120 F. 318 | U.S. Circuit Court for the District of Kentucky | 1902
(after making foregoing statement). It is now in order to consider the various defenses which the defendant relies on to defeat complainant’s right to the relief he seeks, and they will be taken up and disposed of one at a time.
i. Inability of complainant to perform his part of the contract is urged, and many reasons are set forth for claiming that this inability exists. These reasons, and the court’s views as to their sufficiency, are as follows:
(i) It is claimed that such inability exists because of the fact that the contract of sale was a private one. It is contended that an assignee for the benefit of creditors cannot make a private sale of the real estate held by him under a voluntary deed of assignment, and that, therefore, even though such sale may be authorized and confirmed by the county court, he cannot pass the title to such property in pursuance to such a contract of sale. The effect of this position, it will be noticed, is not only inability on complainant’s part to perform his contract, but also that his contract is void. Prior to the act of March 16, 1894, entitled “An act relating to voluntary assignments” (Sess. Acts 1894, p. 189), and chapter 7 of the Kentucky Statutes, there were but two statutory provisions in Kentucky in relation to such assignments. One was what is known as the “statute of 1820,”
“No sale made of any real estate by a trustee by virtue of a deed of trust or pledge to secure tbe payment of debts shall be valid, nor shall the conveyance by such trustee pass the title of the property specified in such deed or pledge, unless the sale thereof shall be in pursuance to a judgment of court or the maker of such deed or pledge shall join in a writing evidencing the sale.”
The effect of this statutory provision upon such instruments is thus stated by Judge Simpson in the case of Ely v. Hair, 16 B. Mon. 230:
“Mortgages and deeds of trust, with respect to a sale of the property embraced by them, are placed substantially upon the same footing by the laws of this state. No sale can be made under a deed of trust without the intervention of a court of equity, unless it be made with the consent of the grantor. A sale of the mortgaged property may be made in the same way, the mortgagor and mortgagee concurring therein.”
To the same effect are remarks of the same learned judge in the case of Lyons v. Field, 17 B. Mon. 549. Though this is undoubtedly true, there is a difference between the terms of a voluntary deed of assignment for the benefit of creditors and those of an ordinary mortgage. The former contains a power of sale in the assignee. The latter contains no such power. The result is that, if the statute had not been enacted, the assignee, under such a deed, would have had the power to sell and convey the property covered by it independent of a court of equity or the assignor, and without any limit upon it other than what might be contained in the instrument itself, or put upon it by the principles of ordinary business prudence. In the case of Hahn v. Pindell, 3 Bush, 189, Mr. Chief Justice Robertson, in speaking of a special statute repealing the act of 1820 as to a certain corporation, said:
“The Inevitable effect of the literal import of that legislative enactment is to restore the common-law right, without the intervention of a conrt of equity, to sell mortgaged property in execution of a power given in the mortgage, and so far as to abrogate the Kentucky statute of 1820.”
He said further:
“There can be no judicial doubt that the common law legalized fair sales of mortgaged property, either real or personal, when made according to powef to sell reserved in the mortgage. And it is historically true that such powers are the more prevalent in,the most commercial cities and countries of the world.”
In the case of Shinkle’s Assignee v. Bristow, 95 Ky. 89, 23 S. W. 671, Pryor, J., said:
“It is plain the trustee has no power to sell or pass the title, except in the manner provided by the statute, and equally clear, but for the statute, the trustee could sell and pass the fee. * * * The statute intervenes and places a limitation on the power of the trustee only for the benefit of the grantor and creditors, and prohibits a sale and conveyance by him, unless by the direction of the chancellor or the consent of the grantor. It does not divest the trustee of the title, but says, in effect, ‘You have the title, but*329 shall not pass It, except in the mode prescribed by the statute.’ It will not be contended that the trustee would be without power to convey in the absence of this statute, and the limitation placed on his right to sell by its provisions only requires the passing of the title from the assignee in a prescribed mode, for, without this limitation, the trustee, being intrusted with title, could sell and convey at his own will and pleasure.”
The way, therefore, this statute placed voluntary deeds of assignment and mortgages upon the same footing, was by curtailing the power of sale contained in the former. After its enactment the power could only be exercised in pursuance to a judgment of court or in conjunction with the assignor. So exercised^ there was nothing in the statute preventing the sale under the power being either public or private, as might be determined by the court or by the parties to the instrument; and, when the sale was made, it was in pursuance to the power. This statute remained unchanged until the act of February 25, 1893, entitled “An act concerning lands,” which forms chapter 150 of the Acts of 1891-93, p. 495, and first five articles of chapter 76 of the Kentucky Statutes. By section 20, art. 2, of said Act, section 2356, Ky. St., it was provided;
“No sale made of any real, estate by a trustee by virtue of a deed of trust, or pledged to secure tbe payment of debts, shall be valid, nor shall the conveyance by such trustee pass the title of the property specified in such deed or pledge, unless the sale thereof shall be in pursuance to a judgment of the court, or shall be made by an assignee under a voluntary deed or assignment, or the maker of such deed or pledge shall join in a writing evidencing the sale.”
The effect of this change in the phraseology of the statute of 1820 was to restore the law in relation to voluntary deeds of assignment to what it was prior to the passage of that statute. There was this difference, however, between the law as it was before the statute of 1820 and as it became after the act of February 25, 1893: The power of the assignee to sell in pursuance to the power of sale under the deed of assignment before the statute of 1820 was without statutory recognition. It was dependent solely upon the unwritten law. As it became upon the enactment of the act of February 25, 1893, that power was recognized, and impliedly, at least, declared, by statute. After the passage of this act, therefore, the assignee, under such an assignment, had power to sell independent of court and assignor. He had full and ample power to sell publicly or privately, as he deemed best, and to pass the title by his own deed to the purchaser. Such was the state of the law when the act of March 16, 1894, entitled “An act relating to voluntary assignments,” and constituting chapter 7 of the Kentucky Statutes, was passed; and in construing the provisions of that act in relation to the matter in hand, in order to a proper construction thereof, this must be borne in mind. By section 14 of that act, which is section 87 of the Kentucky Statutes, it was provided;
“Personal property conveyed shall be sold by the assignee at private or public sale, as the court may direct; and the assignee shall have power to pass title to the same as fully as the assignor could have done at the date of the assignment. Real property shall be sold in the same manner and upon the same terms as real property sold at decretal sale, and the court shall make such orders concerning the advertisement of the sale as it deems*330 ''proper, and the assignee shall have power to convey and pass all the right and title to the same, which the grantors in the deed of assignment had at its date. The report of sale shall be filed by the assignee within ten days after the sale. If no exceptions are filed thereto, the same shall be confirmed at the second regular term after it has been filed. If exceptions are filed, they shall be heard by the court and disposed of.”
This section presupposes the law as it then existed in relation to such assignments, and as it continued in existence after the passage of that act. One provision of that law, which is presupposed, was that the assignee, under and by virtue of the terms of the deed of assignment, and,,the provision of section 20, art. 1, of the act of February 25, 1893 (section 2356, Ky. St.), had the power to make the sale and pass the title independent of court and assignor. Possibly another was the requirement of the act of March 8, 1876, requiring the assignee to report his sales to the county court. Hence there is no attempt in the section to provide that power to sell shall be conferred-on the assignee by order of the county court, or that a report of sale shall be filed. It simply assumes that such power exists, and such filing shall be had. It provides that the exercise of the power of sale shall be under the direction and supervision, and subject to the approval, of the county court. As to personal property, it confers powers on the county court to direct whether it shall be sold at private or at public sale. As to real property, it provides that it shall be sold in the same manner and upon the same terms as real property sold at decretal sale. The manner and terms of sales of real property sold at decretal sales are prescribed by section 696 of the Civil Code of Practice. According to this provision, such sales must always be public. Hence the section in question required that real property sold under a deed of assignment should be sold at public sale, and cut off any power to sell such property at private sale. It conferred power on the county court to make such orders concerning the advertisement of the sale as it deemed proper. And it expressly conferred on the assignee power to pass title to the personal property sold by him as fully as the assignor could have done at the date of the assignment, and to convey and pass all right and title to the real property sold by him which the grantors in the deed of assignment had at its date. This, however, was simply declaratory of existing power, when exercised under the limitation prescribed by the section. This section was subsequently amended by an act approved March 16, 1898, found in Sess. Acts 1898, p. 104. That amendment added some words to the second sentence thereof, so as to make that sentence read as follows:
‘‘Real property, when sold at public auction, shall be sold in the same manner and upon the same terms as real property sold at decretal sale, provided, the purchaser shall have the right to pay cash and the assignee to accept cash in payment of the purchase price at any such sale, and the court may make such orders concerning the advertisement of the sale as it deems proper, and the assignee shall have power to convey and pass all the right and title to the same, which the grantor in the deed of assignment had at its date.”
The words so added, which affect the matter in hand, are contained in the conditional phrase, “when sold at public auction,” inserted near the beginning of the sentence. Their addition removed the require
“And the said circuit court shall have all the power and authority to administer and settle up the assigned estate, conferred on the county court by*332 this act, in addition to its power and authority heretofore existing as a chancery court, and the assignee shall have full power and authority to sell the personal and real property belonging to the assigned estate at public or private sale, and to convey and pass over the right and title to the same, which the grantors had in the deed of assignment at its date; and said assignee shall, within ten days after such sale, report same to the circuit court in. which the suit for settlement of the estate is pending, and such report shall thereupon be laid over for ten days for exceptions, and if no exceptions are filed within that time, same shall thereupon be confirmed. If exceptions are filed, then such exceptions shall be heard and determined by the court” Acts-1898, p. 105.
There can be no doubt but that the effect of this amendment was to declare, if not to create, power in the assignee to sell publicly or privately, and that without any order or judgment of court, after jurisdiction had passed to the circuit court; it being provided that that jurisdiction after the passage should be the same as the county court. This amendment would seem to clearly recognize that before that passage, and whilst the jurisdiction remained in- the county court, the assignee had the same power to sell publicly or privately as after the passage, and no good reason has been or can be assigned' why he should not have it.
Counsel for defendant feel put to account for the amendment adding the conditional phrase, “when sold at public auction,” to the section relating to proceedings when jurisdiction is in the county court. They suggest that it was intended thereby to provide that a certain course-should be pursued in case of a. public sale after jurisdiction had passed to the circuit court by the bringing of a suit for settlement therein. But this is to mix up two provisions that are entirely distinct and relate to proceedings at two separate and distinct stages. Section 14 of the act of March 16, 1894, as amended by the act of March 16, 1898, relates to proceedings whilst jurisdiction is in the county court, and section 23 of that act, as so amended, relates to proceedings' after jurisdiction has passed to the circuit court; and it would seem that there is no sound reason for holding that the provisions of one section have any relation to those of the other. They are entirely separate and distinct.
The conclusion of the court, therefore, is that the complainant had power to make the sale involved herein. The statute authorized him to make a private sale, and the terms of the deed of assignment were full and ample in this particular. This does away with the necessity of considering the effect of the confirmation of the sale, even though there may have been no original power to make a private sale. Probably it would have, in that contingency, no validating effect. Authority, however, is not wanting that it would. It was so held in the case of Apel v. Kelsey, 52 Ark. 341, 12 S. W. 703, 20 Am. St. Rep. 183. The defense, it should be added, is without merit, other than such as belongs to any purely technical defense. Pirtle & Trabue, who had authority to examine the title, and to confer with complainant in regard to same, — as to what was necessary to be done by him in order to pass a good title, — indicated to complainant what they thought was thus necessary, and never intimated to him that a private sale would not do. On the contrary, after he had complied with their suggestion as to appraisement and confirmation of sale, they informed
(2) Again, it is claimed that such inability exists because there was no valid appraisement of the real estate covered by the contract prior to making of the contract. It is claimed that the law requires an appraisement to be had of real estate held by an assignee under a deed of assignment, before making a sale of same, either publicly or privately, and that the appraisement which was made was invalid, because it was an appraisement of both the real and personal estate sold, without a separate appraisement of the real estate, and because it was made after, and not before, the sale. This defense, like the former one as to the sale being a private one, is not meritorious. It is true that Pirtle & Trabue, in their letter of June 23d, took the position not only that the real estate should be appraised, but that it should have been appraised prior to entering into the contract, and that in their letter of August 2d to Mr. Stoll there is reference to this position, somewhat ambiguous. But complainant’s testimony that as a result of his personal interview, on June 24th, Judge Pirtle agreed that an appraisement after the contract would do, is not denied by him. In the letter of Blanton & Berry to Pirtle & Trabue of August 19th,. the former said to the latter that, if they still adhered to their former opinion as to the necessity of the appraisement prior to the sale, the only way this could be done was for the assignee to have the property appraised, and thereafter enter into another contract of sale with Mr. Stoll, and expressed a desire to hear from them as to this at their earliest convenience. And again, in the letter of Blanton & Berry to Pirtle & Trabue of August 21st, they repeated:
“If you think' the appraisement should antedate the date of sale, the only thing we can do now is to enter into a new contract of sale as of a different date, subsequent to the appraisement.”
A copy of the letter of August 19th, at least, was sent to Mr. Stoll. In answer to both letters, Pirtle & Trabue said:
*334 “We think, after the order of confirmation of the sale has been entered at the August term of the court, that the objections heretofore made will be cured. We think we have expressed this opinion heretofore, when we stated that it would not be necessary to begin over again from the beginning in this matter.”
A copy of this letter, no doubt, was sent to Mr. Stoll. In view of this, it does not come with good grace, if everything else should be all right, for defendant to urge a defective appraisement as a reason why its contract should not be enforced. If the fact that the appraisement included some personal estate rendered complainant unable to pass a good title to defendant, no objection could be urged to defendant’s relying on this, as it does not seem to have seen the appraisement until after this litigation. But it would hardly be held, if an appraisement was necessary, that because it included some personal property, which was essential to the operation of the distillery and the carrying on of the business, and, with the real estáte, constituted a distinct whole, the appraisement was so defective that complainant was unable to pass title to defendant after confirmation of the sale.
Was, then, an appraisement required? Defendant contends that it was, by the act of April 9, 1878, entitled “An act providing for the redemption of real estate sold under an order or judgment of a court” (1 Acts 1877-78, p. 122), re-enacted by Article 2 of the said act of February 25, 1893, entitled “An act concerning lands,” heretofore referred to, and found in sections 2362, 2365, Ky. St. Section 2362 provides that “before any real estate shall be sold under an order or judgment of a court other than an execution, the commissioner or officer, whose duty it may be to sell the same, shall cause it-to be valued” in the manner pointed out therein. Section 2363 provides that the valuation so made shall be in writing, signed by the persons making it, and returned by such commissioner or officer to the court which made the order or rendered the judgment for the sale of the property, and the same shall be filed among the papers of the cause in which the judgment was rendered or the order made, and also spread upon the records of the court. Section 2364 provides that, if the real estate which may be sold in pursuance of such judgment or order does not bring two-thirds of such valuation, the defendant and his representatives shall have the right to redeem the same within the time and in the manner therein provided. Section 2365 provides that, “if the judgment in pursuance of which such sale is made be not satisfied by such sale, the right of redemption herein provided for may be sold in satisfaction of the residue of such judgment; and the said right of redemption shall also be liable to sale under execution,” with additional provision as to method of redemption in such case, and as to filing report of sale.
Now, it must be acknowledged that before the act of February 25, 1893, removing the bar to the assignee’s making a sale of the assigned property without the assignor’s written consent, in case of a sale by the assignee with the assignor’s written consent, and after that act, and before the act of March 16, 1894, in case of a sale by thassignee alone, publicly or privately, this appraisement statute had no application, and no appraisement was essential. That for the reason that the sale was not under an order or judgment of a court, but
There is no room for claiming that the act of March 16, 1894, made any change in the application of the appraisement statute to a sale of real property by the assignee under a voluntary deéd of assignment. The sole effect it had upon such a sale was to require that it be in the same manner and upon the same terms as real property sold at decretal sale, and that it be reported to and confirmed by the county court, and perhaps, also, to cut off all power on part of the assignee to sell it under the deed of assignment after jurisdiction of the assigned estate had passed to the circuit court by the filing therein of a petition to settle that estate. The effect of the amendment of March 16, 1898, was to restore to the assignee the power to sell the real property privately whilst the county court had jurisdiction, and to confer upon the assignee the right to sell privately or publicly after jurisdiction had passed to the circuit court. The act of March 16, 1894, as amended by the act of March 16, 1898, expressly provides that the assignee, both whilst the county court has jurisdiction and after the circuit court has acquired jurisdiction, shall have the power not only to sell, but to convey to the purchaser the right and title of the assignee. The only connection which the county court, in the one instance, and the circuit
But if it be conceded that the law required an appraisement, and that it should have been made prior to the sale, and of the real estate alone, it does not follow that because the appraisement was made after the sale, and included the personalty connected with the operation of the distillery and the carrying on of its business, that there has been any flaw in complainant’s title on this score since the confirmation of the sale. Counsel for defendant cites authorities to the effect that a failure to comply with a statutory requirement as to appraisement will invalidate the sale. But it will be found that most, if not all, of those authorities, are cases of sales by a sheriff under execution, whose sole authority to act depends upon statute, and whose action is not reported to a court, and subject to exception and confirmation. It would seem that in a case like this, where the statute requires the sale to be reported to the court, and permits exceptions to be taken to the sale for irregularities, and provides for confirmation, if valid exceptions are taken, a failure to except to a sale for want of an appraisement, or of a regular appraisement, by a party in interest, and confirmation of the sale by the court, put an end to any invalidity on this score. The fail
“As the life estate of Gray was subject to levy and sale, the next question for consideration is whether the mistake of the appraisers in valuing the fee simple, instead of the life estate of the debtor, renders the sale absolutely void. The provisions of the statute concerning the sales of land under execution, requiring them to be advertised, the lands to be valued, and the officer to return the valuation with the execution, and to refer to and explain the proceedings, are not so mandatory that a failure to observe them literally will necessarily render the sale void and of no effect. The valuation is for the benefit of the defendant, and to secure to him the legal right to redeem in case the estate should not sell for two-thirds of its value. This legal right may be waived, at the election of the defendant; and, if he chooses to waive it, the purchaser cannot, on account thereof, avoid his purchase, as he might undoubtedly do if the sale was null and void.”
There is nothing in the cases of Cantrill v. Perry’s Adm’r and Graves v. Association, supra, to the contrary. In each case exceptions were filed to the report of sale before it was confirmed, and the sale was set aside on these exceptions. And in the case of Cantrill v. Perry’s Adm’r it was held that the heirs of the deceased debtor could not affect the right of the creditors of the decedent to except to the sale because of irregularity in the matter of appraisement by any contract on their part. In neither case was there any question as to the right of anybody to complain of the sale after its confirmation because of any such irregularity.
(3) A third reason for defendant’s position as to complainant’s inability to perform is that the deed of assignment from T. J. Megibben Company to complainant did not pass the title. That deed was executed on behalf of said company by its president, J. W. Megibben, and recited that it was insolvent and unable to pay its debts in full, and that at a meeting of its board of directors, at which all were present, a resolution was adopted reciting that it was to the best interests of said company and its creditors that a deed of assignment be made, and directing its said president to execute and deliver such a deed to complainant. The ground upon which it contended that said deed of assignment so executed did not pass the title is that by the articles of incorporation of said company it was provided that the board of directors or officers could not sell, mortgage, or otherwise dispose of any real estate belonging to the corporation unless authority therefor was first given by a vote of a majority of the stock, and that there is no admissible evidence in the record of a meeting of the stockholders at which any authority was given for the execution of the deed of assignment, and such evidence as there was shows that there was not a majority of the stock represented. It is shown conclusively that the
"There is a distinction between proving a fact which has been described in a writing, and proving the writing itself. Because a fact has been described in a writing does not exclude other proof of the fact. For example, the proceedings of a corporate meeting of stockholders or directors are facts. They are ordinarily reduced to writing in the minutes of the meeting. Tet they may still be proved by independent oral téstimony. But suppose the dispute be as to the minutes themselves; then the writing becomes the best evidence of what the minutes are, and must be produced.”
In this case the minutes were lost, and much more so, therefore, was oral testimony admissible as to the proceedings had at the meeting. We are aware of no rule which requires a preference between those present at the meeting, as to who shall prove what took place.
Then as to the point that the testimony of complainant shows that a majority of the stock was not represented at that meeting: It shows that 334 shares were represented there by E. J. Megibben, 158 by J. W. Megibben, and 8 by P. R. Megibben; making, in all, 500 shares, which complainant claims was the entire stock of said company, so represented. Defendant contends, however, that the shares represented by E. J. Megibben and J. W. Megibben were not owned by them, but by Lewis Debus, and he was not present at the meeting, and E. J. Megibben and J. W. Megibben were not acting for him: It contends, further, that in addition to this stock there were 500 more shares of stock in said company held by the estate of T. J. Megibben, which was not represented at said meeting. If either position is correct, then it is true that a majority of the stock did not take part in the meeting which authorized the making of the deed of assignment. But inasmuch as these two contentions of defendant arise in connection with another aspect of the defense of inability to perform on complainant’s part, the determination of their validity will be deferred until we come to consider that aspect thereof. Assume, however, that a majority of the stock was not represented at that meeting, and that the making of the deed of assignment was without the authority of the stockholders; does this render the deed of complainant’s assignor, admittedly an insolvent corporation, executed on its behalf by its president in pursuance to authority of the board of directors, ineffectual to- pass the title to complainant? The authority of the board of directors of a corporation to make an assignment for the' benefit of creditors is thus stated by 3 Thomp. Corp. § 3986:
•‘There is much authority for the view that the directors of an insolvent corporation may, without the consent of the stockholders, make an assignment in good faith of all its assets to a trustee for the payment of its creditors, though, as the exercise of this power generally has the effect of putting an end to the corporation, its existence- is denied by some courts. And clearly the directors have no such power where the governing statute prescribes a different mode for winding up the affairs of. the corporation and liquidating its debts. The statutory mode is exclusive. The reason is that the statute*339 forms a part of the security of the public, and one of the conditions upon which corporations subject thereto take their chartered powers.”
Such being the law as to the right of the board of directors to authorize an assignment for the benefit of creditors, in view of the provisions in the articles of incorporation of the T. J. Megibben Company there may be some question as to the authority of its board of directors to authorize the deed of assignment made to complainant. But it is unnecessary to determine this question. The same work (volume 5, § 6473) states the law in relation to such assignments in another particular to be as follows, to wit:
“It is scarcely necessary to add that such an assignment, even if made without original power on the part of the directors, would be validated by the subsequent assent or acquiescence of the stockholders, and, on the other-hand, that a stockholder may be precluded by his laches from questioning such an assignment.”
The assignment in question herein was made nearly four years ago, —July 1, 1898, — and since then much has been done by complainant, outside of the' making of the contract of sale involved herein, towards winding up the estate which has passed into his hands under the deed of assignment. It is stated somewhere in the testimony that as much as $160,000 has passed through his hands. Lewis Lebus, who; as defendant contends, is the owner of the stock represented by E. J. Megibben and J. W. Megibben at said meeting, is a defendant to this suit, and is seeking herein to have the lien which he holds on the property covered by the contract satisfied out of the moneys to be paid by defendant, if it is enforced by the decree herein. E. J. Megibben, J. W. Megibben, and P. R. Megibben, who were at said meeting and authorized said sale, are the widow and two of the heirs at law of T. J. Megibben, to whose estate it is claimed that the alleged additional 500 shares belong. No stockholder, so far as this record shows, has ever raised his hand against the assignment, and it is certainly too late for him now to do so. It must be adjudged, therefore, that this point is not well taken.
(4) A fourth reason for claiming that inability to perform on complainant’s part exists is that such title as the T. J. Megibben Company had to the premises was acquired from T. J. Megibben by deed made 7th day of December, 1888, and the title of T. J. Megibben thereto was defective. T. J. Megibben claimed title thereto under deeds from the heirs of John Lail, Sr. He had ten children, and, at the time he claimed to have acquired title, two of these, to wit, Nancy Bell and George Lail, were dead, each leaving seven children. The deeds filed as exhibits in this case from the heirs of John Lail, Sr., to said T. J. Megibben, range in date from 1857 to 1863; and they cover the entire interests of those heirs, except several of the individual one-seventh interests of the children of Nancy Bell and George Lail. It is conceded that, at the time the contract in suit herein was made, there were no deeds of record for said interests. But immediately after the making of said contract, in April and May, 1899, before the abstract of title was delivered in pursuance to the contract, deeds were obtained for said interest's from the proper parties, and put to record. The obtention of these deeds is what delayed delivery of
“Some of the heirs of the former owner of this property have never conveyed their interest to Mr. Megibben. * * * We subsequently secured the release of all the heirs of old man Lail, except possibly i/to part of the undivided interest in the property.”
It is this possible VT0 interest, if any, that is not covered by the recorded deeds, but we have been unable to make out that there is an outstanding Vto interest that has not been conveyed. And however this may be, the evidence in the cause establishes beyond question that T. J. Megibben, T. J. Megibben Company, and complainant have been in the exclusive, continuous, open, and adverse possession of the real estate covered by the contract of sale herein for a period of well-nigh 50 years; and this possession is sufficient to bar any outstanding y™ interest, and was sufficient for that purpose, as to the interests covered by the deeds obtained after the making of the contract of sale herein, so that the obtaining thereof was really a matter of extra precaution. The court must conclude that there is no inability to perform in this particular.
(5) A fifth reason for claiming inability to perform on complainant’s part, urged, is that there are on the distillery premises a mortgage and attachment lien for $23,000 in favor of Lewis Lebus, a mechanic’s lien for $809.03 in favor of J. T. Megibben, and a similar lien for $3,154.89 in favor of P. R. Megibben, and a lien for $- in favor of R. E. Hall. This is undoubtedly true. But this does not render complainant unable to pass a title to defendant clear of said liens. They are parties defendant to- this action, and provision can be made in the decree for paying and discharging them out of the money coming to complainant. This will but be carrying out the suggestion of Pirtle & Trabue in their letter of June 23d, pointing out what was necessary to be done in order to clear up the title,— that an agreement might be made whereby the lien creditors referred to would release their respective liens, and look to the proceeds in complainant’s hands for payment.
(6) A sixth reason is that there is a lien on the property for state and county taxes for the year 1900. It was developed in the testimony in the cause that the taxes for the year 1899 had not been paid by complainant before the bringing of this suit, because of a failure to assess the property in 1898, after the deed of assignment had been made. But since then the property has been assessed and the taxes paid. As to the taxes for the year 1900 due on the assessment made September 15, 1899, it would seem that defendant is
“Tlie holder of the legal title, .and the holder of the equitable title, and the claimant or bailee in possession of the property on the fifteenth of September of the year the assessment is made, shall be liable for the taxes thereon, but, as between themselves, it shall be the duty of the holder of the equitable title to list the property and pay the taxes thereon, whether the property be in possession, or not, at the time of the payment.”
But even if complainant were bound to pay said year’s tax, provision can be made for its payment out of the purchase price, as in the case of the other liens, and the lien removed from the property in this way.
(7) A seventh reason is that the defendant will become liable for all state and county taxes assessed against the whisky contained in the bonded warehouse since its manufacture, upon the removal thereof from the warehouse, without right to obtain from the owners of the whisky so removed funds to meet such liability, unless, by the terms of the warehouse receipts issued for same, such taxes can be collected from such owners, and that there is a large quantity of whisky in said warehouse, the taxes on which cannot be so collected. It is not made clear whether it is thought that this liability will be a mere personal one on defendant’s part, by virtue of its ownership of the distillery premises and warehouse, or whether that property itself is, and will continue to be, subject to a lien therefor. This liability is deduced from the peculiar method of assessing whisky in bonded warehouse, and collecting the taxes thereon. The revenue laws of Kentucky provide for the annual assessment of whisky in bonded warehouse as of September 15th in each year, by a state board of valuation and assessment, and for payment of the taxes due thereon for all the years it has been assessed, when taken out of bond, and, further, that on the 1st day of January, May, or September next after the whisky has been removed from the warehouse, the owner or proprietor of the bonded warehouse shall report to the auditor of public accounts and the clerk of the county court the quantity of spirits removed from the warehouse during the preceding four months, and certain other information, and shall at the same time pay all taxes and interest due the state, county, taxing district, city, or town, to the officer entitled to receive the same. Because of this statutory provision, it is claimed that the defendant, as owner and proprietor of the bonded warehouse on the premises in question, upon the completion of its purchase will become bound to pay all state and county taxes assessed against the whisky contained in said warehouse since its manufacture, within four months after its removal therefrom. Is this true, and, if so, will it, or not, have the right to collect such taxes from the owners of the whisky, whatever may be the terms of the warehouse receipts ? It is given by defendant as a reason why it is important to it that the stipulation in complainant’s contract that he should procure for and deliver to it 90 per cent, of the capital stock of his assignor, the T. J. Megibben Company, and the resignation of its board of directors and officers should be performed, notwithstanding said corporation is now without assets of any kind or de
“The commonwealth and each county * * * shall have a lien on the property assessed for the taxes due them respectively, which shall not be defeated by gift, devise, sale, alienation, or any means whatever, unless the gift, devise, sale or alienation shall have been made for more than five years before the institution of proceedings to enforce the lien.”
And by section 4109, Ky. St., — one of the sections of article 5 of the chapter on “Revenue and Taxation,” — in relation to “assessment of distilled spirits,” it is provided as follows:
“Any person or corporation having the custody of such spirits on the fifteenth day of September in the year the assessment is made, shall be liable for all taxes due thereon, together with, all interest and penalties which may accrue; and any warehouse-man or custodian of such spirits, who shall pay the taxes, interest or penalties on such spirits, shall have a lien thereon for the amount so paid, with legal interest from the date of payment.”
If this section does not indicate an intent that the warehouseman who is made liable for the taxes is the warehouseman at the time the assessment was made, it certainly does indicate an intention that the warehouseman, who is bound to pay the taxes and does so, shall have a lien on the spirits for them. So we see that the state and county both have liens on the whisky in the warehouse in question, to secure the taxes assessed in their favor, respectively; and if defendant should become bound to pay them, by reason of the acquisition of the title to the bonded warehouse, it has a lien on them, also* for the amount it may have to pay. Its right to this lien will in no way be affected by the warehouse receipts which have been issued by the T. J. Megibben Company, no matter what the terms of those receipts may be. It never issued them, and is no party to them, and
(8) An eighth reason is that there were in the bonded warehouse, at the time performance was tendered, about 7,500 barrels of whisky, the United States government tax upon which amounted to as much as $330,000, and that there must still be a large amount of whisky stored there, upon which a very large tax is due the United States government. This tax is primarily a lien on the whisky, but, if the whisky is not sufficient to meet it, the distillery premises are liable therefor. Defendant apprehends danger from this source for two reasons: The evidence discloses that J. W. Megibben, president of the T. J. Megibben Company, before the assignment, had issued duplicate, and even triplicate, warehouse receipts for whisky in the bonded warehouse, and had removed from it whisky for which warehouse receipts had been issued, without the consent of the holders thereof, and had thus, rendered himself liable to criminal prosecution. It is suggested that in order to take away evidence of the absence of the whisky removed, and protect himself from conviction for its removal, J. W. Megibben may cause the bonded warehouse and its contents to be destroyed by fire, and in this way the government lien may be thrown upon the distillery premises. This is so improbable^ as shown by defendant’s own presentation of the matter, that no heed need be given to it. The other ground for such apprehension is that what is termed the “outages” from the whisky remaining in the bonded warehouse may be so greatly in excess of what is allowed by the government that what is left may not be sufficient to pay the tax, so that the lien on the distillery premises may have been enforced to make up the deficiency. It does not seem to the court that the evidence in the record warrants such a conclusion. The defendant does not seem to have apprehended much danger from this source when the contract was made, for it then knew, through its agent, Mr. Stoll, who drafted the contract and-
(9) A final reason for claiming inability on complainant’s part to-perform its part of the contract is that complainant is not supplied-with 90 per cent, of the capital stock of the T. J. Megibben Company to deliver to defendant upon the execution of the contract. The ground upon which this claim is based has been theretofore referred to. It is, in brief, that the 492 shares which complainant claims to-have, obtained from E. J. Megibben and J. W. Megibben, belong to-Lewis Lebus, and not to them, and the total number of shares in said company is 1,000, instead of 500, as claimed by complainant. As to-the 492 shares, the evidence shows that certificates therefor were issued to E. J. Megibben and J. W. Megibben March 1, 1892, — 334 to one, and 158 to the other; that thereafter those certificates were transferred, to Lewis Lebus as collateral security for debt; and that on February 1,. 1900, he delivered to E. J. Megibben and J. W. Megibben a paper reciting that he had surrendered said certificate to them; that the transfer of them to him was null and void; and that they were owned by them, respectively. It is not. necessary to consider in detail the grounds upon which it is claimed that, notwithstanding these facts, said certificates belong to Lewis Lebus. Suffice to say that the court does-not think them well taken. So far as the point made that the paper so-delivered by said Lewis Lebus should be stamped is concerned, that objection, if valid, can be met by stamping them, which can be provided for in the decree. In regard to the claim that the total number of shares of stock which have been issued by said company are 1,000,. instead of 500, as claimed by complainant, there is this to be said: The sole evidence for the issuing of 500 shares in addition to the-500, as claimed by complainant, is the statement on the stub of the stock certificate book that on March 1, 1892, a certificate was issued for 500 shares to the estate.of T. J. Megibben. But the same stub-that contains that statement contains the additional statement that
2. Another defense relied on to defeat complainant’s effort to obtain specific peformance herein is that complainant did not make a good tender of performance of his part of the contract before he brought suit. It is conceded that he made a certain tender to Mr. Bradley, the defendant’s assistant treasurer, and chief official in Kentucky, at its Frankfort office,, on February 2, 1900, before the suit was brought; but it is contended that that tender was not good, and that in several particulars. It was not made within the time stipulated in the contract, and time was of its essence. The deed tendered recited that, under the contract, complainant was entitled to $39,000, without any guaranty as to the storage claims to be transferred, and transferred them without any such guaranty, when the contract provided that, to entitle complainant to that much,- he should guaranty the storage to amount to as much as $3,600. And no tender was made of the resignation of the directors, and the stock tendered did not amount to 90 per cent, of the entire capital stock. What, if any, tender was complainant bound to make, and when was he to make it? The contract provided, it is true, that the complainant should, within 10 days after approval of the sale by the Harrison county court, “execute and deliver” to the defendant, “at its office in the city of Louisville, Kentucky, deeds in accordance with the terms of the agreement, upon a day to be designated by him, notice of which should be given to defendant, or to Charles H. Stoll, at the Columbia Building, in the city of Louisville, Kentucky, three days before the time of delivery of said deeds.” But this provision as to time and place of delivery was subsequently waived by defendant, through its attorneys, who had full charge of the matter. In Mr. Stoll’s letter to complainant of July 31st, he stated that, if Pirtle & Trabue’s opinion as to the title should be satisfactory, a deed would be' prepared, and he would be ready for settlement with complainant, and that it would not be necessary for him to leave home, as arrangements would be made to settle there upon the execution of the deed. In Pirtle & Trabue’s letter of August 30th, expressing satisfaction with what had been done by complainant in the county court, they stated that they would at once prepare a deed, and send it to Mr. Stoll for his approval, with the request that upon approving it he forward it to complainant for execution, and he would then arrange for the delivery of the deed and-the payment of the money.- Thus it was that the place of delivery was changed to complainant’s home, at Cynthiana, and the time to be arranged by Mr. Stoll. In view of this, it is hardly to be contended that it was complainant’s duty to tender performance to defendant at Louisville within 10 days from August 28th, the date of the approval-of the sale by the county court, or at any time or place, until de
One is that the.contract expressly provided that the division of the consideration for all the property between the two deeds was to be made by defendant, and the deeds were to be drawn according to forms prepared by defendant. In other words, the deeds to be executed and delivered by complainant were to be prepared by defendant. It follows from this that it was impossible for complainant to comply with his contract in regard to execution and delivery of deeds without defendant’s taking the initiative, and tendering him the deeds to be executed and delivered .by him. Complainant’s execution and delivery of deeds was necessarily conditional upon their preparation .and delivery by defendant to complainant, to be executed by him'. He could not have been sued by defendant for their nonexecution and delivery without previous preparation and tender of them to him by defendant for execution. Langdell’s Summary of the Law of Contracts, § 41, says:
“A covenant or promise which cannot be performed, except upon the happening of a certain event, is necessarily conditional upon the happening of* that event, and the condition may be said to be implied in fact. The necessity for making the implication may be found either in the language of the covenant or promise, or in its subject.”
In Ranay v. Alexander, Yel. 76, it was held that the defendant’s promise, being to deliver to plaintiff 15 tods of wool, to be chosen by the plaintiff out of 17 tods in defendant’s possession, was necessarily conditional upon plaintiff’s making the selection. In Coombe v. Greene, 11 Mees. & W. 480, it was held that the defendant’s covenant, being to lay out £100 under the direction or with the approbation of some competent surveyor, to be named by plaintiff, could not possibly be performed until the plaintiff named a surveyor. In Rae v. Hackett, 12 Mees. & W. 724, defendant’s promise was that a certain ship should sail and proceed in ballast to a safe and convenient port .near Cape Town. It was held that, as the voyage was to be made on plaintiff’s account, it necessarily followed that the port was to be selected by the plaintiff, and not by the defendant, and as the vessel could not sail direct to a port selected by the plaintiff, near to Cape Town, unless the port was selected and notice of it given to the defendant before the vessel sailed, it necessarily followed that the
And on the other hand, complainant had the right to sue the defendant for noncompliance with its contract after the expiration of the 10 days, without tendering the deeds. An authority expressly in point is the case of Poole v. Hill, 6 Mees. & W. 835. That was a suit at law by a vendor against the purchaser to recover damages for his failure to comply with his contract. In England where this case arose and was decided, the presumption is that the deed of conveyance is to be prepared by the buyer, and tendered to the seller for execution, —the same thing which was a matter of express stipulation in this case. The declaration did not allege that the plaintiff had tendered a conveyance to the defendant. It did allege a readiness and willingness to make a deed of conveyance. On demurrer to the declaration, it was held to be good. Lord Abinger said:
“On a contract for the sale of lands, unless it be expressly stipulated otherwise, the conveyance is to be at the expense of, and to be prepared by, the purchaser. Here it was for the purchaser to make out the conveyance in the usual course. That being done, his agreement is, on a given day, to pay the purchase money; and the plaintiff’s, to execute the conveyance and complete the title. The defendant could not have maintained an action for the noncompletion of the purchase without averring that he had tendered a conveyance. He was to perform the initiative before the plaintiff could be called upon to offer a conveyance, and the plaintiff was not bound to execute a conveyance until the defendant had prepared and tendered it for execution. The declaration is, therefore, good, and the judgment will be for the plaintiff.”
The correctness of this position was presupposed by Mr. Justice Story in the case of Taylor v. Longworth, 14 Pet. 172, 10 L. Ed. 405. He there said:
“Now, the plain import of the words of his [vendor’s] contract is that he will make the deed. The excuse for the omission is that it was the duty of the other side to prepare and tender a formal deed to him for execution. And authorities are relied on, principally from the English courts, to show that in all eases of this sort the established rule is that the vendee shall prepare and tender the conveyance. This is certainly the rule in England,— founded, doubtless, upon the general understanding and practice among conveyancers, as well as upon the peculiar circumstances attendant upon conveyances in that country. The same rule does not seem to have been adopted generally in America, although it may be adopted in some states. In Ohio the rule as stated by the learned judge who decided the present case ought not to prevail, and the local practice in a ease of this sort ought certainly to constitute the proper guide in the interpretation of the terms of the contract.”
The other reason why the complainant was not bound to tender deeds before suit brought was the fact that before then the defendant had set complainant at defiance by notifying him that it would not accept his title. This it did by the letters of Mr. Mayer, beginning with that of December 18th, and by the personal interview with Mr. Stoll on January 16, 1900, at Lexington. Defendant would have it that the contents of these letters and the statements of Mr. Stoll in this interview did not amount to an absolute refusal on its part to comply with its contract, but only a qualified refusal, i. e., unless the complainant cured the defects in its title, it would not accept it, and that it desired to inform complainant what the defects were, in order that he might cure them, and he would not permit Mr. Stoll to do so. But there was no intimation to complainant that the defects which it claimed in the title could be cured by him. Nor is there any such intimation now. On the contrary, the contention now is that they are. incurable, and that such was defendant’s view of the matter was the reasonable deduction to be drawn from Mr. Mayer’s letter and Mr. Stoll’s statements. Indeed, the only defect which Mr. Stoll succeeded in conveying to complainant, according to his account of the interview on January 16th, if acceded to, meant an end to the contract of sale between complainant and defendant. That was the fact that the property had not been appraised prior to the making of that contract. In order to cure this defect, if it was a defect, it would have been necessary to have set that contract aside, and had á resale, so that an appraisement could be had before it; and, upon the contract being set aside, it would have been entirely with defendant whether it would have entered into another contract with complainant. So no other interpretation can be put upon defendant’s statements, written or oral, through its attorneys, than that they amounted to an absolute refusal to comply with their contract. That being the case, it is well settled that complainant was relieved from any tender of performance on his part before suit brought. In the case of Moore v. Crawford, 130 U. S. 122, 9 Sup. Ct. 447, 32 L. Ed. 878, suit for specific performance was brought by vendee against the vendor of a contract of sale for an undivided one-sixth interest in certain land in consideration of $10 cash and $240 to be paid subsequently. Mr. Chief Justice Fuller said:
“It is true there is no offer to pay the balance of the purchase money, but the case shows that a tender would have been but an empty show; and as the court had it in its power to require payment of the $240 note, thus eomnleting performance by Moore, and as it did this by its decree, the allegation would have been merely formal, and became immaterial.”
“A party filing a bill submits to do everything that is required by him; and the practice of the court is not to require the party to make the formal tender, where, as in this case, from the facts stated in the bill, or from the evidence, it appears that the tender would have been a mere form, and that the party to whom it was made would have refused to accept the money.”
No tender at all, therefore, being necessary before suit brought, it is entirely immaterial that the tender which was made was defective. The stipulation in the deed which was tendered to Mr. Bradley that it was without guaranty of storage, of course, rendered the tender defective, because the contract of sale provided that, in the event complainant demanded $4,000 for the storage claims, he should guaranty them to amount to as much as $3,600. But it was purely a mistake that the deed contained such a stipulation, it being intended to conform to the requirement of the contract in the matter of the guaranty as to storage. And such a mistake is not sufficient to deprive a party of his right to specific performance, even where a tender is essential. In the case of Willard v. Tayloe, 8 Wall. 557, 19 L. Ed. 501, the contract sought to be specifically performed therein, according to the construction put upon it by the supreme court of the United States, required the purchaser to pay the purchase price in gold. He tendered greenbacks at a time when they were much depreciated. It was held that he was entitled to specific performance, notwithstanding the defective tender, and would be acquired by the decree to pay gold. Mr. Justice Field said:
“The kind of currency which the complainant offered is only important in considering the good faith of his conduct. A party does not forfeit his rights to the interposition of a court of equity to enforce specific performance of a contract if he seasonably and in good faith offers to comply and continues ready to comply with its stipulations on his part, although he may err in estimating the extent of his obligation. It is only in courts of law that literal and exact performance is required.”
As to the claim that the tender was defective for failure to tender 90 per cent, of the stock of said company, it is not denied that the complainant tendered 492 shares of stock under the title of E. J. and J. W. Megibben. The sole claim is that this stock did not belong to them, but to Lewis Lebus, and that, because of the existence of 500 shares of stock belonging to the estate of T. J. Megibben, it was not 90 per cent, of the entire capital stock. This claim has been heretofore disposed of, so that the tender was not defective in this particular. But as to the resignations of the directors, it is conceded that they were not tendered at that time, and that they were not even procured until after this suit was brought. It is doubtful, to say the least, whether the contract required that the resignations of the directors should be procured before the making of the deed and payment of the purchase price. Clause 10 provided that certificates for 90 per cent, of the stock, and the resignations of the directors, should be delivered “along with said distillery property,” — phraseology which is somewhat indefinite. It is further provided that complaiant should cause a meeting of the board of directors to be held to receive the resignations, and install a new board, and that at such time as the defendant might
We-therefore conclude that the defense of failure to make a proper tender of performance before suit brought, and possible slight inability to perform at that time, is not sustained.
3. Again, defendant urges that complainant is not entitled to a specific performance of the contract of sale herein, because of want of mutuality in it. This want of mutuality is not in matter of obligation, but in matter of remedy. The contract on complainant’s part was, as we have seen, not only to convey to defendant, by general warranty deed, an unincumbered fee-simple title to the distillery plant and personal property referred to, but to procure and deliver to defendant, at the time of the delivery of the deed, 90 per cent, of the capital stock of complainant’s assignor, the T. J. Megibben Company, and the resignation of its board of directors. This latter part of complainant’s-contract it was not within his power to comply with when the contract was made, as the stock and resignations had to be procured from the-parties who held the stock and offices, and could not be obtained from them without their -consent. Defendant therefore could not enforce-specific performance of this part of complainant’s contract, and it contends that as it is a principle of equity jurisprudence that equality is-equity, and, as it could not have specific performance of the entire contract on complainant’s part, complainant is not entitled to specific performance of defendant’s part of the contract. This position assumes, for the sake of the argument, that complainant has procured the stock and resignations, and has made a proper tender thereof, and claims-that, from the mere fact of this original want of mutuality in the matter of remedy, the contract is not specifically enforceable on complainant’s part. It .merits careful consideration on our part. It is undoubtedly laid down as a general rule that contracts are not specifically enforceable unless they are mutual in the matter of obligation and remedy, both. The books, however, recognize numerous exceptions to the rule, and it is quite difficult to understand the exact extent and' limitations of the doctrine of mutuality in specific performance of con
“I think it very clear that the rule was applied with much more strictness and severity in the older than in the later decisions. Indeed, the rule, so far as it relates to the mutuality of the remedy alone, is evidently based upon no principles of abstract right and justice, but, at most, upon notions of expediency; and the arguments in its support are often mere repetitions of time-honored verbal formulas, which, when closely analyzed, are found to have little or no real force or meaning.”
Mr. Parsons, in his work on Contracts (6th Ed.) 409, note “t,” says:
“The meaning of the rule is not very clear, nor is it easy to make a satisfactory classification of the cases in which it has been announced as the ground of decision.”
And a master of equity jurisprudence and equity pleading ^ (Prof. Eangdell) is quoted in 1 Harv. Law Rev. p. 104, as having said in a lecture:
“The rule as to mutuality of remedy is obscure in principle and in extent, artificial, and difficult to understand and remember.”
Perhaps as good a way as any of approaching a determination of the question whether the want of mutuality, in the particular stated, is sufficient of itself to defeat complainant’s suit, is to consider the authorities cited-by defendant’s counsel on this point, and see if this case comes within the principles recognized and enforced in those cases. They cite, Bronson v. Cahill, 4 McLean, 19, Fed. Cas. No. 1,926; Ross v. Railway Co., 4 Woolw. 26, Fed. Cas. No. 12,080; Marble Co. v. Ripley, 10 Wall. 359, 19 L. Ed. 955; Pullman’s Palace Car Co. v. Texas & P. R. Co., 11 Fed. 630, 4 Woods, 317; Duff v. Hopkins (D. C.) 33 Fed. 608; Norris v. Fox (C. C.) 45 Fed. 406; Strang v. Railroad Co., 41 C. C. A. 474, 101 Fed. 516; Blackett v. Bates, 1 Ch. App. 125; Ikerd v. Beavers, 106 Ind. 487, 7 N. E. 326.
The cases of Ross v. Railway Co., Pullman’s Palace Car Co. v. Texas & P. R. Co., Strang v. Railroad Co., Blackett v. Bates, and Ikerd v. Beavers are alike in their essential characteristics. In each case the plaintiff was denied specific performance of the contract involved therein. The ground upon which the denial was based was that plaintiff’s part of the contract was of a nature that specific performance thereof could not be decreed. It consisted in doing, and not in giving. The decree in suits for specific performance, where specific performance is granted, always decrees performance on both sides, and that without a cross-bill on part of defendant. Prof, Langdell, in his Brief Survey of Equity Jurisdiction, 1 Harv. Law Rev. 361, says that:
“Courts of equity * * * make it a condition of giving relief to the plaintiff that he shall submit to a decree made against him, also; and, indeed, they treat a plaintiff as so submitting by implication. Accordingly, whenever a decree is made for the performance of a bilateral contract, the two sides of which constitute mutual and concurrent conditions, the court will, if necessary, appoint a time and place for performance, and will require both parties to perform at such time and place concurrently; and, if either of them refuses or neglects so to perform, he will be punished for contempt on the. application of the other.”
This being so, it is readily seen that, if specific performance of plaintiff’s part of the contract cannot be decreed, the defendant’s should not be.
In the case of Strang v. Railroad Co., Simonton, J., said:
“The bill, in purpose and substance, is for the specific performance of a contract to build the road. If the court could undertake to order the defendant, on its part, to fulfill all the parts of its contract, it must order the plaintiff, on his part, to fulfill his contract; that is, to build the road. A contract, to be specifically performed, must be mutual. Fry, Spec. Perf. § 266. So the bill called upon the court to compel one party to build the railroad, and the other party to pay for it. This the court cannot do. A contract to build a railroad will not be enforced.”
The case of Pullman’s Palace Car Co. v. Texas & P. R. Co. was a suit to specifically enforce a contract for the lease of sleeping cars, to be run by defendant on its own trains over its own road. Pardee, C. J., said:
“No such decree or order should be rendered when there is not a mutuality of remedy between the parties, obtainable from the court. If the position of the parties were reversed, it does not seem that there could be any order for the Pullman Company to comply, because the court could not compel that company to build ears or purchase ears, or furnish cars sufficient to meet the requirements of travel over the extensive lines of the railroad company.”
The case of Brackett v. Bates was a suit to enforce specific performance of an award of a certain lease. Lord Cranworth stated the ground of refusing the relief in these words:
“Had it been an agreement, would there have been a case for specific performance? I think not, and for this short and simple reason: That court does not grant specific performance unless it can give full relief to bbth parties. Here the plaintiff gets at once what he seeks, — the lease; but the defendant cannot get what he is entitled to, for his right is not a right to something which can be performed at once, but a right to enforce the performance by plaintiff of daily duties during the whole term of the lease. The court has no means of enforcing the performance of those duties. All it can do is to punish the plaintiff by imprisonment or fine if he does not perform them. The form of the decree itself shows want of jurisdiction.” And again: “In order that the court may interfere, there must be mutual rights, capable of being enforced by the court. Now, here, if defendant had been willing to perform the award, and the plaintiff unwilling, could the defendant have filed a bill for specific performance of the agreement to keep the road in repair, or to supply the engine power? It is clear that such a bill could not be maintained. This disposes of the case. There is no mutuality.”
The case of Ikerd v. Beavers was a suit to enforce specific performance of a contract to convey a certain tract of land in consideration of the agreement on the part of the vendee to take care of and support the vendor, during his life, on said land. Mitchell, J., thus stated the ground for refusing the relief sought:
“Besides being complete and definite, it [the contract] must belong to a class capable of being specifically enforced, and be of a nature that the court can decree its complete performance against both parties without add-*353 tog to its terms.” And again: “Unless a contract can be specifically enforced as to both parties, a court will not interfere. Being unable to execute the contract against the plaintiff, nothing remained for the court in this instance except to decline to compel the execution of a deed in his favor.”
It is thus seen that these five cases were all cases where at the time of the hearing a decree could not be entered, enforcing specific performance of the contract on plaintiff’s part as well as the defendant’s. This was not because it was not within plaintiff’s power to do the thing which he had agreed to do.. It was because of the nature of that thing. It was such that equity could not decree its specific performance. As, therefore, specific performance on plaintiff’s part, as well as defendant’s could not be decreed, it was inequitable, and contrary to the settled form of decrees in such cases, to decree specific performance on defendant’s part alone. These cases, therefore, can have no application in the case in hand. Here, though want of mutuality existed when the contract was made, because complainant did not then have the stock and resignations which he agreed to deliver with his deeds, it has been removed, if the assumption on which we are proceeding, that he now has the stock and resignations, is correct. This contract can now be specifically enforced on both sides by the decree herein.
The cases of Marble Co. v. Ripley and Duff v. Hopkins may likewise be considered together.
In the case of Marble Co. v. Ripley, the latter had conveyed to the former property, including a large marble quarry. The contract provided that the Marble Company, as part of the consideration for the conveyance, should furnish Ripley with a certain amount of marble annually. Ripley claimed that the company had broken its contract, and brought the suit for specific performance. Mr. Justice Strong gave many reasons for the holding of the court that Ripley was not entitled to the relief he sought; said that “another” one was found “in the want of mutuality.” The particular in which there was want of mutuality was that the contract provided that Ripley had a right to terminate it at any time on giving one year’s notice. It was a case, therefore, of want of mutuality in point of obligation, and such want of mutuality would have continued to exist, had specific performance on the Marble Company’s part been decreed. Granting specific performance under such circumstances would have been clearly inequitable.
The case of Duff v. Hopkins was a case where an assignee in bankruptcy entered into a contract with another for the release and conveyance to the estate of the bankrupt of certain real estate acquired from the bankrupt under execution sales against him, in consideration of certain payments to be made by the assignee. The suit for specific performance was against the vendor and his subsequent grantee. It was held that the assignee was not entitled to the relief sought, because of want of mutuality. The particular in which there was nonmutuality, and why it was sufficient to defeat the assignee’s suit, is indicated by the following quotation from the opinion of Judge Acheson. He said:
“No one pretends that the assignee incurred individual liability, and, to give the agreement in question any binding effect against him in his repre*354 sentatlve character, the consent of the bankrupt court was a .sine qua non. Now, the assignee alone could invoke the authority of that tribunal. The bank has no standing in that forum for such purpose. It is idle to speculate as to what might have been the result had the assignee made a timely application to the court, and obtained its sanction to the proposed compromise. The fact is that he did not move in the matter until after the expiration of the year within which the contemplated settlement should have been carried out to full completion. In the meantime the attitude of the parties had become one of antagonism.”
This, therefore, was a case of nonmutuality in the matter of obligation and repudiation of the contract before any attempt had been made to remove the nonmutuality.
These two cases are certainly not applicable to the case in hand.
The remaining two cases cited by defendant, of Bronson v. Cahill and Norris v. Fox, may also be considered together. Both were cases of specific performance sought of a contract of sale of land, brought by vendor against vendee.
In Bronson v. Cahill, one of two joint owners of a tract of land made a contract to sell the land, as if he were the sole owner. The vendee did not know that it was owned by him jointly with another. He claimed to be acting for himself and as agent for his co-owner. After considerable delay, but within what was alleged to be a reasonable time, a deed was tendered, executed by both owners. The vendee refused to accept it, and a suit for specific performance of the contract was brought by the- vendor and his co-owner. It was held that they were not entitled to the relief. There was some question as to whether the deed tendered was properly executed, and as to whether it was tendered within a reasonable time. But the decision was based “chiefly on the fact that there was a want of mutuality in the contract.” The court said:
“There was nothing on the face of the agreement which could give the defendant a claim against Wood for his interest in the land. There was then a want of mutuality in the contract, and this is essential to a decree for a specific execution of the contract. Benedict v. Lynch, 1 Johns. Oh. 370, 7 Am. JDec. 484; Parkhurst v. Van Cortlandt, i Johns. Ch. 282; German v. Maehin, 6 Paige, 288.”
This is the extent of the consideration given to this question in the opinion. It is not entirely certain that the court realized the fact that the vendor’s contract embraced his co-owner’s interest in the land, as well as 'his own, and that the joint deed tendered was in performance of that contract on his part. It is possible that the court looked upon the transaction as if the vendee had no obligation for the co-owner’s interest in the land, and that it was a case of non-mutuality in the obligation. It is certain that the co-owner who made no contract to convey his interest was a party seeking the enforcement of the vendee’s contract, and the authorities relied on were cases of want of mutuality in obligation. But however this may be, it must be conceded that this case does decide that a half owner of land, who has made a contract of sale of the whole land, and in performance thereof has tendered a deed from himself and co-owner before any repudiation of the contract, is not entitled to specific performance of the contract.
In the case of Norris v. Fox, Norris agreed to procure for Fox,
“The rule Is fundamental that a contract will not bé specifically enforced unless it is obligatory on both parties, nor unless both parties, at the time it is executed, have the right to resort to equity for its specific enforcement.” And again: “And where a contract, when executed, Is not specifically enforceable against one of the parties, he cannot, by subsequent performance of those conditions that could not be specifically enforced, put himself in a position to demand specific enforcement against the other party.” And again: “In the case at bar the agreement of Norris to procure a warranty deed of the land, at the time belonging to another, was of that nature that an action at law would lie for a breach of the agreement. As Fox could not eompél specific performance of the contract when made, and only had his remedy at law by a suit for damages, the complainant must resort to the same remedy.”
In regard to this case, it is to be noted in the first instance that the authorities cited by Judge Thayer in support of the first proposition quoted from his opinion were all authorities holding that a contract will not be specifically enforced where there is want of mutuality in obligation. Those cited in support of the second proposition so quoted are the case of Hope v. Hope, 8 De Gex, M. & G. 731, and Fry, Spec. Perf. (3d Am. Ed.) § 443. The latter authority is based upon the case of Hope v. Hope, so that really that case is the sole judicial support which that proposition has, other than the indorsement given to it by Judge Thayer. That was a suit by a wife against a husband to enforce specific performance of a contract entered into after a separation between them, whereby he was to pay her certain sums of money at certain stated periods. A part of the consideration for said contract was an agreement on the part of the wife not to oppose a suit for divorce instituted by him against her in the English courts. In answer to the position that this consideration was illegal, and therefore the contract based upon it could not be enforced, it was urged that, whatever objection there may have been to the agreement in its inception, part of it had been performed, and what remained to be performed was legal and unobjectionable. To this Eord Justice Turner responded:
“To hold that an agreement so objectionable as that this court would not perform it can be rendered capable of performance by the objectionable part of it having been carried into execution is a doctrine to which I cannot assent.”
This is certainly not an authority for the proposition in support of which it is cited. It does not follow that, because the performance of an illegal contract will not entitle the party who has performed it to specific performance by the other party of his part of the contract, the performance of a contract not specifically enforceable when the contract was made, but entirely legal, may not entitle the party performing to specific performance of the other’s part. It is thus seen that the authorities upon which the case of Norris v. Fox is based are
“It is to be observed that there was no mutuality, for the defendant could not have had a decree against the plaintiff to perform that contract, because the court does not attempt to compel a person to do what is impossible. The plaintiff had no power to grant the lease, and neither the court nor the defendant could have compelled him to do so.”
He said further:
“The case was like that of a person undertaking to sell a propertyt which does not belong to him. * * * If he [landlord] had made this statement in September, 1864, and* Farrer had communicated it to Nash, there would have been an end to the question. But how long was Nash to go on, and wait to know whether Farrer could make out a good title? Farrer filed his bill in October, 1864, and it is proved that in January, 1865, he was not able to grant the lease he had agreed to grant; and he does not show that he was ever able to complete his contract until April, 1865. Is a person entitled to keep another in suspense during that time? If so, it may go any length of time.”
And again he said:
“I am of the opinion that when a person sells property which he is neither able to convey himself, nor has the power to compel a conveyance of it from any other person, the purchaser, as soon as he finds that to be the case, may say, T will have nothing to do with it.’ The purchaser is not bound to wait and see whether the vendor can induce some third person (who has the power) to join in making a good title to the property itself.”
In the case of Wylson v. Dunn the vendor did not own the land which he contracted to sell, or any interest in it, at the time of the making of the contract. This fact was known to the vendee. Subse
“It is a teelmical doctrine, but, like many other technical doctrines, founded on common sense. It comes simply to this: that one party to a bargain shall not be held bound to that bargain, when he cannot enforce it against the other. If the contract is not mutually enforceable, it is a voidable contract; that is, it may be avoided as soon as the person who has a right to avoid it discovers that the cause or occasion for so doing occurs.”
He said further:
“If a man contracts to sell an agreement for a lease, and it turns out that he has not got an agreement for a lease, the purchaser, when he finds that to be so, may say: T will not enter into it. I am entitled to be off, and I am off. I have contracted to buy that which you have not to give, and therefore you cannot enforce any contract against me.’ That is one of the cases, and a very simple case. * * * But there arises the question whether this power of avoidance for nonmutuality is applicable to the case where the non-mutuality is apparent in the first instance, and is an essential part of the bargain. * * * But the doctrine of nonmutuality — the doctrine * that a purchaser may avoid a contract when he discovers that his vendor has not got that which he contracted to sell — seems to me altogether inapplicable to a case where the vendor in the first instance tells the purchaser, and the purchaser knows from the circumstances of the case, that the vendor has no-title, and is not likely to have one for some time. Is not such a contract as I have just described determinable by the purchaser on notice? I think it is. I think that a purchaser, having entered into such a contract as I have suggested, is entitled at any time to say: ‘You have not got that land, yet I hoped you would have got it by this time. I do not care now to have the-land, and I determine the contract.’ If in the meantime the vendor had incurred expense, it may be that he would have a right of action against the purchaser for expenditures incurred and labor bestowed at the purchaser’s-request, but that is not specific performance. The purchaser might, I think, in the case I am suggesting, get off the contract by notice, and say: ‘You are not in a position to convey or perform your contract, and therefore I am. off.’ But when must the notice be given? Must it be given some time before the vendor gets that which enables him to perform his contract? Must not the purchaser be active, and bring the matter to an end before it has been brought to an end on the other side? That is certainly my conviction, applicable to such a case.”
The obiter expressions in the opinion in case of Farrer v. Nash, an<3 its implication, and the decision in the case of Wylson v. Dunn, are therefore to the effect that the original nonmutuality in such contracts-as were involved in those cases is not sufficient, in and of itself, without regard to and irrespective of other considerations, to defeat the vendor’s right to specific performance. It is necessary, in addition, that the vendee should, before the vendor has put himself in position to comply with his contract and to demand performance on the part of the vendee, to notify the vendor of the fact that he will not accept the property if procured. If the vendor obtains the property, and places himself in such position before receipt of such notice, he is entitled to specific performance, notwithstanding the original nonmutuality.
In regard to the case of Norris v. Fox, it is still further to be noted that certain authorities, which may be considered to be in line with
In the case of Townshend v. Goodfellow (Minn.) 41 N. W. 1056, 3 L. R. A. 739, 12 Am. St. Rep. 736, Vanderburgh, J., said:
“The defendants contend that the court ought not to enforce the contract in favor of the plaintiff vendor, because it appears that at the time the contract was made he had no title to the premises, and that equity will not actively interfere to aid a party who makes a contract to sell lands of which he is not the owner.”
The rule as insisted on by the defendants is only applicable where a party has no interest in the lands which he agrees to convey, but volunteers to enter into a contract as a mere venture. Such a transaction will not be sanctioned by a court of equity, because it is a mere speculation, and one who speculates upon that which he has no contract, or the means of acquiring it, is not a bona fide contractor. Bisp. Eq. p. 437, says:
“But this doctrine will not be carried to the extent of holding that a vendor is entitled to specific performance if he had no title at the date of the corn tract, although he may have subsequently acquired one; for one who speculates upon that which is not within his control is not a bona fide contractor, and there is no mutuality between the parties.”
Eaton, Eq. p. 548, says:
“But if the vendor had no title at the time the contract was executed, equity will not interfere to compel specific performance of the contract, even if the vendor subsequently acquires a title. Such a transaction is speculative, and the vendor is not a bona fide contractor.”
But whatever may be the extent of the rule in such cases, — whether the vendor in no contingency will be entitled to specific performance, or will be entitled to it if he obtains the property before time of performance, and notification from the vendee that he claims the right to be off from the contract, and whatever may be the foundation of the rule, the original nonmutuality of the contract, or its speculative character, it is certain that the rule has application only to cases where the vendor is without that which he agreed to convey or any interest in it. It has no application to a case where the vendor has title to some extent, but it is defective or' incumbered in some particular. This is recognized in the opinion rendered by the supreme court of Minnesota, and by the text-writers from which we have just quoted; and, in immediate connection with that which we have quoted, Vanderburgh, J., continues the above statement of the law as follows:
“But the general rule Is that, where a contract is entered into in gdod faith, it is not necessary that the vendor be actually in the situation to perform it at the time it is entered into, provided he be able at the proper time to place himself in that situation. Imperfections in the title when the contract is made will form no ground of objection thereto, if removed before the time of completing the purchase.”
Bispham precedes the above statement quoted from him by this:
• “It may be added here that it has been decided that a court of equity will decree specific performance if the vendor is able to make a good title at any time before final decree.”
“And a court of equity will compel a purchaser to complete his contract for the purchase of lands if the vendor is able to make good the title at any time before the final decree of the court is pronounced, and the vendor will be permitted to remedy the defects in the title if he can do so within a reasonable time.”
Of course, these authorities, in laying down this proposition of law, assume that it is only applicable where time is not of the essence of the contract. And they go to the extent of enforcing specific performance, even though the nonmutuality exists at the time suit is brought, and hold that it may be cured at any time before defense. Support of it may be found in the following decisions of the supreme court of the United States, to wit: Hepburn v. Auld, 5 Cranch, 262, 3 L. Ed. 96; Hepburn v. Dunlop, 1 Wheat. 179, 4 L. Ed. 65; Watts v. Waddle, 6 Pet. 402, 8 L. Ed. 437. It has also found recognition in the following recent decisions of the. court of appeals of Kentucky, to wit: Logan v. Bull, 78 Ky. 607; Smith v. Cansler, 83 Ky. 371; Tapp v. Nock, 89 Ky. 414; 12 S. W. 713; Collins v. Park, 03 Kv. 6. 18 S. W. 1013.
Holt, J., in Smith v. Cansler, said:
“Mutuality of obligation is, in general, necessary to the validity of a contract; and it is a general rule that, in order to be binding, it must be enforceable by either party. If, however, one is not invested with such a title as he undertakes by his contract to make to a purchaser, yet if time be not of the essence of it, and he is able to make title when the time for performance arrives, and tenders the deed, then it will be enforced, although his title was defective at the date of the contract; and in such a case, if a rescission be asked by the other party, and the vendor is not able at the time of the institution of a suit for this purpose to comply with the contract, yet, if he can perfect the title within a reasonable time, the court will afford him an opportunity to do so.”
Indeed, it has received well-nigh-universal recognition by the courts and text-writers, and is involved in the proper practice as to putting title in issue and ascertaining it. That practice is thus referred to by Prof. Langdell in his Brief Survey of Equity Jurisdiction, 1 Harv. Law Rev. p. 369:
“The court takes upon Itself the burden of ascertaining whether the vendor has such a title as the vendee is bound to accept; and that, too, whether the vendor or the vendee be plaintiff in the suit. Thus, if the vendor be plaintiff, he is not required either to allege or prove that his title is good, nor is the vendee required to allege or prove the contrary, but the pleadings and proofs assume the plaintiff is able to make a good title; and, if the questions raised by ‘the pleadings and proofs be decided in the plaintiff’s favor, a decree is made that the contract be specifically performed, provided the plaintiff be able to make a good title, and that the cause be referred to a master, to report whether a good title can be made. So, though the vendee be the one who seeks specific performance, he is not regarded as submitting to perform on his part, except upon condition that he can have a good title; and, therefore, if a decree be made in his favor, it must be in the same form as when the vendor is plaintiff, unless the vendee declare himself satisfied with the vendor’s title, and waive any reference to a master in regard to it. The result is, therefore, a reference as to title is an incident to every specific performance in equity of a contract for the purchase and sale of land, unless such reference be waived by the vendee.”
How far the case of Bronson v. Cahill is reconcilable with these authorities, it is not necessary to determine. The authorities go even
“There is no doubt that the vendee of an estate in an unexecuted contract is entitled to have that for which he contracts, before he can be compelled to-part with the consideration he agreed to pay, and that the ability of the-vendor to convey should exist when his duty by the contract arises to convey, or at the time of a decree for a conveyance, where time is not of the essence-of the contract. * * * But it does not necessarily follow from this general rule that there is no case of specific execution at the instance of the vendor unless he has ability to convey in strict and exact compliance with the contract as to the quantity or extent of the subject-matter sold. On the contrary, notwithstanding the general rule thus stated, there are many cases, owing to special circumstances, where the vendor may obtain specific performance of the contract in equity, although he may not be able to convey to the vendee to the full extent bargained for. And if in any case the contract be one that is fit and proper to be thus executed on the application of the vendor, it is clear the vendee can have no option to rescind it, in view of a court of equity, whatever may be his right at law. In a case where the vendor is unable, from any cause not involving mala tides on his part, to-convey each and every parcel of the land contracted to be sold, and it is apparent that the part that cannot be conveyed is of small importance, or is immaterial to the purchaser’s enjoyment of that which may be conveyed to-him, there the vendor may insist on performance, with compensation to the purchaser, or a proportionate abatement from the agreed price of what has not been paid. This cannot, however, be done where the part in reference to-which the defect exists is a considerable portion of the entire subject-matter, or is in its nature material to the enjoyment of that part about which there-is no defect. To this effect the authorities are abundant and decisive.”
Of course, specific performance will not be granted in such cases-unless compensation can be made for what is not conveyed. But there-is an absence of strict mutuality in them; it being considered inequitable to deny specific performance where compensation can be had, and the part not conveyed is not essential to that which is.
It is evident, therefore, that the case of Norris v. Fox is not applicable to the case in hand, either in the point decided, or in the-ground upon which it was so decided, even conceding that it was correctly decided. This is not a case where complainant was absolutely without title to that which he agreed to sell to the defendant. So far as the defense at present upon consideration is concerned, it must be-accepted that complainant has, and since the execution of the contract has had, an absolute and unincumbered title to the distillery plant and personal property sold, which was the principal subject of the contract. The only particular in which he was lacking when the contract was made, as to the stock in, and resignations of the directors-of, his assignor, the T. J. Megibben Company, and the nonmutuality in point of remedy existing at that time, was as to a matter entirely collateral. This case, therefore, is not the case decided in Norris v. Fox. Nor is the ground upon which that case was decided, to wit, nonmutuality in matter of remedy existing at the time when the contract was made, applicable to this case, because applied there. As.
The result, then, of our consideration of the authorities cited by counsel for defendant in support of the position that complainant is-not entitled to specific performance, because of nonmutuality in the-particular stated, is to show that they do not uphold that position. And we are not aware of any that do. On the contrary, it seems to the court that the principle applied in the authorities cited, to the effect that a court of equity will enforce specific performance when time is not of the essence of the contract, even though the vendor’s-title is defective when suit is brought, is against that position. Likewise the general rule applicable to suits for specific performance, as stated by Mr. Justice Field in the case of Willard v. Tayloe, supra, in-these words:
“In general it may be said that the specific relief will be granted when it is apparent, from a view of all the circumstances of the particular case, that it will subserve the ends of justice, and that it will be withheld when, from a like view, it appears that it will produce hardship or injustice to either of the parties.”
And also the rule which guides courts of equity in all suits, as laid down in the following language of Mr. Justice Campbell in the case of Secombe v. Steele, 20 How. 106, 15 L. Ed. 833:
“Courts of equity make a distinction in all eases between that which is matter of substance and that which is matter of form; and, if it find that by insisting on form the substance will be defeated, it holds it inequitable to allow a person to insist on such form, and thereby defeat the substance.”
To hold that the mere want of mutuality existing at the time the contract was made, in matter of remedy, as to something that was entirely collateral to the main subject of the contract, and not of very great value to the defendant, is to defeat complainant’s right to specific performance of the contract, would, in view of all the circumstances of this case, be to adhere to the matter of form, and lose sight of matter of substance. Counsel for defendant suggests that it will be a great hardship to defendant, after the lapse of nearly three years without operation of the distillery, and probable consequent deterioration of the property and depreciation in value, to have -to take the property and pay for it. That may be true, but it is a matter of defendant’s own bringing about. On the other hand, it will be a hardship to complainant to have to keep the property under such circumstances, and hunt up another purchaser, when the present condition of things was brought about through no instrumentality of his. If any one is to suffer for the delay, it should be that party who is responsible for it.
For these reasons given, the court does not think that defendant has made good any of its defenses, but that complainant is entitled to a decree.