Bacon v. Grossmann (71 A.D. 574, 1902)

O’Brien, J.:

The issue presented by the pleadings was whether the agreement •of settlement of April 9, 1895, between Lee, Higginson & Co. and the defendant gave to plaintiff’s assignor the right to receive from the General Electric Company the benefits of the agreement of November 8, 1893, and to any moneys which might be paid thereunder.

The shares were transferred “subject * * * to an agreement * * * dated November 8, 1893, concerning such preferred shares ; ” and thus it appears that both parties were entirely familiar with the agreement made with the General Electric Company and the limitations .imposed' that no more than sixty-five dollars per share should be received and the benefit that might accrue by the, payment of ten dollars a share by that company, Can it be said that the parties intended this stock to be transferred with the limitation imposed by the agreement that no more than sixty-five dollars per share should be received thereon and with the benefit of the ten-dollar share reserved to the defendant ? The words used-are “ subject to,” but did not this mean subject- to the receipt of-benefits as well as the imposition of limitations ? What is the ordinary meaning to attach to the words “ subject to ? ” Is it not that it is subject to something which impairs its value ? The provision that the General Electric Company was to get all over sixty-five-dollars per share with the accompanying guaranty of ten dollars; per share may have been regarded as a cloud upon the full title- to the stock. Although,, therefore, the transfer was “ subject to ” the agreement, it gave to the transferee the benefits, as well as it. imposed the disadvantages, provided -for in that agreement.

That seems the reasonable interpretation, and from the correspondence admitted on the trial it is conclusively shown that this was the. interpretation which the defendant himself adopted. . Thus, he replied to the General Electric Company on November 27,, 1895,, after receipt of the money, as follows : “ I beg to say that as I no-longer hold the shares I cannot sign the papers you mention and that I am holding the proceeds of the check for the benefit of Whom it may concern.” And thereafter he wrote the same comr pany, in reply to their repeated request for return of check, that-“I am * * * advised that I have, under the circumstances no-right to. deliver the amount except to the present holders of the stock and on his presentation of same to me for indorsement of the-amount. * * * Since the holder of the stock has all -this time-not claimed -the amount, I am furthermore led to believe that for-reasons resulting from, legal complications he has decided' to relinquish his claim in my favor.” Thereafter defendant, acting on advice of his attorneys, refused upon demand to deliver the money to plaintiff.

The circumstances under which the settlement agreement was made are also shown by the correspondence and by the testimony ; and that there was more than a .mere assignment of shares clearly appears. The evidence is that prior to April, 1895, the defendant received from- Lee, Higginson & Co. these same 310 shares of Northwest General Electric Company, giving in exchange 200 shares of General Electric Company and the sum of $11,300. Thereafter, when the affairs of the Northwest General Electric Company were seen to be in bad shape and negotiations with the General Electric Company began, resulting in the- agreement of November 8, 1893, the defendant made claims against Lee, Higginson