Herrmann & Henican v. De La Perriere

• Decision Date: 25 September 1933
• Docket Number: 22835.
• Citation: 171 S.E. 232,47 Ga.App. 541
• Parties: HERRMANN & HENICAN v. DE LA PERRIERE.
• Court: Georgia Court of Appeals

171 S.E. 232

47 Ga.App. 541

HERRMANN & HENICAN v. DE LA PERRIERE.

No. 22835.

Court of Appeals of Georgia, First Division

September 25, 1933

Syllabus by the Court.

In seller's suit for buyer's refusal to accept stock contracted for, refusing amendment to petition alleging that stock was worthless when tendered held reversible error (Civ. Code 1910, § 4397).

In seller's suit for buyer's refusal to accept stock contracted for, amendment to defendant's answer alleging stock was worthless when sale contract was made and when stock was tendered stated defense, and was properly allowed.

1. The plaintiff should have been allowed to amend his petition so as to allege that the stock was worthless on the day it was tendered, the tender being made in accordance with the contract of sale, and it was reversible error to refuse such amendment.

2. The defendant had a right to plead that the stock was worthless on the day the contract of sale was made, and on the day of tender, and that therefore the sale was without consideration, and it was not error to allow an amendment to this effect.

Error from Superior Court, Barrow County; W. W. Stark, Judge.

Suit by Herrmann & Henican against E. E. De La Perriere, executor. To review the judgment, plaintiff brings error.

Reversed.

Winfield P. Jones, of Atlanta, and G. A. Johns, of Winder, for plaintiff in error.

MacINTYRE Judge.

The plaintiffs in error brought suit alleging that they were entitled to recover on a contract for the sale of fifty shares of common stock of the Barrow County Cotton Mills, in the sum of $2,500; and further alleging that, in pursuance of said contract, they subsequently tendered said stock to the purchaser at Winder, Ga., and that he rejected the same. This is the second appearance of this case in this court. See De La Perriere v. Herrmann & Henican, 41 Ga.App. 60 (4), 151 S.E. 813, where it was held: "Under a contract of sale of personal property, where the purchaser refuses to accept delivery and the seller retains the property as his own, the seller's measure of damages is the difference between the contract price and the market value of the property at the time and place for delivery. Georgia Refining Co. v. Augusta Oil Co., 74 Ga. 497 (2). This rule applies equally to the sale of corporate stock. Brandt v. Buckley, 27 Ga.App. 515 (109 S.E. 692)."

1. The plaintiff excepted to the overruling of a demurrer to paragraph 10 of the amendment to the defendant's answer which paragraph is as follows: "Defendant says that there was no consideration for the sale alleged in plaintiff's petition, for the reason that the stock alleged to have been purchased by the defendant's testator had no market value and was worthless on the date of said alleged sale and on the date that it is alleged in plaintiff's petition to have been delivered to defendant's testator." The gist of the demurrer was that "the allegations therein contained set up no defense to plaintiff's action." We cannot agree with the contention of the plaintiffs, but, on the other hand think that "the same legal principles govern with regard to the elements of a contract for the sale of stock as apply in the case of contracts generally; and its formation is governed by precisely the same principles as the formation of other contracts." 6 Fletcher on Corporations, § 3857. "Of course there must be a consideration to render an agreement for the sale of stock a binding contract. And there must also be a mutuality of obligation." 6 Fletcher on Corporations, § 3858. If there was a promise to sell, with a corresponding promise to buy, and the stock had no market value and was worthless on the day of the alleged sale and on the day that it was delivered (tendered) to the defendant as pleaded by the defendant, this would be a defense. However if the stock had a market value, or some value, on the day it was tendered, this would not constitute a defense of want of consideration. A distinction should be drawn between want or total failure of consideration and inadequacy of consideration. See, in this connection, 14 Corpus Juris, p 691, § 1064.

Generally the market value, as used in connection with stock, means that the market value of the stock which was the subject-matter of the sale and purchase, or exchange in the market, is determined by the sales of such stock in the community, so as to fix upon the stock at different times a customary price. Intrinsic value may be determined by the property of the corporation as compared with its liabilities. As to the method by which the value of the stock may be arrived at, see 14 Corpus Juris, p. 718, § 1099, which reads as follows: "There is no presumption that the...