Mortimer B. Burnside & Co. v. Havener Securities Corp. , 269 N.Y.S.2d 724 ( 1966 )

Per Curiam.

In an action for breach of an alleged oral agreement whereby defendants were to assign and deliver common stock purchase warrants to plaintiff, the defendants have been awarded summary judgment dismissing the complaint.

The alleged oral agreement was made January 9,1965. Plaintiff alleges it to be one whereby defendants agreed to assign to plaintiff one third of the 25,000 common stock purchase warrants issued to defendant Havener Securities Corp. by Ormont Drug & Chemical Co., Inc., in the event plaintiff purchased Ormont stock from one Friedman. On February 12, 1965 plaintiff entered into a written agreement with Friedman to purchase 10,000 shares of common stock of Ormont with an option to purchase 20,170 additional shares. Plaintiff alleges it consummated the purchase of the Friedman stock and thereby became entitled to the said warrants.

The issue presented is whether the contract is within the purview of the Statute of Frauds. If it is, the plaintiff may not recover and defendants would be entitled to summary judgment.

The contract for the sale of a security comes within the Statute of Frauds and therefore to be enforcible it must be in writing. (Uniform Commercial Code, § 8-319; see R. & L. Co. v. Metz, 175 App. Div. 276, affd. 219 N. Y. 556.)

The first question that arises is whether this transaction contemplates a “ sale ”. The answer is furnished by section 2-106 of the Uniform Commercial Code which provides that “ A sale consists in the passing of title from the seller to the buyer for a price ”. The agreement here alleged does call for the transfer of title to securities in the nature of warrants. The transaction does not contemplate a gift or a pledge but rather the transfer of the securities for a consideration. Consequently, it would ........ «qthin the definition of a “ sale ”, provided, however, that the transfer is for a “ price”. That brings us to the second question as to whether the contemplated transfer of the warrants was for a “price”. The answer to that question is furnished by section 2-304 of the Uniform Commercial Code which states that ‘ ‘ The price can be made payable in money or otherwise ”. The word “ otherwise ” is not limited in- any way and therefore it' could include any consideration sufficient to support a contract. The purchase of the stock from Friedman, at defendants’ request, constituted the consideration for the agreement to transfer the warrants. It does not matter that the purchase was to be made from a third party. It is the act of purchase that defendants requested in exchange for their promise to deliver the warrants and the performance of that act constitutes the ‘ ‘ price ’ ’ within the meaning of the statute. Thus, there is here alleged a transaction contemplating a sale of securities which to be enforcible must be in writing.

The contract alleged is unilateral in nature and in order to be binding upon the defendants the plaintiff must have completed the performance required of it. But such performance does not bring it within the exception excusing the failure to have a writing. To bring it within that exception the act of performance must be “ unequivocally referable ” to the promise alleged to have been made. (Sleeth v. Sampson, 237 N. Y. 69; Burns v. McCormick, 233 N. Y. 230.) If this were not so, any act may be claimed to be performance in reliance on any promise the actor chooses to assert against anyone. The rule that performance must be- unequivocally referable to the alleged promise implements and serves the purpose of the Statute of Frauds. A writing is the only other statutory protection against frauds. The purchase of the stock from Friedman could have been made for any number of reasons quite apart from any promise by the defendants. It is not “ unequivocally referable ” to a promise to deliver the warrants. (See Bright Radio Labs. v. Coastal Commercial Corp., 4 A D 2d 491, 494, affd. 4 N Y 2d 1021.) The alleged agreement with the defendants therefore comes within the Statute of Frauds, is not enforcible and it was proper to grant summary judgment dismissing the complaint.

There is an additional basis for affirmance as to the individual defendant Paul W. Havener, president of the corporate defendant. An officer of a corporation is not personally liable for the obligations of the corporation. (Beskow v. Halow, 223 App. Div. 434, 439, affd. 251 N. Y. 514.)

The order should be affirmed, with costs and disbursements to defendants-respondents.