Dodge v. Blood

• Citation: 299 Mich. 364,300 N.W. 121
• Decision Date: 06 October 1941
• Docket Number: No. 67.,67.
• Parties: DODGE v. BLOOD.
• Court: Michigan Supreme Court

299 Mich. 364

300 N.W. 121

DODGE

v.BLOOD.

No. 67.

Supreme Court of Michigan.

Oct. 6, 1941.

Suit in equity by C. Gerard Dodge against Howard E. Blood for specific performance of a contract. From an order dismissing the bill of complaint, plaintiff appeals.

Reversed and remanded.Appeal from Circuit Court, Wayne County, in Chancery; John J. Maher, judge.

Argued before the Entire Bench.

Miller, Canfield, Paddock & Stone, of Detroit, for plaintiff and appellant.

Leo W. Kuhn, of Detroit, for defendant and appellee.

BUTZEL, Justice.

Plaintiff sues in equity for specific performance of a contract. His bill of complaint was demurred to, and dismissed, and he appeals. The allegations of fact contained in the bill must, therefore, be taken as true. Insofar as such allegations relate to the circumstances surrounding the making of the contract sued on, they are as follows:

‘4. On October 15, 1940, at New York, plaintiff employed the services of * * * First of Michigan Corporation to negotiate sale to him by defendant of 63 shares of the capital stock of S. A. Woods Machine Company * * *.

‘5. On October 16, 1940, at Detroit, defendant agreed to sell to said First of Michigan Corporation as agent for an undisclosed principal 63 shares of the capital stock of said S. A. Woods Machine Company, at a price of $105 per share.

‘6. On October 16, 1940, said First of Michigan Corporation, with the knowledge and consent of defendant and on his behalf, executed and delivered to plaintiff a written confirmation of such sale, a copy of which, maked Exhibit A, is attached to this bill of complaint and made a part of it, and at same time on behalf of plaintiff executed and delivered to defendant a written confirmation of said sale, a copy of which, marked Exhibit B, is attached to this bill of complaint and by this reference made a part of it.

‘7. On October 17, 1940, defendant advised said First of Michigan Corporation that he believed he had a defense to any action to enforce his contract to sell said shares of stock and that sale of said shares of stock would embarrass his relations with members of his family who held other shares of said stock, and then and at all times since that date defendant has failed and refused to deliver said shares of stock, though often requested so to do.’

Plaintiff states that his remedy at law is inadequate because ownership of these 63 shares would give him and his brother together practical control of the corporation.

Exhibit ‘A’ reads as follows:

‘First of Michigan Corporation

October 16, 1940.

‘Mr. C. Gerard Dodge,

‘20 Exchange Place,

‘New York City.

‘Dear Sir:

‘We are pleased to confirm sale to you today, by our representative, Mr. Warren J. Hoysradt, as agents for an undisclosed principal, of--

‘63 shares S. A. Wood Company Capital Stock at $105 a Share plus $2 a share commission.

‘For delivery Monday, October 21, 1940.

‘No information was given by us in connection with this transaction, except to identify the security and state the price.

‘Thanking you for this business, we are

‘Yours very truly,

‘First of Michigan Corporation.

‘By Adrian G. Francis,

‘Per pro

Vice President.

‘AGF:mhs

‘We confirm the above in accordance with our understanding.

________

‘(Pleas sign and return this copy)

‘Approved ________’

Exhibit B was in substantially identical terms, but addressed to Blood at Detroit, and confirmed purchase from, rather than sale to, the addressee.

Defendant moved to dismiss the bill of complaint on the ground that the contract therein set forth is unenforceable under the statute of frauds: ‘A contract to sell or a sale of any goods or choses in action of the value of one hundred (100) dollars or upwards shall not be enforceable by action, unless the buyer shall accept part of the goods or choses in action so contracted to be sold or sold, and actually receive the same, or give something in earnest to bind the contract, or in part payment, or unless some note or memorandum in writing of the contract or sale be signed by the party to be charged, or his agent in that behalf.’ 2 Comp. Laws 1929, § 9443 (Stat.Ann. § 19.244).

Plaintiff relies on Exhibit ‘A’ as a sufficient memorandum signed by First of Michigan Corporation, as agent for defendant Blood, the party herein sought to be charged, to take the contract evidenced thereby out of the statute. In his brief and statement of questions involved, plaintiff also advances the alternative argument that Exhibits ‘A’ and ‘B’ may be integrated, construed together as one document, a single memorandum, identifying both principals by name. We shall not consider this question, as it was not included in the ‘reasons and grounds of appeal’ as Court Rule No. 66, § 3(1933) requires), and furthermore, in the disposition which we make of the case, it will be unnecessary to consider it. We confine our attention to Exhibit ‘A’.

Defendant contends that Exhibit ‘A’ is insufficient as a memorandum because it does not identify him as the vendor. It is well settled that a memorandum is insufficient if it fails to state any element essential to the contract it purports to evidence, and concededly a vendor is indispensable in a contract of sale.

The trial court granted defendant's motion to dismiss on the ground that Exhibit ‘A’ is not a sufficient memorandum, and also upon an additional ground, which we shall discuss later. Before proceeding to discuss the merits of the dismissal on the ground of insufficiency of memorandum, we propose to clarify our discussion by adopting the following definitions of the terms disclosed principal, partially disclosed principal, and undisclosed principal, which the American Law Institute has promulgated in its restatement of the Law of Agency (1933) § 4:

‘(1) If, at the time of a transaction conducted by the agent, the other party thereto has notice that the agent is acting for a principal and of the principal's identity, the principal is disclosed.

‘(2) If the other party has notice that the agent is or may be acting for a principal but has no notice of the principal's identity, the principal for whom the agent is acting is partially disclosed.

‘(3) If the other party has no notice that the agent is acting for a principal, the principal is undisclosed.’

Exhibit ‘A’, by referring to ‘an undisclosed principal’ (i. e., Blood), had the effect of making Blood a partially disclosed principal, since it revealed his existence to, but concealed his identity from, the ‘other party’ (i. e., Dodge).

In the present opinion, we determine the status of a principal as disclosed, partially disclosed, or undisclosed, entirely from what appears in the memorandum, since the statute of frauds is involved, and actual knowledge by the other party is no substitute for disclosure in the memorandum. Jarrett v. Hunter, L.R. 34, Ch.D. 182, 185.

No Michigan decision has been produced by counsel or discovered by us in which the precise question presented on this appeal was raised or passed upon. The case being one of first impression, we are at liberty to follow the dictates of principle, enlightened by experience as embodied in precedents from other jurisdictions, which we have examined with care.

The rule of the decided cases is well expressed by the following quotations from Williston on Sales (1924), chap. 5 (Satisfaction of the Statute (of Frauds) by a Memorandum in Writing):

Ԥ 102. Contents of Memorandum-Parties.

‘It is essential that the memorandum state the substance of the transaction to which it relates. It is necessary, therefore, that the memorandum state the name of both parties to the bargain. * * * By a liberal application of the legal rule identifying the principal with his agent, the name of one or both of the contracting parties may be represented by that of an agent, and such a memorandum will bind the principals. But it is essential that by the terms of the memorandum either the principal or the agent be named as a party. If the agent by the terms of the memorandum is contracting in such terms as exclude him from personal liability, the memorandum is insufficient. * * *

Ԥ 105a. Certainty of description of parties.

‘It is within the principal allowing definition of terms, that a memorandum which names A as one of the parties to the transaction, sufficiently designates B when the latter is shown by parol to be A's principal. * * * The same doctrine is applicable even though the memorandum discloses the agent is an agent, provided the form of the contract purports to bind him personally. If, however, the agent's name appears on the paper, not as that of a contracting party, his name will not serve as a substitute for the name of his principal as a party to the contract.’

The following decisions amply support the foregoing text: Lovesy v. Palmer, 1916, 2 Ch. 233, 243-244; Mertz v. Hubbard, 75 Kan. 1, 5, 88 P. 529, 8 L.R.A., N.S. 733, 121 Am.St.Rep. 352,12 Ann.Cas. 485;Tobin v. Larkin, 183 Mass. 389, 391, 67 N.E. 340;Irvmor Corporation v. Rodewald, 253 N.Y. 472, 475, 476, 171 N.E. 747, 70 A.L.R. 192; Bradley v. Elliott, 11 Ont. L.R. 398, 399, 400. Many cases are collected in 23 A.L.R. 932-943. We summarize the rules deducible from all these authorities as follows:

I. If a memorandum (1) is signed by an agent in his own name, (2) partially discloses a principal, (3) does not purport to bind the agent as a party to the contract, the statute requires the exclusion of parol evidence of the identity of the partially disclosed principal.

II. If a memorandum (1) is signed by an agent in his own name, (2) partially discloses a principal, (3) purports to bind the agent as a party to the contract, the statute does not prevent the admission of parol evidence of the identity of the partially disclosed principal.

III. If a memorandum (1) is signed by an agent in his own name, (2) leaves any principal other than the signer wholly undisclosed, (3) the legal consequence being that the agent is bound as a party to the contrct, the statute does...