majority">Per Curiam.

This action arises out of a contract entered into between the parties on October 28, 1957. By such contract the plaintiff transferred all of Ms stock (unregistered) in Spear & Co. to the defendant as the u sole and absolute owner ” subject, however, to a continued interest of the plaintiff in such stock. Such interest consisted of a right to % of any dividends declared on such stock and in the event the stock should be sold to % of *250the net proceeds from the sale or sales, after defendant shall have recouped advancements made by him, pursuant to the contract.

The stock so transferred was referred to as the “ Spear Equity ” and it will be so referred to hereinafter. The agreement between the parties provided for the satisfaction by the defendant of the outstanding liens and judgments. Under the terms of the contract, if the defendant desired to sell any of the stock he was required to submit written evidence of a bona fide purchase offer to the plaintiff, who had the right and option to purchase the shares upon the terms set forth in the offer.

At the time the contract was made the defendant was the owner of a large block of Spear & Co. stock which he held in his own name. Subsequent to the making of the contract the defendant sold large blocks of Spear & Co. stock. Certain of the shares sold are conceded to be those of the “ Spear Equity ”, while other shares that were sold were those that originally belonged to the defendant. Together, they amounted to more than the 793,808 shares delivered by the plaintiff to defendant under the terms of the contract. Except with respect to one sale, no prior notice of the sales was given to the plaintiff, as required by the contract.

In this accounting proceeding the plaintiff seeks to hold the defendant accountable to him for the value of the entire 793,808 shares of common stock of Spear & Co., transferred by him to defendant.

Stripped of the several peripheral issues involved, the basic question in this case is whether the defendant was obliged, if and when he did sell any Spear & Co. stock, to first sell that which was given to him by the plaintiff. The trial court held defendant chargeable as though he had sold all of the ‘ ‘ Spear Equity ’ ’.

Arty fair reading of the contract imports a duty upon the defendant, if he did sell any Spear & Co. stock, to first sell the “Spear Equity!’. We hold this obligation to be implicit in the contract despite the fact that defendant was not a fiduciary, as we have previously determined. (Kaminsky v. Kahn, 23 A D 2d 231.)

To hold otherwise would allow the defendant to sell.his own shares whenever the market was high, and to sell the “ Spear Equity ” shares whenever the market was low. Moreover, such a holding would allow the defendant to disregard completely the plaintiff’s interest in the stock transferred, and would permit the defendant to trade in Spear & Co., generally, at will, retaining for himself any profit accruing.

*251Inasmuch as defendant did sell Spear & Co. stock in an amount greater than that given him by the plaintiff, it was proper to hold defendant accountable for sales of Spear & Co. stock up to the entire amount received by him from the plaintiff.

However, it is our opinion that Trial Term applied an improper measure in fixing the amount with which the defendant was chargeable. Because the defendant violated the option agreement contained in the contract, the court held him accountable for the market price, less what it would cost to register the stock. In the context of this case, such measure was improper. The testimony showed that the sale of unregistered stock, such as here involved, is worth about 30 to 60% less than registered stock traded on the exchange. A comparison of the price which this stock sold for on the exchange with the actual price received by the defendant in his several sales, reveals that the sales price was just about 30% less than the market. This conforms to the testimony as to the value of unregistered stock. Therefore, we charge the defendant only with the sales price, and the judgment should, accordingly, be modified to reduce the award to $321,152.93, with interest, such amount reflecting the actual sales price received by the defendant, as determined by Trial Term.

Other questions are raised, but only several need be mentioned. Trial Term found that, as to 100,000 shares which were sold to Satnick & Go., the option notice given pursuant to the contract was defective and, therefore, charged defendant for the market price, less cost to register. While the question as to whether the option agreement was complied with need not be determined in view of our holding that the defendant is accountable only for the sales price, we do hold, as does the entire court, that the notice given was sufficient and complied with the requirements of the contract.

The defendant also questions Trial Term’s determination charging him for the sale of Spear & Go. stock, owned by AemeHamilton Corporation. The amount of shares involved is 77,785. If we were to exclude these sales from the amount of approximately 850,000 shares of Spear & Go., which the trial court found defendant sold, then the defendant would be accountable to the plaintiff for approximately 772,215 shares (850,000 minus 77,785) instead of the 793,808. However, we hold that it was proper to charge the defendant with the sale of stock owned by Acme-Hamilton. Trial Term found that that corporation was controlled by defendant and was his alter ego. The finding is supported by the evidence.

*252Finally, defendant argues that he should be awarded interest which he asserts he had to pay on money he borrowed to pay the judgment owing to Southern Bedding. This is the only expense which defendant puts in issue as not having been awarded to him by the trial court. He is not entitled to repayment of such interest because the contract expressly provides that defendant is to be credited for 1 ‘ all sums paid by [him] to Southern under the Southern Agreement, without* [him] charging interest.”

Accordingly, the judgment dated March 22, 1966 should be modified on the law and on the facts to reduce the amount awarded in the judgment to the sum of $321,152.93, with interest at the rate of 6% per annum from August 4, 1960 to the date of entry of judgment, and as so modified, the judgment should be affirmed, without costs or disbursements to either party.

Settle order on notice, including proposed modified findings of fact and conclusions of law.

Emphasis ours.

Citation profile

How this case has been treated — in progress