Watkins v. Record Photographing Abstract Co.

Opinion by Mr. Chief Justice Moore. It is maintained by the appellant that the pleadings disclose a cause of action founded upon an express contract whereby the defendant was to deliver its capital stock at par to the plaintiff in settlement of his demand; that the wrong complained of is the nonobservance of the terms of that agreement, thereby limiting the recovery to the market value of such stock at the time of the breach, and, such being the case, an error was committed in construing the complaint as stating a cause of action in assumpsit. This postulate is denied by respondent’s counsel, who asserts that, where a party to an agreement refuses to comply with its terms, the other party thereto, if not himself in fault, may elect to treat the contract as rescinded, and recover what he has paid thereon, in the nature of an action in assumpsit on an implied contract as for money had and received. 1. Our statute relating to the forms of action reads: “The distinction heretofore existing between forms of actions at law is abolished, and hereafter there shall be but one form of action at law, for the enforcement of private rights or the redress of private wrongs”: Section 1, L. O. L. Though the forms have thus been abrogated, the substance of the common-law actions remains: Weber [425] v. Rothchild, 15 Or. 385 (15 Pac. 650, 3 Am. St. Rep. 162); Hornefius v. Wilkinson, 51 Or. 45 (93 Pac. 474); Lee Tung v. Burkhart, 59 Or. 194 (116 Pac. 1066); Van de Wiele v. Garbade, 60 Or. 585 (120 Pac. 752). 2. In discussing the subject of subscriptions for capital stock, a text-writer remarks: “The corporation is bound, upon demand, to deliver to a stockholder a certificate of stock representing his interests in the corporation. If it refuses to issue the certificate, the stockholder may bring suit in equity to compel its issuance, or he may recover of the corporation in assumpsit the value of the stock at the time of the demand”: 1 Cooke, Corp. (7 ed.), § 61. In Swazey v. Choate Mfg. Co., 48 N. H. 200, the plaintiff, having advanced to a corporation money for shares of stock which were not issued to him, rescinded the agreement and brought an action in assumpsit for money had and received, and it was held that a recovery could be had. Mr. Justice Bellows, speaking for the court in deciding the case, observes: “By the terms of the receipt the defendants were to issue to the plaintiff the stock of the corporation to the amount of the $300 paid by him, which, as the case finds, was three shares; and it may fairly be inferred that defendants were to deliver to the plaintiff the proper evidence of the issuing of that stock, that is, the usual certificates. On the refusal of the defendants to issue the stock the plaintiff might maintain a suit on the contract and recover damages for the breach of it, or he might rescind the contract and recover back the money so paid.” So, too, in Kinser v. Cowie, 235 Ill. 383 (85 N. E. 623, 126 Am. St. Rep. 221), it was ruled that a purchaser of shares of stock in a corporation might rescind the contract and recover the purchase money from the vendor when the latter refused to deliver the stock [426] certificate as agreed: See, also, Morgan v. Hendrie, 34 Colo. 25 (81 Pac. 700, 7 Ann. Cas. 935). Mr. Thompson, in his work on the Law of Sales of Stocks and Bonds, 123, 124, in treating of actions in assumpsit, says: “A buyer’s measure of damages against the seller for failure to perform a condition precedent to the sale, on paying the purchase money, is usually the amount of his purchase money.” The rule to be deduced from these authorities is that a party who has advanced money on account of the purchase of corporate stock which is. not delivered to him has a choice of the following remedies: (1) He may, in some jurisdictions, maintain a suit in equity for specific performance, and compel a delivery of the stock; (2) he may treat the executory agreement as subsisting and recover the damages occasioned by the breach; or (3) he may rescind the contract and maintain an action in assumpsit for the recovery of the sum paid as money had and received. The plaintiff herein has proceeded upon the theory of accepting as a rescission of the executory contract the defendant’s failure to issue the certificates of stock, and has adopted the third remedy stated to recover the money and value of services he advanced in payment of his subscription. Several disputed questions of fact were settled by the verdict, and require no consideration. Other assigned errors are deemed immaterial. It follows that the judgment should be affirmed, and it is so ordered. Affirmed.