegation that the plaintiff was the owner of the stock at the time of the commencement of the action. Upon the trial the defendant moved to dismiss the complaint upon the ground that there was no allegation that the plaintiff was the owner of the stock or any part thereof during the period for which she claims to recover the dividends, and upon appeal insists that a denial of this motion was error; but this appears to be without merit. The complaint alleged the purchase of the stock by the plaintiff, and there is no allegation in the answer that the plaintiff had ceased to be the owner of any stock that she had purchased. By the purchase the plaintiff became the owner of the stock, and it is presumed that such ownership continued until it was terminated by a sale or transfer of the stock. It seems clear that this complaint would be good upon demurrer. Upon the trial the certificate of stock was produced by the plaintiff; it certified that the plaintiff was the owner of this stock, and there is no allegation or proof tending to show that she had ever parted with it or was not the owner during the year 1898. The agreement sought to be enforced is an agreement with the plaintiff, whereby, in the event of the said corporation not declaring eight per cent dividend in each year on said stock, the defendants agreed “ jointly and severally to pay you in cash semi-annually, on or before the 15th day of January and the 15th day of July of each year, so long as said corporation shall exist, such an amount of money as may be necessary to make up the eight per cent dividends on the above-mentioned stock.” While, undoubtedly, it would be true that, had the plaintiff parted with the stock so that she had not the right to receive dividends declared by the corporation upon the stock, the defendants’ obligation to pay such dividends would cease, yet so long as she continued the owner of the stock and entitled to receive the dividends declared thereon, the obligation of the defendants continued. The defendants also claim that this agreement is within the Statute of Frauds as an agreement to answer for the debt, default or miscarriage of another, and is void in that it fails to set forth a valid consideration for the promise. It seems clear, however, that this agreement was not within the Statute of Frauds. By it the defendants agree that in the event that the corporation fails to declare eight per cent dividends in each year on its stock they will pay the amount of money necessary to make up the eight per cent dividends thereon. Upon acquiring this stock the plaintiff acquired no right to eight per cent dividends from the corporation. It was under no obligation to pay her any dividends until such dividends should be duly declared. The agreement, therefore, was not one to answer for the debt, default or miscarriage of the corporation, but was clearly an independent agreement by the defendants by which they assumed and agreed to pay a sum of money which would be sufficient to make the dividends declared by the company equal to eight per cent upon the stock. There is not, directly or indirectly, any debt or obligation of the corporation that the defendants agreed to answer for. It is also claimed that, assuming the contract not to be within the Statute of Frauds, no consideration was proved. But we think it clear that there was ample consideration. That the plaintiff paid this money for the stock, relying upon this agreement of the defendants, is clearly established by the evidence. The fact that the receipt for the certificate in the stock book is dated February twelfth, and the letter is dated February thirteenth, is entirely immaterial. There is no evidence that the plaintiff actually received the stock prior to the receipt of this letter, the receipt for the stock being dated upon the same day that the certificate is dated, but the consideration for the stock was all paid after the execution and delivery of the letter. The payment by the plaintiff for the stock was a good consideration for the defendants’ promise. The sale of the stock and the execution by the defendants of the agreement was one transaction by which the plaintiff bought and paid for the stock, the consideration being the transfer of the stock by the corporation and the agreement by the defendants sought to be enforced. There were exceptions to rulings on questions of evidence, but •the rulings were correct and no evidence was excluded that could in any possible way be of advantage to the defendants. It follows that the judgment and order appealed from must be affirmed, with costs. Van Brunt, P. J., O’Brien, McLaughlin and Hatch, JJ., concurred. Judgment and order affirmed, with costs.