992 JOHNSON V.-JOHNSON. [188 JOHNSON V. JOHNSON. 4-3384 Opinion delivered February 26, 1934. • 1.. EVIDENCE—WRITTEN CONTRACT—EXTRINSIC EVIDENCE.—The court will not look to extrinsic evidence to discover the reasons for which the sale was made where the contract is not ambiguous. 2. 'CORPORATIONS—SALE OF STOCK.—The purchase of stock held a sufficient consideration for the buyer's promise to pay therefor and for his agreement to resell to the seller upon the happening of a named contingency. 3. CORPORATIONS—SALE OF STOCK.—Retention of stock. by the seller as collateral for a, note evidencing its purchase price held not to prevent the paSsing of the title to, the buyer. 4. CORPORATIONS—SALE OF STOCK—CONSIDERATION.—A contract for sale of corporate stock was not void for lack of mutuality . where the buyer received benefits from ownership of the stock and was entitled to possession of the stock upon payment of the purchase price. 5. CONTRACTS—MUTUALITY.—A contract does not lack mutuality because every obligation of the one party is not met by an equivalent counter obligation of the other party. _ • 6. CONTRACTSCONSIDERATION. -L-While a consideiation is essential to a contract, mutuality of obligation is not, unless the want of mutuality leaves a party without consideration for his promise. Appeal from Clark Chancery Court ; Pratt P. Bacon, Chancellor ; affirmed. MoElhannon ite Callaway, for appellant. 0. A. Featherston and McMillan cE McMillan, for appellee.
JOHNSON V. JOHNSON: 993 'BUTLER, J. -On Teln'uary . 26; 1927, J• R. Johnson, being then the owner -Of $4,000 worth of the capital stock of the Johnson Orchard Company, a corporation, sold the same 'on credit to W. 'S. JohnSon, who on . that day executed and delivered to J. R. Johnson his three promissOry notes for the suni. of $1,333.33, due respectively, one, two and three years after date with 8 per pent. interest until paid. Each note recited that it was in part payment of 'the purchase Money of the capital stock ." according to the terms of the centract made and entered into en this date, in which contract these notes are referred to." That pa.rt of the-'contract ihvOlved, aTter reciting the. execution of the notes, 'proVided "in effect that the purchaser of the 'stock-agreed to resell the same at its par value . to the- seller, 'J: R. JolMson, -up'on a return of the notes,' or, if . any or all 'of tliem-should haVe been-paid, to Make repayment in cash for any Or all of such notes as had been paid'. It was also previded that the resale `.` shall be consUmmated when the debt due. the Pike 'City Orc,hard Company from • the- Johnson *Orchard Company shall have been' fully paid," and' that no additional stock of the 'Johnson. ' Orchard ' ComPany shOuld be issued as would in any way impair the. value" of- the stock involved without the consent of J. R. Johnson.. J. -R. Johhson died in 1.930, 'and appellee, .his widow and administratrix, broUght - this. suit to enforce the payment- of the noteS. On "issue joined testimOhy , Was adduced; and the trial , coukt -found the notes to' be valid and unpaid ; that deferidant was 'entitled to an offset, and rendered: judgment for the , balance. The defendant has appealed and rests . his 'ease on-the'sole ground 'that the notes and contract . ' are void fOr want 'of , mutuality. In support' of this cohtehtion," he argues' that, although he was obligated:to pay:the hoteS-and tbfesefl the stock to J. R. Johhson for the 'same sums at which he pnr-chased . the stodk . it Was left'optional with J. R. Johnson wifethei he Would repurchaSethe same. Appellant points out the fact that the stock was not delivered to him but retained by the seller; and from this contends there was really no sale of the - slock but a , ColOrable., transaction only Made for the' purPose of enabling 'J. R. Johnson to
994 JOHNSON V. JOHNSON. a88 borrow money, the result of which would _be solely-beneficial to J. R. Johnson and without any corresponding benefit to 1;im. At this point it May be said that the testimony of several witnesses was taken for the purpose of showing the reasons for which the sale was made and the contract entered into, but which we do not consider because the contract is miambiguous, and we therefore look only to it to" discover its terms and the intent of the parties. - In support, of the contention of want of mutuality, we are ,cited to a number of decisions of our court which have held that the contracts considered in tho'se cases were void for the reason contended in the case at bar, and especially to the rule as formulated in the case of Grayling Lumber Co. v. Hemingway, 124 Ark. 354, 187 S. W. , 327, as follows ; "It ,is a general principle, in the law of contracts that an agreement entered into between the parties to a contract in order to be binding must be mutual ; and this is especially so when the consideration consists of mutual promises. In such cases, if it appears that the. one _party neyer was bound on his part to do the act which _forms the consideration for the promise of , the other, the agreement is void for want of mutuality." - An examination of those cases discloses _that the doctrine stated was appli-ed because the want of mutuality would leave one party without a valid or available consideration for his promise: Such is not the case in the contract before us. The consideration for appellant's promise to pay was his purchase of the stock with what-•ever advantage which might result to him -thereby, whether great or _small, and is sufficient to support the obligation on his part to resell to his vendor upon the happening of the contingency named in the contract, namely, the payment to the Pike City- Orchard Company of the debt due it by the Johnson Orchard Company. Peterson v. Chase, 115 Wis. 239, 91 N. W. 687; Pyskoty v. Sobusiak, 109 Conn. 593, 145 Atl. 58. The last named case was one where the -seller of the stock agreed that if the purchaser should become dissatisfied he would rebuy it. It was held that the official and financial interest of
ARK.] JOHNSON V. JOHNSON. 995 the seller- in the corporation was such as to afford_ a sufficient consideration for his agreement to repurchase the stock. The fact that the stock was retained by, J. R. John-son and never delivered to the appellant is immaterial. The contract is that the stock was to be held by J. Johnson only as collateral security for the payment of the notes evidencing its inirchase price. As between the .parties, delivery was not .necessary to -vest title 'in the buyer, and title to the stock passed, although it was not delivered to the appellant but remained in the possession of ' the seller. CoStar v. Davies, 8 Ark: 213, 46 Am. Dec. 311 ; Danley v. Rector, 10 Ark. 211, 50 Am. Dec..242. In the instant case the appellant received the:benefit .resulting from the ownership of the -stock and was entitled to the- possession of the certificates of shares upon . the payment of the noteS. The defense Of .want of mutuality has no application exCept where the party alleging it has never received the benefit of the contract on his part and never had the right to enforce it. Coldeleugh v. Johnson,, 34 Ark. 312. In 6 R. C. L., p 689, the rule is thus stated: "A contract does not lack mutuality merely because every obligation of the one party is not met -by an equivalent counter obligation of. the "other party." And on page-686 the author says: . "Consideration is essential; mutuality of obligation.is .not, unless the want of mutuality would leave one party without a valid or . available con-, sideration for. his . promise. The doctrine . of -mutuality of . obligation appears therefore' to be merely one aspect. of the rule that mutual prOmises constitute considerations for each other. Where there is no other consideration for a contract, the mutual promises must -be binding -, on both parties. But where there is any other consideration for the Contract, mutuality of obligation is. not essential. .These principles were referred to with approval by. this court in ihe case of Philyi.ot Const. Co. v. Danaher," 180 _ Ark. 926-37, 23 S. W. (2d) 632, and their application to the cOntract involved in the instant case renders the plea:of want of ' mutuality unavailable, and the trial
court was correct in _so holding. Let the decree be affirmed.
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