Summary
In Hopper v. Sage (1889) 112 N.Y. 530, 20 N.E. 350, the defendant had agreed with a broker representing the plaintiff for the purchase from the broker of certain stock to be delivered within thirty days. There was a provision in the agreement that the defendant was to have "all dividends or extra dividends declared during the time."
Summary of this case from Union New Haven Trust Co. v. WatrousOpinion
Argued January 23, 1889
Decided March 5, 1889
Henry S. Bennett for appellant. S. Jones for respondent.
The only question in this case is as to whether the defendant was entitled to insist upon his claim to the dividend on the common stock of the railway which had been declared on the 16th of May and was payable on the 27th of June 1878. It has been held a number of times in this court that when a dividend is declared it belongs to the owner of the stock at that time, but that until such declaration the profits form part of the assets, and an assignment by a stockholder before such declaration carries with it his proportional share of the assets, including all undeclared dividends. This is so in regard to dividends declared, but which are payable at a future time, and such dividends belong to the owner of the stock when declared. The declaration of the dividend is in legal contemplation a separation of the amount thereof from the assets of the corporation, which holds such amount thereafter as the trustee of the stockholder at the time of the declaration of the dividend. In the absence, therefore, of any provision in a contract of sale and purchase of stock, outside of and not subject to the rules of the Stock Exchange, the law declares that such a contract gives the dividends to the owner of the shares when the dividends were declared. This rule was announced in Boardman v. Lake Shore M.S. Railway Co. ( 84 N.Y. 157), Jermain v. Same Defendant (91 id. 483, 492) and in Matter of Kernochan (104 id. 618).
On looking at the contract in question, it is seen that the parties did make some provision as to dividends, and it was agreed that the defendant was to be entitled to all dividends or extra dividends declared during the time of its running, that is, for thirty days from the date thereof, which was May 23, 1878. But that provision did not include the case of a dividend which had already been declared, and as to that dividend the contract was silent, and the law itself fixes the ownership thereof just the same as if it were thus provided in so many words in the contract. To overcome this result the counsel for the defendant endeavored in many and various ways to show that, by usage of the Stock Exchange, a person situated as was the defendant with reference to this stock and under precisely the same liability as the defendant, under the contract in question, was entitled to the dividend which had been declared, and which each party to this action now claims. All the various offers to prove facts, and all the various questions asked of different witnesses had this one result for their object, which was to change the law on the subject by reason of this custom or usage claimed to be prevalent on the New York Stock Exchange.
We think the learned trial judge correctly refused to permit evidence of this nature to be given. Usage and custom cannot be proved to contravene a rule of law or to alter or contradict the express or implied terms of a contract free from ambiguity, or to make the legal rights or liabilities of the parties to a contract other than they are by the terms thereof. When the terms of a contract are clear, unambiguous and valid, they must prevail, and no evidence of custom or usage can be permitted to change them. ( Markham v. Jaudon, 41 N.Y. 236; Bradley v. Wheeler, 44 id. 495; Baker v. Drake, 66 id. 518; Colgate v. Penn. Co., 31 Hun, 297-299.)
In Walls v. Bailey ( 49 N.Y. 464), evidence was held proper of the existence of a custom among plasterers, in Buffalo, as to the particular manner of measuring the number of square yards plastered. It was admitted because, as the court said, the contract for the payment for the work done was not so plain in its terms as that there could be but one conclusion as to the mode of measurement by which the number of square yards could be arrived at. Usage, it was said, was to be considered as entering into and forming a part of a contract when the usage was reasonable, uniform, well settled; not in opposition to fixed rules of law, and not in contradiction of the terms of the contract.
The evidence offered in this case would have been inconsistent with the rules of law and would have contradicted the plain terms and legal effect of the contract. This is not a case where, by the terms of the contract made between members of the Stock Exchange, its rules and regulations are to control in its interpretation and obligations. Nor was it made under such circumstances that those rules and regulations could have any legal effect. The contract was made at the office of the defendant and by a broker for plaintiff's decedent, who as to this contract, at all events, was not acting as a member of the Stock Exchange, and, so far as the case shows, he was not a member thereof.
Upon the question of damages the proof was uncontradicted that at the time of the tender of the stock, when the defendant should have paid the plaintiff's decedent $49 a share for the stock, in compliance with his agreement, the stock was selling at $46 per share, and that was its market-value.
There was no error committed on the trial, and the judgment entered upon the verdict for the plaintiff should be affirmed, with costs.
All concur.
Judgment affirmed.