Summary
In Morse v. Douglass (112 App. Div. 798) the defendant, agent of a disclosed principal, agreed with the plaintiff that if the latter would purchase certain stock from defendant's principal, he, the agent, would repurchase it from him subsequently if he became dissatisfied with the purchase.
Summary of this case from De Waal v. JamisonOpinion
May 2, 1906.
A.J. Nellis, Fred G. Paddock and Thomas Cantwell, for the appellant.
Benjamin L. Wells, for the respondent.
We must assume under the verdict of the jury that the facts are as testified to by the plaintiff, and that, therefore, the defendant made an oral agreement to take back the stock from the plaintiff and pay to him the amount he had paid therefor.
The defense is that such an agreement is void under the Statute of Frauds. (See Pers. Prop. Law [Laws of 1897, chap. 417], § 21.) If there was but a single agreement involved in the whole transaction the statute does not apply. If, on the other hand, there were two separate and distinct contracts — one, that the plaintiff would buy the stock from the principal who the defendant represented, and the other, that the defendant would buy the stock back from the plaintiff at any time he became dissatisfied concerning it and refund him the money — then the statute would apply. I think it is altogether clear under the evidence that there were two separate and distinct agreements. The plaintiff knew that he was dealing with the defendant simply as an agent of a disclosed principal, and that when he agreed to buy the stock the title thereto was to come from the principal and not from the agent, and that the money paid therefor was paid through the agent to the principal That arrangement was closed when the stock certificates were delivered and the consideration paid. In addition to this was the agreement between the plaintiff and the defendant to take back the stock. That was made with the defendant individually and not with any one else. The contracting parties were different under the separate agreements. The case, therefore, falls squarely within the principles laid down in the cases of Hagar v. King (38 Barb. 200) and Chamberlain v. Jones ( 32 App. Div. 237.)
In Hagar v. King copartners were indebted to the plaintiffs, and one of the firm agreed by parol with the plaintiffs that in consideration that the latter would receive the bonds of a railroad company exceeding fifty dollars in amount in payment of such indebtedness of the firm, he would at a future day at the plaintiffs' request repurchase the same bonds of them and pay them therefor the amount of such indebtedness, for which the bonds were taken, and the court held that the agreement was within the Statute of Frauds and void for the reason that it was not in writing and no part of the purchase money was paid.
WELLES, J., in writing the opinion of the court in that case, said: "The whole arrangement comprises two entire and independent agreements. The one for the sale of the bonds by the defendant to the plaintiffs, or that the plaintiffs would accept and receive them in satisfaction of their demand against King, Stancliffe Co.; and the other, that after the plaintiffs had so become the owners of the bonds, they would sell them back to the defendant at the same price they had advanced King for them. The former has been fully executed but the latter remains open and executory. It is true that the first contract was the consideration for the second, but how that circumstance relieves the case from the difficulty in question is more than I can discover."
In Chamberlain v. Jones it was held that an oral promise by a party recommending to another the purchase of certain bonds of the value of over fifty dollars, from a third party, to repurchase and take back the bonds at the election of such other person was a transaction distinct and independent of the purchase made by the latter upon the reliance of the promise, and was void under the Statute of Frauds. In that case Chamberlain sued to recover the purchase price of two bonds in a tunnel company which she claimed to have purchased of such company in reliance upon an oral agreement made by the defendant that he would repurchase the same in the event that the plaintiff requested him so to do, and the court held that the two transactions were entirely distinct and independent. The defendant in that case did not own the bonds; nor did the defendant in this case own the stock which was the subject of the sale, and the court followed Hagar v. King in holding the promise void.
The plaintiff in support of a contrary doctrine cites numerous cases, but in all of them, except Johnston v. Trask ( 116 N.Y. 141), the defendants were the owners of the stock or bonds in question that were the subject of sale, and it was held in each case that but one contract was presented, and that the contract to take back the property and repay the purchase price was a part of the contract of sale and was not void by the Statute of Frauds. The case of Johnston v. Trask is not substantially different from the others and is not counter to the principle decided in Hagar v. King and Chamberlain v. Jones, for in the Johnston case while the defendants were not in the first instance the owners of the bonds they went out upon the order of the plaintiff and purchased them in the open market. The defendants themselves held the bonds until the purchase price and their commissions for purchasing were paid by the plaintiff and then delivered them to him. There was no one known in the case except the plaintiff and the defendants. The latter were brokers and were accustomed to purchase and carry securities on margin for their customers. The case was regarded by the court as one where the defendants were selling their own choses in action, and it was held that there was but a single contract and, therefore, that the promise of the defendants that they would take the bonds off the plaintiff's hands at what they cost him upon request, was valid.
We think that the Statute of Frauds presented a complete defense to the contract sued upon in this case, and, therefore, that the judgment and orders appealed from must be affirmed upon the facts and reversed upon the law and a new trial granted, with costs to the appellant to abide the event.
All concurred; KELLOGG, J., in result.
Judgment and orders affirmed upon the facts and reversed upon the law, and new trial granted, with costs to appellant to abide event.