Paulson v. Weeks

• Decision Date: 16 May 1916
• Citation: 80 Or. 468,157 P. 590
• Parties: PAULSON v. WEEKS.
• Court: Oregon Supreme Court

157 P. 590

80 Or. 468

PAULSON v. WEEKS.

Supreme Court of Oregon

May 16, 1916

Department 2.

Appeal from Circuit Court, Multnomah County; Robert G. Morrow Judge.

Action by L. L. Paulson against F. O. Weeks. From a judgment for defendant, plaintiff appeals. Judgment affirmed.

L. L Paulson commenced this action to recover $6,500 which he paid to F. O. Weeks for 11,250 shares of the capital stock of the Big Hill Coal Mining Company, an Oregon corporation. The plaintiff has appealed from a judgment which was entered for the defendant after a demurrer to the amended complaint had been sustained and the plaintiff had refused to plead further. On February 26, 1907, the defendant was the owner of 7,500 shares of stock, which he had acquired from one White and he had also contracted with Henry Stockem for the purchase of 7,500 additional shares of stock. The amended complaint alleges that on the day mentioned Weeks agreed to deliver to Paulson the White stock for $5,500 and one-half the Stockem stock--

"for whatever the same cost when he had obtained the same, all upon the following terms, conditions, and considerations, to wit: That said defendant would and should sell said shares of stock to plaintiff for the price above set out, and that if plaintiff should at any time thereafter become dissatisfied with the purchase of said shares of stock, defendant would repay to plaintiff the said sums of money so paid to defendant by plaintiff as the purchase price of said shares of stock with 8 per cent. interest per arnum, upon demand made by plaintiff upon defendant therefor, and the return to defendant of said capital stock."

The pleading states that pursuant to the agreement plaintiff purchased 11,250 shares of stock; that on February 26, 1907 defendant was paid $5,500 for the White stock, which was delivered on that day, and that on February 2, 1909, the purchase was completed by the delivery of 3,750 shares of the Stockem stock to plaintiff, who at the same time paid to Weeks the sum of $1,000 upon the claim of the defendant, and that $1,000 "was the amount said shares of stock had cost him." It is also recited in the amended complaint that the defendant induced the plaintiff to purchase the stock by fraudulently representing that the stock was worth $1 per share, when it was practically worthless; that the company had plenty of money in the treasury, when it was without funds to work the mine; and that he would immediately put up bunkers, but that he had not done so. The plaintiff also charges that the defendant did not pay as much for the stock as he represented, and that he is exploiting the mine in his own interest, and has so manipulated the affairs of the company "as to bring it into such disrepute that there is no market for said stock and no sale therefor at any price." It appears from the pleading:

"That on or about the 1st day of July, 1911, plaintiff became and is dissatisfied with the purchase of said shares of stock."

And after the averments of fraud and misrepresentation already alluded to we read:

"That although plaintiff became dissatisfied, on or about the 1st day of July, 1911, as hereinbefore alleged, he did not become fully aware of the extent of said misrepresentation and of the fraud and deception practiced upon plaintiff by defendant, and of the utter worthlessness of said shares of stock, until on or about the 25th day of November, 1914 when he made demand upon defendant for the repayment of said purchase money and tendered back to him the said shares of stock as hereinafter alleged."

The defendant refused to rescind. The plaintiff has placed the stock in the custody of the clerk of the court for the defendant.

Albert H. Tanner, of Portland (Geo. F. Brice, of Portland, on the brief), for appellant. W. T. Hume, of Portland (W. A. Leet and Will H. Bard, both of Portland, on the brief), for respondent.

HARRIS J. (after stating the facts as above).

Reducing the pleading to its substance, it discloses a situation where Weeks agreed to sell 11,250 shares of stock; 7,500 shares were delivered and paid for on February 26, 1907, and the remaining 3,750 shares were delivered and paid for on February 2, 1909. The agreement for the sale provides that "if plaintiff should at any time thereafter become dissatisfied with the purchase" the defendant would repay the purchase money, with interest. Paulson became dissatisfied on July 1, 1911, but it does not appear that he gave notice of his dissatisfaction until November 25, 1914, when he says he became fully aware of the worthlessness of the stock and demanded repayment of the purchase money. This action was commenced on January 8, 1915. For the purposes of this discussion we must assume that the amended complaint speaks the truth when the pleading is challenged by a demurrer.

This action does not involve an attempt to rescind a contract on account of misrepresentation or fraud, but the plaintiff is seeking to recover money which he alleges the defendant agreed to repay if the plaintiff became dissatisfied with the stock at any time. It is true that averments of fraud and misrepresentation are found in the pleading, and yet it is obvious that they are not employed as the foundation for a rescission of the sale and the recovery of damages. The allegations of fraud and misrepresentation are probably designed to inform Weeks of the circumstances upon which Paulson contends that he was honestly and in good faith dissatisfied, and that his dissatisfaction was not capricious and arbitrary. Lumberman's Nat. Bk. v. Minor, 65 Or. 412, 133 P. 87; 9 Cyc. 624; 6 R. C. L. p. 952. The plaintiff rests his asserted right to rescind upon an express stipulation, which is a component part of the only contract which the parties entered into.

The contract was legal and binds the parties. It violates no statute, and is not against public policy; and, since the parties had the right to enter into the agreement, courts cannot unmake the contract merely because it may have been unwisely made. Johnston v. Trask, 116 N.Y. 136, 22...