8 N.Y.S. 834 | N.Y. Sup. Ct. | 1890
Lead Opinion
In the statement of facts upon which the legal questions which are to be discussed arose it will not be necessary to advert to but a few of those found by the referee. This action was brought to recover $200,000, with interest from the 16th of May, 1872, as damages for the breach of a contract dated the 26th day of March, 1872, made by Joseph Seligman and George H. Brown with the plaintiff in the following language:
“Oliver W. Barnes having, by instruments bearing even date herewith, assigned and transferred to us, George H. Brown and Joseph Seligman, all claims and demands against the New York City Central Underground Railway Company, and his title to certain subscriptions to the capital stock of said company, and also any interest he may have in a certain alleged contract made with the said company by Francis P. Byrne, and having also transferred sixty shares of stock in said company: Now we, George H. Brown and Joseph Seligman, do hereby, in consideration of the premises, and of one dollar to us paid by the said Oliver W. Barnes, agree that we will, upon certain amendments to the charter of the said New York City Central Underground Railway Company, now pending before the legislature of the state of New York, becoming a law, pay, or cause to be paid, to the said Oliver W. Barnes, his representatives and assigns, the sum of twenty-seven thousand ñve hundred dollars in currency of the United States, being the amount of certain advances made, and services rendered, by the said Barnes to the said railway company. And also that we will cause to be delivered to the said Barnes, or his assigns, at the time of the payment of the said money, two thousand shares of the capital stock of the said railway company, which said stock is to be full-paid stock. And we further agree with the said Oliver W. Barnes, his representatives and assigns, that, in the event of the said amendments not becoming a law at the present session of the legislature, we will either cause said money to be paid, and said two thousand shares of stock delivered, to the said Barnes, or his assigns, or have reassigned to the said Barnes, or his assigns, the claims, demands, and rights so assigned to us, and transfer to him, or his assigns, the said sixty shares of stock so transferred to us, the next day after the close of the present session of the legislature of New York. And we further agree that not more than one hundred additional shares of the stock of said company shall be issued until the said payment be made and stock delivered without the consent of the said Barnes, and that so much of said one hundred shares as shall be issued shall be transferred to the said Barnes, if we do not exercise our option of paying said twenty-seven thousand five hundred dollars, and delivering said two thousand shares, on the failure of the said amendments to become a law at the present session. And we further agree that no contract for the construction of the railway of the company shall be entered into without the consent of the said Barnes, until the said money shall be paid and the*836 stock delivered. In witness whereof we have hereunto set our hands and seals this twenty-sixth day of March, in the year one thousand eight hundred and seventy-two. George H. Brown. [Seal.]
“Joseph Seligman. [Seal.]”
Prior to and at the time of making said contract the said plaintiff owned, and had claims and demands against, the New York Central Underground ¡Railway Company, and a title to certain subscriptions to the capital stock of said company, and an interest in a contract made by one Byrne, and 60 shares of the capital stock of said company. At the date of the contract only 117 shares of the capital stock of the company had been paid in or issued, of which the plaintiff held 63 shares. On the day of the date of the contract 100 additional shares were issued, and no further or other issues of full-paid stock were ever made. The plaintiff performed the said contract on his part to che satisfaction of said Joseph Seligman and George H. Brown, and duly trans-, ferred the property mentioned in said contract. The amendments to the charter of said company, referred to in said contract, did not become a law at the session of the legislature mentioned in said contract, and the said session closed and adjourned sine die on or about the 14th of May, 1872. Neither Brown nor Seligman either reassigned, or caused to be reassigned or retransferred, to the plaintiff, or to any person on his behalf, the claims, demands, and rights assigned to them by said agreement of March 26, 1872, or have transferred to him or his assigns the said 60 shares of stock transferred to them, or any part of said property, or made any offer so to do. On the second day after the adjournment of the legislature, the plaintiff demanded from Seligman and Brown the payment-of the cash and delivery of the stock which said contract called for. Brown and Seligman, notwithstanding the failure of the passage of the proposed amendments to the charter, elected to keep the property transferred to them by the plaintiff, and to perform their contract with the plaintiff, and they subsequently paid to the plaintiff the sum of $27,-500, mentioned on said contract. But they never delivered, or offered to deliver, the 2,000 shares of full-paid stock mentioned in the contract. The referee found that the plaintiff had sustained no actual damage by the failure of Brown and Seligman to deliver to him the 2,000 shares of said stock, such finding being based upon proof that the stock had no actual value. He also found that the complaint should be dismissed as to the executors of Seligman, in that the action was commenced after the death of Joseph Seligman, against his executors, and the complaint did not contain any allegation of the insolvency of Brown. He further found that the plaintiff was entitled to judgment, against the defendant Brown for nominal damages, six cents. Upon application orders were made granting extra allowances, and from the judgment and orders thus made this appeal is taken.
The appellant founds his appeal upon the claim that the learned referee-erred in the measure of the plaintiff’s damages, and this is the most important question involved. There is no dispute about the main facts of the ease. The plaintiff and the defendant Brown and Seligman entered into the contract to which attention has been called. The plaintiff performed his part of the contract, and assigned the property therein mentioned to Brown and Seligman, as therein required to do. Brown and Seligman accepted this property, and, after it had been ascertained that the amendments which were then pending before the legislature, and referred to in the contract, had not been passed, elected to keep to keep that property, and perform the contract upon their part, and paid the plaintiff $27,500 in cash, by the contract required to be paid. They attempted to deliver to the plaintiff the stock provided for in the contract, but this stock was not of the character required by the contract to be delivered to him,—namely, it was not full-paid stock,—-which the plaintiff, upon discovery of the fact, tendered back to them, demanding the full-paid shares to which he was entitled under the contract. It was also proven that.
It appears from the evidence in the case at bar that the only way in which this stock could be procured was by payment of the face value of that stock into the treasury of the company, and causing it to be issued by the corporation. There was no way in which the plaintiff could get possession of the 2,000 shares of stock which Brown and Seligman had agreed to give him, except by paying $200,000 into the treasury of the company, and causing the stock to be issued; and there was no other way in which Brown and Seligman could procure that stock for the purpose of carrying out the provisions of their contract. 27ofv, under the principles to which attention has been called, the measure of damages is the amount of money which it would take the plaintiff to put himself in the condition he would have occupied had the contract
Our attention is called, in support of the proposition made by the defendants, to" the case of Kirschmann v. Lediard, 61 Barb. 573. In that case the defendant had agreed to organize a stock company for the manufacture of articles, under letters patent owned by plaintiff. The plaintiff agreed to transfer the letters to the company when formed, and he was to receive therefor from the defendant some cash and $50,000 in the capital stock of said company. The defendant failed to organize the company, and plaintiff sued for damages. The court directed a verdict for the plaintiff for $50,000, the nominal par value of said stock. This was overruled by the general term. “The plaintiff,” the court said, “was entitled to damages for a breach of the contract. The amount depended on the value of the stock after the corporation was formed,, to be proven by showing what sucii value would have been if the company had been formed, taking into consideration the property that was to be transferred, and also the fact that, by the breach of the contract, the plaintiff was released from the obligation to transfer the property. It may be that the stock would have been valuable, or it may be that the damages would be only nominal.” It is apparent, upon a consideration of the facts in the ease cited and those in the case at bar, that it is no authority for the proposition claimed upon the part of the defendant. In the case cited nothing had been done under the contract. The plaintiff had his property, and the defendant had not organized the company, and the question of damage was affected by the fact that the plaintiff was released from the obligation to transfer the property. In the case at bar the plaintiff had transferred the property. The defendants had it, and, when they had an oppoitunity to return it, refused to do so, preferring to confirm their contract,—an entirely different condition of affairs, even if the case of Kirschmann v. Lediard is to be considered as an authority upon this proposition as
It is only necessary to call attention to the principles laid down in the case of Bruce v. Welch, 5 N. Y. Supp. 668, where it is distinctly held that good morals certainly forbid that a man should be allowed to derive benefit from a violation of his obligations to others; and the question is asked: “Does the law permit a wrong-doer to retain to himself advantages thus gained as against the person whom he has wronged?” In the case at bar the adoption of any other rule of damages would enable these defendants to keep the property which had been transferred to them without paying a cent for it, because the payment of the $27,500 has nothing to do with the question now under consideration. Their rights would have been precisely the same had no such sum been mentioned in the contract, and they had not been required to pay the same. Entirely in harmony with this proposition is the case of Johnson v. Hathorn, 2 Abb. Dec. 465. It seems to us that the only rule which can be adopted, as applicable to eases of this description, is that the damage which the party sustains by reason of the breach of that contract, if the property has a market price, is the market price for the property; or, if it has no market price, what it would cost to procure the same, if it was possible to do so. Any other rule of damages would relegate us to the realms of speculation alone. There would be no certainty, and it would be a violation of the rule to which attention has been called, viz., that the law will not allow a party to make a profit out of the violation of his contract to deliver certain articles which he is able to procure, but which he says' would be expensive for him to procure, and which, if he had procured them, would not have been of any use to the other contracting party. Of what avail the ownership of that stock would have been to the plaintiff we are not aware. It may have been of value to him outside of the mere question of market value. He may have had projects for the successful prosecution of which the ownership of this stock was necessary; and is it to be said that where a man bargains for a particular piece of property, which he deems is absolutely necessary for himself, but which may be worthless for anybody else, that he has no remedy because that piece of property, however valuable to himself, is worthless to others? We think, therefore, that an entirely erroneous rule was adopted as to the measure of damages, and that the proof as to what the plaintiff could have sold this property for was entirely immaterial. If it had no market value,—if it was not to be procured in the open market,—then what it would have cost to procure it seems to have been the only rational rule which could be adopted.
Another question which is involved is the referee’s ruling dismissing the complaint as to the executors of Seligman. Seligman had died before the action was commenced, and the suit was brought against Brown and the executors of Seligman, without any allegation whatever as to the insolvency of Brown. It seems to us that the want of this allegation was fatal to the right of the plaintiff to recover as against the executors of Seligman. The contract sued upon was a joint obligation. It is clearly so from its language: and the general rule which prevails in reference to a contract is that, if several persons agree to perform a particular act, they are bound jointly, and not severally, in the absence of express words creating a several liability. This being
It is urged, however, upon the part of the appellant, that, there never having been any demurrer in this case, it has been held sufficient to prove the survivor’s insolvency at the trial, in which case the complaint should be amended to conform to the facts proved. It is a familiar rule that a complaint cannot be amended to conform to the facts proved where an objection has been taken in time to the proving of the fact, because of the insufficiency of the pleading; and the cases of Van Riper v. Poppenhausen, 43 N. Y. 68; Bank v. Morgan, 73 N. Y. 593; and Pope v. Cole, 55 N. Y. 124,—in no way conflict with this proposition. The questions decided in those cases were that, where proof was given of the insolvency under proper averments, a recovery might be had against the representatives of the deceased partner.
It is further sought by the appellant to limit this doctrine to cases of partnership contracts. But we see no reason for the limitation. In fact in the case of Pope v. Cole the contrary doctrine is expressly recognized, although perhaps the question was not involved in the case. But the principles upon which those cases proceed, and the right to pursue the personal representatives rests, certainly make no such distinction as is claimed by the learned counsel; and that there is no distinction between the cases is apparent from the fact that it is not a legal right which is attempted to be enforced, but an equitable one. It was because equity intervened for the purpose of relieving from the hardship which arose by the discharge of the estate of a joint obligor who died, that any right of recovery whatever exists; and, in order that the hardship should exist, it is necessary that the impossibility of collecting the debt from the surviving obligor should appear. And hence arises the rule that, upon showing the insolvency of the surviving obligor, the estate of the deceased obligor may be called upon to pay. It being thus an equitable right simply which is enforced, the right to recover does not depend upon a question of partnership, but simply upon the fact that in law the estate of the joint obligor is discharged upon his death from any obligation under the contract; We think that, without the allegations as to the insolvency of Brown, it is clear that no action could be maintained against the estate of Seligman. The sections of the Code to which attention has been called do not seem to apply to the question here, this action being brought against a survivor of two joint obligors and the representatives of one who is dead.
The question is also raised as to the refusal of the referee to allow the complaint to be amended. It is claimed by the counsel for the appellant that the referee refused to amend, upon the ground that it was immaterial, and then excluded the evidence offered, because such an allegation was not contained in the complaint. An examination of the record, however, does not support this proposition. It does not appear upon what ground the referee refused permission to amend. It is true that the amendment was objected to upon various grounds, among which was that it was wholly immaterial. The motion to amend was denied, and the objection sustained, and an exception taken; but upon what ground the motion was denied does not appear. The referee states in his opinion that he deemed it as a matter of dhcretion, and there is nothing in the record which controverts this proposition. We do not think, under the circumstances, that the referee was bound to allow this amendment upon the trial. If the parties desired to make a more formal application than could be made upon the trial, they had the opportunity to resort to the court, when the court could impose such conditions upon the allowance of the amend
There are also appeals from the orders granting extra allowances in this case. An extra allowance of $1,000 was granted to each of the defendants. Of course this order must fall with the reversal of the judgment as to the defendant Brown, and we think that, in view of the circumstances of this case, such allowance as to the defendants Seligman was improvidently granted. The defendants Seligman had an opportunity to raise by demurrer the objection which they did raise on the trial. They neglected so to do, preferring to go on and raise the objection upon the trial. They should not be allowed, in view of this condition of affairs, to get more costs, which are within the discretion of the court, than they would have got had they interposed a demurrer. We think, therefore, that the order granting them an extra allowance should be reversed, with $10 costs to the appellants, and that the judgment in favor of the defendants Seligman should be reduced to the sum of $1,361.51, and affirmed for that amount, without costs, and that the judgment as to the defendant Brown should be reversed, and a new trial ordered, with costs to appellant to abide the event.
Concurrence Opinion
(concurring.) It is not deemed absolutely necessary to add anything further for the disposition of this appeal to the reasons assigned by the presiding justice, whose opinion has concluded for the reversal of the judgment affecting the right of the plaintiff to maintain the action. But some further observations are deemed to be appropriate for the purpose of sustaining one of the conclusions which in that opinion has been reached. As to the disposition of so much of the principal appeal as relates to the liability of the executors, nothing further is designed to be stated. But the more important feature of the litigation is that which includes the plaintiff’s right to substantial damages for the non-performance of the agreement or covenant made with him by the defendant Brown and Joseph Seligman, the testator. When this agreement was made, the plaintiff was the president of the Hew York City Underground Railway Company, and prior to that time he owned and had claims against the-company, and a title to subscriptions to its capital stock, and an interest in a contract made with Francis P. Byrne, and owned 60 odd shares of the capital stock of the company. These interests the defendant Brown and the testator were desirous of acquiring, and the object of their transaction with the plaintiff was their assignment and transfer to them. At the time when the agreement was entered into, there had been issued no more than 117 shares of the stock of the company. Other shares had been subscribed for, not exceeding 60 in number, and the defendant Brown and the testator were familiar with and informed of the affairs of the company prior to the making of this contract, and they then knew the fact to be that no more than 117 shares of the stock of the company had been issued, and that the stock subscribed for and not issued did not exceed 60 shares. It was in this condition of the affairs of the company, known to the defendant and the testator, that the contract was entered into by them with the plaintiff; and its construction and effect accordingly are to be ascertained, as far as they may be affected by these circumstances, with this knowledge •existing in the minds of the defendant Brown and the testator. It was in consideration of the assignment and transfer of the interests and the 60 shares of stock already mentioned to them by the plaintiff that their agreement, which is the foundation of the action, was made and entered into. At that
The bill containing these amendments did not become a law, but it was rejected by the legislature. The defendant Brown and the testator did not, however, on that account, transfer back to the plaintiff the rights and interests acquired through the assignment from him, or the 60 shares of stock received by them, but they elected, as they were entitled to do, to retain the stock and interests assigned to them, and to deliver to the plaintiff the 2,000' shares of the capital stock of the company, mentioned in the agreement. They did pay to him the sum of money which, in the event arising, they had become obligated to pay, but they did not deliver to the plaintiff the 2,000 shares of paid-up stock mentioned in the agreement. But after they had elected to retain the rights and interests and stock transferred to them, and to pay the money, and deliver the 2,000 shares of paid-up stock to the plaintiff, they obtained from the company 2,000 shares of its stock, and delivered that to him as paid-up stock. No part of this stock, however, had been paid for in any manner to the company, and, when the fact was ascertained by the plaintiff, he disaffirmed this part of the transaction by tendering and offering to return these 2,000 shares to the testator, the defendant Brown being at that time absent from the United States, and he then demanded the 2,000-shares of fully paid up stock, which he had become entitled to receive under the obligation created by the agreement. This tender and demand was made in 1874, and it was repeated again in December, 1884, when the plaintiff was informed by the testator that he understood from Mr. Brown’s counsel that all engagements with the plaintiff had been properly fulfilled, and no further notice was taken of his demand and request. Upon the trial of the action the ■plaintiff offered to surrender these shares of stock, as not being those he was entitled to under the agreement, and demanded judgment for so much money as would enable him to obtain 2,000 shares of the paid-up stock of the company. It appeared upon the trial that the debts owing by the company greatly exceeded its assets, and that none of its stock was on the market for sale, and it had no marketable or actual value; and for that reason the referee, by his decision, limited the right of the plaintiff to recover against Brown, the surviving party who had executed the contract, to the sum of six cents. This limitation of the plaintiff’s right to damages is deemed to be unwarranted by the contract, construed, as it should be, in the light of the circumstances attending its execution and delivery. At that time it was known to the defendant and the testator that the stock, in the event of their electing to abide by their right to make its delivery to the plaintiff, could not be obtained by purchase in the market, but must be procured from the company itself. This resulted from their knowledge and familiarity with the affairs and condition of tile company, and it is further indicated by the obligation created in the agree
What the law generally requires the party in default to do for the satisfaction of a contract or obligation is to pay to the other party so much money as will secure to him the ability to place himself in the position which, by the terms of the agreement, he was entitled to occupy. In ordinary cases that would be, where the consideration for the property had been paid, so much money as would enable the party not in default to purchase and acquire the property.entitled to be received by him under the terms of the agreement. That would fully indemnify him for the loss to which he would be subjected by the failure of the other party to perform the agreement. But that rule is inapplicable to this case, for the article which was to be delivered was not one which was dealt with in the market. It could not be obtained by purchasing it from others; but. the only manner in which it could be secured was from the company itself, and then only by paying to it the par value of the shares. The circumstances in this respect were peculiar, for the party not in default could in no other way obtain the benefit and advantage of the contract made with him than by obtaining these shares from the railway company; and, where that is the nature of the agreement, then the ordinary rules applicable to adjustment of differences are not to be followed. Ormsby v. Mining Co., 56 N. Y. 623. What the law designs to secure to the party entitled to the performance of a contract made with him is such a measure of indemnity as will place him in the same position that he would have been in if the contract had been observed and performed by the other party. This subject was quite at large considered in Baker v. Drake, 53 N. Y. 211, and it was there conceded, in deference to the early English authorities, that, in an action on a bond conditioned for the return of government stocks, the party entitled to them should be fully reimbursed for the expense of obtaining them himself; and Gruman v. Smith, 81 N. Y. 25, and Colt v. Owens, 90 N. Y. 368, are in harmony with this right. And so the law was declared to be in Dana v. Fiedler, 12 N. Y. 41. Tljat was a contract for the sale and delivery of “madder, ” and it
For these reasons, as well as those which have been stated at large in the opinion of the presiding justice, the law requires this judgment, so far as it is in favor of the defendant Brown, to be reversed, and a new trial ordered.
As to the other matters which have been brought into discussion by the appeals taken in this action, they have been fully and completely disposed of in thti opinion already mentioned, and as to them the directions suggested-appear to be those required by the law to be made.
Dissenting Opinion
(dissenting.) I find myself unable to concur with the presiding justice in his view of the measure of damages. His opinion is an exceedingly forcible exposition of the theory upon which alone the plaintiff can hope to recover the par value of the shares in question, and it is therefore with great diffidence, and a due sense of what is needful to answer such vigorous thought convincingly, that I venture to present the opposite, and, as I conceive, correct, view.' I cannot, however, believe that any just legal principle requires us to mulct these defendants in the sum of $200,000 for the breach of a partly executed contract to deliver to the plaintiff a piece of paper representing 2,000 shares of full-paid, but utterly worthless, stock. For that is precisely what it comes to. The underlying thought which pervades the presiding justice’s opinion, and which seems to have led to his ultimate conclusion, is that, unless the defendants are required to pay to the plaintiff this enormous sum, they will be permitted to profit by their own wrong. I have no fault to find with the principle which presents such unrighteous profit, although I agree with Mr. Sedgwick that “the motives of the defaulter are not to be taken into view.” The principle itself is just, and well settled; but, as I conceive, wholly inapplicable to the special facts.of this case. It was for-mulated and well illustrated in Suydam v. Jenkins, 3 Sandf. 620, where Dxjer, J., observed “that the owner to whom compensation is due must be fully
Then, as to profiting by the breach, what benefit have the wrong-doers here derived from their own injustice? Have they sold the 2,000 shares for more than the six pence awarded? Have they ever had it in their power to do so? Not at all. Now this, as we have seen, is the nature of the profit which the law will not permit the wrong-doer to retain. This is clearly illustrated by Judge Duer in the following language; “Even where the market value of the property, when the right of action accrued, would more than suffice to-
It is also claimed that when the defendants refused to deliver the stock the plaintiff had a right to procure it, and to charge the defendants with the costs. Assume that the plaintiff had this right,—and it is a mere assumption,—how is the situation altered ? In the first place, the plaintiff did not do this. But had he done it, the situation, so far as he is concerned, would have been unchanged. 1-Ie would have squandered $200,000 upon a worthless piece of paper; not, as argued, upon something which subsequently became valueless, but which was then, and ever since has been, valueless. He would have, pro tanto, supplied a bankrupt treasury, and enabled the company to pay about one-half of its debts, thus benefiting the defendants, who are ‘creditors of the company. For oit must not be overlooked, although the fact may have no special significance, that a part of the very property turned over to the defendants by the contract in question consisted of a claim of the plaintiff against this very company for some $12,000. How, if the plaintiff, upon paying this $200,000 into the company’s treasury, and taking the full-paid stock therefor, could have recovered from the defendants the amount so paid, how would he have been the gainer? The recovery would simply have offset the payment, and, in the end, the plaintiff would have found himself in the possession of 2,000 shares of full-paid but valueless stock. Thus, at last, he would have had what that stock was worth, and nothing more. Ultimately, therefore, he would have come into the inevitable sixpence. It comes to this, that in no way, manner, or shape, could the plaintiff have obtained from his contract aught save the full-paid shares, or the intrinsic value of such full-paid shares. The plaintiff undoubtedly saw where the execution of this idea with regard to procuring
The stock, of course, had no market value, because it had not been issued. It had no intrinsic value, because the company had no property of any value, •and was over $300,000 in debt. These 2,000 shares of unissued stock simply represented one-fiftieth part of the capital, property, assets, and franchise of the company,—in effect, one-fiftieth part of what was $300,000 worse than ■nothing. In no view of the pleadings and proofs, therefore, could the plain
There are two minor considerations advanced by the plaintiff which should perhaps be briefly noticed. One is the suggestion of an analogy between the rule he contends for and the principle which governs with regard to agreements .to deliver bonds and notes. There is here no real analogy, because the company, by the issue of its stock, makes no agreement to pay any specific sum. But if it did, the result would be the same. For,'while it is conceded that the measure of damages upon failure to comply with such contracts is prima facie the face of the obligation, yet it is equally well settled that the insolvency of the obligors or makers may be shown in mitigation, and the damages thus reduced to a nominal sum. Thayer v. Manley, 73 N. Y. 308, and cases there cited.
The remaining consideration is the plaintiff’s reference to that class of cases where the purchase price is specified in money, payable, however, in stock or some commodity; such, for instance, as in Johnson v. Hathorn, 2 Abb. Dec. 465. A different rule there applies, for the reason that the promise is to pay a fixed sum in a particular manner, not, as here, merely to deliver a specific thing. The present contract cannot well be tortured, by any subtlety of construction, into an agreement to pay $227,500 in any form or manner.
Upon all the other questions discussed I agree with the presiding justice, and, although I am in favor of affirming the judgment as to Brown, I think the order granting him an extra allowance should be reversed, without costs. It is not a case where the plaintiff should be burdened any more than the law requires.
The judgment as to Brown should therefore be reduced to the sum of $1,364.02, and affirmed for that amount, without costs.
