Clement v. Rowe

• Decision Date: 06 April 1914
• Citation: 146 N.W. 700,33 S.D. 499
• Parties: CLEMENT v. ROWE.
• Court: South Dakota Supreme Court

146 N.W. 700

33 S.D. 499

CLEMENT v. ROWE.

Supreme Court of South Dakota

April 6, 1914

Appeal from Circuit Court, Codington County; C. G. Sherwood, Judge.

Action by Joseph S. Clement against H. S. Rowe. From an order of the circuit court setting aside a directed verdict for the defendant, and granting a new trial to the plaintiff, the defendant appeals. Affirmed.

Loucks Mather & Stover, of Watertown, for appellant.

Wilbur S. Glass, of Watertown, for respondent.

GATES J.

Action on contract for the recovery of money only. Paragraph 2 of the complaint is as follows:

"(2) That on the said date [November 7, 1908] defendant submitted to plaintiff a proposition as follows, to wit: If you will take 160 shares of the preferred treasury stock of the Blue Bell Medicine Company, a South Dakota corporation, with its office at Watertown, S. D., upon my representation as to their value, and I represent to you that 160 shares of the preferred treasury stock of said company is of the value and worth $16,000, and transfer to the Medicine Company your real estate in Deuel county, described as section 28, and the west half of section 33, in township 115, range 48, by good warranty deed, I will have the Blue Bell Medicine Company issue in your name 160 shares of the preferred treasury stock of said company, and I will see that the stock certificates for the 160 shares of said stock is delivered to you by mail or otherwise, and will have the medicine company pay you in money $26.20, which is the difference between the value of the stock as represented by me and the value of the land less the incumbrance thereon, and, in consideration of your accepting this proposition, and in full performance by you under it, in making such transfer of your land and premises I agree that, if the Blue Bell Medicine Company fails to declare and pay annually a 7 per cent. dividend upon said shares of stock, you may, at the expiration of two years of the date of the issuance of such shares of stock, surrender to me the stock certificate issued for the 160 shares of the said preferred treasury stock, properly indorsed to me, and I will pay you the sum of $16,000, the value I place upon said shares of stock, and the value I have represented to you with interest thereon at the rate of 7 per cent. per annum since the date of the issuance of said shares of stock."

The remaining portion of the complaint alleged in substance that on November 7, 1908, plaintiff was the owner of said lands, which were of the value of $28,800, and incumbered in the sum of $12,773.80; that plaintiff accepted defendant's proposition, delivered the deed to the medicine company on said date, and on December 29, 1908, received 160 shares of said preferred treasury stock, together with $26.20 in money; that the company has not declared any dividend; that on February 11, 1911, prior to beginning this action, plaintiff offered to surrender said shares to the defendant, and demanded from defendant $16,000, with interest from November 7, 1908; that defendant refused; that plaintiff is the owner of said shares, and is able, ready, and willing to transfer them to defendant. Judgment was demanded for $16,000, with interest from November 7, 1908. In addition to being in substance a general denial, the answer alleged that the net value of the land over and above the incumbrance was not to exceed $4,606.20; that the transaction, if had, was solely between plaintiff and the medicine company; and that, if the transaction was had, it was within the sections or subdivisions of sections of the statute of frauds hereinafter discussed. The case was tried by jury. Plaintiff's evidence tended to substantiate the complaint. Upon the trial it appeared that the agreement sued upon was not in writing. Defendant made suitable objections to the introduction of testimony to prove the same. At the close of plaintiff's evidence defendant moved for the direction of the verdict upon grounds hereinafter mentioned. The motion was granted. Subsequently on motion of plaintiff the directed verdict was set aside, and the cause set down for trial. From this order, defendant has appealed.

Aside from certain matters which we do not deem of sufficient importance to discuss, it is appellant's contention that the oral agreement was void: (1) Under subdivision 1, § 1238, C. C.; (2) under subdivision 2, § 1238, C. C.; (3) under subdivision 4, § 1238, C. C. The provisions of said section applicable thereto are as follows:

"Section 1238. The following contracts are invalid unless the same, or some note or memorandum thereof, be in writing and subscribed by the party to be charged, or by his agent:

"1. An agreement that, by its terms, is not to be performed within a year from the making thereof.

"2. A special promise to answer for the debt, default or miscarriage of another, except in the cases provided for in § 1973.

"4. An agreement for the sale of goods, chattels, or things in action, at a price not less than fifty dollars unless the buyer accept or receive part of such goods and chattels, or the evidences, or some of them of such things in action, or pay at the time some part of the purchase money. ***"

It is manifest from an inspection of the complaint that the facts in this case do not bring the oral contract sued upon within the provisions of subdivision 4 of said section, and consequently the appellant's third contention is unavailing.

Waiving for the present the first contention, let us consider the second. We are of the opinion that the contract in this case does not come within the exception provided for in section 1973, Civil Code. Was the agreement then one "to answer for the debt, default or miscarriage of another?" We think not. The only contract between plaintiff and the Blue Bell Medicine Company, if it may be called a contract, was that which was evidenced by the certificate of stock issued to plaintiff as follows:

"Number 3. Shares, 160. The Blue Bell Medicine Company, Watertown, South Dakota. This certifies that Jos. S. Clement is the owner of 160 shares of one hundred dollars each of the preferred treasury stock of the Blue Bell Medicine Company of Watertown, S.D. Transferable only on the books of the corporation by the holder hereof in person or by attorney upon surrender of this certificate properly indorsed, which is issued in accordance with resolution of stockholders of date, June 1, 1908. In witness whereof the said corporation has caused this certificate to be signed by its duly authorized officers, and to be sealed with the seal of the corporation, at Watertown, South Dakota, this 7th day of November, A. D. 1908. [Corporate Seal.] R. L. Hardy, President. H. S. Rowe, Secretary. This stock may be retired after one year, on call at $125 per share."

The following appears on margin of certificate: "This stock guaranteed to pay 7 per cent. per annum."

This stock certificate does not contain any promise on the part of the Blue Bell Medicine Company to repay to plaintiff the sum of $16,000 at the expiration of two years, nor at all. Even if the marginal indorsement, "This stock guaranteed to pay 7 per cent. per annum," may be said to be a contract between the medicine company and plaintiff to pay him 7 per cent. annual dividends, which we do not decide, such agreement was only an incident to the main agreement made between plaintiff and defendant to which main agreement the medicine company was not a party. If the said medicine company had made the promise which it is alleged the defendant made, and which we must for the present purposes of this case assume that he did make, then a very different situation would have been presented.

It is next urged by plaintiff that there was no consideration moving to the defendant for the promise alleged to have been made by him. It is a full and complete answer...