Barton v. Simmons

Replevin to recover possession of a stock certificate. Plaintiff was given judgment on the pleadings and defendant appeals.

AFFIRMED.

This case was in its inception an action in replevin instituted by plaintiff Katherine E. Barton against the Astoria National Bank for the recovery of the possession of stock certificate No. 203, issued by the Chuctanunda Gas Light Company, a corporation, for nine shares of the capital stock of said company, and of the value of $400.

The complaint follows the usual form in replevin actions. Upon service thereof on the defendant bank, it appeared by motion and affidavit setting forth that the shares were held by it in escrow according to an agreement, which agreement is as follows:

"May 13, 1927.

"Astoria National Bank, "Astoria, Oregon.

"Gentlemen:

"I herewith hand you certificate stock of Chuctanunda Gas Light Co. No. 203, for nine (9) of its shares. This stock is a guarantee that I will pay to you for Mrs. Katherine E. Barton, twenty-five hundred ($2500) on or before June 15th, 1927.

"If not done by that date you are to turn over to said Mrs. Barton the stock above mentioned, but upon payment being made, then said stock is to be returned to me.

"This $2500 is for the first payment on account of the purchase price of the Barton Hotel at the price of sixteen thousand dollars ($16,000.00).

"(Signed) HARRY W. SIMMONS. "Approved: May 13, 1927. "(Signed) KATHERINE E. BARTON."

It was further alleged that on June 15, 1927, the following telegram was received by said bank:

"Portland, Oregon 235 P June 15, 1927.

"Astoria National Bank, "Astoria, Oreg

"On behalf of my client Harry W Simmons you are hereby respectfully notified not to deliver to Mrs Katherine E Barton the stock certificate for nine shares Chuctanunda Gas and Light Company left in escrow with you on May thirteenth last and return the same to him is hereby demanded on ground among others that supposed contract referred to in this escrow agreement for purchase by him of Barton Hotel is void and not enforceable.

"GEORGE N. WOODLEY "Attorney."

It was also alleged that on June 16th plaintiff, in writing, demanded delivery of the stock certificate to her; that defendant bank had no interest in said certificate, except as arising from the escrow agreement; that both Mrs. Barton and Harry W. Simmons demanded possession of the same each claiming a preferred right thereto, and that the bank could not, without hazard to itself, determine to which of said claimants the certificate belonged, wherefore, it asked that plaintiff and Simmons be required to interplead and tender deposit of the certificate with the clerk of the court to abide the result of the final judgment. The motion was allowed and Simmons was substituted as defendant, and the case thereafter proceeded under the present title.

The answer of defendant Simmons is, in part, as follows:

"That on May 13, 1927, the plaintiff was the owner and proprietor of a certain hotel business known as the `Barton Hotel,' consisting of: (1) certain real estate, to-wit, a certain leasehold interest held by the plaintiff, as leasee, under a certain written lease of that portion of the four-story brick building in which the said `Barton Hotel' was then being conducted by the plaintiff, the unexpired term of which lease according to the express provisions thereof, was then for a longer period than one year; and (2) certain personal property, to-wit, the furniture, furnishings and equipment then contained in said leased premises and used by the plaintiff in conducting said hotel business, and the goodwill of said business. That the fair and reasonable value of the said personal property then was in excess of fifty dollars ($50.00).

"That on May 13, 1927 the plaintiff and defendant entered into a verbal agreement, hereinafter sometimes referred to and designated as the `Supposed Purchase-Agreement,' whereby the plaintiff agreed to sell to the defendant, and the defendant agreed to purchase from the plaintiff, the said hotel-business, consisting as aforesaid, for the total purchase price of sixteen thousand dollars ($16,000.00) payable in installments as follows: $2500.00 on or before June 15, 1927, and the balance, with interest at the rate of 6% per annum on the deferred payments thereof, in monthly installments thereafter, of $250.00 each, including interest, until the said balance with such interest should be fully paid, the said installment payments other than the first thereof to be made to the Meier Frank Company, a corporation, at its office in the city of Portland, Multnomah County, Oregon, for the account of the plaintiff, until the unpaid balance of a certain chattel mortgage in the amount of approximately $7200.00 then unpaid thereon and then held by the said Meier Frank Company and secured upon the said furniture and equipment, should be fully paid thereby, and thereafter to the plaintiff at the West Coast National Bank in said city of Portland, the said first installment of $2500.00 to be paid to the plaintiff at the said Astoria National Bank. That it was further agreed in and by said Supposed Purchase-Agreement that the said lease should be assigned, and occupancy of said hotel premises with the said furniture, furnishings and equipment therein should be delivered, by the plaintiff to the defendant, simultaneously with the payment by the defendant of the first installment of $2500.00 as aforesaid; and that the defendant should forthwith deposit in escrow with the said Astoria National Bank the said stock certificate No. 203 of the Chuctanunda Gas Light Co. as a guarantee of the payment by him of the said first installment of $2500 as aforesaid.

"That solely in consideration of the said Supposed Purchase-Agreement and pursuant to the last mentioned provision thereof, for the purpose of guaranteeing the payment by him of the said first installment of $2500.00 of the said purchase price thereunder and not otherwise, the defendant immediately thereupon, on May 13th, 1927, entered into a certain written agreement, with the said Astoria National Bank and the plaintiff, sometimes hereinafter referred to as the `Escrow Agreement,' which escrow agreement was in words and figures and signed by the said parties, as follows, to-wit:

"`Astoria National Bank "`Astoria, Oregon.

"`May 13, 1927.

"`Astoria National Bank, "`Astoria, Oregon.

"`Gentlemen:

"`I herewith hand you certificate of stock of Chuctanunda Gas Light Co., No. 203 for nine (9) of its shares. This stock is a guarantee that I will to pay you for Mrs. Katherine E. Barton Twenty-five Hundred Dollars ($2500.00) on or before June 15th, 1927.

"`If not done by that date you are to turn over to said Mrs. Barton the stock above mentioned, but upon payment being made, then said stock is to be returned to me.

"`This $2500.00 is for the first payment on account of the purchase price of the Barton Hotel at the price of Sixteen Thousand Dollars ($16,000.00).

"`(Signed) HARRY W. SIMMONS. "`Approved: May 13, 1927. "`(Signed) KATHERINE E. BARTON.'

and deposited the said stock certificate No. 203 of the Chuctanunda Gas Light Co. with the said Astoria National Bank in escrow thereunder.

"That the said escrow agreement was, and is, the only agreement in writing, or note or memorandum of an agreement, between the plaintiff and defendant or to which either of them was or is a party, ever subscribed by the defendant or by his lawfully authorized agent.

"That, the said Supposed Purchase-Agreement by its terms was not to be performed within a year from the making thereof, and was also an agreement for the sale of personal property at a price not less than $50.00, and was also an agreement for the sale of an interest in real property. That the defendant has not accepted or received any part of the said personal property to be purchased by him thereunder, or paid to the plaintiff or to any person for her any part of the purchase money provided for therein, or received or accepted possession of the said premises mentioned therein or possession of any part of said premises, or received or accepted any assignment of said lease. That neither said agreement nor any note or memorandum thereof, expressing the consideration, was, or is, in writing and subscribed by the defendant or by his lawfully authorized agent, as required by Section 808 of the Oregon Laws, and so the defendant says that the said Supposed Purchase-Agreement was, and is, void and that he has received no consideration whatever for his agreement as evidenced by said escrow agreement or any of the same or for his deposit of said certificate of stock thereunder as aforesaid."

The plaintiff filed a reply, containing technical denials, but, in legal effect, admitting the fact and substance of the oral contract made between the plaintiff and defendant and alleging,inter alia, the following:

"That thereupon, and as earnest money and part payment on such purchase price, the said defendant and his said wife paid to this plaintiff, and plaintiff received from such defendant and his said wife the sum of $5.00, and it was further therein mutually covenanted and agreed that defendant Harry W. Simmons and his wife should forthwith deposit with the Astoria National Bank, of Astoria, Oregon, a certificate of stock owned by such defendant, of the Chuctanunda Gas Light Co., a corporation, such stock certificate being numbered 203, for nine (9) shares of the capital stock of such corporation, under a written agreement, that should the defendant and his wife, or either, fail, neglect or refuse to pay to plaintiff, on or before June 15, 1927, the said first installment of $2,500.00 on the purchase price of said hotel properties, then, in that event, the said stock should become the property of plaintiff herein as liquidated damages for the breach of the contract of purchase. That accordingly thereafter, on May 13, 1927, the plaintiff and defendant herein entered into a contract in writing in words and figures following, to-wit."

(Here is inserted a copy of the escrow agreement, identical with the copy of the same as set out in defendant's separate answer.)

"That said agreement, together with the said certificate of stock therein mentioned was, on that date, deposited with the said Astoria National Bank.

"That said defendant and his said wife breached their said contract of purchase, and refused to perform the same, and refused to be bound by the terms thereof, and repudiated such contract of sale, and refused to pay plaintiff the said sum of $2,500.00 on or before June 15, 1927, or any sum or amount whatever.

"That prior to said June 15, 1927, plaintiff executed, in due form, a good and sufficient bill of sale, conveying the title to the whole of the furniture, furnishings and equipment of said Barton Hotel to the said defendant and his wife, and offered to deliver the same to the defendant and his wife, and tendered the same to defendant and his said wife, and, at the same time, tendered to and offered to deliver to defendant the said lease for said hotel, duly assigned, according to the terms thereof together with the written consent of the owner of such assignment thereof endorsed thereon, but such defendant and his said wife refused to accept such documents, and repudiated the entire contract prior to said June 15, 1927.

"That plaintiff at all times performed all the terms and conditions of said contract with the defendant and with the defendant and his wife on her part required to be done and performed, and duly offered to perform all the terms and conditions on her part required to be done and performed, but the defendant did not, on said June 15, 1927, or at any time, pay to plaintiff, or said bank, or to anyone, the said sum of $2,500.00, or any part thereof, but wholly breached said contract in that regard, and, thereupon, this plaintiff became and ever since has been entitled to the immediate possession of said stock certificate hereinbefore mentioned."

The matter being thus at issue, both parties moved for judgment on the pleadings. The motion of defendant was overruled and the motion of plaintiff was allowed, and a judgment was rendered in favor of plaintiff for the delivery to her by the clerk of the stock certificate, and a recovery from defendant of plaintiff's costs and disbursements. AFFIRMED. Defendant admits entering into an oral agreement with plaintiff for the purchase of her real and personal property and the deposit of the certificate of stock with the bank as a guaranty of his promise to pay $2,500 on the purchase price, as shown by the written agreement of deposit. By the terms of that agreement, plaintiff became at the very instant it was made, vested with a special property as the certificate could only be divested by defendant paying $2,500 to the bank on the fifteenth day of June, 1927. The defendant interposes but one defense, the statute of frauds. He says that the written agreement is not what it seems to be, a complete instrument, but is only a part of a larger transaction, which, by reason of the statute of frauds, is void, and, that the larger contract being void, the written contract falls with it.

Much depends therefore upon the meaning of the word "void" as used in Section 808, Or. L. Section 808, Or. L., so far as it relates to the present controversy, is as follows:

"Agreement not in Writing, When Void. In the following cases the agreement is void unless the same or some note or memorandum thereof, expressing the consideration, be in writing and subscribed by the party to be charged, or by his lawfully authorized agent; evidence, therefore, of the agreement shall not be received other than the writing, or secondary evidence of its contents, in the cases prescribed by law.

"1. An agreement that by its terms it is not to be performed within a year from the making thereof: * *

"5. An agreement for the sale of personal property at a price not less than $50 unless the buyer accept and receive some part of such personal property, or pay at the time some part of the purchase money; but when the sale is made by auction, an entry by the auctioneer in his sale book, at the time of the sale, of the kind of property sold, the terms of the sale, the price and the names of the purchaser and person on whose account the sale is made, is a sufficient memorandum;

"6. An agreement for the leasing for a longer period than one year, or for the sale of real property, or of any interest therein";

While the word "void" primarily means an act utterly of no effect and incapable of ratification, it is frequently, and perhaps most frequently, used as synonymous with "voidable" as shown by the citations following:

"Void. That which has no force or effect. This word is often used as in effect meaning `voidable' only; [Bennett v.Mattingly] 110 Ind. 202 (10 N.E. 299, 11 N.E. 792); and is seldom, unless in a very clear case, to be regarded as implying a complete nullity, but is to be taken in a legal sense, subject to a large qualification in view of all the circumstances calling for its application and the rights and interest to be affected in a given case; [Brown v. Brown] 50 N.H. 552. See [Kearney v.Vaughan] 50 Mo. 287. In formal instruments it has been held to mean voidable; 4 B. Ald. 401; 4 Bing. (N.C.) 395; and in contracts of infants: 14 Ir. C.L. 61. The distinction between void and voidable transactions is a fundamental one, though it is often obscured by carelessness of language. An act or agreement void from the beginning has no legal effect at all except so far as any party to it incurs penal consequences. A voidable act on the contrary takes its full and proper legal effect unless, and until it is disputed, and set aside by some tribunal entitled so to do; Poll. Contr. 8. A voidable contract has been defined to be such an agreement as that one of the parties is entitled to his option to treat as never having been binding on him; id. 9. As applied to contracts the distinction between the terms void and voidable is often one of great practical importance, and wherever technical accuracy is required, the term void can only be properly applied to such contracts as are a mere nullity and incapable of ratification or confirmation; [Allis v.Billings] 6 Metc. (Mass.) 417 (39 Am. Dec. 744). Agreements to hinder, delay, and defraud creditors are not void but merely voidable against the creditors, while valid between the parties; Pom. Contr., § 282."

Lawrence Burd v. Hornick, 81 Iowa, 193, 195 (46 N.W. 987); Van Shaack v. Robbins, 36 Iowa, 201; Pearsoll v.Chapin, 44 Pa. St. 9; Columbia etc. R.R. Co. v. Braillard etal., 12 Wash. 22 (40 P. 382); Martin v. Cowles,18 N.C. 29, 32. From all of these authorities, as well as a multitude of others, we conclude that the term "void," as here used, is synonymous with voidable.

A contract, in respect to real estate, is not like a gambling contract or other illegal contracts, void as against public policy, being wholly lawful in that sense; but the law merely provides that the method of proof shall be in writing, thereby making it optional with either party to perform the contract or not as he may choose. A party commits no offense in making an oral contract to convey land, but when he attempts to enforce it, he finds himself against a stone wall in the requirement that he must produce a memorandum of the agreement in writing signed by the party to be charged.

We see no difference in this case between the defendant putting up these shares of stock or depositing an amount of money with the bank with instructions that, if he failed to pay $2,500 at a certain date, the bank should turn the money over to plaintiff. The principle is exactly the same and it is settled law that money paid upon an oral contract for the purchase of land cannot be recovered if the vendor is ready and willing to comply with his contract, which is the case here: Fletcher v. Lake,121 Me. 474 (118 A. 321); Murman v. Manning, 125 Misc. Rep. 830 (211 N.Y. Supp. 575); Hefford v. Lichtman, 116 Misc. Rep. 692 (190 N.Y. Supp. 554).

The oral contract was sufficient consideration for the deposit. Fletcher v. Lake, supra. This view of the transaction, not only satisfies the technical law of the case, but, is in accordance with justice and good morals. The defendant in his answer admits an oral contract containing every term and stipulation which would authorize plaintiff to compel specific performance, except for the important fact that it was not in writing and therefore unenforceable. The written contract, which defendant denominates an escrow contract, is complete in itself; it says in effect, "If I do not pay you $2500 on my agreement to purchase on or before the 15th day of June, 1927, these shares of stock are yours, and the bank must turn them over to you." He now pleads in court what amounts to a "bunko trick"; that the whole proceeding was void and that the plaintiff, although she has held the property for him from May 13th to June 15th, 1927, and is still ready to convey it in accordance with the agreement, shall not only lose the benefit of her bargain, but shall give back the stock upon the faith of which she made the agreement. It is difficult to say whether the defense is designed to be legal or equitable. If legal, the only defense would be a denial of the execution of the "escrow agreement" or a plea that the consideration thereof had failed, or that plaintiff had refused to convey, neither of which facts exists here. If equitable, no court would allow the defense in the absence of allegations tending to show some default on the part of the plaintiff. The statute of frauds was never designed to perpetrate a fraud, and it would be a gross fraud on plaintiff to allow defendant not only to be released, upon a technicality, from complying with his agreement to purchase plaintiff's property, but also to give him back the property which he deposited as an earnest of his good intentions.

This action is not an attempt to enforce specific performance of an oral agreement to convey property, real or personal, but to enforce a written contract made upon a sufficient consideration to turn over to plaintiff specific personal property. All the conditions, under which the certificate was to become the property of plaintiff, have been complied with and she is the owner of the certificate.

Both parties moved for judgment on the pleadings, each thereby admitting that the pleadings state the truth. Considering them therefore in this light, we are of the opinion that the judgment of the Circuit Court was correct and it is therefore affirmed.

AFFIRMED.

COSHOW, C.J., and ROSSMAN and RAND, JJ., concur.