Proskin, Arnold W

Wieder, Barry L

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Boston College Law ReviewVolume 4 | Issue 2 Article 91-1-1963Article 8: Investment SecuritiesBarry L. WiederArnold W. ProskinFollow this and additional works at: http://lawdigitalcommons.bc.edu/bclrPart of the Securities Law CommonsThis Uniform Commercial Code Commentary is brought to you for free and open access by the Law Journals at Digital Commons @ Boston CollegeLaw School. It has been accepted for inclusion in Boston College Law Review by an authorized administrator of Digital Commons @ Boston CollegeLaw School. For more information, please contact nick.szydlowski@bc.edu.Recommended CitationBarry L. Wieder and Arnold W. Proskin, Article 8: Investment Securities, 4 B.C.L. Rev. 353 (1963),http://lawdigitalcommons.bc.edu/bclr/vol4/iss2/9UNIFORM COMMERCIAL CODE ANNOTATIONSment and items are made available to the customer (subsection (1)) discoverand report his unauthorized signature or any alteration on the face or backof the item or does not within three years from that time discover and reportany unauthorized indorsement is precluded from asserting against the banksuch unauthorized signature or indorsement or such alteration.(5) If under this section a payor bank has a valid defense against aclaim of a customer upon or resulting from payment of an item and waivesor fails upon request to assert the defense the bank may not assert againstany collecting bank or other prior party presenting or transferring the itema claim based upon the unauthorized signature or alteration giving rise tothe customer's claim.Stone & Webster Eng'r Corp. v. First Nat'l Bank & Trust Co. of Green-field, — Mass. —, 184 N.E.2d 358 (1962).See case note, infra, for a summary and full discussion of this case.ARTICLE 8: INVESTMENT SECURITIESSECTION 8-319. Statute of Frauds.A contract for the sale of securities is not enforceable by way of actionor defense unless(a) there is some writing signed by the party against whom enforce-ment is sought or by his authorized agent or broker sufficient to indicatethat a contract has been made for sale of a stated quantity of describedsecurities at a defined or stated price; or(b) delivery of the security has been accepted or payment hasbeen made but the contract is enforceable under this provision only to theextent of such delivery or payment; or(c) within a reasonable time a writing in confirmation of the saleor purchase and sufficient against the sender under paragraph (a) has beenreceived by the party against whom enforcement is sought and he has failedto send written objection to its contents within ten days after its receipt; or(d) the party against whom enforcement is sought admits in hispleading, testimony or otherwise in court that a contract was made forsale of a stated quantity of described securities at a defined or stated price.Kessler v. Green Co., 28 Pa. D. & C.2d 186 (1962).Defendant made an oral contract with plaintiff whereby the latteragreed to exert his best efforts to promote and obtain a public offering ofdefendant corporation's stock. As consideration for plaintiff's work,he was to receive an option to purchase 7,500 shares of defendantcorporation's stock at the book value as of the date plaintiff secured abroker ready, willing and able to handle a public sale of the securities.Plaintiff secured such a broker, and defendant refused to consummate anunderwriting agreement with him and refused to give the purchase op-tion to defendant. Plaintiff brought suit in equity for specific perform-ance of the oral contract. Defendant alleged that plaintiff's suit wasbarred by the Statute of Frauds.353BOSTON COLLEGE INDUSTRIAL AND COMMERCIAL LAW REVIEWThe court held that the Statute of Frauds which pertained to in-vestment securities did bar plaintiff's suit. Section 8-319. Had therebeen delivery, payment, confirmation or an admission of the sale, thecontract would have been enforceable, but under these facts, it had tobe in writing to be so.[Annotator's Comment: The Statute of Frauds in Section 8-319is similar in content to the Statute of Frauds for sales of goods inSection 2-201. In a case which involved a contract analogous to theone in the instant case, the Federal District Court in Pennsylvania heldSection 2-201 did not bar enforcement of the contract for it was anemployment contract and fully performed by the aggrieved party. Stonev. Krylon, Inc., 141 F. Supp. 785 (E.D. Pa. 1956). In this case, thecourt could have construed the contract as an employment contractwith full performance by plaintiff which would place the contract out-side the scope of Section 8-319, and it would be therefore enforceable.The court's other alternative would have been to find that the partieshad entered into two separate contracts: the first was plaintiff's ob-taining a selling agent in consideration for defendant's giving plaintiffan option to purchase stock; the option (agreement to transfer theshares) would be the second. Under this construction there would belittle doubt that if plaintiff could prove his allegations, the contractwould not be unenforceable because of either Section 8-319 or Section2-201. The option itself would not be involved in the action.From the facts it also seems that plaintiff had alleged that full pay-ment was made to defendant in the form of services rather than moneywhich satisfied the performance exception to the requirement of a writ-ing under Section 8-319(b). Plaintiff would be entitled to specificperformance of the contract if he could prove his allegation.]ARTICLE 9: SECURED TRANSACTIONS; SALES OF ACCOUNTS,CONTRACT RIGHTS AND CHATTEL PAPERSECTION 9-103. Accounts, Contract Rights, General Intangibles andEquipment Relating to Another Jurisdiction; andIncoming Goods Already Subject to a Security In-terest.(3) If personal property other than that governed by subsections (1)and (2) is already subject to a security interest when it is brought into thisstate, the validity of the security interest in this state is to be determinedby the law (including the conflict of laws rules) of the jurisdiction wherethe property was when the security interest attached. However, if theparties to the transaction understood at the time that the security interestattached that the property would be kept in this state and it was broughtinto this state within 30 days after the security interest attached for pur-poses other than transportation through this state, then the validity of thesecurity interest in this state is to be determined by the law of this state.If the security , interest was already perfected under the law of the juris-354

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