Krouse v. Woodward

Temple, J. This action was brought to recover from appellant twenty shares of stock in the defendant corporation. Plaintiff avers ownership of the stock on the twenty-fifth day of August, 1893, represented by certificate No. 7, then issued to him, and that he still owns the same; that the stock is of uncertain value; that the stock of said company has no known or fixed market value, and that plaintiff purchased said stock with a view of retaining the same for purposes of profit, investment, and speculation; that he became indebted to Woodward in the sum of four hundred dollars, for which sum Woodward held his promissory note; that he delivered to said Woodward said certificate as a pledge to secure the payment of said note; that afterward, on January 9, 1894, the note being due, he tendered to Woodward the amount due on said note, and demanded the return of the stock and of said note, both of which demands Woodward refused to comply with; that seven days afterward Woodward pretended to sell said stock to defendant Alexander. Said pretended sale was without consideration, and was made to deprive plaintiff of his stock; that Alexander had full knowledge of plaintiff’s rights, and that the certificate was held by Woodward as a pledge. It was also charged that Woodward now owns and holds more than twenty shares of the capital stock of the corporate defendant; that said Woodward threatens to sell all of his stock, and, unless enjoined, will do so. The tender of the money to Woodward was kept good-, and plaintiff asked that plaintiff be declared the owner of certificate No. 7, and of said stock, and that said certificate be delivered to him, or, in case this cannot be done, that he recover twenty shares of the same stock now owned by Woodward. [641] Answers were put in by the defendants, in which practically all the allegations of the complaint were denied. The court found the allegations of the complaint stated above to be true, except that the court found that Alexander purchased the stock from Woodward in good faith, and for a valuable consideration, to wit, for foun hundred and fifty dollars, then paid by him. The court, also found that Woodward, although not owning the certificate of stock, was by the act of the plaintiff clothedi with the apparent ownership, and, inasmuch as Alex--, ander purchased without knowledge of the infirmity of Woodward’s title, he acquired a good title. The court by its decree required Woodward to convey to plaintiff twenty shares of the stock which he owned and held in the same corporation, in lieu of plaintiff’s stock which he had wrongfully sold to defendant Alexander. From this judgment the defendant Woodward brings this appeal upon the judgment-roll alone. 1. Appellant’s first contention is that plaintiff has an adequate remedy at law, and is, therefore, not entitled to equitable relief. It appears somewhat singular that upon this proposition the peculiar language of our code has never been noticed. As originally enacted, section 3384 of the Civil Code read as follows: “ Except as otherwise provided in this article, the specific performance of an obligation may be compelled: 1. When the act to be done is in the performance, wholly or partly, of an express trust; 2. When the act to be done is such that pecuniary compensation for its nonperformance would not afford adequate relief; 3. When it would be extremely difficult to ascertain the actual damage caused by the nonperformance of the act to be done; or 4. When it has been expressly agreed, in writing, between the parties to the contract, that specific performance thereof may be required by either party, or that damages shall not be considered adequate relief.” In 1874 this section was amended by striking out all the subdivisions. This apparently establishes the rule [642] that all obligations may be specifically enforced, unless it is otherwise provided in that title, and not that certain specified obligations may be specifically enforced. At the same time section 3385, which provides that where one party was entitled to specific performance the other was also entitled to the remedy, although not within the rule as then established in section 3384, was repealed. Then follow quite a number of instances in which it is expressly provided that specific performance cannot be enforced. It would seem that it was intended to reverse the usual test as to the jurisdiction of a coui’t of equity to enforce specific performance of a contract, and to place the burden upon the party resisting such action to show that the case in hand is within some exception. The subdivisions of section.3384 stricken out contain a concise statement of the jurisdiction of courts of equity as stated in the text-books, i This amendment was made in 1874, and there are numerous cases since in which it has been assumed that the rule was as established by the decisions of courts of equity. It is not necessary here to determine whether the jurisdiction of courts of equity have been enlarged by this change in the law. Appellant claims that such jurisdiction has been narrowed by the code, because section 3366 limits the relief to the cases specified in title III. But section 3384 is a later section, and reverses .the rule stated in section 3366; or it may be regarded as itself a specification under section 3366. At all events, there is no ground to claim that the power of the court to enforce specific performance has been narrowed by the Civil Code. Without appealing to the code to show a change in the rules of equity upon the subject of specific performance, there can be no doubt of the right of the plaintiff. The specific circumstances which authorize the court to give this relief are: 1. That the stock has no market or ascertainable value; and 2. Plaintiff purchased the „ stock for an investment—in other words, with a view to anticipated increase in value; and 3. That he cannot [643] purchase other shares in the corporation, because no holder will sell any. In Senter v. Davis, 38 Cal. 450, the matter was discussed, and the reasoning found there fully sustains this view. In. that case, however, relief was denied because it did not appear that the property had no market value. The matter is elaborately considered in Cushman v. Thayer Mfg. Co., 76 N. Y. 365, 32 Am. Rep. 315, where numerous authorities are cited. (See, also, Johnson v. Brooks, 93 N. Y. 342; Adams v. Messinger, 147 Mass. 185; 9 Am. St. Rep. 679.) 2. It is further contended that the court could not compel Woodward to convey his own stock in lieu of the certificate which he received from plaintiff. The property assigned to Woodward was twenty shares of stock. There was no difference in the shares. In Atkins v. Gamble, 42 Cal. 86, 10 Am. Rep. 282, it was held that under precisely the same circumstances, the only right which the bailor had was to recover the precise number of shares. He cannot insist upon a return of the identical stock, for it is a matter of no consequence. There can be no preiium affectionis for the certificate. The same rule must prevail here. Appellant has no cause to complain. The propriety of the action of the court is, however, fully sustained by authority. (Cushman v. Thayer Mfg. Co., supra; 1 Morawetz on Private Corporations, sec. 219; 1 Pomeroy’s Equity Jurisprudence, sec. 164; Johnson v. Brooks, 93 N. Y. 342.) I see nothing in the point that plaintiff made no investment because he borrowed from appellant, upon a pledge of this identical stock, the money with which he paid the subscription. He gave his note, and was personally bound for its payment. The judgment is affirmed. McFarland, J., and Henshaw, J., concurred.