poration, and that, if said Pugh could get him a purchaser, he would retire from the control and management of said corporation; that said Pugh then entered into conversation with complainant regarding the sale of said stock, and upon inquiry from said Pugh the complainant represented and warranted that said corporation did not owe exceeding $5,000 for merchandise, supplies, equipment, etc., and that same was the total amount owed by said corporation, exclusive of the amount that the corporation owed to banks for borrowed money; that the defendant Pugh, although president of said corporation, resided in Montgomery, Alabama, and was not familiar with the financial condition of said corporation, as the same was entirely intrusted to the complainant, and, having confidence in the complainant, the defendant Pugh believed all that complainant told him with reference to the financial condition of said corporation; that upon these warranties and representations the said Pugh told the complainant in good faith that he thought he could probably get the defendant A. T. Howard to buy the stock and assume control of the plant, and that he would take the matter up with the defendant Howard, who was then living at Columbus, Mississippi; that the defendant Pugh relied entirely upon said representations and warranties, and made no investigation as to the financial condition of said corporation, and shortly thereafter went to Columbus, Mississippi, to see the defendant Howard, with a view of communicating to him the representations and warranties of the complainant, Gressett, and the offer of the said Gressett to sell his said capital stock in said corporation for the sum of $10,000 upon said representations and warranties of the financial condition of said corporation; that the defendant Pugh did go to Columbus, Mississippi, and communicate with the defendant Howard, and, in said communication, he stated that Gressett offered to sell his

entire twenty shares of capital stock in said corporation for $10,000, and stated to said defendant Howard that the complainant, Gressett, represented and warranted to him that said corporation did not owe an amount exceeding $5,000, that being the total amount of indebtedness due by said corporation for merchandise, equipment, supplies, etc., exclusive of the money borrowed from the banks; that the defendant Howard then agreed to come to Meridian with the defendant Pugh, to have a conference with Gressett, and shortly thereafter did come to Meridian and have a conference with the complainant, and that complainant, in the presence of both the defendants, offered to sell his twenty shares of the capital stock of the said corporation and retire from the management and control of said business, and did then and there represent and warrant again the financial condition of said corporation as above stated; that thereupon the defendant Howard told the complainant that he and Pugh would go back to Columbus, Mississippi, as the said defendant Howard wanted to talk the matter over with his sister and brother, and that he would give complainant an answer regarding same after he had talked with them. Thereafter, the defendants, relying upon the statements made by the complainant with reference to the financial condition of said corporation, and in the utmost confidence of said warranties and representations made by said complainant, after they had gone to Columbus, Mississippi, the defendant Pugh sent the complainant a letter as detailed in said bill of complaint, and sent said telegram as detailed therein.

Defendants further state that on the 4th of October, 1922, the defendant Howard came to Meridian, it being the object and purpose of the said Howard at that time to consummate the trade for the said capital stock of complainant upon the representations and warranties made by said complainant, Gressett, as

to the financial condition and status of said corporation, and he went to the said plant of said corporation and met Gressett, the complainant, and talked with him about the matter, and that complainant again represented and warranted to the defendant Howard that the corporation did not owe exceeding $5,000; that that was all the money said corporation owed exclusive of the money owed to the banks for borrowed money; that complainant further represented and warranted to the said defendant Howard that upon the sale of said stock he, the said Gressett, would retire from the management and control of said business; that after said conference, and without any sale being agreed to or being consummated, the said Howard, defendant, made some investigation in the city of Meridian in regard to the corporation, and upon such investigation became doubtful about the truth of the representations made by the complainant as to the indebtedness due by said corporation, and upon informing the complainant about the same the complainant admitted he had not represented the matter as it was as to the indebtedness, and that said corporation did owe more money than he had represented and warranted as above. It is further alleged in the answer that the complainant well knew that he was making false and fraudulent representations and warranties regarding the financial condition of said corporation as to the debts due and owing by same, for the purpose of misleading and deceiving the defendants, and for the purpose of inducing them to buy said capital stock in said corporation, and that complainant at the time was fully aware of the financial condition of said corporation and knew that it owed debts in a sum far in excess of the said amount represented and warranted by him, as above set forth.

Defendants allege, further, that there was no tender of stock by the complainant, nor were any negotia

tions concluded and trade consummated as averred in the bill of complaint. Defendants further deny any practice of fraud upon the complainant in said transaction, and further deny that complainant put Howard in charge of the plant, and charge as a fact that complainant did not put Howard in control there

Defendants further plead the Statute of Frauds of the state.

There was an application by the complainant to amend, so as to allege a subsequent agreement signed by Howard in the name of the Chero-Cola Bottling Company, by himself as manager, to pay $8,000 for the said capital stock, but the court declined to permit said amendment.

There is considerable difference in the testimony of Gressett, complainant, and the defendants, as to the conversations which took place in reference to the said sale, the chancellor in his decree finding for the complainant in the sum of $10,000, and the complainant's version will have to be accepted by this court as being true, and will have to determine the matters as though the facts testified to by him were true, there being such a conflict as, in the opinion of the court, would make it binding upon this court to accept the findings of fact by the chancellor.

We will first take up the question as to the Statute of Frauds; it being contended that the writings above set out are insufficient under the law to constitute a contract, because it is claimed by the appellants that the terms of the contract are not sufficiently set forth or agreed upon in the letters and telegrams passing between the parties, and it being further the contention of the appellant that the oral conversations in the negotiations cannot be considered for the purpose of aiding or enlarging the written contract.

After a thorough consideration of the matter the court is of the opinion that the case does not come within the Statute of Frauds, for the reason that the surrender of the control and management of the plant

Contractssale of stockpart perform

ance.

a

by the complainant, and the acceptance and taking charge by the defendants, were such part performance of the contract as would make the statute inapplicable. It appears from the evidence of the complainant that the corporation had a capital stock of $10,000, and that he bought two tenths of said capital stock, paying therefor $10,000, and that he was the manager and had charge under said contract of the affairs of the corporation, and was to receive and did receive, prior to the making of said arrangement, $300 per month salary therefor. It further appears from his evidence that Mr. Pugh approached complainant about the matter and stated that the parent company at Columbus, Georgia, was dissatisfied with the management of the company at Meridian, and that it would not advance further money and advertise the business at Meridian as it was accustomed to do, unless there was a change in the management; that complainant stated to Pugh that in that view he would be willing to sell his stock and surrender the control if he could get $15,000 for it; that Pugh stated that the stock was not worth that, and he would not pay it; that complainant then said he would not surrender control without a lawsuit, and that whoever bought the plant or the stock would buy a lawsuit; that after considerable discussion said Pugh said he might interest the defendant Howard, at Columbus, Mississippi, in the matter, and afterwards he did go to Columbus, Mississippi, and take up with Howard the proposition, and got Howard interested, and as a result that Howard came down and inspected the plant and agreed to take the proposition. Complainant denies that he represented or warranted that there were no debts in excess of $5,000 owing by the CheroCola Bottling Company, but avers that he expressed the opinion only that $5,000 would cover the amount of

indebtedness outside of the

amounts due the banks for borrowed money.

It seems to us that the negotiation between the complainant and the defendants was not merely to sell or buy the stock involved, but that one of the considerations, and perhaps the leading consideration, influencing all of the parties, was the giving up by the complainant of the management and control as manager, and on the part of the defendants was to procure the control of the plant and business, and to have full control and management thereof, and to eliminate complainant's connection therewith.

The case of Ford v. Howgate, 106 Me. 522, 29 L.R.A. (N.S.) 734, 76 Atl. 939, illustrates the principle governing in cases like this. In that case it was held that a contract for sale of unissued stock in a corporation, and an interest in an automobile, was taken out of the Statute of Frauds by entering into possession of the business with the other owners, carrying it on as contemplated by the contract, and taking and using the automobile as one of the owners. In the opinion the court said:

"It was urged, among other defenses: (1) That the alleged agreement was void under the Statute of Frauds; and (2) that the plaintiff could not recover without delivery or tender to the defendant of a certificate of the shares of stock. Section 4 of chap. 113, Rev. Stat., commonly known as the Statute of Frauds, provides: 'No contract for the sale of goods, wares, or merchandise, for $30 or more, shall be valid, unless the purchaser accepts and receives part of the goods, or gives something in earnest to bind the bargain, or in part payment thereof, or some note or memorandum thereof is made and signed by the party to be charged thereby, or by his agent.' The plaintiff did not contend at the trial that the subjectmatter of the contract of sale, comprising, as he claimed, his ownership of the shares of stock in the corporation and his interest in the

automobile, was not 'goods, wares, or merchandise,' within the meaning of the Statute of Frauds. Such claim, if made, would have been without support in reason or authority. Pray v. Mitchell, 60 Me. 430.

"But it was the plaintiff's theory that, although the oral contract of sale was within the terms of the statute, nevertheless it had been taken out of the operation and effect of the statute by reason of a compliance with the provisions of the exception that, if 'the purchaser accepts and receives a part of the goods,' the contract is valid and enforceable. Upon this branch of the case the presiding justice instructed the jury that although all the right which Mr. Ford had in the business was his shares, it being a corporation, nevertheless it was a corporation in which he was acting as men do with their own property, and he and Mr. Wentworth had been operating it. It was a business, and the sale of the interest in the business gave Mr. Howgate an equitable right to have the stock delivered to him; and if he went into possession of the business under the trade which he claims, and took part in it as owner, it was an executed contract. It was all done; nothing to be done except to pay. And when a contract has been executed and completed,-finished,-and the parties have gone into the business, carrying it out, then the Statute of Frauds does not apply.' In respect to the effect of an acceptance and receipt of the automobile by defendant, as claimed by the plaintiff, the presiding justice said: 'And the plaintiff claims in this case that the automobile was physically accepted, that is, the defendant Howgate took it into his possession; not into his sole possession, because it was only an undivided interest in an automobile that he bought anyway, but that he took it and used it as one of the owners. If he did, then that would be an acceptance of it, and an acceptance of a part of the whole thing that was furnished,-interest in the business and automobile,-and that

would take it out of the Statute of Frauds also. So that upon the plaintiff's theory that the defendant made the trade and went into the execution of it by taking the business, or taking his part of the business, the Statute of Frauds does not apply.'

"Summarizing his instructions as to the Statute of Frauds as a defense, the justice said: 'And it comes back, so far as those legal defenses are concerned, to the proposition which I stated earlier, that, if the trade was made as the plaintiff claims, that the interest in the business and the half interest in the automobile were sold at an agreed price of $1,000, and the defendant Howgate entered into the possession of the business with the other man, running it as an owner, carrying it on as contemplated by the contract, and took the automobile in the same way, then he must pay what he agreed, so far as any evidence in this case is concerned.'

"The defendant contends, in support of his exceptions, that the instructions given did not sufficiently distinguish the plaintiff's interest in the business, being only an intangible right of ownership in the shares of stock in the corporation, from an ownership in the physical property of the corporation, and for this reason the jury were permitted to conclude, and naturally did conclude, that if the defendant went into possession of the business of the corporation with Mr. Wentworth, he thereby physically accepted and received the plaintiff's 'interest in the business,' which was the subject of the sale, and thereby the exception in the statute was necessarily complied with. We do not think the instructions are open to that objection. The theory on which they were given is that, because the plaintiff's interest in the business was only the intangible right of ownership of the shares of stock, for which no certificate had ever been issued, the contract of sale gave the defendant all and the same right to the ownership of those shares

which the plaintiff before had, no act on the part of the plaintiff remaining to be done, and if the defendant, on his part, accepted that contract, and used and enjoyed the privileges and benefits it was intended to afford him, then the contract became executed, and for that reason the Statute of Frauds was not applicable to it."

Davis Laundry & Cleaning Co. v. Whitmore, 92 Ohio St. 44, 110 N. E. 518, Ann. Cas. 1917C, 988, was also a case in which the laundry company was a corporation capitalized at 250 shares of the par value of $100 each, of which the plaintiff owned 126 shares, the balance outstanding in the names of other parties. Another laundry company doing a kindred business desired to purchase all of the shares and executed to plaintiff the following memorandum of agreement:

"We agree to purchase 126 shares of Ideal Laundry stock for $5,500,

and the balance of 124 shares at $50 per share, from F. C. Whitmore. "[Signed] The Davis Laundry Company,

"per E. W. Sloan."

There was no time fixed for the delivery of such shares, and it was verbally agreed that delivery should be made at a local bank, and that the buyer should assist in obtaining the outstanding shares. On February 21, 1910, the seller had deposited in the bank his own 126 shares and had obtained 116 of those outstanding, at which time he notified the defendant of this fact, and that the remaining 8 shares would be delivered in a very short time. On January 31, 1910, the buyer took possession of the plant and assets of the Ideal Laundry Company and operated the same for a period of two weeks. On February 28, 1910, the seller had secured the entire 250 shares and deposited them with the local bank for delivery, and so notified the buyer. On February 16, 1910, the buyer yielded possession and repudiated the contract. The plaintiff recovered, and the court af

firmed the judgment. The court held that shares of stock were personal property. The court then said (92 Ohio St. 52):

"The record in this case discloses that the buyer, through its officers, took charge of the kindred laundry company, its plant and all its assets, and operated the same for a period of about two weeks' time or more; that while in the possession and operation of this plant, and at the time they repudiated the contract of purchase, they had knowledge of the fact that all but 8 of the 250 shares of stock were in the possession of the bank, ready for delivery, and that the remaining 8 shares would be available in a very short time.

"Section 8384 (1), General Code, supra, provides that verbal contracts 'shall not be enforceable by action unless the buyer shall accept part of the goods or choses in action so contracted to be sold.' Subdivithere is an acceptance of goods sion 3 of that section provides that within the meaning of this section when the buyer, either before or after delivery of the goods, expresses by words or conduct his assent to becoming the owner of those specific goods.' Under the facts stated it was for the jury to determine whether or not the acts and conduct of the defendant in the possession and operation of the plant were of such character as to show an acceptance under the contract of 242 shares of stock that had been deposited with the National Bank of Commerce for delivery to the defendant."

The court then quotes the above case of Ford v. Howgate, 106 Me. 517, 29 L.R.A. (N.S.) 734, 76 Atl. 939, and says: "In the absence of time stipulated in the agreement for the delivery of shares of stock, the plaintiff had a right to a reasonable time to procure such delivery. By its letter of February 16, 1910, the defendant undertook to say that they had waited a reasonable time for the delivery of this stock, and repudiated the agreement. The question whether the time was a