Erie City Iron Works v. Thomas

• Decision Date: 03 July 1905
• Citation: Erie City Iron Works v. Thomas, 139 F. 995 (S.D. N.Y. 1905)
• Parties: ERIE CITY IRON WORKS v. THOMAS et al.
• Court: U.S. District Court — Southern District of New York

139 F. 995

ERIE CITY IRON WORKS v. THOMAS et al.

United States Circuit Court, S.D. New York.

July 3, 1905

At Law. On demurrer to complaint.

Gilbert E. Roe, for plaintiff.

Richard A. Irving, for defendants.

HAZEL District Judge.

This is an action at law to recover the sum of $5,000, the par value of certain 6 per cent. gold bonds of the Empire State Sugar Company, a New York corporation. The defendants demurred to the complaint on the ground that a cause of action is not stated. The complaint alleges that the plaintiff entered into a contract with the Empire State Sugar Company, by which, in consideration of the payment of $18,000, it furnished said corporation with boilers, machinery, etc., and as a part of the purchase price therefor, being induced so to do by the promise of the defendants, as hereinafter stated, accepted five bonds of the corporation, secured by a mortgage. Upon this point the complaint alleges:

'That as a part consideration for entering into said contract and as an inducement to the complainant to enter therein and for other valuable consideration, as plaintiff is informed and verily believes, the said defendants jointly and severally promised and agreed with this plaintiff at said time that if this plaintiff would accept the above-mentioned bonds in part payment on said contract, as above stated, the said defendants would forthwith buy for cash the said bonds of plaintiff at their face or par value at any time within six months after the delivery thereof.

The bonds were not delivered on January 1, 1901, as agreed, but an interim certificate was issued at that time to the plaintiff. Subsequently, on March 28, 1901, the bonds were delivered to, and accepted by, the plaintiff. After the issuance of the certificate, and also after the delivery of the bonds (within the six-months period), the plaintiff made a tender thereof to the defendants, who, however, refused to accept them. The principal question is whether the promise of the defendants, who were officers and directors of the corporation, to purchase the bonds within the time specified is void for lack of consideration. Defendants contend that there was no binding obligation upon the plaintiff to sell the bonds, and therefore the agreement is unilateral. This proposition is untenable. The complaint clearly indicates that the plaintiff was induced by the defendants to make the contract with the sugar company and to part with its property in reliance upon the promise of the defendants to afterwards take the bonds off its hands. Under the circumstances, plaintiff's consent to sell the bonds to the defendants may be presumed. A concurrent binding obligation to do so existed. Ketchum v. Duncan, 96 U.S. 659, 24 L.Ed. 868; Mason v. Decker, 72...