O.A. Olin Co. v. Lambach

• Decision Date: 20 July 1922
• Citation: 35 Idaho 767,209 P. 277
• Parties: THE O. A. OLIN COMPANY, Appellant, v. H. C. LAMBACH, Respondent
• Court: Idaho Supreme Court

209 P. 277

35 Idaho 767

THE O. A. OLIN COMPANY, Appellant, v. H. C. LAMBACH, Respondent

Supreme Court of Idaho

July 20, 1922

SALE OF PERSONAL PROPERTY-OPTION-EXECUTED SALE-CONTRACT OF SALE-MUTUALITY-MEASURE OF DAMAGES FOR BREACH OF-NOMINAL DAMAGES.

1. Where a seller agrees to sell a definite quantity of a certain article at a fixed price but the buyer does not agree to purchase any definite quantity, there is no contract because of lack of mutuality in the promises.

2. An option contract is one whereby the prospective purchaser obtains, for a consideration, the right of election to purchase the property for a given time.

3. Title to an article sold passes when the contract is made, if the article is identified and nothing remains to be done other than the delivery of the goods and the payment of the price.

4. Where a written agreement contains an offer on the part of the seller to sell a definite quantity of a certain article for a definite price and the word "accepted" signed by the buyer, this constitutes a definite offer and a definite acceptance resulting in a valid contract of sale.

5. The correct measure of damages for refusal of a purchaser to accept and pay for goods under a contract of sale is the difference between the market value and the contract price except where the article is specially ordered and prepared is not readily salable on the market, and where a market price cannot readily be fixed.

6. Nominal damages are recoverable for a breach of contract where there is no proof of actual damage.

7. A complaint setting out a breach of a valid contract is a statement of a cause of action for nominal damages, even though there is no allegation of compensatory damages.

APPEAL from the District Court of the First Judicial District, for Shoshone County. Hon. Wm. W. Woods, Judge.

Action for damages for breach of contract. Appeal from judgment of dismissal. Reversed.

Judgment reversed, with costs to appellant. Petition for rehearing denied.

W. H Hanson and Jas. A. Wayne, for Appellant.

The contract involved in this action was not lacking in mutuality, but embodied a written offer by the plaintiff to sell a definite number of shares of corporate stock at a definite price per share, payable on fixed dates, and upon the written acceptance of such offer by defendant it became a valid and binding contract. (1 Elliott on Contracts, secs. 25, 26, 57; Tiffany on Sales, sec. 15; Benjamin on Sales, secs. 38, 39; Ferry v. International Cotton Co., 136 Ga. 187, 70 S.E. 1100; McGhee Cotton Co. v. Herrine, 10 Ga.App. 700, 74 S.E. 66; Howel v. Kinney, 26 Ga.App. 168, 105 S.E. 716; J. E. Dunson & Bros. Co. v. J. C. Smith Seed Co., 26 Ga.App. 585, 106 S.E. 914; Lima Locomotive etc. Co. v. National Steel Castings Co., 155 F. 77, 83 C. C. A. 593, 11 L. R. A., N. S., 113; Campfield v. Sauer, 164 F. 833, 91 C. C. A. 304; E. C. Dailey Co. v. Clark Can Co., 128 Mich. 591, 87 N.W. 761; Golden Cycle Min. Co. v. Rapson Coal Min. Co., 188 F. 179, 112 C. C. A. 95; Cherry v. Smith, 3 Humph. (Tenn.) 19, 39 Am. Dec. 150; Cutting v. Dana, 25 N. J. Eq., 265; Dement Bros. Co. v. Coon, 104 Wash. 603, 177 P. 354.)

C. W. Beale, for Respondent.

The agreement exhibited in the original and amended complaints if valid at all is no more than an option granting to respondent the right to purchase certain stock at his pleasure, and is not an agreement of sale and purchase, and does not constitute a sale of the stock to respondent, and is not enforceable against the respondent. (James on Option Contracts, sec. 105; Clark on Contracts, 2d ed., p. 119; American Cotton Oil Co. v. Kirk, 68 F. 791, 15 C. C. A. 540; Teipel v. Meyer, 106 Wis. 41, 81 N.W. 982; Hoffman v. Maffioli, 104 Wis. 630, 80 N.W. 1032, 47 L. R. A. 427; Richardson v. Hardwick, 106 U.S. 252, 1 S.Ct. 213, 27 L.Ed. 145; Smith v. Beebe, 31 Idaho 469, 174 P. 608; Kessler v. Pruitt, 14 Idaho 175, 190, 93 P. 965.)

MCCARTHY, J. Rice, C. J., and Dunn, J., concur.

OPINION

MCCARTHY, J.

The amended complaint alleges that appellant sold respondent, and respondent purchased from appellant, 96,667 shares of the capital stock of the Old Hickory Mining Company, an Idaho corporation in accordance with a written contract as follows, to wit:

"Copy of Note Agreement to H. C. Lambach, March 6th, 1919.

"We have this date sold to Mr. H. C. Lambach 96,667 shares of Old Hickory Mining Co. stock, under the following terms and conditions:

"That the price of the aforesaid stock shall be Ten Cents per share, and shall be paid for as follows: Twenty-five per cent of the purchase price on or before April 6th, 1919, twenty-five per cent on or before May 6th, 1919, and the balance, fifty per cent, on or before June 6th, 1919.

"It is understood and agreed the stock sold herewith is pooled stock and that deliveries will be made in the form of Pool Certificates in the respective amounts desired as paid for not to exceed the total amount of stock above mentioned.

"THE O. A. OLIN COMPANY,

"By H. H. ROSS, Secretary.

"Accepted this 6th day of March, 1919.

"H. C. LAMBACH."

It further alleges that appellant tendered the stock and demanded payments as provided in the contract, and that respondent refused to make the payments or accept the stock. Appellant tenders to respondent a certificate or certificates in such amounts as the latter may desire, and demands judgment for $ 9,666.70, being the contract price, with interest. A general demurrer having been sustained, and appellant refusing to plead further, judgment was entered dismissing the action. From it this appeal is taken. The principal assignments of error are that the court erred in sustaining the demurrer and dismissing the action.

Respondent contends that the writing sued on is not a valid contract, for lack of mutuality. He cites many authorities holding that where the seller agrees to sell a definite quantity of a certain article at a fixed price, and the buyer does not agree to purchase any definite quantity, but only so much as he may desire from time to time, there is no contract, because of lack of mutuality in the promises. This is in accord with an elementary principle of the law of contracts. Is it applicable to the written agreement in question?

Respondent contends that the writing is mere option. In an option contract the prospective purchaser obtains, for a consideration, the right of election to purchase the property, for a given time. (James on Option Contracts, sec. 105.) This writing is not an option contract. The only consideration flowing from respondent is a promise. If that promise fulfills the requirements of mutuality a contract of sale results. If it does not, there is no consideration flowing from respondent and no contract at all.

Appellant contends that the writing constitutes a completed sale. The Uniform Sales Act, Sess. Laws '19, chap. 149, not having been adopted in Idaho until after the contract was executed, does not apply in this case. The rule adopted by the majority of modern authorities, and supported by reason, is identical with that embodied in the Sales Act, vi., that the title to an article sold is presumed to pass when the contract is made, if the article is identified, and nothing remains to be done other than the delivery of the goods and the payment of the price. (Bill v. Fuller, 146 Cal. 50, 79 P. 592; Crug v. Gorham, 74 Conn. 541, 51 A. 519; Warner v. Warner, 30 Ind.App. 578, 66 N.E. 760; Wing v. Clark, 24 Me. 366; Parsons v. Dickinson, 11 Pick. (Mass.) 352; Julius Kessler & Co. v. Veio, 142 Mich. 471, 106 N.W. 73; Smith v. Wheeler, 7 Ore. 49, 33 Am. Rep. 698; Ballentine v. Robinson, 46 Pa. 177; Williston on Sales, Sec. 264, p. 359, and other cases there cited.) In this case something remained to be done other than the delivery of the goods and the payment of the price, viz., the designation by the purchaser of the amounts or denominations of the pool certificates. Therefore title or property did not pass at the time of the agreement and it did not constitute an executed sale. The use of the word "sold" is not conclusive. It is frequently used in agreements which are executory contracts rather than completed sales. (Frazier v. Simmons, 139 Mass. 531, 2 N.E. 112; Mebius & Drescher Co. v. Mills, 150 Cal. 229, 88 P. 917.)

The question remains: Does the agreement constitute a contract of sale? The first part is an offer on appellant's part to sell respondent 96,667 shares of the stock, for ten cents per share, payable twenty-five per cent on or before April 6, 1919, twenty-five per cent on or before May 6, 1919, and the balance on or before June 1, 1919. Then follows this paragraph: "It is understood and agreed the stock sold herewith is pooled stock and that deliveries will be made in the form of Pool Certificates in the respective amounts desired as paid for not to exceed the total amount of stock above mentioned."

Respondent contends that this paragraph...