Pound v. Lawrence

I do not concur in the result reached by the majority members of this court in the proper disposition to be made of this case. I fully concur in the majority opinion that shares of stock in the corporation are "commodities," as that term is used in the anti-trust articles of our statute, but I am of the opinion that the trial court was not in error in overruling the appellants' general demurrer, nor in rendering judgment upon the fact submitted and found by the jury.

In addition to the testimony of appellee, Lawrence, I submit that of George H. Pound, though not materially different from that of Lawrence. Pound testified:

"On the 23d day of January, 1920, the corporation of George H. Pound Co. was doing business in El Paso, and did so continue to do business here until April 1, 1920; at that time the corporation was dissolved. I was president, and C. A. Williams was secretary and treasurer. During that time George H. Pound, H. B. McDowell, and J. O. Crockett were directors of that corporation. I was manager of the George H. Pound Co. from the 23d of January, 1920, up to the 1st day of April, 1920. * * * The American Oil Refining Company was a joint-stock association. * * * On the 23d day of January, 1920, down to the 1st of April, 1920, George H. Pound Company was the sole agent and underwriters of the American Oil Refining Company as regards the handling and selling of the stock of the American Oil Refining Company. * * * I had a conversation with Mr. Lawrence there in his office. * * * After I was introduced to Mr. Lawrence, I said: ``I understand you have some stock of the American Oil Refining Company to sell, which you are going to sell for less than $1. He said that he had, and he might sell it for less than $1. I was selling it at that time on the curb for $1. * * * I told him I would prefer that he would not sell his stock for less than $1, and he said if I would guarantee him a price he would not do so. * * * My object in going down there [to Lawrence's place of business] was that I preferred that he not sell his stock for 75 cents. My purpose in going over there was to do something to prevent him from selling it for less than $1, because I was then selling the same stock on the curb for $1, provided I could do so in a proper way. * * * I went there for the purpose of getting Lawrence to forbear and refrain from selling his 1,600 shares, provided I could do so properly. He did not sell his stock up to the time he told me he put the matter in the hands of his attorney. I sold the stock of the American Oil Refining Company during that time for $1 a share."

The action of the trial court in overruling the general demurrer I think presents the material point of controversy in the case. The sixth subdivision of the petition copied into the majority opinion, and to which the demurrer is directed, states the agreement entered into by Lawrence and Pound. It reads:

"George H. Pound Co. agreed with plaintiff [Lawrence] that in consideration of said plaintiff forbearing and refraining from selling his 1,600 shares of stock at said price of 75 cents per share and withholding same from sale at said price, that it, the said George H. Pound Co., guaranteed to the said plaintiff that he, the said plaintiff, within 60 days from said date, would receive, and agreed that it, the said George H. Pound Co. would within 60 days from said date pay unto the plaintiff the sum of 90 cents per share for the said 1,600 shares owned by the said plaintiff aforesaid."

The rest of the paragraph states the action taken by Lawrence under the agreement; that is, that he did refrain and forbear from selling the shares of stock.

The petition and the evidence is somewhat confusing by the use of the word "guaranty." I think that, in view of the latter portion of the paragraph, in stating that Pound agreed to pay Lawrence within 60 days the sum of 90 cents per share for the 1,600 shares of stock, the agreement made was not a guaranty, as alleged, but was a collateral warranty, an original and absolute undertaking in præsenti that Lawrence should realize the sum of 90 cents per share for each share of his stock to be paid by appellants within 60 days. It was not a guaranty to answer for the default of another, which must be in writing; the subject-matter of the agreement was things, shares of stock, and not persons, and in that sense, though not in writing, the agreement is enforceable, if not void as contravening the anti-trust laws of this state. The case was tried upon the issue as to whether Pound agreed to pay Lawrence 90 cents per share, within 60 days, in consideration that Lawrence would not sell the shares in the market at 75 cents per share. Lawrence said Pound was to have 60 days in which time he (Lawrence) was to make no effort to sell his stock, and that he made no effort at all to sell. There is practically no difference between the testimony of Pound and Lawrence on the issue presented in the appeal; the difference in portions of their evidence was settled by the jury in the issue presented, and found as stated in the opinion. The petition does not show on its face that subsequent to the agreement Lawrence was to put the shares on the market at any price, nor that Pound was to do so for Lawrence, nor that Pound and Lawrence were to act together in any way in reference to the shares. The only concert of action alleged or shown was that Lawrence was to sell and Pound to buy the shares of stock at the price and time agreed upon.

The jury found under the evidence, and I think on a fair construction of the agreement, that Pound bought the 1,600 shares of stock at the time of the agreement, and agreed to pay for them 90 cents per share within 60 days. That seems to be the construction the parties put upon the agreement, and as construed by the trial court and as found by the jury.

To be a trust under the statute and subject to the demurrer, the petition must show on its face that the parties agreed to a combination of capital, or a combination of skill or acts of the parties with reference to the transaction had, and to accomplish some one or more of the purposes specified under article 7796, V. S.

The term "combination" is not defined by the statute. The term, however, as applied to the anti-trust laws of this state has been defined and construed by our Supreme Court. Judge Denman said in Gates v. Hooper,90 Tex. 563, 39 S.W. 1079, that —

"``Combination' as here used means union or association. If there be no union or association by two or more of their ``capital, skill or acts,' there can be no ``combination' and hence no ``trust.' "

In that case the court was led to the conclusion that the union or association of capital, skill, or acts, denounced by the statute is where the parties in the particular case designed the united co-operation of such agencies which otherwise might have been Independent and competing for the accomplishment of one or more of the purposes specified.

I do not understand the law to be that it prohibits Lawrence from making an absolute sale of his shares of stock to Pound, although the effect of such sale is to remove Lawrence as a competitor of Pound in the market in the sale of the shares of stock, or that such sale of the Lawrence shares would have the effect to enable Pound to sell the shares in the market at a higher price than that at which Lawrence was offering them for sale, and but for the sale to Pound Lawrence would have sold them at a lower price than that at which he sold to Pound. Neither the pleading nor the evidence shows Lawrence to be a stockbroker, or that Lawrence owned or had bought or sold any shares of stock other than that involved in the one transaction with Pound, but it does show him to be a wholesale groceryman, and at the time of the transaction was engaged in that business. The evidence further shows that at the time of the transaction shares of stock in the American Oil Refining Company were being sold on the curb and in the open market at $1 per share. The evidence does not show that any shares of stock, in the American Oil Refining Company, at that time or any other time, was being offered for sale or sold for less than $1 per share. The evidence further shows that Lawrence sold to Pound at 10 cents less than the open market price to enable Pound to make a commission on the sale, as Pound said it would not be fair to him to buy and make nothing on selling.

The petition at which the demurrer is directed does not allege the intent of Lawrence and Pound in effecting the sale and purchase of the stock, nor its effect upon the market, and I think to consider either the intent of the parties in making the agreement or its effect upon the market of the price of the stock would add to the statute an element not written therein. I am of the opinion that one owning a commodity may sell it to another for cash or on time, regardless of what his intent may be in making the sale, and regardless of the effect such sale may have upon the market price of such commodity by reason of such sale, and although the purchaser, prior to such sale, was a competitor in the market with the seller of such commodity, and without being in combination with the buyer, in capital, skill or acts, and without being in violation of the anti-trust laws of this state.

The view I take of the petition alleging the agreement, the construction the parties themselves put upon the agreement alleged, the evidence offered, and the fact found by the jury, I am of the opinion that there is not alleged such combination of capital, skill, or acts of the parties, and the purpose for which it is formed, as is denounced by the statute, and think the case should be affirmed.