.

Lamm v. Burrell, 69 Md. 275, 14 Atl. 682. To have ignored the pooling agreement

would have been a flat breach of contract and trust, which would meet the condemnation of the court if made without authority.

Fry, Spec. Perf. 187, § 407.

The court ought not to give its aid toward enforcing the specific performance of any speculating engagements.

Perkins v. Wright, 3 Harr. & M'H. 326; Penn v. McCullough, 76 Md. 229, 24 Atl. 424; Fry, Spec. Perf. 308.

As McLane received the certificates in trust he must hold them accordingly, and as the time specified and a transfer demanded, as the element of mutuality is thereby supplied.

d. Fraud.

Specifc performance of the contract may be refused when sought by one by whose fraud the other was induced to enter into the contract.

Thus, Todd v. Diamond State Iron Co. 8 Houst. (Del.) 372, 14 Atl. 27, holds that a contract to sell stock to the secretary of the corporation will not be specifically enforced at his instance where it was, to his knowledge, worth much more than the contract price, and he endeavored to deceive the seller as to its value, and told him that he did not know where he could place it, while he in fact wanted it for himself.

But the contract will be specifically enforced against the purchaser, although he was induced to make the purchase by the false representations of a third person not connected with either party, to the effect that he had paid for the shares, and that the purchaser would merely hold them in trust for him. Wilson v. Keating, 7 Week. Rep. 635, 4 De G. & J. 588, Affirming 28 L. J. Ch. N. S. 895, 5 Jur. N. S. 815, 7 Week. Rep. 484, 27 Beav. 121.

And New England Trust Co. v. Abbott, 162 Mass. 148, 27 L. R. A. 271, 38 N. E. 432, holds that an agreement by a stockholder that on his death his shares shall be appraised by the directors and purchased by the corporation if it so elect, will not be refused specific performance against his executors on the ground that the shares were undervalued, unless the difference In value is so great as to indicate fraud, mistake, or concealment in the nature of fraud.

e. Illegality of contract.

An agreement by one transferring property to a corporation to be organized in return for stock to be issued to him, to transfer a specified amount of such stock to one subscribing for other stock, will not be specifically enforced where the promisee became a director in the corporation after its organization, and as such voted for the transfer of the stock in payment for the property turned over to the corporation. Kos ter v. Pain, 41 App. Div. 443, 58 N. Y. Supp. 865.

Specific performance of a contract for the purchase by one railroad company of the stock of another railroad company will not be refused on the ground that the contract is against public policy. Northern C. R. Co. v. Walworth, 193 Pa. 207, 44 Atl. 253.

The contract must be stated definitely, and the proof must conform to the statement; otherwise performance will be denied. Specific 2 Brantly, Dig. Performance, 1177; Semmes v. Worthington, 38 Md. 298. The contract must be sufficiently certain and definite to make the court confident that the decree will enforce the true agreement of the parties.

Allen v. Burke, 2 Md. Ch. 538.

f. Claim that partnership created. Specific performance of a contract to take shares in a joint-stock company sought against the purchaser was refused in Sheffield Gas Consumers' Co. v. Harrison, 17 Beav. 294, on the ground that it was virtually a contract to become a partner in a partnership.

But in New Brunswick & C. R. & Land Co. v. Muggeridge, 4 Drew. 686, 1 Drew. & S. 363, the court refused to follow the preceding case, and held that such a contract would be specifically enforced, as, though the purchaser could put an end to his liability as a shareholder immediately after becoming such, he could do so only by transferring the shares to someone else.

A similar decision was reached in Oriental Inland Steam Co. v. Briggs, 4 De G. F. & J. 191, 31 L. J. Ch. N. S. 241, 8 Jur. N. S. 201. 5 L. T. N. S. 477, 10 Week. Rep. 125; and in several other cases cited in this note an action for specific performance was maintained against a joint-stock company, without any objection being raised on such ground.

g. Laches or delay of party seeking. Promptness on the part of the one seeking enforcement in performing on his part, and in seeking relief, seems to be especially necessary in this class of contracts, as the value of stock is so subject to fluctuation.

Thus, Doloret v. Rothschild, 1 Sim. & Stu. 590, 2 L. J. Ch. 125, holds that time is of the essence of a contract, as the price of the stock is subject to daily variations in value.

And in Davison v. Davis, 125 U. S. 90, 31 L. ed. 635, 8 Sup. Ct. Rep. 825, Affirming 20 Fed. Rep. 353, specific performance was refused, where suit was not brought until five and a half years after the maturity of the note for the purchase price, during which period the stock had nearly or quite doubled in value.

And Rogers v. Van Nortwick, 87 Wis. 414, 58 N. W. 757, holds that a delay of more than three years in bringing suit to compel the transfer of stock from one who, after agreeing to purchase it for another, took the title in his own name, will prevent relief, where the one for whom the purchase was to have been made possessed such knowledge as would, with reasonable diligence, have led to a disclosure of all the facts, and the stock had in the meantime greatly increased in value.

And Todd v. Diamond State Iron Co. 8 Houst. (Del.) 372, 14 Atl. 27, holds that where the contract provides for a cash payment and the balance within five years, and no payment of any kind has been made, an offer to pay the

Fowler, J., delivered the opinion of the

court:

The bill in this case was filed by Thomas F. Ryan, of New York, against Louis McLane and others, for the specific performance of an alleged contract, and for an injunction to restrain the defendants from parting with, transferring, or encumbering the possession of any certificates of stock held by them, respectively, of the Seaboard Company, a railroad company incorporated and existing under the laws of Virginia and North Carolina. Under powers granted by its charter, this company operates, not only its own line, extending from Portsmouth, Virginia, to Weldon, North Carolina, with several branches connected therewith, but it also controls and operates eight other lines of railroad, the names and lengths and termini of which it is not necessary now to whole sum after the five years have expired, and after the vendor has discovered that the stock is worth much more than the contract price, is not such a tender as will entitle the purchaser to specific performance.

And Wonson v. Fenno, 129 Mass. 410, holds that a sale of stock by a firm will not be specifically enforced after its dissolution against a member who did not know of the sale, where the purchaser might have had the stock transferred on the books of the corporation if he had applied at any time within a month after the contract was executed, but did not apply until six months thereafter, when the firm had no stock left, and its value had increased.

A contract to sell all the stock of a water company cannot be specifically enforced by the purchaser where no specific time for the delivery of the stock was provided for, but a cash payment was required, which the purchaser never made or tendered. Wescott v. Mulvane, 7 C. C. A. 242, 19 U. S. App. 125, 58 Fed. Rep. 305.

In New York v. Passaic Rolling-Mill Co. 30 Fed. Rep. 471, specific performance was denied on the ground that the purchaser waited seven years after a surrender of the agreement was obtained from him before bringing suit, although he claimed that such surrender was obtained by fraud.

In Chilhowie Iron Co. v. Gardiner, 79 Va. 305, specific performance of an agreement to transfer stock for land belonging to the wife of the party seeking was refused where he refused to give a deed when the stock was tendered, and for five years thereafter, and until two years after the corporation had ceased to do business, where it appeared that it was his purpose to obtain the money for the land, and that he did not wish or expect to obtain the stock.

mention; but the bill alleges that, by means of the ownership of its own chartered line and the control of the other corporations just referred to, the Seaboard Company practically owns, controls, and operates a railroad nearly 1,000 miles in length, extending from Norfolk to Atlanta, the total capital stock of which aggregates $6,142,550, and the total bonded debts and rental charges amount to about $16,712,000, while the gross earnings of the whole system for the fiscal year ending June 30, 1898, were officially reported to be $4,011,554.32. In the sixth paragraph of the bill it is alleged that on October 6, 1896, the plaintiff was a stockholder of the Seaboard Company, and had, as was well known to the defendants, entered into contracts to purchase a large amount of such stock; that on the day just mentioned he entered into negotiations with would go to the son, and evidenced such an intention in his will made five years before the suit commenced. Parish v. Parish, 32 Beav. 207.

An agreement to transfer stock if a specified amount is paid at maturity without grace will be specifically enforced, although it is not paid until what would have been the last day of grace, where the maker of the note mistakenly supposed that grace was allowed, and the payee on the day after the note matured treated the matter as if payment was yet to be made, and did not offer to deliver up the note. Todd v. Taft, 7 Allen, 371.

But where the holder of railroad bonds is given therein the option to receive payment in money or stock, the former to be raised by a sale of the latter, he is not entitled to specific performance of the agreement to pay in stock unless he makes known his election to receive such payment on or before the day fixed for payment. Chaffee v. Middlesex R. Co. 146 Mass. 224, 16 N. E. 34.

The above case, however, holds that if he makes known his election within reasonable time on the last day of payment, although after the time the business office of the corporation is usually closed, it is sufficient.

In Ryder v. Bushwick R. Co. 32 N. Y. S. R. 1105, 10 N. Y. Supp. 748, an action for specific performance of certificates entitling the holder to stock in a corporation was held to have been barred by limitation in New York in ten years.

h. Disposal of stock to other persons. The contract will not be specifically enforced if the vendor, because of a previous disposal of the stock to other persons, or from other cause, has no stock to turn over to the purchaser, unless the one to whom the stock was turned over knew the facts, and is made a party to the suit.

ous applications for performance of the contract are made, is not such delay as will prevent relief. Oriental Inland Steam Co. v. Briggs, 4 De G. F. & J. 191, 31 L. J. Ch. N. S. 241, 8 Jur. N. S. 201, 5 L. T. N. S. 477, 10 Week. Rep. 125. And a delay of fourteen years, by a son, in demanding specific performance of an agreement by his father to transfer stock to him, during which time the son received only one dividend, was held not to prevent relief where the father bad stated that on his death the stock

persons.

And an agreement by a corporation to issue a certain number of shares of stock to certain persons assisting in its organization will not be specifically enforced, or any relief given in such an action, when the stock has been issued to other persons, and none remains at the disposal of the corporation. Summerlin v. Fronteriza Silver Min. & Mill. Co. 41 Fed. Rep. 249; Chaffee v. Middlesex R. Co. 146 Mass. 224, 16 N. E. 34.

Memorandum of understanding and agreement between Louis McLane, Moncure Robinson, and Legh R. Watts, committee, parties of the first part, and Thomas F. Ryan, in behalf of himself and associates, party of the second part. Whereas, the parties of the first part are stockholders in the Seaboard sent of the directors, but only a provision that no transfer shall be made except in such manner as the directors shall approve. Poole v. Middleton, 7 Jur. N. S. 1262, 4 L. T. N. S. 631, 9 Week. Rep. 758, 29 Beav. 646.

And in Evans v. Wood, L. R. 5 Eq. 9, 37 L. J. Ch. N. S. 159, and Coles v. Bristowe, L. R. 6 Eq. 149, the fact that the corporation could not or would not, after its insolvency, register the name of the purchaser, was held not to be ground for refusing specific performance against the purchaser in order to relieve the vendor from liability on his stock.

In Shaw v. Fisher, 5 De G. M. & G. 596, 1 Jur. N. S. 1055, 4 Week. Rep. 35, Affirming 1 Jur. N. S. 971, 3 Weck. Rep. 601, specific performance of the contract against the original purchaser was refused because the vendor had transferred to a purchaser from him, receiving the purchase money, thus devesting himself of title, even though the subpurchaser had not been registered so as to relieve the vendor from liability.

For other cases where the liability of the purchaser to complete the purchase in order to indemnify the vendor is considered, see supra, I. f.

An agreement between stockholders of a joint-stock company, that a purchaser of any stock shall not have the right to vote it for a specified time, and that no sale shall be made to one not holding stock without first giving the other stockholders the right to purchase at the price offered by an outsider, will not be specifically enforced so as to compel a sale to other stockholders at the amount for which a sale has been made to a third party, as such a provision is a restraint on alienation. Moses V. Scott, 84 Ala. 608, 4 So. 742.

In Rigg v. Reading & S. W. Street R. Co. 191 Pa. 298, 43 Atl. 212, a person purchased stock for another in h's own name, under an agreement that the purchase was for the mutual interest of both, and that any time the one for whom the purchase was made wished to dispose of the stock it was to come back to the one making the purchase, and that he would not sell to an unfriendly person without first giving such purchaser an opportunity to buy for himself. Such purchaser continued to hold the stock in his own name, and the other, in violation of his agreement, sold the stock to an unfriendly person who knew of the agreement, and that the stock was in such other person's name, and who said that he would take his chances in making the purchase. The court held that under the circumstances specific performance would not be decreed.

The main case holds that one seeking specific performance of a contract for the sale by a committee representing a pool of stock under an agreement known to him, by the terms of which no member should sell or transfer his interest without the consent of the holders of three fourths of the stock, cannot set up the invalidity of the pooling agreement against the contention of the committee that the contract had not been ratified by the holders of three fourths of the stock as required, as the two contracts are so connected that the later one must be deemed to have been made subject to the provisions of the earlier.

A vote by the directors of a corporation offering to distribute new stock to existing stockholders in specified proportions, one third of the purchase price to be paid at the time of subscribing, does not constitute a written contract to sell stock to one not an actual stockholder who had purchased from stockholders the right to subscribe in their place, so as to entitle him to maintain an action for specific performance, under a statute authorizing such an action on any written contract. Sewall v. Eastern R. Co. 9 Cush. 5.

In Chater v. San Francisco Sugar Ref. Co. 19 Cal. 219, three persons agreed to form a corporation, two to contribute money and the other to give his note, the stock to be evenly divided between them, and the latter to pledge his stock to the others as security for his note on which they were to raise money. The note was not given, and the stock was not issued to such third person, and no demand for either was made, but he was recognized by the others as a corporator, and the share coming to him was sufficient to pay his contribution. The court held that he was entitled to specific performance of the agreement to transfer his share to him, the others having waived the right to demand the note and the pledge of the shares as security.

A sale by commissioners of turnpike stock belonging to the state authorized by statute at the time will be enforced against the commissioners, notwithstanding the subsequent repeal of such statute. Baldwin v. Com. 11 Bush, 417.

An agreement to sell stocks in a manufacturing company will not be specifically enforced at the instance of the purchaser, where he has voluntarily surrendered the agreement. York v. Passaic Rolling Mill Co. 30 Fed. Rep. 471.

An agreement to transfer stock as security for a debt will not be specifically enforced after the debtor's death, although it might be enforced as against the debtor or his heirs. City F. Ins. Co. v. Olursted, 33 Conn. 476.