Mutual Oil Co. v. Hills

HUNT, Circuit Judge

(after stating the facts as above).

[1] It is urged by defendant that it was error for the court to decree that the defendant corporation should cause to be issued and delivered to plaintiff certificates for 30 shares of its stock. The assignment of error is predicated upon certain evidence that Hills had bought stock for himself in the corporation in open market within two years of the date of the trial of the case, and that under such circumstances equity would not interfere, but would leave the plaintiff to his remedy at law. While ordinarily, complete and satisfactory remedy for failure to deliver certificates of stock may be had in damages at law, there are exceptions. For example, where the value of stock in question is not readily to be ascertained, as in Newton v. Wooley (C. C.) 105 Fed. 541, or where the stock cannot be had in the market, except at great inconvenience and expense, as in Equitable G. Co. v. Baltimore Coal Tar & Mfg. Co., 63 Md. 285, equity will give relief. Story Equity Jurisprudence, 717(a), 718. The Supreme Court, in Hyer v. Richmond Traction Co., 168 U. S. 471, 18 Sup. Ct. 114, 42 L. Ed. 547, in considering a contract specifically for the transfer of corporate stock, said:

“If stock has a recognized market value, courts will ordinarily leave the parties to their action at law for damages for breach of the agreement to sell; but in cases where the átock has no recognized market value, is not purchasable in the market, or has a value which is not settled, but is contingent upon the future workings of the corporation, equity will sometimes decree specific performance of a contract of purchase.” ,

See Express Co. v. Railroad Co., 99 U. S. 191, 25 L. Ed. 319; Reach v. Forbes, 11 Gray (Mass.) 506, 71 Am. Dec. 732; Cushman v. Thayer Mfg Co., 76 N. Y. 365, 32 Am. Rep. 315; Johnson v. Brooks, 93 N. Y. 338; Schmidt v. Pritchard, 135 Iowa, 240, 112 N. W. 801.

[2] Plaintiff’s evidence was to the effect that the value of shares of stock had risen to not less than $200 per share; that the business of the company has increased, and will increase; that large dividends will be earned, the exact amount of which could not be estimated by plaintiff; that there is but a limited amount of stock issued; that it is.not for sale upon the market, and cannot be readily bought; that it was impossible to determine the actual damage which plaintiff would sustain if the stock should not be delivered to him; and it is not denied that defendant has sufficient stock to enable it to live up to the agreement and deliver 30 shares. There was some testimony by the secretary of the defendant company to the effect that at the time of the trial Mr. Greenlees and another person were offering stock for $160 per share; but it was indefinite, not only as to the amount of stock so offered, but whether there was any general market for the stock. In Bernier v. Griscom-Spencer Co. (C. C.) 161 Fed. 438, cited by the appellant, .plaintiff' did not allege that the common stock could not be bought in the market, or that it had any peculiar or special value to the plaintiff, or that the defendant retained any of its stock. The court, however, expressly recognized that equity would sustain an action for specific performance under conditions not generally unlike those presented in the present case. In our opinion the court was well within the rules which gave it jurisdiction in equity.

[3] It is contended that the contract was implied, and not expressed, and that equity should not decree specific performancé, unless there was mutuality, certainty, and definiteness. But there was nothing unilateral in the agreement, for the evidence clearly shows that after the parties had been to the office of an attorney in Great Falls, with the purpose of putting their whole contract in writing, Hills gave up his position with his former company and directed all his energies to the advancement of the interests of his new employer, the defendant company. The note for the shares of stock was given and accepted, the defendant company paid him $120 per month, the agreed compensation, and Hills went ahead to extend the business of the company, and for a long time carried it on, apparently to the satisfaction of the president of the company and to the advantage of the corporation. The contract is enforceable for benefits corresponding with the time of performance by plaintiff. Law v. Smith, 68 N. J. Eq. 81, 59 Atl. 327.

[4] It is said that the contract was not expressly authorized, and was not within the implied powers of the president of the defendant company, and that there never was a subsequent ratification of the agreement. But it is plain that Greenlees, when he made the contract, had general control over the management of the business of the defendant company, and it is found that the corporation, with knowledge on the part of the incorporators and directors and secretary, accepted the benefits of the services of the plaintiff, acquiesced in the arrangement, and for several years failed to make any objection thereto. Under such circumstances it does not help the defendant that the contract was not formally brought before the board of directors until 1912, for the corporation will be bound by the contract. Paul Steam System Co. v. Paul (C. C.) 129 Fed. 757; Cook on Corporations, § 727; Marshall on Private Corporations, § 363.

Other errors assigned are of less importance, and we find none well founded. We think plaintiff was entitled to maintain the suit, and to have the stock transferred, and to the relief granted by the lower court to the extent stipulated upon between the parties in case of affirmance.

Affirmed.