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poration, and that, if said Pugh entire twenty shares of capital stock could get him a purchaser, he would in said corporation for $10,000, and retire from the control and manage- stated to said defendant Howard ment of said corporation; that said that the complainant, Gressett, repPugh then entered into conversa- resented and warranted to him that tion with complainant regarding the said corporation did not owe an sale of said stock, and upon inquiry amount exceeding $5,000, that being from said Pugh the complainant the total amount of indebtedness due represented and warranted that said by said corporation for merchancorporation did not owe exceeding dise, equipment, supplies, etc., ex$5,000 for merchandise, supplies, clusive of the money borrowed from equipment, etc., and that same was the banks; that the defendant Howthe total amount owed by said cor- ard then agreed to come to Meridporation, exclusive of the amount ian with the defendant Pugh, to that the corporation owed to banks have a conference with Gressett, for borrowed money; that the de- and shortly thereafter did come to fendant Pugh, although president of Meridian and have a conference said corporation, resided in Mont- with the complainant, and that comgomery, Alabama, and was not fa- plainant, in the presence of both the miliar with the financial condition defendants, offered to sell his twenof said corporation, as the same was ty shares of the capital stock of the entirely intrusted to the complain- said corporation and retire from the ant, and, having confidence in the management and control of said complainant, the defendant Pugh business, and did then and there believed all that complainant told represent and warrant again the him with reference to the financial financial condition of said corporacondition of said corporation; that tion as above stated; that thereupon upon these warranties and represen- the defendant Howard told the comtations the said Pugh told the com- plainant that he and Pugh would go plainant in good faith that he back to Columbus, Mississippi, as thought he could probably get the the said defendant Howard wanted defendant A. T. Howard to buy the to talk the matter over with his sisstock and assume control of the
ter and brother, and that he would plant, and that he would take the give complainant an answer regard
, matter up with the defendant How- ing same after he had talked with ard, who was then living at Colum- them.
them. Thereafter, the defendants, bus, Mississippi ; that the defendant relying upon the statements made Pugh relied entirely upon said rep- by the complainant with reference resentations and warranties, and to the financial condition of said made no investigation as to the fi- corporation, and in the utmost connancial condition of said corpora fidence of said warranties and reption, and shortly thereafter went to resentations made by said complainColumbus, Mississippi, to see the de- ant, after they had gone to Columfendant Howard, with a view of bus, Mississippi, the defendant communicating to him the represen- Pugh sent the complainant a letter tations and warranties of the com- as detailed in said bill of complaint, plainant, Gressett, and the offer of and sent said telegram as detailed the said Gressett to sell his said cap- therein. ital stock in said corporation for the Defendants further state that on sum of $10,000 upon said represen- the 4th of October, 1922, the defendtations and warranties of the finan- ant Howard came to Meridian, it becial condition of said corporation; ing the object and purpose of the that the defendant Pugh did go to said Howard at that time to consumColumbus, Mississippi, and commu- mate the trade for the said capital nicate with the defendant Howard, stock of complainant upon the repand, in said communication, he stat- resentations and warranties made ed that Gressett offered to sell his by said complainant, Gressett, as
(136 Miss. 661, 101 80. 691.) to the financial condition and status tions concluded and trade consumof said corporation, and he went mated as averred in the bill of comto the said plant of said corporation plaint. Defendants further deny and met Gressett, the complainant, any practice of fraud upon the comand talked with him about the mat- plainant in said transaction, and ter, and that complainant again rep- further deny that complainant put resented and warranted to the de- Howard in charge of the plant, and fendant Howard that the corpora-. charge as a fact that complainant tion did not owe exceeding $5,000; did not put Howard in control therethat that was all the money said of. Defendants further plead the corporation owed exclusive of the Statute of Frauds of the state. money owed to the banks for bor- There was an application by the rowed money; that complainant fur complainant to amend, so as to alther represented and warranted to lege a subsequent agreement signed the said defendant Howard that up- by Howard in the name of the on the sale of said stock he, the said Chero-Cola Bottling Company, by Gressett, would retire from the himself as manager, to pay $8,000 management and control of said for the said capital stock, but the business; that after said conference, court declined to permit said amendand without any sale being agreed ment. to or being consummated, the said There is considerable difference in Howard, defendant, made some in- the testimony of Gressett, complainvestigation in the city of Meridian ant, and the defendants, as to the in regard to the corporation, and up- conversations which took place in on such investigation became doubt- reference to the said sale, the chanful about the truth of the repre- cellor in his decree finding for the sentations made by the complainant complainant in the sum of $10,000, as to the indebtedness due by said and the complainant's version will corporation, and upon informing the have to be accepted by this court as complainant about the same the being true, and will have to detercomplainant admitted he had not mine the matters as though the facts represented the matter as it was as testified to by him were true, there to the indebtedness, and that said being such a conflict as, in the opincorporation did owe more money ion of the court, would make it bindthan he had represented and war- ing upon this court to accept the ranted as above. It is further al- findings of fact by the chancellor. leged in the answer that the com- We will first take up the quesplainant well knew that he was mak- tion as to the Statute of Frauds; it ing false and fraudulent represen- being contended that the writings tations and warranties regarding above set out are insufficient under the financial condition of said cor- the law to constitute a contract, beporation as to the debts due and cause it is claimed by the appellants owing by same, for the purpose of that the terms of the contract are misleading and deceiving the de- not sufficiently set forth or agreed fendants, and for the purpose of in- upon in the letters and telegrams ducing them to buy said capital passing between the parties, and it stock in said corporation, and that being further the contention of the complainant at the time was fully appellant that the oral conversations aware of the financial condition of in the negotiations cannot be consaid corporation and knew that it sidered for the purpose of aiding owed debts in a sum far in excess of or enlarging the written contract. the said amount represented and After a thorough consideration of warranted by him, as above set the matter the court is of the opinforth.
ion that the case does not come withDefendants allege, further, that in the Statute of Frauds, for the there was no tender of stock by the reason that the surrender of the concomplainant, nor were any negotia- trol and management of the plant
by the complainant, and the accept- amounts due the banks for borance and taking charge by the de
rowed money. fendants, were such It seems to us that the negotiation sale of stock- a part perform- between the complainant and the depart perform
ance of the contract fendants was not merely to sell or
as would make the buy the stock involved, but that one statute inapplicable. It appears
of the considerations, and perhaps from the evidence of the com
the leading consideration, influencplainant that the corporation had a ing all of the parties, was the giving capital stock of $10,000, and that up by the complainant of the manhe bought two tenths of said capital agement and control as manager, stock, paying therefor $10,000, and and on the part of the defendants that he was the manager and had was to procure the control of the charge under said contract of the plant and business, and to have full affairs of the corporation, and was control and management thereof, to receive and did receive, prior to
and to eliminate complainant's conthe making of said arrangement,
nection therewith. $300 per month salary therefor. It The case of Ford v. Howgate, 106 further appears from his evidence Me. 522, 29 L.R.A. (N.S.) 734, 76 that Mr. Pugh approached com- Atl. 939, illustrates the principle plainant about the matter and stated governing in cases like this. In that that the parent company at Colum- case it was held that a contract for bus, Georgia, was dissatisfied with sale of unissued stock in a corporathe management of the company at tion, and an interest in an automoMeridian, and that it would not ad- bile, was taken out of the Statute of vance further money and advertise Frauds by entering into possession the business at Meridian as it was of the business with the other ownaccustomed to do, unless there was ers, carrying it on as contemplated a change in the management; that by the contract, and taking and uscomplainant stated to Pugh that in ing the automobile as one of the that view he would be willing to sell owners. In the opinion the court his stock and surrender the control said: if he could get $15,000 for it; that "It was urged, among other dePugh stated that the stock was not fenses: (1) That the alleged agreeworth that, and he would not pay ment was void under the Statute of it; that complainant then said he Frauds; and (2) that the plaintiff would not surrender control with could not recover without delivery out a lawsuit, and that whoever or tender to the defendant of a cerbought the plant or the stock would tificate of the shares of stock. Secbuy a lawsuit; that after consider- tion 4 of chap. 113, Rev. Stat., comable discussion said Pugh said he monly known as the Statute of might interest the defendant How- Frauds, provides: 'No contract for ard, at Columbus, Mississippi, in the the sale of goods, wares, or mermatter, and afterwards he did go chandise, for $30 or more, shall be to Columbus, Mississippi, and take valid, unless the purchaser accepts up with Howard the proposition, and receives part of the goods, or and got Howard interested, and as a gives something in earnest to bind result that Howard came down and the bargain, or in part payment inspected the plant and agreed to thereof, or some note or memorantake the proposition. Complainant dum thereof is made and signed by denies that he represented or war- the party to be charged thereby, or ranted that there were no debts in by his agent. The plaintiff did not excess of $5,000 owing by the Chero- contend at the trial that the subjectCola Bottling Company, but avers matter of the contract of sale, comthat he expressed the opinion only prising, as he claimed, his ownerthat $5,000 would cover the amount ship of the shares of stock in the of indebtedness outside of the
of the corporation and his interest in the (136 Ni88. 661, 101 80. 691.) automobile, was not 'goods, wares, would take it out of the Statute of or merchandise,' within the meaning Frauds also. So that upon the of the Statute of Frauds. Such plaintiff's theory that the defendant claim, if made, would have been made the trade and went into the without support in reason or author- execution of it by taking the busiity. Pray v. Mitchell, 60 Me. 430.
ness, or taking his part of the busi“But it was the plaintiff's theory ness, the Statute of Frauds does not that, although the oral contract of apply.' sale was within the terms of the "Summarizing his instructions as statute, nevertheless it had been to the Statute of Frauds as a detaken out of the operation and ef- fense, the justice said: ‘And it fect of the statute by reason of a comes back, so far as those legal decompliance with the provisions of fenses are concerned, to the proposithe exception that, if 'the purchaser tion which I stated earlier, that, if accepts and receives a part of the the trade was made as the plaintiff goods,' the contract is valid and en- claims, that the interest in the busiforceable. Upon this branch of the ness and the half interest in the auoase the presiding justice instructed tomobile were sold at an agreed the jury 'that although all the right price of $1,000, and the defendant which Mr. Ford had in the business Howgate entered into the possession was his shares, it being a corpora- of the business with the other man, tion, nevertheless it was a corpora running it as an owner, carrying it tion in which he was acting as men on as contemplated by the contract, do with their own property, and he and took the automobile in the same and Mr. Wentworth had been oper- way, then he must pay what he ating it. It was a business, and the agreed, so far as any evidence in sale of the interest in the business this case is concerned.' gave Mr. Howgate an equitable “The defendant contends, in supright to have the stock delivered to
port of his exceptions, that the inhim; and if he went into possession structions given did not sufficiently of the business under the trade
distinguish the plaintiff's interest in which he claims, and took part in the business, being only an intangiit as owner, it was an executed con- ble right of ownership in the shares tract. It was all done; nothing to of stock in the corporation, from an be done except to pay. And when
. And when ownership in the physical property a contract has been executed and
of the corporation, and for this reacompleted,-finished,—and the par- son the jury were permitted to conties have gone into the business, clude, and naturally did conclude, carrying it out, then the Statute of that if the defendant went into posFrauds does not apply.' In respect session of the business of the corto the effect of an acceptance and re- poration with Mr. Wentworth, he ceipt of the automobile by defend
thereby physically accepted and reant, as claimed by the plaintiff, the ceived the plaintiff's 'interest in the presiding justice said: "And the
business,' which was the subject of plaintiff claims in this case that the the sale, and thereby the exception automobile was physically accepted, in the statute was necessarily comthat is, the defendant Howgate took plied with. We do not think the init into his possession; not into his structions are open to that objecsole possession, because it was only tion. The theory on which they an undivided interest in an automo- were given is that, because the bile that he bought anyway, but that plaintiff's interest in the business he took it and used it as one of the
was only the intangible right of owners. If he did, then that would ownership of the shares of stock, be an acceptance of it, and an ac- for which no certificate had ever ceptance of a part of the whole thing been issued, the contract of sale gave that was furnished, -interest in the the defendant all and the same right business and automobile,--and that to the ownership of those shares
which the plaintiff before had, no firmed the judgment. The court act on the part of the plaintiff re- held that shares of stock were permaining to be done, and if the de- sonal property. The court then said fendant, on his part, accepted that (92 Ohio St. 52): contract, and used and enjoyed the “The record in this case discloses privileges and benefits it was in- that the buyer, through its officers, tended to afford him, then the con- took charge of the kindred laundry tract became executed, and for that company, its plant and all its assets, reason the Statute of Frauds was and operated the same for a period not applicable to it."
of about two weeks' time or more; Davis Laundry & Cleaning Co. v. that while in the possession and op Whitmore, 92 Ohio St. 44, 110 N. E. eration of this plant, and at the time 518, Ann. Cas. 1917C, 988, was also they repudiated the contract of pura case in which the laundry com- chase, they had knowledge of the pany was a corporation capitalized fact that all but 8 of the 250 shares at 250 shares of the par value of of stock were in the possession of $100 each, of which the plaintiff the bank, ready for delivery, and owned 126 shares, the balance out- that the remaining 8 shares would standing in the names of other par- be available in a very short time. ties. Another laundry company “Section 8384 (1), General Code, doing a kindred business desired to supra, provides that verbal conpurchase all of the shares and ex- tracts 'shall not be enforceable by ecuted to plaintiff the following action unless the buyer shall accept memorandum of agreement:
part of the goods or choses in action “We agree to purchase 126 shares
so contracted to be sold.' Subdivi
sion 3 of that section provides that of Ideal Laundry stock for $5,500,
'there is an acceptance of goods and the balance of 124 shares at $50 per share, from F. C. Whitmore.
within the meaning of this section
when the buyer, either before or aft“[Signed] The Davis Laundry Com
er delivery of the goods, expresses pany, "per E. W. Sloan."
by words or conduct his assent to
becoming the owner of those specific There was no time fixed for the goods. Under the facts stated it delivery of such shares, and it was
was for the jury to determine verbally agreed that delivery should whether or not the acts and conduct be made at a local bank, and that
of the defendant in the possession the buyer should assist in obtain
and operation of the plant were of ing the outstanding shares. On such character as to show an acceptFebruary 21, 1910, the seller had ance under the contract of 242 deposited in the bank his own 126
shares of stock that had been deposshares and had obtained 116 of those
ited with the National Bank of Comoutstanding, at which time he no- merce for delivery to the defendtified the defendant of this fact, and ant." that the remaining 8 shares would The court then quotes the above be delivered in a very short time. case of Ford v. Howgate, 106 Me. On January 31, 1910, the buyer took 517, 29 L.R.A.(N.S.) 734, 76 Atl. possession of the plant and assets of 939, and says: “In the absence of the Ideal Laundry Company and op- time stipulated in the agreement for erated the same for a period of two
the delivery of shares of stock, the weeks. On February 28, 1910, the plaintiff had a right to a reasonable seller had secured the entire 250 time to procure such delivery. By shares and deposited them with the its letter of February 16, 1910, the local bank for delivery, and so noti- defendant undertook to say that fied the buyer. On February 16, they had waited a reasonable time 1910, the buyer yielded possession for the delivery of this stock, and and repudiated the contract. The repudiated the agreement. The plaintiff recovered, and the court af- question whether the time was a