Opinion
No. 3863.
March 7, 1950.
Equity will enforce specific performance of an agreement to sell closely held stock not purchasable in the open market and which has been subject to much litigation. An oral agreement to execute a written option for the sale of stock in a corporation is within the policy and scope of the statute of frauds. The fact that the plaintiff executed a written option for the sale of his stock to a third party in reliance upon the defendant's oral agreement to execute a similar option of the stock he held is not such performance as to satisfy the requisite of part payment demanded by the statute of frauds.
BILL IN EQUITY, for the specific performance of an oral agreement between the parties to execute a written option for the sale of shares of stock in a corporation. Plaintiffs' exceptions to the granting of defendant's motion to dismiss and to the denial of the plaintiffs' motion that the grounds for dismissal be stated by the Court were reserved and transferred by Goodnow, C. J.
The petition alleges that the defendant orally agreed with the plaintiff Trefethen to give one Rogers a written option to purchase her 270 shares in the Atlantic Terminal Corporation at $300 per share if the plaintiffs would give the same option for the remaining 230 shares in the corporation. The plaintiffs executed their options to Rogers but the defendant refused to do so. The affairs of the corporation have been in litigation for some time and the defendant, although owning a majority of the stock, is prohibited from voting 92 shares of her stock so long as the plaintiff Trefethen owns any stock in the corporation. Trefethen v. Amazeen, 93 N.H. 110. Other allegations of the petition are stated in the opinion.
Hughes Burns (Mr. Donald R. Bryant orally), for the plaintiffs.
William H. Sleeper and Wayne J. Mullavey (Mr. Mullavey orally), for the defendant.
In the present case the corporate stock was closely held, not available on the open market and was the subject of considerable litigation so that a valid contract related to it would be specifically enforceable. Irwin v. Company, 95 N.H. 20. "There is no doubt that equity will enforce specific performance of an agreement to sell closely held stock not purchasable in the market." Nigro v. Conti, 319 Mass. 480, 484. The case for equitable relief may be more impelling where control of the corporation is at stake. 49 Harv. L. Rev. 122; Waddle v. Cobana, 220 N.Y. 18.
The second argument in support of the motion to dismiss is that the agreement is within the statute of frauds. R. L., c. 200, s. 4. An oral contract for the sale and purchase of stock, if not within other provisions of the Sales Act (Langlois v. Maloney, 95 N.H. 408, 413), is within the express provisions of the statute of frauds. Adams v. Thayer, 85 N.H. 177, 185. While an option is an unilateral contract (Barclay v. Dublin Lake Club, 89 N.H. 87, 89) rather than an agreement to sell or a sale and while options are not specifically mentioned in the statute of frauds relating to choses in action or land, they have been considered within the policy and scope of the statute. McGuirk v. Ward, 115 Vt. 221; Anno. 61 A.L.R. 1454; Leadbetter v. Price, 103 Or. 222. A contract to will personalty is not "a contract to sell . . . goods" in the ordinary use of that statutory phrase (R. L., c. 200, s. 4) yet it is considered within the policy of our statute of frauds. Boyle v. Dudley, 87 N.H. 282.
The plaintiffs would be in no better position if the defendant was considered to have agreed to execute a written memorandum of the oral contract. McCrillis v. Company, 85 N.H. 165. The oral agreement is considered unenforceable by the better view because it is "opposed to the spirit of the act." 2 Williston, Contracts (Rev. ed.) s. 524A, p. 1512; Restatement, Contracts, s. 178.
The execution of written options by the plaintiffs to Rogers is not such performance on their part "as to satisfy the requisite of part payment demanded by" the statute of frauds just as the "making of a will by the plaintiff" in Boyle v. Dudley, 87 N.H. 282, 288, was not considered sufficient to avoid the statute. The agreement between the parties is within the statute of frauds and the dismissal of the petition for specific performance was proper. It is unnecessary to consider defendant's further argument that the failure to make Rogers a party to this proceeding was a sufficient reason for dismissing the petition. Cf. Champollion v. Corbin, 71 N.H. 78; Erickson v. Nesmith, 46 N.H. 371.
Exceptions overruled.
All concurred.