93 N.Y.S. 113 | N.Y. App. Div. | 1905
Lead Opinion
This action is based upon a contract which is described in the complaint as one by which, among other things, the plaintiff “ agreed to procure and deliver to the defendant within four months from the date thereof all the above-mentioned outstanding capital stock of
The defendant admits the making of the agreement and admits that he has refused to deliver to the plaintiff 500 shares of the capital stock of the Wright’s Company, but-denies that the plaintiff has performed the conditions of the contract on his part and denies the other allegations of the complaint. The answer then sets up as an affirmative defense that the contract was procured by reliance upon certain representations made by the plaintiff with intent to deceive and defraud the defendant; that the plaintiff knew that these representations were false ; that the defendant relied upon these representations in making the contract, and demanded judgment dismissing the complaint and declaring the alleged agreement null and void and canceling the same. Although affirmative relief was thus demanded, there seems to have been no reply served to this answer, so that these allegations were not treated as setting up a counterclaim which would entitle the defendant to affirmative relief, but merely as a defense to the action alleged in the complaint. The action being at issue, the parties consented that it be referred to a referee to hear and determine. The referee found that the stock of Wright’s Automatic Tobacco Packing Machine Company had never been listed on any exchange or had any quoted value or any definite market price, or any certain value capable of exact ascertainment;
The first question is whether this action, as an action^in equity, could be maintained, or whether the remedy was an action at law for damages for a breach of the contract.
The action was based upon a breach of contract to sell stock of an incorporated company. It is not alleged that the contract was made to enable the plaintiff to acquire the control of the company; nor is there any fact alleged or found by the referee to justify the court in entertaining an action for specific performance, except the fact that the stock had no market value. The case is no different, therefore, from the sale of any merchandise which has no market value, and unless a different rule is to be applied to a contract for the sale of stock from that applied to a contract for the sale of other personal property I do not think that this is sufficient. The referee found that in case the defendant did not deliver the stock the plaintiff was to have judgment for its value, leaving the question of value to be determined upon application at the foot of the judgment. This would seem to be inconsistent with the finding that plaintiff had no adequate remedy at law.
It is a general rule, which I had supposed was settled, that a court of equity will not entertain an action for a specific performance ' of a contract for the sale of chattels, unless special facts are alleged and proved to show that an award of damages for a breach of the contract of sale would not afford the plaintiff an adequate remedy. Thus, the rule is stated in the American and English Encyclopaedia of Law (Vol. 26 [2d ed.], p. 17) : “As the origin of the remedy of specific performance was due to the inadequacy of the common law,
USTo case in this State to which my attention has been called, or which I have been able to find, has held that a mere executory agreement to sell stock of a corporation can be specifically enforced on merely showing that there have been no sales of the stock; that it is not listed on any exchange, and that the defendant is the owner of a large majority of the stock of the corporation; and that is the evidence upon which the court has granted specific performance of this contract. In Phillips v. Berger (2 Barb. 608), cited by the Court of Appeals in Johnson v. Brooks, Mr. Justice Edmonds says: “ The rule in regard to personal contracts yet falls short of that, and is extended only to cases where the party wants the thing in specie and he cannot otherwise be compensated ; that is, where an award of damages would not put him in a situation as beneficial as if the agreement were specifically performed. * * * Or, where the compensation in damages would fall short of the redress which his situation might require. * * * The general rule is not to entertain jurisdiction to decree a specific performance of agreements respecting goods, chattels, stock, dioses in action and other things of a mere personal nature ; but the rule is qualified and is limited to cases where a compensation in damages would furnish a complete and satisfactory remedy.” In Bomeisler v. Forster (154 N. Y. 229) Judge Gbay, in stating the instances in which courts of equity will interfere, says: “ The rule of specific performance will be extended to personal contracts, where the party wants the thing in specie and he cannot otherwise be compensated. * * * That is to say, the extension of the rule to such cases is justified where there would not be a complete and satisfactory remedy by compensation in damages, or where the benefits of the contract would not inure fully to the party in whose favor it was made, unless it was specifically performed.” In Lighthouse v. Third Nat. Bank (162 N. Y. 336) the rule is stated “ that in general a court of equity will not take upon
The same rule is recognized in Matter of Argus (138 N. Y. 557), limiting the right to enforce a contract for the sale of stock by specific performance to a case where “compensation in damages would not furnish a complete and satisfactory • remedy.” (See, also, Kennedy v. Thompson, 97 App. Div. 296.) Williams v. Montgomery (148 N. Y. 519) illustrated a case in which a court of equity was justified in decreeing the specific performance of a contract. 'Judge Vann, in delivering the opinion, says“Although performance of a contract relating to, personal property may not be - demanded as a right, it rests in the sound discretion of the court, where, as in this case, compensation in damages would be difficult, if not impossible, owing to the fact that the matter was in the nature of an experiment, contracted for but not made, so that the result, of necessity, could never be known.” In all these cases the rule is stated that specific performance of a contract for the sale of chattels will not be decreed where the judgment for damages will be adequate relief; and in no case in this State has specific performance been decreed merely because there was difficulty in ascertaining the damages that the plaintiff would sustain by reason of a breach of a contract for the sale of stock. No fact is shown here" to justify a finding that the plaintiff had a special interest to acquire this specific stock. It would not give him the control of the corporation, and it is not suggested that he desires the stock except for the purpose of the pecuniary advantage which would accrue to him from its ownership. Such pecuniary advantage would be compénsated by the award of an amount as damages, the difference between the value of his stock that he was to transfer to the defendant and the stock that the defendant was to transfer to him. . If there is no market value of the stock, there can be, I think, no difficulty in ascertaining its value, considering the contracts that the company has made, the nature of its business, the amount of the- dividends paid, and the other facts relating to the value of its property and its income; and the referee himself recognized the practicability of
The plaintiff claims that this point is not available, because it was not pleaded. The plaintiff, however, to sustain his cause of action and to justify an application to the court for equitable relief, expressly alleges in the complaint that the plaintiff will suffer great and irreparable damage if the contract shall not be specifically enforced, and that he has no adequate remedy at law. That allegation is denied by the answer, and there is, therefore, presented an issue as to whether or not the plaintiff has an adequate remedy at law. The plaintiff based his cause of action for a specific performance upon this allegation, and a denial by the defendant of the allegation presented an issue, and no affirmative allegation that the plaintiff had a remedy at law was essential. The fact that the defendant assented that the action, be tried by a referee would not waive 1ns right to have the question determined as to whether lie should be compelled to part with his stock by a decree of specific performance, or whether he should be left to his remedy at law which was presented by the pleadings.
Without considering the other questions presented I think the . judgment should be reversed and a new trial ordered, with costs to the appellant to abide the event.
Yan Bbunt, P. J., and McLaughlin, J., concurred; Pattebson and Laughlin, JJ., dissented.
Dissenting Opinion
Since for want of a market value it would be exceedingly difficult, .if not impossible, to prove the damages, I fail to see how an action at law would afford adequate relief.
Judgment reversed, new trial ordered, costs to appellant to abide event.