Citation Numbers: 40 Misc. 2d 702
Judges: Arthur, Kudin
Filed Date: 10/10/1963
Status: Precedential
Modified Date: 2/5/2022
Plaintiff, the bearer of 190 “put” option contracts, relating to 19,000 shares of E. L. Bruce Co. stock and indorsed by defendants, alleges in its complaint that the defendants, members of the New York Stock Exchange, have breached their obligation as indorsers under the contracts by refusing to accept same when they were presented and tendered to them.
Plaintiff moves pursuant to rule 109 of the Rules of Civil Practice, to strike the affirmative defenses, and in support of its motion urges that the defenses interposed are inapplicable by virtue of the fact that the option contracts are unilateral, and that the indorsers thereof are required to accept the bearer’s exercise thereof. The contract in question contains the following: “ Upon presentation to the endorser of this option attached to a comparison ticket in the manner and time specified, the endorser agrees to accept notice of the bearer’s exercise by stamping the comparison, and this acknowledgment shall constitute a contract and shall be controlling with respect to delivery of the stock and settlement in accordance with New York Stock Exchange usage.”
From an examination of the foregoing it is evident that the indorser of the put option must accept notice of the bearer’s exercise of the option, upon presentation thereof, by stamping the comparison ticket. The defenses interposed are therefore clearly inapplicable to support defendants’ refusal to accept the notice. Were plaintiff’s complaint confined to the defendants’ refusal to accept plaintiff’s notice of the exercise of its
Upon acceptance by the indorser of a bearer’s notice of exercise of the put option, a binding contract for the purchase of the stocks enumerated therein comes into being. It follows then that there is more involved here than the mere stamping of the comparison ticket. In order to fully “perform” its obligation under the put option contract, an indorser, in addition to accepting the bearer’s exercise of the option and stamping the comparison ticket, would also have to purchase the stock involved at the price stipulated in the “ put ”. Plaintiff’s complaint is based on the defendants’ failure to so perform. The affirmative defenses, relating as they do to defendants’ refusal to so perform, have therefore been properly interposed. A striking of same under these circumstances does not appear warranted.
The fourth and fifth affirmative defenses, however, are insufficiently specific to enable plaintiff to make intelligent reply thereto. Accordingly, plaintiff’s motion is granted to the extent of striking the fourth and fifth defenses, with leave to defendants to serve their amended answers within 10 days after service of a copy of the order to be settled herein with notice of entry thereof. The motion is in all other respects denied.