Rose v. Barclay

• Decision Date: 23 May 1899
• Docket Number: 105
• Citation: 43 A. 385,191 Pa. 594
• Parties: Wilbur F. Rose, Appellant, v. Charles Barclay and the Camden Gas Light Company
• Court: Pennsylvania Supreme Court

43 A. 385

191 Pa. 594

Wilbur F. Rose, Appellant, v. Charles Barclay and the Camden Gas Light Company

No. 105

Supreme Court of Pennsylvania

May 23, 1899

Argued March 24, 1899

Appeal, No. 105, Jan. T., 1899, by plaintiff, from decree of C.P. No. 4, Phila. Co., March T., 1894, No. 1348, on bill in equity. Reversed.

Bill in equity to enforce a transfer of stock.

The facts appear by the opinion of the Supreme Court.

Error assigned was the decree of the court rescinding the contract.

John G Johnson, for appellant. -- The receipt covered the stock dividend: Weimer on Pennsylvania Corporation Law, p. 342; Com. v. Cleveland, etc., R.R. Co., 29 Pa. 370; Allegheny v. Ry. Co., 179 Pa. 421.

The trial judge erred in concluding that there was any misunderstanding as to the subject-matter of the sale Hazlett v. Powell, 30 Pa. 297.

Under a sale of the stock with all dividends due, the stock dividend added to the value; but in agreeing to transfer the stock and all dividends due, Barclay undertook to divest himself, in favor of Rose, of everything he possessed: Beach on Corporations, secs. 383, 614; Bispham's Eq. sec. 211; Kintzing v. McElrath, 5 Pa. 467; Neill v. Shamburg, 158 Pa. 263; Edelman v. Latshaw, 159 Pa. 647; Gordon v. Preston, 1 Watts, 385; Ashhurst's App., 60 Pa. 317; Harvey v. Kay, 9 B. & C. 356; Starkie on Evidence, sec. 455.

The relief demanded was not specific performance of an executory contract, but the completion of a part performed contract: McManus v. Cooke, L.R. 35 Chan. Div. 697; Williams v. Morris, 95 U.S. 457; Townsend v. Vanderwerker, 160 U.S. 171; Goodwin Co.'s App., 117 Pa. 514; Cowles v. Whitman, 10 Conn. 121; Bispham's Eq. sec. 368; Doloret v. Rothschild, 1 Sim. & Stu. 590; Pooley v. Budd, 14 Beav. 34; Kerr on Injunctions, 120; Ramsdell v. Butler, 60 Maine, 216; Baum's App., 113 Pa. 66; Harper's App., 109 Pa. 15; Electric Co.'s App., 114 Pa. 574.

E. Cooper Shapley, for appellees.

Before STERRETT, C.J., GREEN, McCOLLUM, MITCHELL and DEAN, JJ.

OPINION

MR. JUSTICE DEAN:

A large amount of the gross earnings of the Camden Gas Light Company having been expended in improvements of its plant, which had also from other causes increased in value, it was resolved by the company on June 5, 1893, to increase the capital stock from $300,000 to $600,000, the increase to represent the enhanced value of the property; it was further directed, that this increase of stock should be divided among the stockholders as they appeared of record on July 1 following, and within twenty days thereafter certificates for the same should be delivered. Charles Barclay, the appellee, was the owner of record of thirty shares of the stock on June 5, when the resolution was adopted, and on July 1, when it took effect. On July 6, before the expiration of the twenty days for delivery Barclay made this contract with Rose, the appellant:

"409 Chestnut Street, Philadelphia.

"Received, Philadelphia, July 6/93, of W. F. Rose, $4,500, in full payment for thirty shares of the capital stock of the Camden Gas Light Company, including all dividends due or to become due thereon.

(Signed) "CHARLES BARCLAY."

The price was at the rate of $150 per share; the par value was $100 per share; the price agreed to be paid was considerably higher than the stock had theretofore sold for, the highest before that being $135 per share; the thirty shares were transferred and delivered by Barclay to Rose, on payment to him by Rose of the full consideration; Rose then had the certificate for the thirty shares duly placed in his name on the books of the company, but when he demanded those embraced by the stock dividend, he was informed that Barclay had given the company notice not to deliver them to him, Rose, as they did not pass by the contract, and being a mere stakeholder as between the seller and purchaser it could not act until the disputed ownership was settled. Rose then brought this bill against both Barclay and the company to compel a transfer of the stock dividend. It is, really, not a bill for specific performance of a contract between the buyer and seller of stock, but one to compel the performance of an alleged corporate duty by a corporation which has before it the contract and, by the pleadings, has submitted itself to the order of the court. The court below, after full hearing, decreed a rescission of the contract. Whether the court shall direct the company to transfer to appellant the stock dividend depends on the interpretation and validity of the contract between the parties to it, Rose and Barclay.

We first peruse the writing to ascertain the terms of the contract. The paper is not, as argued by appellee, a memorandum; it is a contract complete in all its parts, with no omission of expression of intention. We do not see in it the least sign of ambiguity. It was written by Barclay, a lawyer of standing in the profession, who certainly must be presumed to have known the legal effect of the words he adopted to describe his own property, the subject of the sale. He sold thirty shares of stock, "including all dividends due or to become due thereon." It is argued, that only cash dividends were intended by these words. That, however, is not the meaning of the word "dividend." In Weimer on Pennsylvania Corporation Law this definition of dividend is given, page 342:

"A dividend is that portion of the profits and surplus funds of a corporation which has actually been set apart by a valid resolution of the board of directors, or by the shareholders at a corporate meeting, for distribution among the stockholders, according to their respective interests, in such a sense as to become segregated from the property of the corporation to become the property of the shareholders distributively. It is a matter of no difference whether the dividend is declared in stock or paid in cash and thereafter converted into stock by the shareholders: in either event it is a distribution of the surplus profits of the corporation." And this text is amply supported by Commonwealth v. R.R. Co., 29 Pa. 370, which was followed in Commonwealth v. Ry. Co., 74 Pa. 89, and then by City of Allegheny v. Ry. Co., 179 Pa. 421.

The express language of the contract, therefore, passed to Rose absolutely, the stock dividend, and Barclay is bound by his own words, unless Rose perpetrated a fraud upon him. It is not sufficient answer for him to say, "I did not know of the stock dividend and consequently did not mean what I said;" a lunatic, or one under some mental disability, such as gross ignorance or intoxication, might perhaps make such answer; but it cannot avail a lawyer who ought to be presumed to know, not only the common meaning of common words, but also their legal signification. Nor was there any evidence of over-reaching; of such constraint as at times is exercised over a weak and...