120 Va. 437 | Va. | 1917
delivered the opinion of the court.
The transactions leading up to this litigation are simple enough in themselves, but any intelligent narration of them must necessarily be somewhat prolix.
On March 24, 1903, all of the parties named above, Cowardin, Bradley, Clay, Stagg and Kelly, entered into a partnership'agreement, under the firm name of Cowardin, Bradley, Clay & Co., for the purpose of bidding on a contract with the United States government for the erection of a water filtration plant in Washington city. Cowardin, Bradley and Clay were to be the active managers. Stagg and Kelly were to furnish $10,000 each, as the first capital of the firm, if the contract was awarded to it, and when the $20,000 thus provided was exhausted, all the partners were to be equally obligated to assist in raising any needed funds. Except as here indicated, and as to the further obligation to assist the others in securing bonds needed for the bid and contract, Stagg and Kelly were not required to render any other services, but were to have an equal voice in the management of the affairs of the firm.
Their bid, of $989,000, was accepted. A preliminary bond of $150,000 was executed by all the members of the firm, and this was superseded in a few days by a final bond for $200,000, likewise executed by each member, and also by a bonding company as surety; and, on April 6, 1903, the contract between the government and Cowardin, Bradley, Clay & Co. was duly executed.
On April 7, 1903, just one day after the contract was closed with the government, Thos. E. Stagg, acting for himself and for Cowardin, Bradley and Clay, paid Kelly $500 in cash and Kelly signed a paper presented to him by Stagg, reciting the original partnership agreement, the contract between the partnership and the government, and containing also the following recital and agreement:
“Whereas, now the said M. Kelly expresses his inability to comply with one material condition of said copartnership, and desires to be released from the terms and obligations to provide the sum of Ten Thousand Dollars, as aforesaid, but having by his aid and credit, jointly with each of said parties secured the necessary bond required by the United States government, and is bound for the completion of said contract;
“Now, therefore, this agreement witnesseth, that for and in consideration of the premises, as well as the sum of five hundred dollars, paid to the said M. Kelly, and in further consideration that the said M. Kelly shall be relieved of any duties and all further liability incurred by reason of the prosecution and completion of the aforesaid contract with the United States government, the said M. Kelly doth acknowledge his liability to the Fidelity and Deposit Company of Baltimore as the guarantor on said bond, and doth
This transaction was the end of Kelly’s dealings with his former partners and of his knowledge of what they were doing under the contract, until he was requested to meet them in Washington on May 26, 1903.
Meanwhile, Cowardin, Bradley, Clay and Stagg, continuing in the enterprise under the firm name of Cowardin, Bradley, Clay & Co., began work under the contract with the government, and got together a small equipment, but were financially unable to make very substantial progress, and soon concluded that their only chance to realize any profit for themselves or to perform the obligations they had assumed, was to transfer their contract to some other person or firm having the ability to carry it out. After some negotiations with other persons had failed to materialize, the contracting firm of May and Jekyll made a proposition which resulted in a contract, prepared by the attorney for May & Jekyll, by which they obligated themselves to take over and complete the Work on terms which promised a substantial profit to Cowardin, Bradley, Clay & Co. This contract as prepared, and as finally executed, designated Kelly as one of the partners in the last named firm, required his signature, and upon its face made him in all respects a party thereto, bound by all its obligations and entitled to all its benefits, exactly as the other partners were. When it was explained to the attorney for May & Jekyll that Kelly was no longer interested in the contract, he insisted that Kelly’s signature was essential in order to insure the approval of government representatives who would have to pass upon the contract. Thereupon, on May 26,1903, Cowardin and others sent an urgent message to Kelly in Richmond, requesting him to come to Washington at once, and he did so.
On August 25, 1903, May & Jekyll, who were then apparently in a failing condition financially, entered into a written contract with Cowardin, Bradley, Clay and Stagg, under the terms of which the contract of May 26, 1903, was cancelled and the former firm surrendered to the latter the construction outfit on the site of the filtration plant, and all the fights and contracts connected therewith. And, on the same day, Cowardin, Bradley, Clay and Stagg entered
Shortly thereafter, pursuant to one of the stipulations in the Dean & Sibley contract, a receiver was procured for Cowardin, Bradley, Clay & Co. in a suit instituted in the Supreme Court of the District of Columbia, and thereby certain technical difficulties, not necessary to notice further, were obviated, and the transfer of the government contract to Dean & Sibley was perfected.
The first assignment of error is that the court improperly overruled the demurrer to the bill. The ground of demurrer chiefly relied upon is that the allegation “touching the formation of a new partnership between Kelly and the defendants on May 26, 1903, is obscure,” and does not sufficiently charge any such new partnership; and the argument advanced is that the existence of a partnership relation between the parties is essential to the standing of the complainant in a court of equity.
The bill alleges the original partnership, the retirement of Kelly therefrom, and his subsequent coming back into the firm, for a purpose and upon a consideration therein-specifically set out. The contract with May & Jekyll, filed
There was also a motion made, after the evidence was all in, to dismiss the bill upon the ground that the proof failed to show a case for jurisdiction in equity, even if the allegations of the bill were sufficient for that purpose. The court overruled the motion, and its action in doing so is made the basis of the second assignment of error. In our view of the case, the evidence was entirely sufficient to establish the relationship and the character of the controversy upon which the complainant invoked the equity jurisdiction in his bill, and upon which we have sustained his resort to that forum. There was no error in overruling the motion.
It appears that the cause was argued and submitted some time before the decree appealed from was entered, the court in the meantime having it under advisement; that on November 15, 1915, the decision was announced in a written opinion; and that on December 8, 1916, the decree was entered, containing the following pertinent recital: “And this day at the entry of the decree carrying into effect the opinion of the court, the defendants, by counsel, moved the court to pass on the exceptions of the defendants shown in the depositions to have been taken to certain of the evidence of the plaintiff, especially their exception to the admissibility of said transcript of the record from Washington, and the court declined to pass on any of said exceptions because they were not pointed out and urged in the argument of the counsel at the time the cause was argued and submitted.”
Independent of any question as to the waiver of these exceptions, the appellants have not been prejudiced concerning them.- The exceptions relate to certain testimony disclosing the transactions whereby the appellants, after the surrender of the plant by May & Jekyll, arranged with other parties to complete the work; and it is insisted that the testimony was improper because the bill stated a case under which the complainant could only recover by showing that profits were realized directly from the May & Jekyll contract. We do not so understand the bill or the complainant's rights. The bill distinctly sets out the subsequent contracts and transactions, and claims a share in the profits derived therefrom by the appellants upon the theory that these profits were realized by them in consequence of the May & Jekyll contract, though not directly thereunder. This theory was justified by the terms of the contract which promised Kelly “one-tenth, of the profits that may be real
We come now to the assignment of error upon which we understand appellants to place their chief reliance, and naturally so because, if sound, it would furnish a basis for reversal, going to the merits and substance of the controversy rather than to the form in which the controversy is presented. This assignment challenges the validity of the contract for one-tenth of the profits on the grounds, (1) that it was obtained through duress, and (2) that it was without consideration.
To maintain the contention that the contract was obtained by duress, the appellants rely upon the testimony of Mr. Darlington, a distinguished member of the bar of the Supreme Court of the District of Columbia, who stated, as an expert and in answer to an hypothetical question, that in his opinion “the contract would not form a basis of recovery in the District of Columbia.’’ The facts assumed in the hypothetical question brought the execution of the contract,
“The doctrine appears to be well established that where one party has possession or control of the property of another and refuses to surrender it to the control and use of the owner, except upon compliance with an unlawful demand, a contract made by the owner under such circumstances to emancipate the property is to be regarded as made under compulsion and duress. Nor can it be doubted that a contract, procured by threats inducing fear of the destruction of one’s property, may be avoided on the ground of duress, there being nothing in such a case but the form of a contract, wholly lacking the voluntary assent of the party to be bound by it. To constitute duress, it is sufficient if the will be constrained by the unlawful presentation of a choice between comparative evils; as, inconvenience and loss by the detention of property, loss of prop
This doctrine, however, does not apply here, because the element of an unlawful demand is lacking. The contract of April 7, 1903, whereby Kelly was released from any further obligation so far as Cowardin, Bradley, Clay, and Stagg were concerned, is not correctly interpreted in the hypothetical question answered by Mr. Darlington. The dominant purpose of that contract, to which he was not required to attach his signature, was not to sell Kelly’s interest, but to release him from the contract and from all its burdens and obligations. He had, however, already been of service to his partners in securing the contract and giving -the necessary bond, and he remained bound under both so far as the government and the surety company were concerned. This latter fact prominently appears in the release contract, and it was an abundant consideration for the $500 which they paid him upon a final settlement and termination of their relations with him as an associate under the original contract. The opinion of the learned judge of the lower court deals somewhat elaborately with this phase of the case, and we quite agree with his conclusion that, “on May 26, 1903, Kelly was under no obligation of duty, contractual or otherwise, to the defendants.” And this is necessarily the end of the contention that Kelly procured the contract for a share in the profits by duress. Being under no obligation to sing the May & Jekyll contract, and preferring not to do so at all, even for a consideration, there is no foundation upon which to rest any claim of duress in the procurement of the agreement which he now seeks to enforce.
What has been said to show that there was no duress upon the part of Kelly, practically disposes of the further contention that there was no consideration for the contract for a share in the profits. With no obligation upon him to
This disposes of the substance of all the assignments of error, except one which charges that the court erred in finding that the defendants had realized profits from the contract of May 26, 1903. That contract was an indirect transfer of the government contract, and contained a stipulation that if May & Jekyll failed to carry out their contract, they should surrender the plant, upon specified terms, to “the parties of the first part” to complete the work. Kelly was one of the parties of the first part. He was not consulted when May & Jekyll failed, and the plant was surrendered to Cowardin and others under terms which, by mutual agreement, were different from those originally specified for the surrender. The government' contract was then completed, under the circumstances already briefly outlined, and appellants realized a profit of $65,000. We have no difficulty in holding that this sum, as well as any net amounts they may have realized while May & Jekyll were doing the work, must be regarded as profits “realized by the said firm in the matter of the contract” with May & Jekyll. Appellants insist that this sum was profit from the government contract, and not from the May & Jekyll contract which failed of completion. The argument proves too much. A primary contention of the appellants is that it was the duty of Kelly to sign the May & Jekyll contract since that contract provided a means of rescuing the parties from financial ruin; and, as a matter of fact, it was a very important factor in the final completion of the government contract. We have seen that Kelly,was under no duty to sign the agreement, but it can hardly be consistently argued that profits which his' signature to the May & Jekyll contract made possible were not in the contemplation of the parties as profits “realized from the matter of” that contract. The lower court disposed of this question as follows:
It is quite true that Kelly was not a party to the litigation between Cowardin & Co. and the Sand Filtration Corporation in the Federal courts, and that the issues there were different from those in the instant case; but it is apparent from the opinion of the Court of Appeals of the District of Columbia and of the Supreme Court of the United States, cited above, that both courts regarded the profits realized by Cowardin & Co. as having been an outgrowth of' the May & Jekyll' contract. Nor do we see how they could be otherwise regarded. The chief consideration for the-$65,000 paid by the Sand Filtration Corporation was the plant and equipment acquired from May & Jekyll; and it was by virtue of the contract with them that the appellants finally secured the performance of the contract with the government.
The decree of the chancery court, in our opinion, was. right in all respects, and must be affirmed.
Affirmed.