Gordon v. Swan (1872) · DecisionDepot

Gordon v. Swan

Name: California Superior Court Tentative Rulings
Creator: DecisionDepot
License: https://creativecommons.org/licenses/by-nc/4.0/

California Supreme Court Apr 15, 1872 No. No. 2,468Published

Before: Niles

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Holding. The court held that the defendants were not liable for the installment payments because the contract granted them an option to purchase the mine rather than an absolute obligation to pay, and their failure to pay constituted an election not to purchase.

Issues

Whether the contract imposed an absolute obligation on the defendants to pay the purchase price or merely granted them an option to purchase the mine.
Whether the defendants' failure to pay the first installment rendered them liable for the full purchase price.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The contract contains no obligation on the part of the defendants to purchase the stock. On the contrary, it seems to be clear, from the terms of the instrument, that the purchase should be at defendants’ option.”

“The defendants, by their failure to pay the first installment of the purchase money, exercised their choice, and so lost the privilege of purchase, and forfeited their improvements; but did not become liable for the amount”

Synopsis

Appeal from the District Court of the Fourth Judicial District, City and County of San Francisco.

The stock of the corporation was divided into one thousand shares, of which M. G. Griffith and W. R. Muffley, the assignors of the plaintiff, owned ninety-one and two thirds shares. Stockholders owning about nine hundred and sixty shares signed the contract. The resolution of the Board of Directors authorized the President and Secretary of the mine to deliver possession of the same, and to execute a deed thereof to the defendants. The Court below sustained the demurrer to the complaint, and final judgment was rendered for the defendants, and the plaintiff appealed.

The other facts are stated in the opinion.

By the Court,

Niles, J.: The plaintiff sues as the assignee of Griffith & Muffley of their interest in a contract made between them and a number of other persons, stockholders of the “ Cosumnes Copper Mining Company,” of the one part, and the defendants of the other part. The complaint sets forth the contract [566]in hese verba, and the sufficiency of the complaint must he determined by an inspection of the instrument.

The contract recited that the corporation was the owner of a vein of copper ore; that the parties of the first part were stockholders in the corporation and desirous of selling their respective shares; that the parties of the second part (defendants) were “ desirous of making certain improvements on the said mine, and erecting smelting works for the purpose of reducing the ores of said mine, and of eventually making a purchase of the shares of stock of the parties of the first part and of the mine, if the tests which they shall cause to be made prove satisfactory.”

The stockholders, upon their part, agreed that they would assign their stock to John Sime & Co., to be held by that firm “ in trust, to reassign and return the same to the parties of the first part if the parties of the second part fail to perform their part of this agreement; and if the parties of the second part fulfill their part of this agreement, and pay the money agreed to be paid, then to assign and deliver said certificates of stock to the parties of the second part,” etc.

The defendants, upon their part, agreed to immediately construct a road to the mine, and within a specified time erect a furnace and smelting works for the reduction of the ores.

They further agreed “to pay ” * * * “ to the parties of the first part, by paying the same to the said trustees for them, the sum of fifty thousand dollars at the end of six months from the time this agreement is signed and possession of the mine taken;” and, in similar terms, agreed to make two further payments of fifty thousand dollars each, at intervals of six months.

It was then provided that “if the parties of the second part fail to fulfill any of the agreements herein contained to be by them performed, they shall forfeit whatever improvements they may have made in and about the mine, and all [567]

Gordon v. Swan

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