Agar v. Orda

• Citation: 264 N.Y. 248,190 N.E. 479
• Parties: AGAR et al. v. ORDA.
• Decision Date: 17 April 1934
• Court: New York Court of Appeals

264 N.Y. 248

190 N.E. 479

AGAR et al.

v.ORDA.

Court of Appeals of New York.

April 17, 1934.

Action by Frank E. Agar and others, copartners, doing business under the firm name and style of Agar & Co., against Max Orda. From a judgment of the Appellate Division (239 App. Div. 827, 264 N. Y. S. 939), affirming a judgment of the Trial Term dismissing the complainant (144 Misc. 149, 258 N. Y. S. 274), the plaintiffs appeal by permission of the Court of Appeals.

Judgment affirmed.

CRANE, J., dissenting.

Appeal from Supreme Court, Appellate Division, First department.

John N. Regan and Edward G. Bathon, both of New York City, for appellants.

Max Orda, in pro. per.

LEHMAN, Judge.

An action to recover the purchase price of 200 shares of stock has been dismissed. The contract of purchase and sale was executory. The buyer refused to accept delivery of the certificates when tendered.

The Sales Act (article 5 of the Personal Property Law [Consol. Laws, c. 41]) provides: ‘Where, under a contract to sell or a sale, the property in the goods has passed to the buyer, and the buyer wrongfully neglects or refuses to pay for the goods according to the terms of the contract or the sale, the seller may maintain an action against him for the price of the goods.’ Section 144. Even before the Sales Act was enacted, the same rule was applied in this jurisdiction to contracts to sell or sales of personal property of all kinds.

The same rule was also applied in this jurisdiction prior to the enactment of the Sales Act, to executory contracts for the sale of personal property, where payment of the price and delivery of the personal property were to be simultaneous, if the seller made proper tender of the property he had agreed to sell. Hayden v. Demets, 53 N. Y. 426. Here the Sales Act changed the common-law rule as formulated by the courts of this jurisdiction. In such case the seller of goods is now relegated to an action for damages, and no action for the price will lie. ‘Where the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller may maintain an action against him for damages.’ Section 145. The question now presented is whether, since the enactment of the Sales Act, an action for the price may still be maintained upon the refusal of a buyer of stock certificates to accept delivery of the certificates, though title to the certificates had not passed to the buyer.

Concededly, if certificates of stock are ‘goods' within the definition of the Sales Act, the complaint was properly dismissed. It does not follow that the action for the price will lie, though certificates of stock do not fall within that definition. Prior to the enactment of the Sales Act, the courts held that a seller of personal property had the same remedies, regardless of the nature of the personal property. The same rule was applied to a contract to sell the shares of stock of a construction company struggling to obtain from its friends the means to live, as well as to such personal property as is the subject of general traffic and has a market value. Mason v. Decker, 72 N. Y. 595, 28 Am. Rep. 190. It was applied alike ‘where the property is grain or hops, or a horse,’ and ‘where it is an interest in a partnership.’ Van Brocklen v. Smeallie, 140 N. Y. 70, 76,35 N. E. 415, 416. The logical outcome of disintegrating exception would inevitably be, the court there said, ‘to confuse the rule with narrow and arbitrary distinctions; to open it to attack in numerous directions; to make its operation fickle and uncertain; to breed needless litigation; and in the end to shatter the rule itself.’ The rule has been shattered by the Legislature. It no lenger can be applied to contracts for the sale of ‘goods,’ and goods, as defined by the statute, include ‘all chattels personal other than things in action and money.’ Section 156. The problem is whether a fragment of the shattered rule still persists and is applicable to sales of certificates of stock.

Shares of stock are intangible property, and, at least, for many purposes, must be regarded only as things in action; yet for practical purposes they are merged in stock certificates which are instrumentalities of trade and commerce. Hutchison v. Ross, 262 N. Y. 381, 187 N. E. 65. Such certificates ‘are treated by business men as property for all practical purposes.’ Lockwood v. United States Steel Corp., 209 N. Y. 375, 382,103 N. E. 697, 699, L. R. A. 1915C, 471. Indeed, this court has held that the shares of stock are so completely merged in the certificate that conversion of the certificate may be treated as a conversion of the shares of stock represented by the certificate, even though the certificate was not indorsed by the owner, and after the conversion the original owner remained the record owner of the stock and entitled to all the benefit which flows from such ownership. Pierpoint v. Hoyt, 260 N. Y. 26, 182 N. E. 235,83 A. L. R. 1495. Even so, a strong argument may be made that the Legislature did not intend to include certificates of stock in its definition of ‘goods.’ Assuming that to be true, yet the fact remains that certificates of stock, like other ‘goods,’ are freely bought and sold in the market place and pass from hand to hand, and analogy so complete may dictate that the rules governing sales be applied alike to ‘goods' and other personal property freely bought and sold and passing from hand to hand.

It is significant that this court so applied the same rules to sales of all personal property without distinction long before the Legislature adopted the Sales Act. Since the Sales Act was adopted, we have by analogy applied the provisions of the Personal Property law, §§ 82 and 100, governing the transfer of property in goods, to the transfer of property in certificates of stock. Wills v. Investors' Bankstocks Corporation, 257 N. Y. 451, 178 N. E. 755, 78 A. L. R. 1013. The common-law rules governing the sale of goods were applied without distinction to all personal property, so far as the nature of the property permitted, in order to avoid confusion with its attendant train of evils. Van Brocklen v. Smeallie, 140 N. Y. 70, 35 N. E. 415. The Legislature has changed some of these rules by the adoption of the Uniform Sales Act. It did so primarily for the purpose of promoting uniformity of rules throughout the county. By placing the rules governing the sale of ‘goods' in a statutory code, it shattered or destroyed general common-law rules inconsistent with the statutory code. By limiting the application of the statutory code to the sale of ‘goods' the Legislature gave no indication of what rule the courts should apply to the sale of other personalproperty. That problem it left to the courts.

The courts must formulate the rules applicable in cases not covered by the statute. The field is narrow. Inherent differences between ‘goods' and things in action may require at times the formulation of different rules. Perhaps that is why the Legislature excluded things in action from the scope of the statutory rules. No such differences exist here. Indeed, before the Sales Act was adopted, the courts applied the rule governing actions for the price of goods to actions for the price of other personal property because they found that logic and policy alike dictated that here no distinction should be drawn. The same considerations still apply now that the court is called upon to formulate the rule which shall be applied in cases not covered by the Sales Act. The formulation of the old general rule that, ‘when the vendee of personal property, under an executory contract of sale, refuses to complete his purchase, the vendor may keep the article for him and sue for the entire purchase price’ (Ackerman v. Rubens, 167 N. Y. 405, 408,60 N. E. 750, 53 L. R. A. 867, 82 Am. St. Rep. 728), will not longer suffice. A formulation of the rule to confine it to contracts for the sale of choses in action creates a narrower rule which is supported by none of the considerations which induced the courts originally to adopt the original general rule. It is in effect a new rule. The fragments of the rule shattered by the Legislature are essentially different from the old common-law rule.

Even the old general common law as formulated in this state differed from the common-law rule as formulated in England and many jurisdictions in this country. See Williston on Sales, § 560 et seq. ‘It seems anomalous that the seller should be able to force title upon the buyer by simply electing to do so.’ Section 566. Every reason that might be urged against the old rule as applied to all personal property has at least equal force when urged against a narrower rule to be applied only to certificates of stock. The same reasons that make uniformity in all jurisdictions desirable in regard to sale of goods apply with like force to sale of certificates of stock. After the Legislature in the Sales Act shattered and mutilated beyond recognition the general common-law rule of this state and enacted its preference for the general common-law rule as applied in England and other jurisdictions to all personal property, the courts of this state should apply the same rule, not only to the sale of goods, but to the sale of all personal property. Otherwise the courts without reason introduce distinctions that are harmful and retard uniformity of rules in a field where uniformity should be sought.

The judgment should be affirmed, with costs.

CRANE, Judge (dissenting).

Is the Uniform Sales Act, also referred to as the Sale of Goods Act, article 5 of the Personal Property Law (section 144), applicable to the sales of corporate stock? Section 82 of the act provides that a contract to sell ‘goods' is a contract whereby the seller agrees to transfer the property in ‘goods' to the buyer for a consideration called the price. A sale of ‘goods' is a contract whereby the seller transfers the property in ‘goods' to the buyer for a consideration...