York v. Passaic Rolling-Mill Co.

• Decision Date: 30 March 1887
• Citation: 30 F. 471
• Parties: YORK v. PASSAIC ROLLING-MILL CO.
• Court: U.S. District Court — District of New Jersey

30 F. 471

YORK v. PASSAIC ROLLING-MILL CO.

United States Circuit Court, D. New Jersey.

March 30, 1887

Preston Stevenson, for complainant.

H. A Williams, for defendant.

BUTLER J.

The suit is virtually for specific performance of a contract for the purchase and sale of stock. This view cannot, we think be avoided, notwithstanding the skillful preparation of the bill, and the able argument addressed to the court in the hope of escaping it. The bill avers ownership of the stock refusal by respondents to deliver a certificate, and then sets out a contract of purchase and sale as the foundation of complainant's right. The answer denies the material averments of the bill, and further sets out what the respondents allege to have been the contract, differing essentially from that set up in the bill. It then avers that complainant failed to perform his part; that, in consequence, the contract was canceled by agreement, and the complainant's right thus terminated.

The court finds the following facts:

In the year 1873, or early part of 1874, the respondents, owners and operators of iron-works, which they had recently improved, and prepared for a more extensive business, entered into a parol contract with the complainant, (who was then in their employment, and considered a superior workman, whose services it was important to retain,) to sell him 28 shares of stock, (worth $5,000,) on terms and conditions there specified. The respondents' object was to identify the complainant with them in interest, and thus secure his continued services in their business. This was the only consideration for the contract on the respondents' part, and was so understood by the complainant. The latter was receiving a large salary, ($3,500,) which was to be continued; and the stock was to be paid for wholly out of dividends, if any were made. After the lapse of some time he became dissatisfied, in consequence of the absence of written evidence of his right, and demanded something to show for it; whereupon the respondents, on the nineteenth of December, 1874, executed and delivered to him a paper in the following terms:

'With a view to make Levi D. York personally interested in the success of this company, and with the understanding that his best endeavors thereto will be continued for a time long enough at least to fulfill the intent of this agreement, we, the Passaic Rolling-mill Company, by the hand of our president, do agree, in addition to the salary paid to said L. D. York, to place to his credit, under date May 1, 1874, twenty-eight shares (28) of our capital stock, valued at that date, according to the books of the company, at five thousand (5,000) dollars, subject to the following conditions, viz.: Said L. D. York is to pay to the said company the value aforesaid, with interest at 7 per cent. per annum from May 1, 1874, out of the dividends declared on said shares of stock; but, in case no dividends should be declared, the said L. D. York cannot be held in any other way liable or responsible to the said company for the debt. In case of permanent injury or death, then he or his heirs shall receive the full benefit arising from ownership of said shares, the same as intended to him if in health. Upon the payment to the company of the value, with interest, said L. D. York, or his heirs, to have and to hold said shares in his own hand and right.

WATTS COOKE, President.'

The complainant received this paper with expressions of satisfaction, and retained it until about the time of leaving the company, in the summer of 1878. The paper must therefore be regarded as conclusive respecting the contract. It was prepared and delivered for the purpose of bearing witness to the terms, at a time when they were fresh in mind, and was accepted and retained by complainant as the only evidence of his right. The attempt now made to get rid of it, and substitute the complainant's recollection of the parol agreement, cannot be listened to. In May, 1875, at the next meeting of stockholders after delivery of the paper, a resolution was adopted, acknowledging the complainant's right under it, and setting aside the stock for delivery when his part of the contract should be performed. In pursuance of this resolution, the president and secretary filled up a blank certificate in the complainant's name, which remained without severance from the book containing such form. Across it was written an acknowledgment of its receipt by the company, for complainant. This filling up and indorsement of the certificate was a meaningless formality, which left the rights of the parties undisturbed. The contract entitled complainant to the stock on fulfillment of its terms. Up to that time the respondents were to retain it. It was not t become his. Filling up a certificate in his name, and delivering it to themselves, left the matter precisely as it was before. The appeal to this meaningless (if not foolish) act, as an execution of the contract, need not, we think, receive further notice.

The complainant, who stood well with the company, and seemed to have been on intimate and friendly terms with its officers was allowed to participate in the meetings of stockholders, and to vote on questions arising there. At these meetings statements were made by the officers of the company of its financial condition, which were discussed by the stockholders, the complainant participating. In August, 1878, the complainant resolved to embark in an adventure abroad, made his arrangements accordingly, and gave notice to the company of his intention to quit its employment. His arrangements embraced the withdrawal from their service of several other desirable, skilled workmen. The respondents were seriously dissatisfied with and embarrassed by this movement, and consequently remonstrated against it; reminding the complainant of his agreement, claiming that he was bound to remain, earnestly urging him to do so, and endeavoring to persuade him that...