White v. Western Empire Life Insurance Company

Utah Supreme Court

White v. Western Empire Life Insurance Company

357 P.2d 483, 11 Utah 2d 227, 1960 Utah LEXIS 246

CourtUtah Supreme Court

DecidedDecember 2, 1960

Docket9156

StatusPublished

Cited by8 cases

This text of 357 P.2d 483 (White v. Western Empire Life Insurance Company) is published on Counsel Stack Legal Research, covering Utah Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

White v. Western Empire Life Insurance Company, 357 P.2d 483, 11 Utah 2d 227, 1960 Utah LEXIS 246 (Utah 1960).

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Opinions

HENRIOD, Justice.

Appeal from a judgment for plaintiff in a case tried to the court, for breach of a promise to resell defendant’s stock theretofore sold by defendant’s president to plaintiff. Affirmed with costs to plaintiff.

Negotiations between plaintiff and one Timpson, president of defendant company, culminated in the following letter dated January 3, on defendant’s stationery, addressed to plaintiff:

“This is to certify that any stock that you buy from Western Empire Life Insurance Co. at $60 per share will be sold for you after April 1, 1958, for $120 per share less salesman’s commission at the going rate. Sincerely, A. A. Timpson, President.”

Plaintiff thereupon acquired 60 shares of the defendant’s stock.

Timpson had no express authority to resell stock that he may have sold, although he did have express Board of Directors’ authority to make the original sale. Defendant urges that the trial court erred in finding 1) that Timpson had authority to bind the company to the alleged contract, 2) that plaintiff received no copy of the prospectus, 3) that the contract was not void as a matter of law, and 4) that plaintiff bought 60, rather than 40 shares.

[229]*229Canvassing the points on appeal in reverse, there appears to have been sufficient credible evidence in the record to conclude that plaintiff agreed to and did buy 60 shares; that the contract was not void as a matter of law, since, assuming that the contract could be interpreted as one to purchase the corporation’s own stock, the court found, on substantial evidence, that it would not impair the assets acquired as consideration for sale of shares,¹ in which event repurchases are exempt from the interdiction against corporate purchase of its own shares;² and that plaintiff, who testified that he had not received a prospectus, if believed, justified a finding that he had not seen any prospectus.

Timpson’s authority to bind the corporation to a sale of the stock is conceded. Only question is whether he had implied or ostensible authority to bind the corporation to a promise for the resale of the stock if plaintiff requested it after a three-month period. It is significant that the minutes of the Board, January 3, the same day the letter was written, stated:

“A motion was made * * * that the $60 issue * * * now be withdrawn * * * as of Jan. 6, and that Mr. Timpson seek * * * approval to sell another issue * * * at $120. The motion * * * carried unanimously.”

This could indicate that the offering price was to be upped to $120, the identical figure Timpson had committed the company to resell plaintiff’s shares for three months later. If all this were accomplished, there would be no loss to the company.

It is conceded that if personal property other than stock had been involved, the authorities cited by defendant anent the principal-agent relation would be pertinent. However, sale of securities seems to have been treated differently under those principles. The annotation at 34 A.L.R.2d 515, et seq. points up the majority view that under facts such as we have here, the corporation must accept responsibility for the agreement to resell the securities, on the basis of a binding ostensible authority vested in Timpson.³ Reference to that annotation is made with approval, and it is unnecessary to, repeat its language in this decision.

WADE, J., concurs.

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HENRIOD, Justice.

Appeal from a judgment for plaintiff in a case tried to the court, for breach of a promise to resell defendant’s stock theretofore sold by defendant’s president to plaintiff. Affirmed with costs to plaintiff.

Negotiations between plaintiff and one Timpson, president of defendant company, culminated in the following letter dated January 3, on defendant’s stationery, addressed to plaintiff:

“This is to certify that any stock that you buy from Western Empire Life Insurance Co. at $60 per share will be sold for you after April 1, 1958, for $120 per share less salesman’s commission at the going rate. Sincerely, A. A. Timpson, President.”

Plaintiff thereupon acquired 60 shares of the defendant’s stock.

Timpson had no express authority to resell stock that he may have sold, although he did have express Board of Directors’ authority to make the original sale. Defendant urges that the trial court erred in finding 1) that Timpson had authority to bind the company to the alleged contract, 2) that plaintiff received no copy of the prospectus, 3) that the contract was not void as a matter of law, and 4) that plaintiff bought 60, rather than 40 shares.

[229]*229Canvassing the points on appeal in reverse, there appears to have been sufficient credible evidence in the record to conclude that plaintiff agreed to and did buy 60 shares; that the contract was not void as a matter of law, since, assuming that the contract could be interpreted as one to purchase the corporation’s own stock, the court found, on substantial evidence, that it would not impair the assets acquired as consideration for sale of shares,¹ in which event repurchases are exempt from the interdiction against corporate purchase of its own shares;² and that plaintiff, who testified that he had not received a prospectus, if believed, justified a finding that he had not seen any prospectus.

Timpson’s authority to bind the corporation to a sale of the stock is conceded. Only question is whether he had implied or ostensible authority to bind the corporation to a promise for the resale of the stock if plaintiff requested it after a three-month period. It is significant that the minutes of the Board, January 3, the same day the letter was written, stated:

“A motion was made * * * that the $60 issue * * * now be withdrawn * * * as of Jan. 6, and that Mr. Timpson seek * * * approval to sell another issue * * * at $120. The motion * * * carried unanimously.”

This could indicate that the offering price was to be upped to $120, the identical figure Timpson had committed the company to resell plaintiff’s shares for three months later. If all this were accomplished, there would be no loss to the company.

It is conceded that if personal property other than stock had been involved, the authorities cited by defendant anent the principal-agent relation would be pertinent. However, sale of securities seems to have been treated differently under those principles. The annotation at 34 A.L.R.2d 515, et seq. points up the majority view that under facts such as we have here, the corporation must accept responsibility for the agreement to resell the securities, on the basis of a binding ostensible authority vested in Timpson.³ Reference to that annotation is made with approval, and it is unnecessary to, repeat its language in this decision.

WADE, J., concurs.

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357 P.2d 483, 11 Utah 2d 227, 1960 Utah LEXIS 246, Counsel Stack Legal Research, https://law.counselstack.com/opinion/white-v-western-empire-life-insurance-company-utah-1960.

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