Reith v. Univ. Hous. Corp.

• Citation: 247 Mich. 104,225 N.W. 528
• Decision Date: 03 June 1929
• Docket Number: No. 89.,89.
• Parties: REITH et al. v. UNIVERSITY HOUSING CORPORATION.
• Court: Supreme Court of Michigan

247 Mich. 104

225 N.W. 528

REITH et al.

v.UNIVERSITY HOUSING CORPORATION.

No. 89.

Supreme Court of Michigan.

June 3, 1929.

Appeal from Circuit Court, Washtenaw County, in Chancery; George W. Sample, Judge.

Suit by Fred J. Reith and another against the University Housing Corporation. From a decree dismissing the bill of complaint, plaintiffs appeal. Affirmed, with provision regarding transfer of case to law side of court.

Argued before the Entire Bench.

C. H. & G. M. Lehman, of Detroit, for appellants.

Bonisteel & Lane, of Ann Arbor (Cavanaugh & Burke, of Ann Arbor, of counsel), for appellee.

NORTH, C. J.

This is a suit for specific performance of a contract for the return by the defendant to the plaintiffs of certain stock and for damages alleged to have been sustained by the plaintiff Fred J. Reith incident to the breach of a contract whereby he was employed by the defendant for a period of two years, at an agreed salary of $300 per month. The transactions out of which this litigation arises were almost wholly between the defendant and Mr. Fred J. Reith, and for convenience he will be herein denominated as the plaintiff. In March, 1924, certain officers and agents of the defendant corporation approached the plaintiff and induced him to purchase $11,000 par value of its stock. Payment therefor was made by transferring to the defendant company $11,000 par value in stock of the Detroit Fidelity & Surety Company. As a part of this transaction, it was agreed in writing that the defendant company would return to Reith stock of like value in the Detroit Fidelity & Surety Company ‘whenever said Reith shall become dissatisfied or deem himself insecure in his said investment, within a reasonable time after demand for the return of said Detroit Fidelity & Surety Company stock.’

Practically at the same time, and obviously resulting from the same negotiations, the contract of employment above referred to was consummated. The stock in the defendant company was issued to the plaintiff; and there is some evidence from the records of the corporation that he was elected a director thereof March 11, 1924. He entered upon his employment April 15, 1924. He was notified of his dismissal on the 15th of September following. Two days later the plaintiff caused the following written notice to be served upon the defendant company: ‘I hereby notify you that I have become dissatisfied and deem myself insecure in my investment, and hereby demand a return of $11,000 worth of stock of said Detroit Fidelity and Surety Company, and upon its return I hereby offer to return to you all stock of the University Housing Corporation held by me and my wife, Ella B. Reith, also the bonds pledged to secure the agreement. * * *’

The defendant did not comply with the foregoing demand, and suit followed, resulting in the decree in the circuit dismissing the bill of complaint on the ground that the defendant's alleged agreement to return plaintiff's stock to him was ultra vires, and that equity did not have jurisdiction of plaintiff's claim for damages based upon the breach of his employment contract. The plaintiffs have appealed. In this court appellee contends that the decree of the lower court should be affirmed because it appears from the record that the defendant corporation was insolvent at the time the plaintiff sought to have his contract relative...