Davison v. Davis

• Decision Date: 19 March 1888
• Citation: 31 L.Ed. 635,8 S.Ct. 825,125 U.S. 90
• Parties: DAVISON et al. v. DAVIS. 1
• Court: U.S. Supreme Court

125 U.S. 90

8 S.Ct. 825

31 L.Ed. 635

DAVISON et al. v. DAVIS.¹

March 19, 1888.

Marc Mundy, S. Shellabarger, and J. M. Wilson, for appellants.

Geo. F. Comstock and Alexander P. Humphrey, for appellee.

BRADLEY, J.

The bill in this case was filed by Charles G. Davison and Marc Mundy to compel the defendant, Davis, to deliver to said Mundy 379 1/2 shares of the capital stock of the Louisville City Railroad Company, alleged to belong to said Mundy as assignee of said Davison, and to be beld by Davis as security for the payment of a certain note of Davison for $6,521.36, dated November 10, 1876, and payable in one year, with interest at 7 per cent., Mundy offering to pay the amount due on said note, and praying for an account to be taken to ascertain said amount. The transaction out of which the controversy grew was as follows: In November, 1873, Davison, residing in Louisville, Ky and Alexander H. Davis, of New York city, were each large owners of the capital stock of the Louisville City Railway Company, Davison owning about 800 shares and Davis about 1,200, and they entered into the following agreement for the purpose of equalizing their interest, to-wit:

'Memorandum of an agreement made this 10th day of November, 1873, between Chas. G. Davison, of the city of Lou., Ky., and Alex. Henry Davis, of the city of New York, N. Y., witnesseth:

'Whereas, the said parties of the first and second parts, respectively, are the actual and equitable owners of certain shares of the capital stock of the Lou. City R. W., the said Davison holding or being entitled to hold about eight hundred and the said Davis holding or being equitable entitled to hold about twelve hundred shares of the said stock; and, whereas, the said parties of the first and second parts are desirous of equalizing their respective interests as between themselves, and also of acquiring possession of a greater amount of the said stock: now, therefore, it is hereby agreed that the stock now actually or equitably held by the parties of the first and second parts, respectively, shall be regarded as common property, each party being entitled to the one-half ownership of said stock for the considerations hereinafter to be mentioned. It is also agreed that all purchases of the said stock that may be made hereafter shall be thus made for the joint account of the parties to this contract, and shall be likewise held by them in common. It is furthermore agreed, as the consideration for the equalization of their respective interests, by the said parties to this contract, that the actual cost of the stock held by each party shall be computed as of this date, and a note given by the said Davison at any time upon demand for the amount which would be due from him for the equalization of said joint stock account, it being understood that two hundred and fifteen (215) shares of said stock now held by the said second party shall offset in the account a like number of shares held by the said first party. And it is furthermore agreed that in case of the death of either of the parties to this contract, the survivor shall be entitled to purchase the stock of said deceased party, within one year from the time of such decease, at a price not exceeding twenty-five (25) dollars per share, if within twelve months from the date of this agreement, with an advance of ten (10) dollars per share for each succeeding twelve months.

'In witness whereof the parties of the first and second parts hereby attach their hands and seals this tenth day of November, 1873.

[Signed]

'ALEX. HENRY DAVIS.

[Signed]

'C. G. DAVISON.

'Witness: [Signed] E. H. SPOONER.'

On the 11th of November, 1876, Davis made out a report or statement of the account between him and Davison, showing that he, Davis, held 1,571 shares which cost $32,723.41, and that Davison held 812 shares which cost $19,680.69; and that to make them equal, Davis must transfer to Davison 39 1/2 shares, and Davison must pay therefor the sum of $6,521.36, or, as Davis expressed it, in the report, 'that is the result as I make it,—that I owe you 379 1/2 shares of stock, and you owe me $6,521.36, as of November 10, 1876.' This account was assented to by Davison, and on the 29th of January, 1877, the parties met, and Davison delivered to Davis his promissory note for said sum of $6,521.36, dated November 10, 1876, payable one year from date, with interest at 7 per cent., and Davis, retaining the stock, delivered to Davison a receipt for the note in the words following, to-wit:

'SYRACUSE, N. Y., January 29, 1877.

'Received of C. G. Davison his note, dated November 10, 1876, for $6,521.36, payable one year from date, with interest at 7 per cent. Said note is given me for the purchase of three hundred and seventy-nine and one-half shares of stock of the Louisville City Railway Co., now held by me, and to be delivered, upon payment of his note, to said Davison.

'ALEX HENRY DAVIS.'

The note became due on the 12th of November, 1877, but was not paid. On the 16th of September, 1882, Davison, by an indorsement on the receipt, transferred the 379 1/2 shares mentioned therein to Mundy, who assumed to pay the debt due to Davis therefor; and in January, 1883, Mundy offered to pay Davis the amount due on Davison's note, and demanded the 379 1/2 shares of stock, which Davis refused. Thereupon, on the 27th of March, 1883, the present bill was filed. It sets forth the circumstances of the transaction substantially as above stated, but contains allegations to the effect that the stock in controversy was regarded by the parties as belonging to Davison, and that he agreed and consented that the defendant might hold it by way of pledge or collateral security, for the payment of his note; whereas, the defendant insists that the transaction was an agreement for a sale of the stock, to be assigned and transferred to Davison when it was paid for. The former take their stand on the terms of the original agreement of November, 1873; the latter on the receipt given in January, 1877.

If the transaction relating to the 379 1/2 shares of stock was a sale upon condition of payment of the note at maturity, the...