Pray v. Mitchell

Walton, J. This is an action of assumpsit. The plaintiff has obtained a verdict for $4,450.74. The defendant moves to have-the verdict set aside upon the ground that it is against law andi against evidence. The question is, whether the verdict can be' allowed to stand. We think it cannot. We fail to perceive any ground upon which it can be sustained. Certainly it cannot upon’ the ground that the plaintiff was a member of the firm of N. O. Mitchell & Co. That firm was created by written articles of agreement. The names of its members are not only signed at the bottom of the agreement, but they are mentioned in the body of it. The plaintiff’s name is not among them. The plaintiff not only did not sign the agreement, but he admits that he never saw it; and his name is not mentioned in it. The entire capital is apportioned among the members of the firm who did sign it, and there [434] was no interest remaining which it was possible for any third party to own or possess. To admit the possibility of such an ownership would be in direct conflict with the express terms of the written agreement. Besides, an action of assumpsit is not the appropriate remedy for one whose right to share in the profits of a partnership is denied. If the plaintiff’s membership and right to share in the profits of the partnership were admitted, and his share had actually been apportioned and set out to him, and was now in the hands of the defendant, we do not mean to say that an action of assumpsit would not lie to recover it, as so much money had and received to the plaintiff’s use. But when, as in this case, the plaintiff’s membership and consequent right to share in the profits of the partnership are denied, and no portion of the profits have been set apart for him, we think it is clear that no such action can be maintained. Process in equity is the appropriate remedy. Holyoke v. Mayo, 50 Maine, 385, and authorities there cited. Assuming, therefore, that it is impossible to sustain the verdict upon the ground that the plaintiff was a member of the firm of N. O. Mitchell & Co., both because he never signed the agreement by which that copartnership was formed, and because an action of assumpsit would not be the proper remedy if he had signed it, we come to the inquiry whether it can be sustained upon the ground that the plaintiff made a contract with the defendant alone for a share of his individual interest in the capital stock of the company. We think it cannot for two reasons. The first is that the evidence, fairly construed, will not support such a conclusion. The other is that a contract for the sale of an interest or shares in a joint stock company, is within the statute of frauds ; and in the absence of the other requisites of the statute, must be proved by some note or memorandum in writing. So held in Tisdale v. Harris, 20 Pick. 9, and in North v. Frost, 15 Conn. 400. In the former case the question was very fully considered, and the conclusion reached was that there was nothing in the nature of stocks, or shares in companies, which in reason or sound policy ought to exempt contracts respecting them from those reasonable restrictions, designed by the [435] statute to prevent frauds in the sale of other commodities; that on the contrary, joint stock companies have become so numerous, and. so large an amount of the property of the community is now invested in them, and as the ordinary indicia of property arising from delivery and possession, cannot take place, there seems to be peculiar reason for extending the provisions of the statute to them; that the words ‘ goods ’ and ‘ merchandise ’ may properly include stock, or shares in such companies; and as contracts for the sale of such stock or shares is clearly within the mischief which the statute was designed to prevent, they ought to be held to be within its letter and spirit. And in the latter case the court say that this doctrine is not only supported by the greater weight of authority, but that it is founded upon good sense; that such contracts fall clearly within the mischiefs which the legislature intended to remedy; for there is as much danger of fraud and perjury in the parol proof of contracts for the sale of interests in joint stock companies as in contracts for the sale of any other commodities. It is true that in England it has been held in one case that a contract for the sale of shares in a joint stock banking company is not within the statute of frauds. Humble v. Mitchell, 11 Adolph. & Ellis, 207. And in another case the twelve judges were equally divided upon the question. Pickering v. Appleby, Com. Rep. 354. But in this country, and in this State as well as Massachusetts and Connecticut, the doctrine of Tisdale v. Harris, has not only been sanctioned, but it has been extended so as to include the sale of promissory notes. Baldwin v. Williams, 3 Met. 365; Gooch v. Holmes, 41 Maine, 523. The firm of N. O. Mitchell & Co., was to all intents and purposes a joint stock company. The stock was divided into sixteenths. The defendant owned four sixteenths, which was equal to one-quarter of the whole. The plaintiff testifies that it was then contemplated to put in from eight to ten thousand dollars. A sixteenth would therefore be worth not less than five hundred dollars. The plaintiff avers in his declaration that he agreed to take a certain interest, to wit, ‘ one-sixteenth part in and of a joint stock enterprise.’ It is true that in his testimony he denies that he ever said he was [436] to have a sixteenth. He says he told Mitchell (the defendant) he would take five or six hundred dollars, which amounted to one-sixteenth of what they calculated to put in at the time; that he-was to have his stock in proportion to the amount he put in. This variance, if any, between the allegations in the writ and the proof, is not now material. What we wish now to show is, that if there was a contract for the sale of a portion of the defendant’s stock to the plaintiff, it was for an amount exceeding thirty dollars, as it is to such sales only that the statute of frauds of this State applies. The plaintiff says, in substance, that the contract was for -the purchase of five or six hundred dollars’ worth. Now if we assume that this was not a contract or agreement to become a member of the firm, but a contract with the defendant alone, to purchase a share of his individual interest in the capital stock of the company, must it not, in the absence of delivery, which was impossible, and in the absence of earnest or part payment, which is not claimed, be proved by some note or memorandum in writing, signed by the party to be charged, or by his agent ? Clearly so. Our conclusion, therefore, is, that the verdict must be set aside and a new trial granted. Motion sustained. Verdict set aside. New trial granted. Appleton, C. J.; Kent, Dickerson, and Barrows, JJ., concurred.