
    Richard W. Beyrich, App’lt, v. Theodore Liebler, Resp’t.
    
      (Supreme Court, General Term, Second Department,
    
    
      Filed December 10, 1888.)
    
    1. Contract—Construction of—Validity of—Corporation—Stock.
    The plaintiff and one S. owned a patent right which they disposed of to the defendant under an agreement by which the defendant was to form a joint-stock company “with a capital stock of $10,000, in 400 shares of twenty-five dollars each.” The agreement further provided “that this company immediately, and not later than ten days after incorporation, issue 3:)2 additional sháres of twenty-five dollars" each, which shall'be understood and considered by said company as paid in full, and 'which shall be given and turned over free of charge to said Richard W. Bey-rich.” Meld, that the agreement was valid; that the additional stock ivas issued to pay for the patent right; that if the defendants failed to frame a charter of the company, so that they could issue said stock, it was no defense to this action, which was for the value of said stock.
    2. Practice—Dismissal of complaint at close of plaintiff’s case— Exceptions to not necessary.
    It is not necessary to take a separate appeal from an order dismissing the complaint such dismissal having been made at the close of the plaintiff's testimony on the trial by jury. It is brought up by the appeal from the judgment.
    Appeal from, a judgment entéred upon an order dismissing the complaint at ''‘the' end of the plaintiff’s testimony, on the trial .of an action before a jury.
    
      L. A. Fuller, for app’lt; Smith & Brown, for resp’t.
   Barnard, P. J.

The agreement upon which this action is based is perfectly fair and was intended by the parties to it to be performed. The evidence is clear that it has not been performed and the only question is whether the nonperformance is excused in any legal way. The plaintiff and one Schmidt owned a patent right for an improvement in waist patterns. The defendants, Liebler and Ballin, weré desirous of manufacturing under this patent, and to that end the patent owner and the defendants entered into the agreement set out in the complaint. The owners of the patent, by this agreement, severed their interests and were to be paid, in different ways for an exclusive right to use the patent. Schmidt was to be employed by a company to be formed for the manufacture and paid a weekly sum, and also was to have a royalty on the manufactured article sold. The plaintiff was to have a certain amount of stock in the new company. The article of agreement provided that a joint-stock company should be formed by the defendants, 1 ‘ wi,th a capital stock of $10,000 in 400 shares of twenty-five dollars each.” This agreement further provides “that said company shall immediately, and not later than ten days after its incorporation, issue 392 additional shares of twenty-five dollars each, which shares shall be understood and considered by said company as paid up in full, and which shall be given and turned over, free of chai’ge, to said Richard. W. Beyrich, of Brooklyn.”

This agreement called for an incorporation which could issue stock legally not only for the $10,000 but also for the $9,800 to Beyrich. The spirit of the agreement is plain. A company should be formed with the right to issue stock for $10,000 cash, and $9,800 for a patent right under which the company is to manufacture. There is no other fair conclusion. There is not the least evidence of fraud or of a desire to influence capital beyond cash or the value of cash _ in property needed and indeed essential to the corporation purposes.

The defendants therefore failed to perform the agreement with plaintiff when they failed to deliver this stock called for by the agreement. The framing of the charter of the company was their act and it is no defense if they did not frame it broad enough to perform their contract.

The judgment should be reversed and a new trial granted, costs to abide event.

Pratt, J.

The contract sued on contains a clause that certain stock shall be issued and given and turned over free of charge to the plaintiff.

Upon that clause it was held at circuit that the contract was in effect that the stock should be issued without consideration to the company, and was therefore void.

There was, however, another clause in the contract that the plaintiff and his joint owner, “in consideration of the performance of the above conditions,” would duly license the company to solely manufacture, etc., under a patent described in the contract.

Taking the whole contract together it did not appear that no consideration was to pass to the company for the stock; on the contrary, the company were to receive an exclusive license.

If that license was of the value of $9,800, that of itself would be full value for the stock. Direct evidence of the value of the license was not given, but it clearly appears that all parties regarded it of great value.

For the contract contained a provision for the benefit of the owner of the other half of the patent, by which, for a similar license, he was to receive a sum not less than $1,200 a year. Without regard to- the possibility of the provision for the co-owner resulting in a larger sum than the minimum guaranteed, $1,200 a year, and assuming, in accordance with the presumptions of law, that the intrinsic value of the stock was its par value, it thus appears that the consideration agreed to be paid to the plaintiff’s co-owner, and which is admitted by the pleadings to have been in fact paid up to the time of trial, was largely in excess of that stipulated for the plaintiff.

The $1,200 a year would, in the life-time of the patent, amount to $20,400, and with the addition of simple interest at the legal rate upon the payments would, in seventeen yéars, amount to $30,192.

If the stock stipulated to be issued to the plaintiff should pay six per cent during seventeen years he would receive in that time $9,996. Simple interest would bring the amount to $14,194, and by adding $9,800, the presumptive value of the stock, plaintiff, at the expiration of the patent, would receive $24,594, being $5,598 less than his co-owner would receive during that time.

This calculation is not needed to show that the dismissal of the complaint was an error. It is enough to say that a consideration which the parties, now adverse to the plaintiff, considered to be worth, and for which they agreed te pay $30,000 in seventeen years, is not one which the court can, at their instance, as a matter of law, declare to be of no value.

If we assume that Schmidt’s half of the patent was worth what defendants are paying for it, Beyrich’s half was worth more than $9,800.

The contract, however, does not provide that the license should be the sole consideration the company were to receive for the stock.

Ballin and Liebler contract with the plaintiff to cause the stock to be issued and to be turned over to him. As to whether the company is to receive any other or further consideration for the stock than the license, the contract is. silent.

If that license was not worth $9,800, then, as the law forbids the issue of stock without the actual receipt by the company of the full face value, Ballin and Liebler,in order to fulfill their contract and give plaintiff the valid stock h.e had a right to demand, would be obliged to make up the difference to the company in cash or its equivalent.

If it be said they did not agree to pay anything for the stock, the answer is, that was not a matter that interested Beyrich and was not a matter there was any occasion for the contract to promise.

To Beyrich it was indifferent how they paid, provided he obtained valid stock. That would satisfy the contract;: nothing else would; for a contract to deliver stock implies that the stock will be valid. The law made it certain that-in companies organized under the act of 1875, the consideration paid must be equivalent to cash, and to recite that requirement in the contract would have been superfluous.

The respondent argued that as one-half of the stock must be issued before the company could be organized, and the other half would be only two hundred shares, there would not be so many as three hundred and ninety-two shares-under the control of the company, and the execution of the contract would, therefore, be impossible.

That objection is answered by the statute which provides-a way in which additional shares can be issued b'y a vote of the company, subscription for the stock, and payment of the amounts prescribed by law.

Ballin and Liebler were to control the company and could have had no difficulty in complying with the requirements of the statute.

They assumed that burden, and Beyrich was to look to them for the stock.

It follows that the contract, not requiring acts in contravention of law, is valid.

Further objection is made that by the contract, the license to the company was to be the joint act of Beyrich and Schmidt, and a joint license is not proved.

The contract does not prescribe that the license shall be joint. Both owners are to license. But the contract does not specify whether they shall both subscribe to a single instrument, or whether separate papers shall, be executed. Nor is that detail a matter of importance.

There is no such defense pleaded as that Schmidt refused to license, and the pleadings admit that he has been paid his agreed royalty and salary. The pleadings also admit that the company has manufactured and sold under the license described in the contract, and the testimony is to the effect that it has been done to a great extent.

The defendants and the company could waive any in-formalities in the license, and, if any existed, apparently have done so.

The testimony shows Beyrich persistently offered to give his license, and the defendants were never ready to receive it. That offer to perform, entitled him to bring his action.

Defendants argue that the proofs do not show any evidence of damage; that the value of the stock would depend largely upon the nature of the company’s assets, of which no evidence is given, and that the jury had no means to determine the value of the stock, had it been issued as the contract required.

The statute provides that the stock could only be issued for cash or its equivalent. It must, at the time of the organization of the company, be worth par; which, is in accordance with the presumption of law, that a chose in action is worth its face. The price paid upon a sale is evidence of value. Crounse v. Fitch, 1 Abb. Ct. App. Dec., 475. And the price defendants gave Schmidt, which would be competent evidence, tends to show that the stock was worth more than its face.

A further objection is made that no separate appeal is taken from the order dismissing the complaint.

Such a dismissal at the close of a plaintiff’s testimony on a trial by jury is not required to be separately appealed from. It is brought up by the appeal from the judgment.

No other objections have been made to the plaintiff’s right to recover. We do not think any of these are well founded.

As the testimony stood when.the plaintiff rested his case; he was entitled to a verdict in his favor for- $9,800, and interest from the time of the breach, December 10, 1885.

The printed case laid before the court does not show any ■exception by plaintiff to the dismissal of the complaint.

Inspection of the original case as filed -by the judge who tried the cause shows that the exception was in fact taken.

The original -record controls; the printed case should be made to conform thereto. Judgment reversed with costs to the plaintiff, and new trial ordered.  