Franklin v. Matoa Gold Min. Co.

• Decision Date: 28 December 1907
• Docket Number: 2,650.
• Parties: FRANKLIN v. MATOA GOLD MIN. CO.
• Court: U.S. Court of Appeals — Eighth Circuit

158 F. 941

FRANKLIN v. MATOA GOLD MIN. CO.

No. 2,650.

United States Court of Appeals, Eighth Circuit.

December 28, 1907

Charles J. Hughes, Jr., and Charles W. Franklin (Harry B. Tedrow, on the brief), for plaintiff in error.

David P. Strickler and Tyson S. Dines (Dines, Whitted & Dines, on the brief), for defendant in error.

Before SANBORN and VAN DEVANTER, Circuit Judges, and PHILIPS District judge.

PHILIPS District Judge.

The plaintiff brought an action at law against the defendant corporation for breach of contract in failing to deliver 100,000 shares of the capital stock of the company, of the face value of $1 per share. The first count alleges that in January, 1904, at Colorado Springs, Colo., the defendant promised and agreed with Pence, Franklin & Babbitt, a firm of lawyers in said city, that it would pay them $25 per day 'for services thereafter to be rendered by the said Charles W. Franklin, and the further sum of twenty-five dollars ($25) per day for each day's service thereafter to be rendered by the said Kurnal R. Babbitt, in and about prosecuting, defending, counseling, and advising the said defendant company in and about certain suits hereinafter described; the said sum of twenty-five dollars ($25) per day to be paid for each day when either the said Franklin or Babbitt were absent from their respective offices for and on account of the said business and litigation; and to deliver to the said copartnership fifty thousand (50,000) shares of the capital stock of the said defendant company. ' The complaint alleges that said services were duly rendered, and that portion of the contract requiring the payment of said $25 per day had been complied with by the defendant; but it had failed and refused to deliver said stock. It alleges that the claim sued for had been duly assigned, for a valuable consideration, to the plaintiff Franklin. Damage is laid under this count at $20,000.

The second count alleges a like contract between the defendant and another firm of lawyers, to wit, Lunt, Armit & Brooks, at Colorado Springs, Colo., on the same terms; the payment of the per diem to be made while the said Lunt or the said Brooks were so engaged, and for the delivery to the copartnership of 50,000 shares of the capital stock of the defendant company. Performance on the part of said Lunt Armit & Brooks is alleged; and payment by the defendant of the $25 per diem as agreed is admitted, but default is charged in the delivery of the 50,000 shares of stock aforesaid. This claim was also assigned to the plaintiff by said Lunt, Armit & Brooks. The damage on this count is laid at $20,000. The answer denies the making of the alleged contract, and alleges that the matter of the $25 per diem had no connection whatever with the alleged agreement for the delivery of the shares of stock. Among the various special defenses pleaded, the defendant interposed the plea of the statute of frauds, in that the contract in question was not reduced to writing. As the decision of the case, predicated on the plea of the statute of frauds, is determinative of the right of recovery, it is unnecessary to consider the other matters of defense tendered by the answer. The replication denied that the agreement or understanding with reference to said per diem pay had no connection with the agreement for the delivery of the shares of stock; 'but plaintiff alleges and states the fact to be that under the agreement alleged in the complaint, the said per diem compensation and the capital stock together were to be the consideration for the services thereafter to be rendered.'

At the trial to a jury the following occurred: Mr. Dines, of counsel for defendant, stated that the contract was not in writing and was within the statute of frauds:

'The Court: The replication does not deny that? Mr. Dines: In what we claim is an evasive way, so as not to properly deny it. That is what I raise-- that the replication does not deny that fact; the contract is not in writing. The Court: Does the plaintiff propose to offer proof that the agreement was a written contract-- the contract as set forth in the complaint? Mr. Hughes (of counsel for plaintiff): No, your honor. We will offer to prove in this connection every matter alleged in the replication; we want it to be considered that way; I suppose it would be. By Mr. Franklin we would show that it was done, and in addition the correspondence which I stated in my statement-- that ought to be considered. We do not claim that it was a formal written contract, made at the time; we never have said that. We think it is enough, even if this was within the statute, to take it out by virtue of what is alleged in the replication; and the things which I have stated to the jury we will prove-- in my opening statement.'

Upon this statement the trial court directed a verdict for the defendant. We are of opinion that the court was warranted in treating the statement of plaintiff's counsel as an admission that the contract sued on was not in writing. It was either in writing or not in writing. It was not claimed to have been part one and part the other. But the distinct answer was that it was not in writing; and it is clear that what the plaintiff relied upon was the allegation in the replication of performance on the part of the plaintiff's assignors. In his argument to this court it is contended that the Circuit Court erred in directing a verdict on said admission of counsel, because he suggested to the court that there was correspondence between the parties. What was the correspondence relied upon? Was it claimed to be a 'memorandum of such contract in writing? ' If so, such contention is utterly inconsistent with the statement that the contract was not in writing. The colloquy between court and counsel merely refers back to some statement theretofore made to the jury respecting the correspondence; but what that statement was the bill of exceptions does not disclose. Most certainly before counsel can be heard to complain of the action of the court in proceeding to judgment notwithstanding he proposed to show certain things by correspondence, he should have disclosed to the court what that correspondence contained; and before this court could review it the bill of exceptions should set it forth.

The statute of Colorado (chapter 55, Sec. 2025, vol. 1, Mills' Ann. St.) declares that:

'In the following cases every agreement shall be void, unless such agreement, or some note or memorandum thereof, be in writing, and subscribed by the party charged therewith: * * *

'Fourth. Every contract for the sale of any goods, chattels, or things in action, for the price of $50.00 or more, shall be void unless: First, a note or memorandum of such contract be made in writing and be subscribed by the parties to be charged therewith; or, second, unless the buyer shall accept and receive part of such goods, or the evidence of some of them, or such things in action; or, third, unless the buyer shall, at the time, pay some part of the purchase money.'

The first contention on behalf of the plaintiff is that the transaction in question was not a contract for the sale of goods, or chattels, or things in action, within the terms of the statute. Without prolonging the opinion in a review of the authorities touching this question, it is sufficient to say that the decided weight of authority is that such statute, in its application, makes no distinction between contracts of barter or exchange on the one hand, and of sales on the other. A contract is no less within the statute 'because something other than money is to be given in return for the goods; contracts of barter being regarded, so far as the statute is concerned, as contracts of sale. ' Browne on Statute of Frauds (5th Ed.) c. 14, p. 390, also section 76; Dowling v. McKenney, 124 Mass. 479, 480; Raymond v. Colton, 104 F. 219, loc. cit. 224, 43 C.C.A. 501; Bennett v. Hull, 10 Johns. 364; Howard v. Harris, 8 Allen (Mass.) 297. It is well established, and the generally recognized rule of construction of such statutes, that a contract for the sale of stocks at a future date is within the statute. Smith on the Law of Fraud, etc. (1907) Sec. 373; North v. Forest, 15 Conn. 400; Mayer v. Child, 47 Cal. 142; Meehan v. Sharp, 151 Mass. 564, loc. cit. 566, 24 N.E. 907; Mussel v. Cooke, Pre. Ch. 533; Crull v. Dodson, Sel. Cas. in Chancery, 41. It being conceded that the contract in question was not evidenced by a memorandum made in writing and subscribed by the parties to be charged therewith, it is void, unless the buyer-- that is, the plaintiff's assignors-- accepted and received part of the stock, or the evidence of such things in action, or unless the buyer at the time paid some part of the purchase money.

There being no pretense of claim that plaintiff's assignors received any part of the things-- the stocks-- bartered, or the evidence of any of them, within the meaning of this clause of the statute, the right of action turns upon the only remaining exception, 'unless the buyer shall at the time pay some part of the purchase money. ' The statute in this respect is strikingly different from section 17 of the old English statute of frauds, which prescribed: (1) a written contract or memorandum; (2) acceptance and actual receipt of the property sold; (3) payment of part or all of the purchase price; and (4) payment of earnest money. Under that statute no time was fixed when part of the purchase money should be paid, to avoid the infirmity of the verbal agreement. Whereas, under the Colorado statute, the positive requirement is that the part payment of purchase money must be made at the time of the making of the contract. And this provision differentiates this statute from that of many of the states....