Currie v. White — 30 N.Y. Super. Ct. 637

Majority

p. 637

Charles P. Currie et al., plaintiffs, vs. Cumberland G. White, defendant.

Headnote

1. Dividends declared, and additional shares of stock issued, become the property of those who own the stock in respect whereof they are declared and issued, at the time of such issuance and declaration. They are not incorporated in, nor do they become part of, that stock in respect whereof they are issued; but are mere profits arising therefrom to the then owners thereof.

2. Onq, -by making a contract whereby he agrees to sell, a year after its date, property, real or personal, does not thereby deprive himself of- any profit which may have accrued therefrom, or advantage which may arise from its possession or use, during that year; nor do such profit and advantage pass to the purchaser, in the absence of an express contract that they shall pass.

3. A. contract to sell and purchase stock, payable and deliverable at sellers’

p. 638

option, within a year, is an executory contract; and if it. remains unexecuted until after dividends are declared, and additional stocjf issued, the purchaser is not entitled to them.

4. In an action for the breach of a contract to deliver certain stock, the vendee not having paid to the vendor the purchase money in advance, the measure of damages is the difference between the contract price of the stock and its market price on the day of breach. If the market price of the stock on the day the breach occurred was less than the contract price, the purchaser has sustained no damage.

5. Where a vendor of stock, after tendering the same, declares himself not ready then to fulfill his contract, by saying that he desires' time to consult his lawyer, and will return, shortly, an£ thereupon departs, with the stock in his possession, he will be deemed to -have withdrawn his previous tender.

(Before Jones, J., at Special Term,

October, 1868.)

On the 18th of February, 1867, the plaintiff and defendant entered into an agreement with each other, and executed, as' evidence thereof, the following written instruments :

exhibit A.'

“New York, 18th Feb’y, 1867.'

(1000 shares.)

We have purchased of O. Q-. White one thousand (1000) shares of the capital stock of the Hudson River R. R., at one hundred and twenty-eight per cent, payable and deliverable seller’s option, in this year, (1867,) with interest at the rate of six per cent per annum ; either party having the right to call, from time to time, for deposits, to meet the fluctuations of the market.

Currie, Martin & Co.”

[ 10 Cent Stamp.]

EXHIBIT B.

u New York, Feb’y 18th, 1867.

I have sold to Currie, Martin & Co. one thousand shares of the capital stock of the Hudson River Railroad Company, at one hundred and twenty-eight per cent, payable

p. 639

and deliverable sellers’ option, in this year, with interest at the rate of si-x per cent per annum; either party having the right to call, from time to time, for' deposits, to meet the fluctuations of the market.

0. Gk White.”

[ 10 Cent Stamp.]

Under this contract the plaintiff made six deposits in the United States Trust Company, as follows:

Qn the 23d February, 1867, the sum of 110,000 66 66 13 th May, 66 66 10,000 66 66 20th May, 66 66 5,000 66 66 8th June, 66 66 10,000 66 66 19th July, 66 66 10,000 66 66 22d July, 66 66 10,000

and called upon the defendant to make six like deposits, which he did.

The Trust Company gave to the plaintiffs, for each deposit made by them, a certificate in the following form:

EXHIBIT 0.

“United States Trust Company of Eew York, \ 23d February, 1867. J •

(110,000.)

This is to certify, that Currie, Martin & Co. have deposited with this company ten thousand dollars, payable in current funds, on five days’ notice, to them and C. Gk White jointly, upon the surrender of this certificate, (which is assignable only upon the books of the company,) with interest commencing after ten days from date, at the rate of four per cent per annum. Uo interest to be allowed unless the same amounts to at least fifty cents.

John A. Stewart, President.

W. Darrow, Jr., Secretary.”

.The certficates were all alike, except as to the dates and amounts, which were made to correspond with the

p. 640

deposit for which the particular certificate was given. The Trust ’Company also gave to the defendant, for each deposit .made by him, a certificate in the following form:

EXHIBIT D.

“ United States Trust Company of Sew York,. \ February 23d, 1867. j

($10,000.)

. This is to certify, that C. Gr. White has deposited with this company ten thousand dollars, payable in current funds, on five days’ notice, to him and Currie, Martin & Co. jointly, upon the surrender of this certificate, (which is 'assignable only upon the books of the company,) with interest, commencing after ten days from date, at the rate of four per cent per annum. So interest to be allowed unless the same amounts to at least fifty cents.

John A. Stewart, President.

W. Darrow, Jr., Secretary.”

These certificates were all alike, except as to the dates and amounts, which were made to correspond with the deposit for which the particular certificate was given.

On the 15th of April, 1867, the Hudson Eiver Eailroad Company declared a cash dividend of $4 a share, upon their capital stock as it stood on the 18th February, 1867; and on the l'5th day of October, 1867, declared another cash dividend of $4 a share, upon the same, amount of capital stock. These dividends were paid to the then holders of the stock.

The plaintiffs claim that in the month of April, 1867, the Hudson Eiver Eailroad Company increased their capital stock by doubling it, and that the books of the company were opened for subscriptions to the additional stock, under regulations established by resolution of the board of directors, as follows :

p. 641

EXHIBIT E.

To the Stockholders of the Hudson River Railroad Company :

Take notice, that the board of directors of this company, at their meeting, held this day, passed the following preamble and resolutions:

Whereas, the stockholders of the company, at a meeting of such stockholders, called by the directors of the company, in the manner required by law, and held at the office of the company on the 30th day of • March last, did, with the concurrence of more than two-thirds in amount of all its stockholders, authorize and sanction the increase of the capital stock of the company, to the amount of thirteen millions, nine hundred and thirty-seven thousand and four hundred dollars; therefore,

Resolved, that the capital stock of the company be, and the same is hereby increased to the amount of thirteen millions, nine hundred and thirty-seven thousand and four hundred dollars.

Resolved, that the stock transfer books of this company be closed on the tenth day of April instant, and that the persons or parties in whose names stock shall be standing on that day shall severally, on or before the 15th day of April instant, be entitled to subscribe at the office of the company, Ho. 270 West 30th street, in the city of Hew York, for an equal amount of additional stock; that the price of the additional stock shall be fifty dollars per share, payable as follows :

Fifteen dollars per share at the time of subscribing.

Five dollars per share on the 15th day of May next.

Five dollars per share on the 15th day of June next.

Five dollars per share on the 15th day of July next.

p. 642

Five dollars per share on the 15th day of August next.

Five dollars per share on the 16th day of Sept. next.

Ten dollars per share on the 15th day of October next.

That on the 15th day of October next, all installments being paid, full paid stock shall be issued.

Eesolved, that where parties desire, for their own convenience, to anticipate payments, their money for any number of installments will' be received, but no interest will in any -case be allowed ; nor will the stock be issued until the 15th day of October next.

Eesolved, that stockholders failing to subscribe on or before the 15th day of April instant, or neglecting to pay their several installments as they severally become due, will lose all right to the additional stock, and will be deemed to have abandoned their subscriptions.

Eesolved, that the subscriptions may be made to the additional stock, either in person or by attorney. A scrip receipt will be given for the payments made, and this receipt must be presented at this office on the payment of any of the subsequent installments, in order to have them entered upon it, and be surrendered to be canceled on the issue of the additional stock.

Eesolved, that where parties desire to receive full stock on the 15th day of April instant, they may do so by paying fifty-four dollars per share at the time of making their subscriptions. By order of the board.

C. 0. Clarke, Treasurer.”

On the 10th of April, 1867, the plaintiffs sent to the defendant a notice, of which the following is a copy:

' EXHIBIT E.

“Hew York, April 8th, 1867.

C. Q-. White, Esq.

Dear Sir: On the 18th February last, we purchased from you pne thousand shares of Hudson Eiver Eailroad Coin

p. 643

pany stock, at one hundred and twenty-eight per cent, sellers' option, this year.

You will please take notice that we elect to subscribe for the additional stock as provided in the resolutions of the company, at their meeting on the 1st April inst., and that we look to you for the same. .

Very respectfully,

Currie, Martin & Co."

This notice was not received by the defendant until between four and five o’clock in the afternoon of April 10th, 1867.

On the 18th of December, 1867, the defendant sent to the plaintiffs a notice, of which the following is a copy:

• EXHIBIT G.

“ Hew York, Dec. 18th, 1867.

Messrs. Currie, Martin & Co.

I will deliver you, to-morrow, 1000 shares Hudson R. R. stock on my contract, Feb. 18th, seller this year, at $128 per share. Respectfully,

C. Q-. White."

On the 19th of December, 1867, the defendant, pursuant to his1 notice, went to the plaintiffs’ office, having with him 1000 shares of said stock, and also a bill, properly stamped, of which the following is a copy:

EXHIBIT H.

“ Currie, Martin & Co.

To O. C. White,

February 18th, 1000 Hudson, $128, . . . $128,000 00

10 mo. and 1 day int., 6 p. c. 6,421 33

Certified check, $134,421 33"

He saw Mr. Martin, one of the plaintiffs, standing behind the counter. He handed Mr. Martin the bill, a copy

p. 644

of which is given above. Mr. Martin asked him if he • would not take off the cash dividends. He replied that he would, if Mr. Martin would send over his certificates-in the Trust Company. Mr. Martin then handed him two papers, copies of which are as follows:

EXHIBIT i.

“Hew York, Dec. 19th, 1867.

“Mr. C. G-. White,

We will accept the 1000 shares Hudson R. R. stock you propose to deliver to us to-day, and pay you therefor the sum stated in your account, $134,421.33, and we demand of you the cash dividends thereon, and interest.

Respectfully,

Currie, Martin & Co.”

EXHIBIT K.

Hew York, Dec. 19th, 1867.

“ Mr. C. G-. White,

We require you to deliver to us, under your contract dated 18th February, 1867, a second 1000 shares of Hudson R. R. stock, the portion of the new issue of stock by said company, on their increase of capital in April, 1867, accruing to the owner and holder of the 1000 shares mentioned in your said contract.- We tender to you the price at which said new stock was issued, with interest, $56,232, and demand and claim from you the delivery of said second 1000 shares, and the cash dividends, if any, that have been made thereon. Yours,

He then stepped to the window, read the two papers, and remarked to Mr. Martin that he did not know the effect of said papers, hut would consult his attorney and return. He then left, taking with him the stock.

p. 645

At this interview of the 19th, the defendant, when he entered the office, had the certificate of stock in his hand, but while reading the two papers put them in his pocket, and did not take them out again while in the office. There was no tender of the stock, or -demand of payment, unless the presentation of the bill marked Exhibit H, be regarded as such tender and demand: Mr. Martin, at this interview, drew a check for $134,421.28, but the check was not certified, nor was it offered or tendered to the defendant, although it was all ready to be delivered, before he left. This is the substance of what occurred at this interview. Nothing further took place until the 31st of December.

On the 31st of December, 1867, about 1J o’clock p. M., the plaintiffs sent to the defendant a letter as follows:

EXHIBIT L.

“Mr. O. G-. White,

Sir: Our checks for $134,421.33 and $56,232 have been ready for you since they were tendered you, with our two notices relative to our Hudson River contract, on the 19th inst.; you then said you were not ready to give an answer, but would see about it.

We are ready to do what we offered and tendered in our notices, and renew our notices, but suppose your silence is equivalent to your refusal to comply with them.

Yours, &c., Currie, Martin & Co.

N. Y., December 31, 1867.”

and two uncertified checks, one for $134,421.33, the other for $56,232. The. messenger who took the checks and letters to the defendant told him that he would get them certified if that was required; and receiving no answer, he afterwards added, “if he would deliver the stock.” The defendant read the letter, and looked at the checks, and told the messenger that he would let him know,

p. 646

shortly; that he would see his lawyer, and stop in at the plaintiffs’ office.

It is in proof that on the-19th day of December, 1867, '

the stock was worth, .........$132,778

On the 31st of December, 1867, .'.....131,078

And on the 8th of February, 1868, .... 149,000

The trial took place after the 8th of February, 1868.

Wm. R. Martin, for the plaintiffs.

Wm. C. Barrett, for the defendant.

The plaintiffs claim, 1st. The dividend declared on the 1000. shares, and interest.

2d. The difference between the value of 1000 of the additional shares on Feb. 8th, 1868, and the sum required by the company to be paid therefor, and interest.

3d. The difference between the value of the 1000 shares mentioned in the contract, on the 8th of February, 1868, and the contract price and interest.

The defendant contests all these claims, and himself claims the difference between the contract price of the 1000 shares mentioned in the contract, and their market valúe on the 19th of December, 1867, with interest thereon.

As to the plaintiffs’ claims: The first two evidently depend on whether the contract was executed, or executory; that is, whether it operated as an actual and present sale, or only as an agreement to sell, to be carried into effect on a future day.

Dividends declared, and additional shares issued, become the property of those who own the stock in respect whereof they are declared and issued, at the time of such issuance and declaration. They are not incorporated in, nor do they become a part of, that stock in respect whereof they

p. 647

are issued; but are mere profits arising therefrom to the then owners thereof.

One by making a contract whereby he agrees to sell, a year after its date, property, real or personal, does not thereby deprive himself of any 'profit which may have accrued therefrom, or advantage which may arise from its possession or use, during that year; nor do such profit and advantage pass to the purchaser, in the absence of an express contract that they shall pass. If, then, the contract in question is executory, and remainéd unexecuted until after the dividends were declared, and the additional stock was issued, the plaintiffs are not entitled to them.

It is often a matter of great difficulty to determine whether a contract is executed or executory; but in this case, whatever doubts I may have had are set at rest by the case of Kelley v. Upton, ( 5 Duer, 336 ,) decided by the general term of this court, which is a direct authority in point, and according to which the contract in question is executory. Nothing was attempted to be done to execute it until December 19, 1867, long after the dividends were declared and the additional stock issued.

It results that the first two claims of the plaintiffs must be disallowed.

The third claim is founded on an erroneous application of the rules relative to the measure of damages. This defendant, if liable at all, is so for the simple breach of a contract to deliver certain stock, the.vendee not having paid to the vendor the purchase money-in advance: In such a case the measure of damages is the difference between the contract price of the articles agreed to be sold, and their market price on the day of breach. This difference the plaintiffs would be entitled to recover. It therefore becomes necessary to ascertain whether the defendant broke his contract. If so, when, and the market value of the stock on the day of the breach.

p. 648

If there has been any breach by the defendant, it occurred either on'the 19th or 31st of December, 1867.. As the market value of the stock on each of those days was less than the contract price, the plaintiffs', even if there was a breach by the defendant, suffered no damage. It is therefore unnecessary, in this view, to consider whether there was such breach.

As to the defendant’s claim :

This rests on the defendant’s allegation that there was a breach of the contract on the plaintiffs’ part on the 19th of December. To establish such breach, he insists that he on that day tendered, and was ready and. offered .to deliver, the stock, but the plaintiff neglected to receive it and pay for it. Assuming that his handing up Exhibit H, the stock being in his possession, was a sufficient tender and a sufficient indication to the plaintiffs of his readiness then and there to fulfill his contract, yet the effect of it was done away with by his subsequent acts, at the same interview. Eor after the plaintiffs handed him Exhibits I and K he clearly withdrew his previous tender, and declared himself not ready then to fulfill his contract, by saying that he desired time to consult his lawyer, and would return shortly, and thereupon departing with the stock in his possession.

The result arrived at is, that neither party has a' claim against the other for damages arising out of a breach of the contract in question, and that each party is entitled to a return of the deposits made by him, with the interest thereon.

The case is one in. which each party should pay his own costs.