Kohlmeyer & Co. v. Bowen

• Decision Date: 21 June 1972
• Docket Number: 3,2,Nos. 1,No. 46934,46934,s. 1
• Citation: 126 Ga.App. 700,192 S.E.2d 400
• Parties: , 11 UCC Rep.Serv. 565 KOHLMEYER & COMPANY v. James O. BOWEN
• Court: Georgia Court of Appeals

Page 400

192 S.E.2d 400

126 Ga.App. 700, 11 UCC Rep.Serv. 565

KOHLMEYER & COMPANY v. James O. BOWEN.

No. 46934.

Court of Appeals of Georgia, Division Nos. 1, 2, 3.

June 21, 1972.

Rehearing Denied July 19, 1972.

Arnall, Golden & Gregory, Alexander Cocalis, Allen I. Hirsch, Michael C. Towers, Atlanta, for appellant.

Swertfeger, Scott, Pike & Simmons, M. H. Blackshear, Jr., Davis & Stringer, Thomas O. Davis, Decatur, for appellee.

King & Spalding, Henry Hall Ware, III, Jack H. Watson, Jr., and Walter W. Driver, Jr., Atlanta, amicus curiae.

Syllabus Opinion by the Court

EBERHARDT, Presiding Judge.

Kohlmeyer & Company, a dealer in securities, brought suit against James Bowen, alleging that on March 20, 1970, Bowen telephoned Kohlmeyer and inquired about the purchase of tax-exempt bonds for his account, as a result of which Bowen orally agreed to purchase $80,000 face amount of Atlanta Airport revenue bonds due January, 1993, and bearing interest at 7 1/4% per annum, on a basis to yield 7.15% when, as, and if the bonds were issued. On the same date Kohlmeyer transmitted to Bowen a 'when issued' confirmation and statement of the transaction; and, on April 21, when the bonds were validated and issued and thus became available on a regular transaction basis, Kohlmeyer sent to Bowen another confirmation and statement of the transaction. When Bowen refused to go through with the purchase, Kohlmeyer, after notice to Bowen, sold the bonds which it had purchased for his account at a net loss of $4,642.80.

Bowen answered, admitting that he orally agreed to purchase $80,000 face amount of the described bonds for a yield of 7.15% when, as, and if issued, and agreed to pay for the bonds upon delivery, but alleging that it was represented to him that he would be entitled to interest accruing on the bonds after March 20. He also alleged that the confirmation statements failed to meet the applicable Statute of Frauds, UCC § 8-319 (Code Ann. § 109A-8-319).

The case was tried before the court without a jury and, at the close of Kohlmeyer's evidence, the court rendered judgment for Bowen on the basis that the Statute of Frauds had not been complied with. Kohlmeyer appeals. Held:

1. Bowen contended below, and now here, that Kohlmeyer had failed to establish its damages since the only evidence as to the price obtained upon Kohlmeyer's sale of the bonds for Bowen's account was contained in a confirmation statement which was excluded from evidence. However, Kohlmeyer's exhibit #8, a statement sent to Bowen of his account, shows that the bonds were sold for $78,169.73 at a loss of $4,642.80. There is ample evidence that this price was obtained as a result of competitive bidding, and we find no merit to Bowen's damages contention.

2. UCC § 8-319 (Code Ann. § 109A-8-319) provides that 'A contract for the sale of securities is not enforceable by way of action or defense unless (a) there is some writing signed by the party against whom enforcement is sought or by his authorized agent or broker sufficient to indicate that a contract has been made for sale of a stated quantity of described securities at a defined or stated price; or . . . (c) within a reasonable time a writing in confirmation of the sale or purchase and sufficient against the sender under paragraph (a) has been received by the party against whom enforcement is sought and he has failed to send written objection to its contents within ten days after its receipt'. Since the evidence is clear that Bowen did not object in writing to the confirmation statement until May 7, more than ten days after the April 21 confirmation statement which Bowen admits receiving, the issues with respect to subsection (c) of the Statute of Frauds are whether the confirmation statements were 'signed' by Kohlmeyer within the meaning of the UCC, whether either of the statements was sufficient to indicate that a contract had been made for the sale of a stated quantity of described securities at a defined or stated price, and whether the confirmation statements were received by Bowen within a reasonable time. ¹

The first question with which we must deal is whether either of the writings was sufficient to deprive Bowen of the absolute defense of the Statute of Frauds.

(a) The confirmation statement of April 21 showed that Bowen bought $80,000 face amount of Atlanta Airport revenue bonds bearing interest at 7.25% per annum maturing January, 1993, on a purchase price basis to earn a yield of 7.15%. The 'price' is further stated as a percentage of face value required to earn the agreed-upon yield of 7.15% (101.099%), and it is also stated as a 'Principal amount' ($80,879.20-or $80,000 101.099%)). The statement shows the 'due date,' or date on which payment and delivery were due, as May 1, 1970, plus the interest proration owed by Bowen for the period between January 1, 1970, the date of the bonds when interest commenced to accrue, and the due date of May 1. ² Hence the requirement of Code Ann. § 109A-8-319(a) that there be a contract for the sale of 'a stated quantity of described securities at a defined or stated price' is clearly met by the April 21 confirmation statement. There is no uncertainty as to the contract terms and conditions which cannot be made certain from those stated, or from those which are admitted. See Dorsey v. Clements, 202 Ga. 820, 824, 44 S.E.2d 783, 173 A.L.R. 509.

(b) The information supplied by the April 21 statement with regard to accrued interest and 'price' or 'principal amount' could only be determined from the 'due date' which, barring advance payment by Bowen, was in turn dependent upon when the bonds were issued. 'The fact that the price of goods sold and delivered was to be ascertained subsequently, by the condition of the market within a specified time at a particular place, does not affect the validity or completeness of the sale, unless for some reason the ascertainment by the terms of the contract becomes impossible.' Allen v. Sams, 31 Ga.App. 405(2), 120 S.E. 808. See also Barrow County Cotton Mills v. Sams, 48 Ga.App. 357(1), 172 S.E. 820. 'The fact that the price is to be ascertained by a method which is certain and exact subsequently to the contract does not affect the validity or completeness of the sale. . . .' Comstock v. Tarbush, 73 Ga.App. 724, 726, 37 S.E.2d 925. Since Bowen admits he purchased the 7.25% bonds on a 'when, as, and if issued' basis to yield 7.15%, and the bonds were not issued until April 21, 1970, we hold that the April 21 confirmation statement, which Bowen admits receiving, was, as a matter of law, received 'within a reasonable time' as required by UCC § 8-319(c) (Code Ann. § 109A-8-319(c)).

(c) Another question is whether the confirmation statement was 'signed' by Kohlmeyer within the meaning of the UCC. "Signed' includes any symbol executed or adopted by a party with present intention to authenticate a writing.' UCC § 1-201(39) (Code Ann. § 109A-1-201(39). 'The inclusion of authentication in the definition of 'signed' is to make clear that as the term is used in this Act a complete signature is not necessary. Authentication may be printed, stamped or written; it may be by initials or by thumbprint. It may be on any part of the document and in appropriate cases may be found in a billhead or letterhead. No catalog of possible authentications can be complete and the court must use common sense and commercial experience in passing upon these matters. The question always is whether the symbol was executed or adopted by the party with present intention to authenticate the writing.' UCC § 1-201, Comment 39, 1962 Official Text. (Emphasis supplied). In conformity with the spirit behind the broad definition of 'signed,' the courts have looked to the writing as well as to the attendant circumstances to determine whether the symbol was executed or adopted by the party with present intention to authenticate, and in the great majority of cases the requisite intent has been found notwithstanding the fact that irregularities appeared on the writings or the niceties and formalities of manual signatures were lacking. See, e.g., Reich v. Helen Harper, Inc., 3 UCC Reporting Service 1048 (Civil Court NYC); Associated Hardware Supply Co. v. Big Wheel Distr. Co., 355 F.2d 114, 118(1, 2) (3d Cir.); Benedict v. Lebowitz, 346 F.2d 120 (2d Cir.); In re Colorado Mercantile Co., 299 F.Supp. 55 (D.C.Colo.); Plemens v. Didde-Glaser, Inc., 244 Md. 556, 224 A.2d 464; In re Excel Stores, Inc., 341 F.2d 961 (2d Cir.); Southwest Eng. Co. v. Martin Tractor Co., 205 Kan. 684, 473 P.2d 18; In re Bengston, 3 UCC Reporting Service 283, 288 (D.C.Conn.); In re Horvath, 1 UCC Reporting Service 624 (D.C.Conn.); Annot., 30 A.L.R.3d 9, 58 (§ 19(b)). Compare Maine &c. Credit Union v. Atlantic Motors, 250 A.2d 497 (Me.); In re Carlstrom, 3 UCC Reporting Service 766 (D.C.Me.). See also Calaway v. Admiral Credit Corp., 407 F.2d 518 (4th Cir.).

In the instant case the confirmation statement consists of Kohlmeyer's standard printed form with various labeled blank spaces or blocks where the appropriate information with regard to the transaction has been typed in. At the top of the form 'Kohlmeyer & Co.,' with its company symbol, address and other information, appears in print. No provision is made on the form for a manual signature, and there is no testimony that such confirmations are ever manually signed. Since the evidence is direct and uncontroverted that Kohlmeyer took this form, completed it with details of the account and the terms of the contract, and addressed and mailed the completed statement to Bowen, a finding would have been authorized if not demanded that Kohlmeyer adopted its printed name with present intention to authenticate the writing and that the writing was sufficient against Kohlmeyer under UCC § 8-319(a) (Code Ann. § 109A-8-319(a)). 'Paragraph (c) is particularly important in the relationship of broker (Section 8-303) and customer. Normally a...