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Statement of the Case.
shall be represented by the quarter of the letters patent aforesaid, now remaining the property of said Hart, shall be given and transferred to said Hart or his assigns, free of all assessment, charge or expense, either to said Hart or to the stock so represented; it being the intention of the said Dennis that the interest of the said Hart which shall go into the said company,
, when formed, shall be held and owned by him, said Hart, and his assigns, free, clear, and unassessable for any charge or expense whatsoever arising ont of the formation and organizing of the said company, or the incorporation thereof; and
“Whereas, A certain agreement in writing has lately been made and entered into hy and between me, the said Dennis, and Edward White, bearing date the 27th October, 1856, in reference to the same object and intention of forming a company and building a machine, as is heretofore provided: Now it is understood that this agreement is made in connection with that agreement, and in part furtherance thereof, and that said Hart lias an interest in enforcing and carrying out the said agreement.
“And I, the said Dennis, do hereby agree to and with the said llart, that so far as the interest and influence of the said Dennis are concerned, the same shall be used for the joint benefit of all concerned, and that he, the said Dennis, will, when such company is formed, use his influence and exertions to the best of his power toward having a new and complete machine built and put in operation, sufficiently large and powerful to cut veneers such as may be required to suit the market; as witness my hand and seal this 25th November, 1856."
Simultaneously with which, Staples, the subscribing witness, made the following memorandum at the request of Dennis, explanatory of the agreement:
“ It is understood by me, and so stated and agreed to on the part of Messrs. White and Dennis as a part of the arrangements toward organizing a company, that Mr. Carmi Hart's interest in the letters patent, being one fourth of said patent, is to represent and receive one quarter of the capital of such company, and that said stock will when issued represent not only one quarter
Statement of the Case.
of said letters patent, but will represent and own one quarter of all the property, machinery, and sums that may be put into said company by White and Rogers, and one quarter of all the property late of the Bridgeport Company, and of any machine or property that may be erected or built by the said company, withont charge to said Hart."
The agreement of the 27th of October, 1856, referred to in the foregoing contract, is sufficiently stated in the opinion of the court.
Dennis died in December, 1856, leaving a will, in which he appointed the defendant one of his executors, and which contained the following provision:
“ Being the owner of three eighth parts of a certain patent called Carmi Hart's Patent Cutting Veneer Machine, invented in 1854, for cutting rosewood, mahogany, etc., it is my wish and desire, if no stock company therefor shall be organized previous to my decease, that then my said executors and the survivors of them shall pay, from time to time, any income arising from my estate not otherwise appropriated, such sum and sums of money, not exceeding ten thousand dollars, as may be necessary for the purposes of carrying out my written agreement with Edward White, relative to the said patent; and after having expended the sum above named, then to aid in relation to the said patent, as they in their judgment may deem most fit and proper and advisable.
“Also, that they pay out of such income such proportioned sum and sums of money as may be necessary for the purpose
of securing the patent right of the above-named inventor in any foreign country or countries."
White and the executors of Dennis endeavored to form a company on a capital of $200,000, in pursuance of the agreement of October, 1856, and requested Hart to put in his remaining one fourth of the patent, which he declined. Failing to form such company, they made efforts to form one on a capital of $100,000. During these times IIart was engaged in making plans for a large machine, but was discharged by White.
In April or May Fitch, the executor of Dennis, told Hart
Statement of the Case.
that they were about forming a company on the basis of one hundred thousand dollars as a capital, and requested him to put his one fourth of the patent into the company. This Hart declined to do, giving as a reason that, according with his understanding with Mr. Dennis, the capital was to be two hundred thousand dollars, and that he was to have one fourth, which would include the mill property of White and Rogers.
Fitch explained to him that he would receive just as much whether the capital was two hundred thousand dollars or one hundred thousand dollars, so long as it included the same property; but he still declined to put his one fourth of the patent into the company.
In May, just before or about the time the company was formed, Fitch again saw Carmi Hart, and told him that if he did not put his one fourth of the patent into the company, they would be obliged to form a company on the basis of three fourths of the patent, but if he would put in his one fourth, or consent to do so, he should receive one fourth of the stock; but Hart again declined to do this.
On the 15th of May, 1857, a company was formed under the general manufacturing law of this State, by Edward White, Joseph Rogers, and B. M. Wilson (the latter one of the executors of Dennis), on a capital of one hundred thousand dollars divided into four thousand shares of twenty-five dollars each, for thirty years, by the corporate name of “ White & Rogers’ New York Sawing, Planing, and Patent Veneer Cutting Company."
No tender of any stock in this company was ever made by the executors of Dennis to George W. Hart, or to his attorney, Columbus Hart, or to Carmi Hart, after the formation of the company, nor any demand made by them, or either of them, for a transfer to the company of the remaining one fourth of the patent.
A month or two after the formation of the company, viz., in June or July, 1857, Carmi Hart, professing to act in behalf of his son (the plaintiff), offered to Edward White, the president of the company, to transfer the remaining one fourth of the patent
to the company, or to whoever they might desire, and to receive the stock; which offer was declined by White, on the ground that the one fourth had not been put into the company, but that the company had been formed on the three fourths of the patent only.
Upon these facts, the referee decided that the plaintiff was entitled to recover, as damages, for not transferring to him the stock of the company formed, the par or nominal value of such stock, there being no proof of any market value, with interest upon such value.
The defendant excepted to the findings, and appealed from the judgment.
Mr. D. B. Eaton, for appellant.
Hart had no option to put his one fourth into the corporation, and there was no obligation on the part of the defendant to do more in relation thereto than to allow the one fourth to come in if duly tendered by Ilart for that purpose. He not only omitted to tender the one fourth, but in the exercise of his right refused to allow it to go in when solicited to furnish it for such purpose. The estate then was clearly guilty of no breach of duty.
The claim that Hart's option might be exercised after the company should be formed, is clearly unreasonable and untenable.
The contract, neither directly nor by any implication, allows or contemplates such an extended right of election.
All the provisions and purposes of the contract is answered, and full justice would be done to the Harts by limiting the right of election to the period anterior to the formation of the contract.
Hart was only to have stock that should be "represented by his one fourth of the patent;” and no stock could be represented by his part of the patent unless he allowed it to go into the corporation, and that he refused. He thereby placed himself outside of the contract, and deprived himself of all just pretence to claim stock under the contract.
The corporation was obliged by law to declare on what property and with what amount of stock it was formed, and there
was no authority to increase the stock; and to give the contract the construction claimed by the Harts would render compliance therewith legally impossible.
It would be practically impossible to form a corporation and dispose of its stock, if it was uncertain how much stock there was to be, and a right was reserved for its increase. It is not to be presumed, nor held but upon the most conclusive testimony, that any contracting parties in the situation of this estate and the Harts, made a contract that would lead to such destructive, anomalous, and illegal results.
Mr. Abram Wakeman, for respondent,
Insisted that it could not be claimed that before a large machine had been built-and before it could have been used in promoting the formation of any company, or any company had ever been incorporated, and without knowing of what its capital would consist, or whether White & Rogers would transfer their property to such a company, or whether the property of the Bridgeport company wonld be included, or whether the stock would be assessable or full stock—Mr. IIart could be called upon to make an election which would bar his rights, or relieve Dennis from his obligations arising under his contract.
The tender was within a reasonable time. The reasonableness of the time, being a mixed question of law and fact, will not be disturbed by an appeal unless palpably erroneous.
But aside from the question of the reasonableness of this tender, it is insisted that the obligation to make a tender rested with the defendant, and not with the plaintiff.
Hart sold and delivered to Dennis one quarter of the whole patent, in payment for which Dennis agreed to give him one quarter of the paid-up stock of a company established as provided for in the contract.
The plaintiff is entitled to damages. The one fourth of the stock of the company, as such, when formed, constituted no measure of the actual damages sustained by the plaintiff, for the reason