Morris v. People's Bank & Trust Co. of Natchitoches

• Decision Date: 22 May 1991
• Docket Number: No. 90-1239,90-1239
• Citation: 580 So.2d 1037
• Court: Court of Appeal of Louisiana — District of US
• Parties: 15 UCC Rep.Serv.2d 575 Huey P. MORRIS and Susie T. Morris Plaintiffs-Appellants, v. PEOPLE'S BANK & TRUST COMPANY OF NATCHITOCHES, Louisiana; People's Bancshares of Natchitoches, Inc.; Peter E. Cloutier, Jr.; Gary S. DeBlieux; Hertzog DeBlieux; Walter C. Jones; John A. Luster; G.F. Thomas, Jr.; Lovan B. Thomas; R. Stacy Williams; and Kenneth D. McCoy, Jr. Defendants and Sam J. Friedman Defendant-Appellee.

Page 1037

580 So.2d 1037

15 UCC Rep.Serv.2d 575

Huey P. MORRIS and Susie T. Morris Plaintiffs-Appellants, v. PEOPLE'S BANK & TRUST COMPANY OF NATCHITOCHES, Louisiana;

People's Bancshares of Natchitoches, Inc.; Peter E.

Cloutier, Jr.; Gary S. DeBlieux; Hertzog DeBlieux; Walter

C. Jones; John A. Luster; G.F. Thomas, Jr.; Lovan B.

Thomas; R. Stacy Williams; and Kenneth D. McCoy, Jr. Defendants

and

Sam J. Friedman Defendant-Appellee.

No. 90-1239.

Court of Appeal of Louisiana, Third Circuit.

May 22, 1991.

Rehearing Denied June 24, 1991.

Cooper & Pierson, Mary O. Pierson, Baton Rouge and Cleveland, Barrios, Kingsdorf & Casteix, Carl W. Cleveland, New Orleans, for plaintiffs/appellants.

McCoy & Hawthorne, Kenneth D. McCoy, Jr., Natchitoches, Willie D. Maynor, Baton Rouge, Watson, Murchison, Crews, Arthur & Corkern, Daniel T. Murchison, Natchitoches, Mayer Smith & Roberts, Caldwell Roberts, Hargrove, Guyton, Ramey & Barlow, Billy R. Pesnell, Shreveport, Luster, Conine & Brunson, John W. Luster, Natchitoches, and Cook, Yancey, King & Galloway, Herschel Richard, Jr., Shreveport, for defendants/appellee.

Before DOMENGEAUX, C.J., and GUIDRY and LABORDE, JJ.

DOMENGEAUX, Chief Judge.

This appeal involves a claim made by Huey P. Morris and his wife, Susie T. Morris, against Sam J. Friedman for breach of an oral contract to purchase securities. In the same suit, Morris asserted certain claims against People's Bank & Trust Company of Natchitoches, People's Bancshares of Natchitoches, Inc., and certain directors of both entities; those claims were appealed and are the subject of our docket number 89-1242, rendered this date and reported at 580 So.2d 1029 (La.App.3d Cir.1991), which decision contains a complete discussion of the facts pertinent to this litigation.

Essentially, Morris claimed the Bank, Bancshares, Friedman, and other directors are liable to him for the Bank's failure to honor its stock purchase obligation upon Morris' resignation as president and chief executive officer of the Bank. Independent of those claims is the allegation which is the issue of this appeal that Friedman orally agreed to purchase Morris' stock. The petition states:

18.

FIFTH CAUSE OF ACTION--BREACH OF ORAL AGREEMENTS TO BUY

In June of 1987, Friedman personally agreed to buy the stock owned by petitioner on or before July 23, 1987. Friedman has failed to fulfill his obligation pursuant to this agreement. In July of 1987, Friedman again agreed to buy the stock owned by petitioner on or before August 5, 1987. Friedman's obligation pursuant to this agreement has not been fulfilled.

The trial court overruled Friedman's exception of no cause of action on this claim, but granted summary judgment in Friedman's favor after reviewing deposition testimony and other evidence. The court relied on La.R.S. 10:8-319. We affirm, and adopt herein the reasons of the trial court on the applicability of Section 8-319.

"The statutory language which the mover relies upon is found in Title 10 of the Louisiana Revised Statutes and is a portion of the Uniform Commercial Code which was adopted by the State of Louisiana in 1978. ... The specific provisions of LSA-R.S. 10:8-319 are as follows:

Sec. 8-319. Statute of frauds

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

(b) Delivery of the security has been accepted or payment has been made but the contract is enforceable under this provision only to the extent of such delivery or payment; 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; or

(d) The party against whom enforcement is sought admits in his pleading, testimony or otherwise in court that a contract was made for sale of a stated quantity of described securities at a defined or stated price.

"On its face, the motion seems well founded in the law because LSA-R.S. 10:8-319 clearly requires a writing meeting the requirements of section (a). Section (a) requires that there be a writing signed by the party against whom enforcement is sought, which writing must be sufficient to indicate that a contract has been made for the sale of a stated quantity of specific securities at a certain or ascertainable price. Despite the fact that the motion appears on its face to have a good legal basis, counsel for the plaintiffs, in well researched and written briefs and in a conference with the court and all counsel, have raised oppositions with sufficient merit to prevent the court from summarily granting this motion.

"Counsel and the court are all in agreement that there is no Louisiana law interpreting the provisions of LSA-R.S. 10:8-319, so the court, in keeping with the directive of the Louisiana Supreme Court in Cromwell v. Commerce and Energy Bank, 464 So.2d 721 (La.Sup.Ct.1985), has looked to the jurisprudence of other states and the Federal Court system for direction. The directive from the Louisiana Supreme Court is stated as follows:

The U.C.C. was adopted in Louisiana in an effort to harmonize the commercial law of Louisiana with that of the other states. We should, therefore, examine the jurisprudence of other states interpreting R.S. 10:5-114(2).

"With this in mind the court will look at the first basis for the opposition to the motion which is to the effect that the Statute of Frauds (LSA-R.S. 10:8-319) does not apply to private sales of securities or private agreements to sell securities. The court has found adequate direction on this issue in the jurisprudence of other states and the Federal system in interpreting section 8.319 of the Commercial Code (our LSA-R.S. 10:8-319). Typical language interpreting this section is found in Young vs. Simpson, which was decided in the Texarkana division of the United States District Court for the Eastern District of Texas and which is reported at 607 F.Supp. 67 (U.S.Dist.Ct.1985). The following language of Simpson is dispositive of this issue:

STATUTE OF FRAUDS

[1, 2] Section 8.319 of the Texas Business and Commerce Code sets forth certain requirements regarding the enforceability of contracts for the sale of securities. The Code reads, in pertinent part:

A contract for the sale of securities is not enforceable by way of action or defense unless:

1. 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. Tex.Bus. & Com.Code Ann. Sec. 8.319 (Vernon Supp.1984). Stock of a closely held corporation comes within the term "securities" as set forth in 8.319 of the Code. Kenney v. Porter, 604 S.W.2d 297, 301 (Tex.Civ.App.--Corpus Christi 1980, writ ref'd n.r.e.). Therefore, the alleged oral agreement to repurchase the stock in Hush Puppy of Little Rock, Inc. is subject to the Code's requirements. Since there is no writing signed by Simpson which evidences such alleged agreement, Dr. Young's claim is unenforceable even if there had been such an agreement. See Consolidated Petroleum Industries, Inc. v. Jacobs, 648 S.W.2d 363, 366 (Tex.App.--Eastland, 1983, writ ref'd n.r.e.)

"To the same effect as Young v. Simpson are Roos v. Aloi, 127 Misc.2d 864, 487 N.Y.S.2d 637 (Supp.1985); Godwin v. Westberry, 231 Ga. 492, 202 S.E.2d 402 (Ga.1973); Murrey v. Specialty Underwriters, Inc. 233 Ga. 804, 213 S.E.2d 668 (1975); Thomas v. Prewitt, 355 So.2d 657 (Miss.1978).

"The next point of opposition raised by the plaintiff is to the effect that LSA-R.S. 10:8-319 does not apply to bank stock. That issue was squarely addressed by the Supreme Court of Kansas in Mildfelt v. Lair, 221 Kan. 557, 561 P.2d 805 (1977). That proceeding was almost identical to the proceeding which is before this court and is described in the syllabus of the case as follows:

Action was brought to recover damages for breach of oral contract, which provided for employment of plaintiff as bank president, * * * and for an option by plaintiff to buy bank stock * * *.

"The Mildfelt case, like the case at bar, was before the court on a motion for summary judgment. The court in Mildfelt applied K.S.A. 84-8-319 (our LSA-R.S. 10:8-319) as follows:

K.S.A. 84-8-319 is our present statute of frauds governing the sale of securities. It reads: "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

"(b) delivery of the security has been accepted or payment has been made but the contract is enforceable under this provision only to the extent of such delivery or payment; 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; or

"(d) the party against whom enforcement is sought admits in his pleading, testimony or otherwise in court that a contract was made for sale of a stated quantity of described securities at a defined or stated price."

None of the four conditions prescribed by K.S.A. 84 8:319 is present here. There is no writing signed by Lair, no delivery of the shares, no payment by Mildfelt, no...