SUBMISSION of a controversy upon an agreed statement of facts, pursuant to section 1279 of the Code of Civil Procedure.
Albert G. Milbank of counsel [Swinburne Hale with him on the brief], Masten & Nichols, attorneys, for the plaintiff.
William R. Begg of counsel [Byrne & Cutcheon, attorneys], for the defendant.
William T. Garner died July 20, 1876, leaving a last will and testament, by which he directed that his executors should continue the business in which he had been theretofore engaged, the income and profits therefrom to be paid in certain proportions to his wife and children. Said business had been conducted under the name 'Garner & Co.,' and he had owned the stock of a number of corporations which manufactured and sold cotton goods, prints and merchandise.
In January, 1899, the defendant was duly organized under the laws of the State of New York for the purpose of carrying on the said business and taking over all of the property of said estate. In 1904, pursuant to authority conferred by special act of the Legislature (Laws of 1899, chap. 39), the corporation, in an action brought for that purpose, was duly appointed administrator with the will annexed of the estate of said Garner, deceased, and trustee under the said will and has since acted as such trustee and administrator.
Since prior to October, 1909, defendant has been engaged in liquidating its affairs, and in said month of October found itself under the necessity of raising without delay upwards of $250,000 in cash. While its assets had a value of $15,000,000 as opposed to liabilities of approximately $5,000,000, exclusive of capital and surplus, nevertheless its resources were not of a character that could be promptly turned into cash to meet its immediate requirements. The president and vice-president applied to the plaintiff, who is a director and the husband of one of the beneficiaries under the will of Garner, and requested a loan of $290,000. The plaintiff then held 15,500 shares of stock in railroad and industrial companies which he had bought and was carrying on a twenty per cent
margin, which the plaintiff believed were then selling considerably below their true value and would in time enjoy a substantial increase in price. He informed the said officers that he was unable to make the loan as requested without disposing of the securities in question and foregoing the opportunity of realizing upon the purchase that he had made. The said officers stated that they were of the opinion that if the plaintiff would sell the aforesaid securities and devote the proceeds of such sale after discharging his obligations incident upon the purchase thereof to the making of a loan to the defendant in the desired amount, the defendant would, in consideration of such loan, agree to pay to the plaintiff the amount of such loan, with interest at five and one-half per centum per annum, and in addition thereto such sum as would represent the rise, if any, in price of the said shares occurring during the interval between the date of the loan and the date of payment thereof, together with the amount of any dividends on the said stocks between the said dates and the cost to plaintiff of making the sale of said shares of stock.
Plaintiff agreed and the board of directors passed a resolution authorizing its officers to make the agreement as proposed.
Plaintiff sold the shares of stock and loaned to the defendant $259,000. By reason of said loan defendant was substantially aided in its credit, and has since that time liquidated its business and is in sound financial condition. This transaction was consummated on October twenty-fifth. On the last day of October, the plaintiff being advised that the stocks which he had disposed of in order to make the said loan were enhancing in value, and being of the opinion that a further rise was likely, suggested to the defendant that unless settlement of the loan were made shortly the loss to it under the aforesaid agreement would be severe. Accordingly the 1st of November, 1909, was set by the parties as the day of settlement, and on that day defendant made and delivered to the plaintiff its promissory demand note for $61,862.50, which was given pursuant to and in settlement of the agreement of October twenty-fifth, and was intended to cover the cost of selling the said stocks and the amount of the rise in their value between the said date and November first
The difference between what the plaintiff actually received for said shares of stock on the day he sold them and what he would have received had he disposed of them on November first was $60,375, and the cost of selling was $1,487.50. The said stocks continued to increase in market value for a considerable period subsequent to November first. Thereafter defendant paid the plaintiff in various installments at its convenience the principal of the said sum loaned, with interest at five and one-half per cent per annum, finally liquidating the same altogether on or about the 25th day of July, 1910. Shortly thereafter the then president of the defendant stated to plaintiff that some question had ...