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Lawskills.com Georgia Caselaw
COPENHAVER v. UNITED AMERICAN INVESTMENT COMPANY.
36887.
Action on contract. Before Judge Etheridge. Fulton Civil Court. August 13, 1957.
GARDNER, P.
Under the record in this case, the court erred in sustaining the general demurrer and dismissing the petition of the plaintiff.
V. D. Copenhaver brought suit against United American Investment Company, to recover $350 based on a contract executed between the defendant and flee plaintiff. The contract involved was attached to the petition and reads as follows: "State of Georgia, County of Fulton. Option agreement: This contract made and entered into between the United American Investment Company, hereinafter referred to as party of the first part, and V. D. Copenhaver, hereinafter referred to as party of the second part:
"Witnesseth: That whereas the party of the first part has previous to the execution of this agreement employed the party of the second part in the position of agent, for the United American Life Insurance Company one of its subsidiaries, and the party of the second part has agreed to accept such position; and whereas, the party of the second part has paid into the party of the first part one dollar ($1.00), receipt of which is hereby acknowledged:
"Now therefore it is agreed: 1. That the party of the first part does hereby offer to sell 1000 shares of the common stock of the United American Investment Company to the party of the second part at two dollars ($2.00) per share and does hereby grant unto the party of the second part the option to buy the said amount of stock at $2.00 per share.
"2. It is further agreed that said stock may be purchased pursuant to said option only under the terms as hereinafter set forth in this paragraph. (a) Stock options shall be exercisable only in the months of March, April, and May of the years, 1956 to 1965 inclusive. (b) The party of the second part shall be entitled to purchase twenty per cent (20%) of said stock for each calendar year employed by the company and commencing with the signing of this agreement. Employment means in this contract any employment by this company or any of its subsidiaries or successors for which any salary or commission is paid by the company. Termination of employment shall constitute forfeiture of all rights not earned prior to said termination.
"3. It is agreed that the option price as above set forth is at least eighty-five per cent (85%) of the fair market value at the time of the signing of this option agreement, the sale price now being $2.00 per share.
"4. It is further agreed that this contract or any of the rights thereunder are not transferable by the party of the second part other than by will or by laws of descent and distribution and is exercisable during the life-time of the party of the second part by him only. If employment is terminated by death, the entire option will be exercisable immediately and for a period of one (1) year thereafter by the heirs of the party of the second part.
"5. It is further agreed and stipulated that at the time this option is granted that the party of the second part possesses less than ten per cent (10%) of the total combined voting power of all classes of stock of the United American Investment Company.
"7. It is agreed that in the event this option is not exercised by June 1, 1965, that the stock will revert to the treasury of the party of the first part or its successors on that date.
"This contract signed in duplicate this 13th day of January, 1956. "United American Investment Company By s/ Garland T. Byrd (Seal) President Party of the first part s/ V. D. Copenhaver (Seal) Party of the second part "Attest: s/ Pierre Howard Secretary."
The petition, omitting the formal parts, alleges: "3. On January 12, 1956, plaintiff was employed by defendant as an insurance salesman for United American Life Insurance Company, a subsidiary corporation of defendant.
"4. On January 13, 1956, in the City of Atlanta, Fulton County, Georgia, plaintiff and defendant, acting by its duly authorized agent and president, Garland T. Byrd, entered into a stock option agreement which was prepared by defendant. A copy of this agreement is attached hereto as exhibit 'A' and made as fully a part of this petition as if incorporated herein.
"5. Plaintiff has remained in the employ of defendant from January 12, 1956, to and including the date of filing this petition.
"6. Pursuant to said agreement, plaintiff on or about May 1, 1956, exercised his option agreement to purchase 200 shares of common stock of defendant corporation and paid defendant $400; and, pursuant to said agreement, defendant accepted the $400 paid by plaintiff and delivered in May of 1956, 200 shares of common stock of defendant corporation to plaintiff.
"7. On May 1, 1957, plaintiff pursuant to laid option agreement, notified defendant that he was exercising the option to purchase an additional 200 shares of common stock in defendant corporation and on said date plaintiff tendered to defendant $400 in cash, but defendant refused to accept said payment and breached the agreement, informing plaintiff that it would not deliver an additional 200 shares of common stock in defendant corporation to plaintiff on the ground that plaintiff was not then entitled to purchase an additional 200 shares under the option agreement because he had not been employed by United American Investment Company for two full calendar years from January 13, 1956, the date of said agreement.
"8. On May 1, 1957, the date that the defendant breached said agreement, the market value in the City of Atlanta, Georgia, of 200 shares of common stock in defendant corporation was $750.
"9. Defendant by breaching its agreement has damaged plaintiff in the amount of $350, which defendant has refused to pay plaintiff upon demand.
"Wherefore, plaintiff prays that process issue and be seized upon defendant requiring it to be and appear at the next term of court to answer this petition; and, further prays for judgment against the defendant in the amount of $350, plus interest from the date of judgment and the cost of this proceeding."
The defendant filed a general demurrer. The court sustained the general demurrer and dismissed the petition. It is on this judgment that error is assigned here.
J. The contentions of the plaintiff are that the plaintiff, having exercised the option and having purchased 200 shares of stock in May 1956, was entitled to exercise the option and purchase an additional 200 shares in May 1957. In our opinion it seems plain that the plaintiff was entitled to purchase 200 shares of the common stock of the defendant company for and during the months of March, April and May of 1956, and to purchase a like number of shares during the months of March, April and May of 1957 at $2.00 per share, and to purchase a like amount of shares for each calendar year through the year 1965, in the event the plaintiff continued to work for the defendant during those calendar years.
In determining the construction of a contract, the intention of the parties to the contract is to be sought and enforced. The record in this case shows that the defendant construed the contract to mean that the plaintiff was entitled to exercise this option at $2.00 per share throughout the complete term of the contract (of course if the plaintiff continued to work with the defendant). If the defendant had not so interpreted the contract and accepted the payment from the plaintiff in 1956, there might have been some basis for the contentions of the defendant as to the intention of the parties under the contract. However, since the stock increased in market value from May 1956 to May 1957 from $400 for 200 shares to $750 for the same number of shares, (an increase of $350, the amount for which suit is brought), it is very likely the reason the suit is before us. See Asa G. Candler, Inc. v. Georgia Theater Co., 148 Ga. 188 (5) (96 S. E. 226, L. R. A. 1918F 389) wherein the Supreme Court said: "The construction placed upon a covenant in a lease by the parties thereto, as shown by their acts and conduct, is entitled to much weight and may be conclusive upon them." See also Taylor v. Dunaway, 79 Ga. App. 754 (54 S. E. 2d 381). It is well to keep in mind that the defendant prepared the contract.
The defendant contends that since the words "calendar year" were mentioned, and the contract was signed on January 13, 1956, the plaintiff was not entitled to prevail. As hereinabove stated, the defendant did not so construe the contract when the plaintiff purchased the stock in May 1956. It is clear to us that both parties treated the sale of the stock in May 1956 as being for the calendar year 1956. This is true notwithstanding the fact that the plaintiff went to work January 12, 1956.
Considering this whole record, the court erred in sustaining the general demurrer to the petition and dismissing it.
Judgment reversed. Townsend and Carlisle, JJ., concur.
Lewis R. Slaton, Jr., Slaton & Holt, contra.
Willingham, Gortatowsky & Morrison, Julian E. Gortatowsky, for plaintiff in error.
DECIDED SEPTEMBER 16, 1957 -- REHEARING DENIED OCTOBER 25, 1957.
Saturday May 23 01:42 EDT


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