Opinion
No. 4448.
Argued January 4, 1956.
Decided February 7, 1956.
Where the defendant agreed in an alternative contract to repay a loan to the plaintiff by a stipulated date in either cash or corporate stock at the defendant's election, the failure of the defendant to elect to do either by such date did not entitle the plaintiff to thereafter himself choose between the alternatives.
In such case, the plaintiff's damages are measured by the alternative that will result in the smallest recovery.
ASSUMPSIT, to recover for breach of contract. There was a trial by jury and at the close of the plaintiff's case, the defendant's motion for a nonsuit was granted subject to the plaintiff's exception. The agreement upon which the suit is founded reads as follows:
"Milton Mills, N.H., April 10, 1950
"FOR VALUE RECEIVED, I, Agnes T. Hayes of Milton Mills, County of Strafford, State of New Hampshire promise to pay Mr. Burton Walker Five Thousand Dollars ($5,000) on April 5, 1953 with interest at five per cent (5%) from the date hereof payable each year on the anniversary date hereof, or in lieu of the payment of said Five Thousand Dollars ($5,000) and at the election of said Agnes T. Hayes to deliver and transfer to said Mr. Burton Walker in full satisfaction of this obligation Fifty (50) shares of the One Hundred Dollar par, non-cumulative Five per cent (5%) Preferred Stock of Miltonia Mills Corporation, a New Hampshire Corporation.
"The right is reserved by said Agnes T. Hayes to anticipate performance of this obligation in whole or in part by payment of cash and/or delivery of said Preferred Stock.
"There is delivered herewith as collateral security for the performance of this obligation the following described stock, namely: Certificate representing Fifty (50) shares of the One Hundred Dollar par, non-cumulative Five per cent (5%) Preferred Stock of Miltonia Mills Corporation with full authority to have the same transferred on the books of said Corporation to said Burton Walker at his election, upon default in the performance of this obligation by said Agnes T. Hayes, and any transfer so made shall operate to discharge said Agnes T. Hayes from all obligations hereunder, except to pay any interest then due.
/s/ Agnes T. Hayes"
On July 11, 1952, the plaintiff had the defendant served with a writ alleging in the declaration her failure "although requested" to pay interest "and/or the principal thereof" and demanding payment of both. No further action was taken by either party until July 27, 1953, when the defendant sent a communication to the plaintiff, the material portions of which are as follows:
"You are hereby notified that I, Agnes T. Hayes, exercise my right to elect to discharge my promissory obligation to you dated April 5, 1950, by the delivery and transfer to you of fifty shares of the $100. Par Non-cumulative 5% Preferred Stock of Miltonia Mills Corporation, a New Hampshire corporation."
It appears the parties have made arrangements as to the payment of interest which is admittedly due up to the time of transfer of the stock, so we need not consider this item. Further facts appear in the opinion. Reserved and transferred by Wheeler, C. J.
Burns, Calderwood Bryant and Robert E. Hinchey (Mr. Hinchey orally), for the plaintiff.
McLane, Carleton, Graf, Greene Brown and Robert A. Raulerson (Mr. Raulerson orally), for the defendant.
This is an alternative contract (Barker v. Jones, 8 N.H. 413; Restatement, Contracts, ss. 325c, 344 illustrations 1, 2), wherein the defendant has the option to satisfy her obligation by either cash or stock. Under this contract the plaintiff had no right to demand performance of a particular alternative. Restatement, Contracts, s. 325, comment e. As a result his damages are measured by "the alternative that will result in the smallest recovery." Id., s. 344; 5 Williston, Contracts, 3920-3922. However, the plaintiff argues that when the defendant failed to elect on or before April 5, 1953, this gave him the option of choosing, as he has endeavored to do, between the alternatives. The few cases which support such a rule have been criticized as lacking a sound basis (5 Corbin on Contracts, ss. 1079, 1081; Williston, supra, 3922), and are contrary to our well established law that the parties' intention controls. Smart v. Hernandez, 95 N.H. 492, 496. There is no indication in the agreement before us that the parties meant to give the plaintiff the option to choose the alternative and his contention is rejected.
Indisputably, the smallest recovery is the stock which the plaintiff already has, and since there is no claim that the delay in transferring the shares caused him any damage, the order is
Judgment lot the defendant.
All concurred.