Phipps v. Sharps

Opinion,

Mr. Justice McCollum :

The appellant bought of the appellee two hundred shares of the capital stock of the Edgerton Electric Motor Company, at *600five dollars a share, on the assurance of the latter that it was a good investment, and on his written guaranty that the former should not lose any money by it. It appears that the appellee was the owner of a large block of this stock, and was anxious to dispose of it, and the consideration of his undertaking to protect the appellant from loss on the investment was the sale of a portion of it to him. The guaran t3, by its terms, was to remain in force two years, and it was executed and delivered and the stock was transferred and paid for on November 22, 1886. The negotiations which resulted in the sale were conducted by J. Warren Coulston, who represented both parties, held stock in the company, and /was the president of it. On the trial of this issue, he testified that the stock “ was never listed, and never had a market value; ” that there had been occasional private sales of it, but that these “were induced by the relations of the parties.” Before the expiration of the two years mentioned in the guaranty, the appellant tried to sell his stock, but could not find a purchaser for it; and on November 13,1888, he called on the appellee, and demanded from him the sum he had paid for it. The latter, Avhilst conceding his liability, claimed that he was then financial^ embarrassed, and that he could not meet the demand until the ensuing spring. The appellant then caused the stock to be sold at public auction by Thomas & Sons, and he realized on the sale of it 152.50. At this sale the stock was purchased by W. J. Smyth for J. Warren Coulston. This suit was then brought by the appellant to recover the difference between the amount he received, and the sum he paid for the stock.

The learned judge of the court below entered a compulsory nonsuit on the ground that the appellant was a purchaser of the stock at his own sale of it, and that he had not sustained any loss. But this assumption, instead of being authorized by the evidence, was in spite of it. The memorandum of the sale made by the auctioneers did not, when explained and coupled with the other testimony in the cause, compel the inference that Sn^th purchased the stock for the appellant. It showed a sale to Smyth as attorney, and the uncontradicted explanation of the memorandum was that he bought the stock as attorney for Coulston. But, in any event, the question was for the jury, and the evidence if credited by them, was sufficient to *601support a verdict for the sum demanded. It showed that tbe appellant bad parted with his stock at a public sale, after unavailing efforts to find a purchaser for it, and that bis loss was the difference between wliat be paid for tbe stock and what be obtained for it. The agreement to protect the appellant from loss was not strictly a guaranty, although tbe parties gave it that name. It was a contract of indemnity, under which it was the duty of tbe appellee at the end of two years to pay to the appellant the amount of his loss, if any, oil tbe investment. The transaction was not a pledge of the stock as security for a loan, but an unconditional sale of it at a price fixed and paid. The appellant had an option under the contract to return the stock within two years, aud demand the money paid for it, but he was not bound to do so. When lie proved that he had made diligent but fruitless efforts to sell tlie stock, and that it bad no market value, it was sufficient to put the appellee on his defence.

Judgment reversed, and venire facias de novo awarded.