Cordova Coal Co. v. Long

McCLELLAN, J. We do not doubt that B. M. Long, appellee here, and complainant below, has all the rights against the consolidated Cordova Coal Company, with respect to the lands in controversy, that he originally could have asserted against the New Orleans & Alabama Coal & Mining Company. The first Cordova Coal Company appears to have been organized by Long at the instance of the New Orleans company, entirely for the purposes of consolidation between the two under the name of the newly organized company, and with a view to the acquisition of its larger powers. In substance, the transaction, so far as Long’s contractual relations were concerned, amounted to a change of the name of the corporation to which he had undertaken to convey the lands; and there is, we do not question, such privity between him and the consolidated corporation as entitles him to all the rights and remedies he had against the New Orleans company in the premises. Under the contract of sale, as modified, the Cordova Coal Company, in consideration oí' the conveyance to it by Long of certain lands, containing 10,800 acres, was to “ pay and deliver to him $50,000 in cash $108,000 in the stock of the company, and $58,000 in the bonds of the company.” The money was paid before the consolidation, and the stock was delivered after that time; but the bonds contracted for had not been delivered when the bill was filed. It is now sought to have declared and enforced a vendor’s lien on the land for $58,000 in money, on the theory, that the bonds were not delivered when they should have been under the contract; that the value of such bonds as were in contemplation of the parties was $58,000, and that the failure to deliver them as contracted invests the complainant with a right to claim their value in money as a part of the purchase price of the land, and enforce the claim as a vendor’s lein. The doctrine generally prevailing outside of Alabama, it may be admitted, is, that when land is conveyed in consideration of the transfer and delivery to the vendor of chattels, choses in action, and the like, no lien exists in favor of the vendor to enforce such delivery, or coerce the payment of a money equivalent, 'the claim in such cases being considered unliquidated and uncertain. — 2 Jones on Liens, § 1071. But the contrary view is taken in this State, and has prevailed too long and been too uniformly adhered lo tobe now disturbed, even if it be unsound in principle, of which we are by no means con — 543 — vinced. The rule here is, that when the consideration is the delivery of chattels, which are capable of reduction to a money value, a lien exists for the collection of such value, upon a failure to deliver them in accordance with the terms of the contract.—Neal v. Clay, 48 Ala. 252; Smith v. Vaughan, 78 Ala. 201. The undertaking to deliver bonds of the company, in the case at bar, is within the principle of these cases. As we construe the contract, it involves no promise to pay $58,000 in money, to be secured by the delivery of the bonds; nor to pay so much money, with a stipulation that it may be discharged by a delivery of the bonds of the company, as in Plowman v. Riddle, 14 Ala. 169, where the sum agreed on was payable in leather. But here, the primary, and indeed only undertaking, with respect to this part of the consideration, was to deliver bonds of an incorporation, of the face value of $58,000; not-in payment of any sum of money ageed to be paid, for there was no such agreement, nor to secure any such payment of money, but in direct consideration of the conveyance. And within the rule stated, the bonds are chattels, ehoses in action, capable of reduction to a money value; and under that rule, thz prima facie presumption is, that a lien was retained on the land to enforce the payment of that money value, upon a failure to deliver these chattels, according to the terms of the contract. The question of chief importance in this case is, whether there has been such a failure on the part of the corporation to deliver the stipulated bonds as entitles the complainant to proceed against the land for their value; and this involves the further inquiries, (1) when were the bonds to be delivered, and (2) what character of bonds was to be delivered. It is very clear, we think, that immedate delivery was not contemplated, and could not in the nature of things have been effected. The original contract for the conveyance of the lands was entered into on February 5th, or 6th, 1888. Its concluding stipulation is in the following language: “It is distinctly understood and agreed, that no payment of any money, or delivery of any stock or bonds, shall be due to, or demanded by said Long, until the lands are examined and accepted by the company, and the titles to the same are examined and approved by its authorized attorney.” This contract was modified on July 24th, 1888, but expressly only to the extent of reducing the acreage to be conveyed from 12,000 to 10,800 acres, with a corresponding reduction in the price. The whole theory of complainant’s case must find support in, and is, in fact, expressly made to depend upon, this contract as thus modified, — 544 — being the only subsisting agreement between him and the consolidated Cordova Coal Company. In it, and in it alone, are found the stipulations under which the lands were to be, and were on September 26th, and October 17th, 1888, subsequent to the consolidation of the two original companies, conveyed to the new Cordova Coal Company. The stipulation we have quoted must, therefore, be still a part of the contract between the parties; and under it there could be no breach of its terms, as to delivery of the bonds, until after the lands had been examined and accepted, and the title to the same examined and approved by the company’s attorney. There is no averment in the bill that this has ever been done. But, aside from this, it is alleged, that the $50,000 in cash was paid before the consolidation of the two original companies. This fact can not be of moment in determining that the lands had been examined, &c.; for non constat, but that the condition precedent to any payment or delivery was to this extent waived by the purchaser. But it is of importance as showing that it was not the intention of the parties, or within their contemplation, that the stock and bonds should be delivered presently, or contemporaneously with the payment of the money; for, to the contrary, the agreement of consolidation, made subsequent to the payment of the $50,000 in money, provides for the delivery thereafter of the stock and bonds. Moreover, neither the stock nor the bonds could be delivered for some time after the consolidation of September 21st, 1888. Time was necessary to prepare and issue and deliver the former; and with respect to the latter, their issuance, their denominations, the rate of interest they were to bear, the amount to be issued, &c., had to be considered, determined upon, and authorized by the corporation, and a mortgage or deed of trust to secure their payment had to be prepared and executed, before there could be any delivery to the complainant. All these considerations exclude the idea that they were to be presently delivered, and lead to and enforce the conclusion, that, at most, a delivery within a reasonable time would satisfy and fill the terms of the contract. Parties may in good faith differ as to what is a reasonable time within which an act is to be done. The party upon whom it rests to perform the act, may be ready and willing to do so, and only delay performance because he believes he has further time. It is, perhaps, on these considerations that the law requires in such a case a demand for performance before the party undertaking to act can be put in default with respect to the act to be done. While suit itself is a legal, and the only necessary demand ordinarily, under a contract payable in money, the contrary doctrine, that — 545 — demand must- precede any suit in the premises, applies to all contracts for delivery, within a reasonable time of goods and chattels, corporeal and incorporeal—Wyatt v. Bailey, 1 Morr. (Iowa), 396; Bradley v. Farrington, 4 Ark. 532; Martin v. Chaurin, 7 Mo. 277; State v. Mooney, 65 Mo. 494; Widner v. Walsh, 3 Colo. 548; Frazer v. McCord, 1 Ind. 224. There is no averment in the present bill of a demand for the delivery of “$58,000 in the bonds of the company,” but the necessity for such a demand is sought to be obviated by averments which are intended to show that it would not have been complied with. These averments are, that the Oordova Coal Company had authorized, and was about to issue $250,000 in the bonds of the company, out of which its purpose was to deliver bonds to the amount of $58,000 to the complainant, in discharge of its contract; that “it was not contemplated when he [the complainant] entered into said contract for the sale of his lands, that the said company should issue bonds to-a greater extent than sufficient to pay orator the purchase-money \i. e., deliver to him $58,000 in bonds] for said lands;” and that the issuance of bonds to the extent of $250,000,, instead of $58,000, would have the effect of depreciating the bonds delivered to complainant, from par to eighty-five cents-on the dollar. We will concede, for the argument, that if the company had resolved not to deliver, and did not intend to deliver,, bonds of the character called for by the contract, a demand for them would have been unavailing, and the complainant was under no necessity to make it. The question then recurs: Do these averments show that state of facts? Do-the allegations of the bill, taken in connection with the contracts exhibited thereto, show that the corporation had resolved not to deliver bonds of the kind called for by the agreement ?’ It sufficiently appears from the bill, that the company would have delivered bonds to the amount required, out of an issue of a larger amount than was necessary to that end. The real inquiry then is, Would such delivery have been a compliance with the contract ? It is very clear, that this question must be determined by the writings, uncontrolled by what may have been the “ contemplation ” even of both parties thereto, much less by the alleged fact, for so the bill must be construed, that complainant did not contemplate the issuance of more than $58,000 of the company’s bonds. This “ contemplation,” at most, imports expectation, or belief, not binding stipulation; and to hold that the corporation had bound itself not to issue more than $58,000 of its bonds, because the complainant, or even its own officers and the complainant, had expected that — 546 — it would not do so, would be an anomaly to which we are unable to subscribe. Equally untenable is the position, advanced by the bill, that for the corporation to exceed complainant’s expectations in this regard, would be a fraud on him. Not only so, but even had there been a parol contemporaneous agreement to this effect, instead of a mere expectation of the parties, or one of them, we can not see how any efficacy could be accorded to it, to change the terms of the writings. We, therefore, proceed to determine whether the issuance of $250,000 of bonds, and a delivery of $58,000 in bonds out of that issue, would be a compliance with the contract of the parties, as it is written. Everywhere in these writings, and in the averments of the bill, the bonds which were to be delivered are described simply as “ bonds of the company.” Everywhere, the undertaking is to deliver to the complainant “ $58,000 in the bonds of the company.” They are nowhere described beyond this. These terms have a well defined signification, when used with reference to incorporated companies. They imply a series of obligations to pay money at some distant date, with interest payable at short intervals, secured by a mortgage or deed of trust on the corporate property, passed from hand to hand by delivery, issued for the purpose of paying — not securing — indebtedness, or to raise a working capital, and are usually purchased as an investment. It was confessedly this kind of bond which the Cordova Coal Company bound itself to deliver to Long. Its charter authorized it to issue $500,000 of these bonds. It is to be assumed that this power is a valuable and necessary one to corporations of this character, and one not to be taken as surrendered, in whole, or in any material part, except upon satisfactory proof of an intention to surrender it, and a binding contract to that end. It is fair to assume, also, that the property of this corporation was worth the amount of its capital stock, or, at least, the amount of that stock which had been subscribed for and issued, since our laws forbid the issuance of stock which is not fully paid; and this record discloses that it had issued stock aggregating $368,000. Is it at all reasonable to suppose that the corporation would bind itself to limit its issue of bonds, secured by property of this value, to $58,000, or that Long could with any plausibility insist upon or even expect such a limitation? Such result must find support in the terms of the paper, before it can be adopted. The writings indicate no such limitation. On the contrary, the terms used, “ $58,000 in bonds of the company,” rather imply than otherwise, that this lot of bonds is to be a part of a larger issue. These terms are referable to the corporate power to issue — 547 — $500,000 of such bonds. They are used in recognition of that power, and import very clearly to our minds, that Long shall receive $58,000 of the bonds which the company may in its discretion issue under that power, whether $250,000 or $500,000, or any other amount the stockholders might deem expedient. There is no hint of bargaining away this valuable and important power in the papers, or of limiting corporate discretion in the exercise of it. It is not said even that Long shall have a first mortgage, or prior lien to secure his bonds. Nor is it stipulated when the bonds shall mature, what rate of interest they shall bear, where they shall be payable, in what denominations they shall be issued, nor whether they shall be secured by a mortgage or a deed of trust. All these matters are left in the discretion of the company. Yet, Long, for aught that appears in the contract, might as well have filed this bill because the bonds authorized were to mature in ten years, or were to bear six per cent, interest, or were to be payable in Birmingham, etc., when he had contemplated their maturity at twenty years, or that they were to bear eight per •cent, interest, or were to be payable in New York, etc., as to now insist that he is under no obligation to take bonds which are a part of a larger issue, which it was clearly within the ■competency and discretion of the company to authorize, issue, and put on the market. We feel no hesitancy in holding this contract to mean, that the corporation would deliver to Long $58,000 in its bonds, •out of, and constituting a part of, any isssue of bonds it might authorize within the limitations of its charter. The issue of $250,000 was within its charter powers; and a delivery of bonds to the face value of $58,000, out of that issue, would have been a full compliance with the contract. The facts alleged as an excuse for pretermitting a demand for the bonds before filing this bill, are wholly inadequate to that end. No default on the part of the company is shown; but, on the contrary, the complainant presents the anomalous attitude of praying an injunction to prevent it from complying with the contract which he affirms they are violating. The 2d, 3d and 4th grounds of demurrer, under the view we have taken of this case, should have been sustained. For ■error committed in overruling them, the decree of the Chancellor is reversed, and the cause remanded. Reversed and remanded.