Martindell v. Fiduciary Counsel Inc.

• Decision Date: 29 January 1943
• Docket Number: No. 217.,217.
• Citation: 30 A.2d 281
• Parties: MARTINDELL v. FIDUCIARY COUNSEL, Inc., et al.
• Court: New Jersey Supreme Court

30 A.2d 281

MARTINDELL

v.FIDUCIARY COUNSEL, Inc., et al.

No. 217.

Court of Errors and Appeals of New Jersey.

Jan. 29, 1943.

COPYRIGHT MATERIAL OMITTED.

Appeal from Court of Chancery.

Suit by Virginia P. Martindell against Fiduciary Counsel, Incorporated, and Mildred Martindell, involving right to a dividend on shares of stock, wherein Mildred Martindell filed a counterclaim. From a decree advised by the Vice Chancellor, 131 N.J.Eq. 523, 26 A.2d 171, complainant appeals.

Affirmed.

DONGES, Justice, dissenting.

McCarter, English & Egner, of Newark (George W. C. McCarter, of Newark, of counsel), for appellant.

John W. McGeehan, Jr., of Newark, for respondent Mildred Martindell.

HEHER, Justice.

A continuing offer grounded in a sufficient consideration constitutes an ‘option’, as the term is known to the law. Since it is a promise upon a legal consideration, it is irrevocable for the time of its continuance, and takes the classification of a contract. It is not open to the objection of want of mutuality. Such is the nature of the promise here. Its exposition is governed by the general rules of interpretation. If the language is clear and explicit, there is no room for the application of any of the secondary rules of construction. If, on the other hand, the expression is ambiguous or uncertain, it is to be strictly construed in favor of the party bound and against the party not bound. Pyrate Corporation v. Sorensen, 9 Cir., 44 F.2d 323; Cloverdale Co. v. Littlefield, 240 Mass. 129, 133 N.E. 565; Atwater & Co. v. Panama R. Co., 246 N.Y. 519, 159 N.E. 418; Williston on Contracts (Rev.Ed.) sec. 620.

The option under review is not lacking in clarity. It does not rule out acceptance of the offer by a mere promise to pay the consideration price of the stock. It does not in terms require acceptance by the payment or tender of payment of the purchase price. An unconditional promise to buy the stock in accordance with the provisions of the option would suffice to create a bilateral executory contract of sale having the requisite mutuality of obligation. Atlantic Pebble Co. v. Lehigh Valley R. Co., 89 N.J.L. 336, 98 A. 410. The optionor bound herself to ‘sell and transfer’ the subject shares of stock to the optionee, for a fixed price, ‘at any time within five years from the date’ of the agreement. The payment of the sale price was not made an express condition precedent to the formation of a bilateral contract of sale. It was not made a prerequisite to the exercise of the right to purchase the stock on the terms prescribed. And such a design is not fairly to be implied. Though irrevocable, the option is but an offer to sell the shares to the optionee for the stipulated price; and notice of its unqualified acceptance serves to create a bilateral executory contract of sale as in the case of the ordinary offer of sale and its unconditional acceptance. In the absence of a provision explicitly enjoining payment or tender of payment of the designated price as a sine qua non to the formation of an executory contract of sale, it is to be presumed that the parties contemplated a reasonable period of time for the preparation of the conveyance and an inquiry into the state of the title. Compare Houghwout v. Boisaubin, 18 N.J.Eq. 315; Atlantic Pebble Co. v. Lehigh Valley R. Co., supra; Atlas Portland Cement Co. v. American Brick & Clay Mfg. Co., 280 Pa. 449, 124 A. 650; McHenry v. Mitchell, 219 Pa. 297, 68 A. 729. The cases elsewhere are in conflict-e. g. Suhre v. Busch, 343 Mo. 170, 120 S.W.2d 47; Leadbetter v. Price, 103 Or. 222, 202 P. 104, 105; Killough v. Lee, 2 Tex.Civ.App. 260, 21 S.W. 970; Pennsylvania Mining Co. v. Martin, 210 Pa. 53, 59 A. 436; Watson v. Coast, 35 W.Va. 463, 14 S.E. 249; Pollock v. Riddick, 6 Cir., 161 F. 280. See, also, cases annotated in 101 A.L.R. 1432. And compare Steele v. Bond, 32 Minn. 14, 18 N.W. 830; McKenzie v. Murphy, 31 Colo. 274, 72 P. 1075; Rease v. Kittle, 56 W.Va. 269, 49 S.E. 150; Crandall v. Willig, 166 Ill. 233, 46 N.E. 755. But we regard the rule herein applied as designed to effectuate what reasonably appears to be the will of the parties, considered in the light of the circumstances; and this is the end to be served by construction. That would seem to be the normal significance of the expression.

As the learned Vice Chancellor pointed out, the legal title to the stock remained in the vendor until the consummation of the sale. In such circumstances, payment of the price and the delivery of the stock certificate, duly assigned, are concurrent acts.

[8] The further point is made that the optionee's letter of acceptance was qualified, since it did ‘not express a readiness and willingness to deliver $5,000 in legal tender to the complainant,’ but merely stated that that sum had been deposited to complainant's credit in the Denver bank, and contained what is termed a ‘counteroffer’ for the designation of a time and place for the delivery of the shares and the payment of the purchase price, if complainant refused to ‘accept such procedure,’ which required acceptance to create an executory contract of sale. But it is a corollary of the foregoing considerations that all that was done respecting the payment of the sale price and the consummation of the sale, after the communication of the notice of acceptance of the option, concerned the performance rather than the formation of the bilateral contract of sale.

There is also the alternative contention that the letter of acceptance forwarded to the optionor was ineffectual, in that it was not ‘properly addressed.’ When the optionor appended her signature to the option, it had been executed by the optionee at Denver, Colorado, where she then lived. The former was a resident of Bernardsville, in this State; and she acknowledged that the ‘knew the transactions were taking place by mail.’ But the optionor's place of abode at the time of the acceptance of the option was not definitely known to the optionee. Indeed, the testimony of the optionor herself was that she was not then residing ‘at any particular place,’ but ‘was staying off and on’ with a sister living at Gladwyn, Pennsylvania. She conceded that she ‘spent most of’ her ‘time’ with her sister there. The letter of acceptance was prepared in triplicate. One was despatched to the optionor by registered mail in care of her sister at the latter's residence in Gladwyn; another was addressed to the optionor at Bernardsville, and was likewise sent by registered mail; and the third was forwarded to her in care of her attorneys, McCarter, English and Egner, at Newark, N. J. The letter mailed to her sister's home at Gladwyn actually reached the optionor three days later; also the letter sent to her at Bernardsville. She was at her sister's home on the day of the mailing of these letters but left on that day for a brief stay with a friend on Long Island. Her sister immediately advised her by telephone of the receipt of the letters, and she thereupon returned and received them.

In these circumstances, there was compliance with the optionee's duty of communication of her mental assent to the terms of the offer embodied in the option. In the absence of provision to the contrary, it suffices if the transmission of the acceptance be done by mail. It is then to be presumed that such is the medium of communication contemplated by the parties themselves. In that situation, the aggregatio mentium occurs when the letter of acceptance is deposited in the post office. Hallock v. Commercial Insurance Co., 26 N.J.L. 268, affirmed 27 N.J.L. 645, 72 Am.Dec. 379.

A dividend declared on corporate capital stock during the pendency of a mere option to purchase the shares inures to the transferor, even though payable in futuro. But if there be no provision otherwise, a dividend declared on shares constituting the subject of a binding executory contract of sale, after the making of the contract and before the consummation of the sale, is the property of the transferee. Equity regards and treats as done what in good conscience ought to be done. Under this cardinal equitable principle, there being no contrary intent, executory contracts for the sale of lands or chattels, while considered as executory for some purposes in equity as well as at law, are from the outset regarded in equity as executed so far as concerns the interest or estate in the subject matter and as operating to transfer that interest to the vendee. An...