[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 349 The Ellenville Petroleum Company was organized, and the stock fully subscribed for, before the plaintiff paid to the treasurer the money which he seeks to recover in this action.
The referee finds that the plaintiff complained to the defendant that he had not been permitted to take a share or interest in the company, and the defendant then said to him, that there was a half share he could control, and if the plaintiff would send to him or the treasurer $500, the nominal value of the half share, he would see that the plaintiff had a half share of the stock. The plaintiff on the 3d day of March, 1865, paid the sum mentioned to the treasurer, who credited it to the defendant. It was understood between the parties that the stock which the plaintiff was to have was part of that alloted to the defendant.
The Ellenville company was composed of individuals who owned oil lands in Pennsylvania. The company was not incorporated. The capital stock was fixed at a certain sum, and was divided into shares of $1,000 each, of which the defendant was entitled to nine and a half shares. It was however the intention of the association to organize as a corporation, and this intention existed before the contract was made between the plaintiff and defendant. This is apparent from the proceedings of the company as shown by the minutes or record of the meetings of the associates. The corporation was formed under the Pennsylvania statute, in June, 1865. The stockholders in the original association were the stockholders in the corporation, and the property held by the associates was transferred to the corporation. The referee finds that both companies, so far as related to its shareholders and property, were identical. The name of the corporation was The Ross Farm Petroleum Company, and this and the corporate character of the new company, constituted the only distinction between the two. The plaintiff, in order to recover back the money paid on the contract to purchase the stock, must establish that there was a breach by the defendant of his contract to transfer it. The law, on this being shown, *Page 351 would raise an implied promise on his part to restore the consideration. But mere proof that the stock had not been transferred to the plaintiff is not sufficient to establish a breach.
To put the defendant in default, a demand of the stock by the plaintiff was necessary, or proof given that the defendant had put it out of his power to transfer it. It is conceded that no demand was made, but it is claimed that the transfer of the property of the associates to the corporation made it impossible for the defendant to perform his contract to give the plaintiff the interest which he contracted for, viz., an interest in the stock of the Ellenville Petroleum Company, and that this made a demand unnecessary. But we are of opinion that under the circumstances proved, the defendant's contract would have been performed by a transfer of stock in the corporation which succeeded to the property of the Ellenville company. The plaintiff is chargeable with knowledge that the purpose of the association was to organize a corporation on the basis of the property held by them, and that company was to be merged in the proposed corporation. His subsequent conduct shows that he understood that his interest under the contract was subject to this change. After the sale of the corporate property to Hermance, in 1866, he stated to him that he thought he had some stock and that he had a right to come in and have the benefit of the right of redemption from the sale, and was informed that his name did not appear as stockholder. Then for the first time he seems to have conceived the idea that he could hold the defendant liable for the money paid. The defendant paid the sum necessary to retain his interest in the property sold, and a transfer to the plaintiff by the defendant of an interest in the property held by Hermance in trust for the stockholders, equal to the interest which the defendant contracted to convey to him, would have satisfied any equitable claim of the plaintiff and have been a legal performance of the defendant's contract. There is no equity in favor of the plaintiff's claim. For all that appears defendant has been ready and willing to perform his contract. The plaintiff took the risks of the *Page 352 adventure, and the loss should be borne by him and not by the defendant. The defendant was not guilty of any fraud, and managed the interest of the plaintiff as he did his own, under an implied authority to do so.
The judgment should be reversed and a new trial granted.
All concur, except FOLGER and ANDREWS, JJ., not voting.
Judgment reversed.