Copper v. Wells

1 N.J. Eq. 10 | New York Court of Chancery | 1830

The Chancellor.

Have the complainants exhibited a proper case for equitable relief?

The complainants represent those who made the original agreement with Wells and wife, in 1814. It is manifest that on the strength of that agreement, expensive buildings were constructed, and large sums of money expended in purchasing machinery necessary for the manufacturing business. The fifteen years mentioned in the contract ended on the 30th of March, 1829; the lease then expired by its own limitation, unless the lessee requested a continuance. In this case such request was not made ; on the contrary, the party then in interest and representing the original lessees, gave notice to those having the legal estate, that the possession would be given up, and that a valuation was desired, of the building and machinery; the complainant having chosen one appraiser, according to the stipulation in the lease. The defendants refused to receive the possession, or to unite in the appraisement. The rent (with the exception of a small part of it) was paid ; and it was offered that this should be allowed out of the valuation.

As to the first species of relief prayed for: can the court decree a specific performance ? Clearly net. The principle is well settled that the court has no power to compel a party to appoint an arbitrator, and of course that a specific performance cannot be decreed. In Mitchell v. Harris, 2 Ves. jr. 129, Lord Eldon inquired whether there was any instance of a bill to compel parties to name arbitrators ; and in Street v. Rigby, 6 Ves. jr. 818, the same chancellor remarks, “ There is considerable weight as evidence of what the law is, in the circumstance that no instance is to be found of a decree for specific performance to name arbitrators, or that any discussion upon it has taken place, in experience, for the last twenty-five years.” The same principle is recognised in Nichols v. Chalie, 14 Ves. jr. 270: Waters v. Taylor, 15 Ves. jr. 10; Wilkes v. Davis, 3 Meriv. 509 ; and has been recently confirmed by this court in the late case of Newbold and others v. Pearson.

It appears however, that the complainant had a valuation made of the buildings and machinery by one Woods, after a notice given to the other party to choose an appraiser. The properly was appraised at $14,337 45, and the bill seeks to have this appraisement cbnfirmed. It is manifest that this appraisement was not made in the manner prescribed by the article of agreement. It is an cxparte proceeding, altogether irregular and void, and can furnish no ground for a decree of this court. The court can afford no aid in that way.

Is then the complainant, Copper, without a remedy? Shall a refusal on the part of the defendants to comply with the agreement, and name an arbitrator to adjust and settle the amount justly due for the improvements and property of the complainant, have the effect of securing to him the benefit of such property, and leaving the complainant without redress? Such cannot be the law. Upon broad principles of justice, Copper, as the representative of Haver-stick, is entitled to a remuneration commensurate with the value of the improvements, subject to the mortgage incumbrance. It cannot be pretended that Wells can compel Copper, the complainant, to extend the lease against his will, much less that he has a right to the building and machinery without making satisfaction.

If the complainant has a remedy, is it in this court?

It sometimes happens in cases of contracts, which from their nature and on general principles may be decreed to be specifically performed, that owing to some circumstances such performance has become impossible; as where after a contract for the sale and purchase of land, the vender sells the property to a bona fide purchaser, without notice, and for a valuable consideration, a specific performance will not be decreed, for such decree would be nugatory. In such cases, as well as in the present, when from the very nature of the contract, a specific performance cannot be decreed, the party aggrieved is entitled to compensation or to damages for the non-performance of the agreement, either in a court of law or of equity. Which is the proper tribunal, is a fair question for consideration.

It is true, in general, that a party whose rights have been injured by the non-performance of a lawful contract, has an ample remedy at law, and must seek redress in the common law courts. The old doctrine was, that he might have his election to resort either to a court or law for damages, or to a court of equity for a specific performance. And Sir William Grant, the master of the rolls, in Greenaway v. Adams, 12 Ves. jr. 401, remarks, that if a court of equity does not see fit to decree a specific performance, or find* that a contract cannot be specifically performed, either way, lie would have thought, there was an end to its jurisdiction; for in the one case, the court does not see reason to exercise the jurisdiction, in the other it finds no room for its exercise. It seems, he adds, that the consequence ought to be that the party must seek his remedy at law. It is equally true, however, that the ancient landmarks between the two courts have been in this particular somewhat shaken; and the result has been favourable to the enlargement of the jurisdiction of this court.

The case of Denton v. Stewart, decided by Lord Kenyon, master of the rolls, in 1786, 1 Cox, 258, is a leading case in favor of such jurisdiction. There the plaintiffhad furnished and repaired the house, and the defendant stated in his answer, that he had actual, ly sold the house to another person for a full valuable consideration ; it was referred to a master to inquire what damages the plaintiff had sustained by the defendant’s not performing his agreement, and what the master should find to be the damage in such respect, together with the costs of suit, should be paid by the defendant to the plaintiff. In Greenaway v. Adams, above cited, the master of the rolls, though he had strong doubts, yielded those doubts to the authority of Lord Kenyon, and made precisely the same decree. The next case was Gwillim v. Stone, 14 Ves. jr. 128. The bill prayed that a contract entered into by the plaintiff for a purchase from the defendant might be delivered up, on the ground of the defective title of the defendant; and that compensation might be made to the plaintiff, for the loss he had sustained by the defendant’s failure to cany the contract into execution. The master’s report was against the title of the defendant, but the master of the rolls declined an order of reference to .a master to inquire as to the injury sustained, and remarked that he had some doubt upon the principle laid down in Denton v. Stewart. In Todd v. Gre, 17 Ves. jr. 274, Lord Eldon held, that a bill for a specific performance, praying in the alternative an issue or inquiry with a view to damages, was not the course of proceeding in equity, except in very special cases, and said that the case of Denton v. Stewart could not be supported according to the principles of the court, unless it was on this distinction, that the defendant had, pending the suit, put it out of his power to perform the agreement. In a late Case, Blore v. Sutton, 3 Meriv. 247, the competency of a court of equity to give damages for the non-performance of an agrcement, was said by Lord Eldon to have been questioned by very high authorities, notwithstanding the case of Denton v. Stewart. In the case before him he refused a decree which would be merely for damages, and not a compensation for the benefit the estate had received.

The case of Denton v. Stewart has been recognized in this country by Chancellor Kent, in Phillips v. Thompson, l John. C. R. 131. Thebill there was for a specific performance. This relief was denied, because the contract was void under the statute of frauds, butthecomplainanthavingsustained damages by the cutting of the canal and lowering his dam, an issue of quantum damnifi-catus was awarded ; the chancellor remarking he was apprehensive the complainant would be remediless without the aid of the court. And in Parkhurst v. Van Cortlandt, 1 John. C. R. 274, the court ordered a reference to a master. In that case the plaintiff had made permanent improvements on the property, and the execution of the contract was resisted on the ground of its being within the statute of frauds.

In Newbold and others v. Pearson, in this court, a reference was lately ordered where permanent improvements had been made and a specific performance had become impossible.

Taking all the cases together, the law can scarcely be considered as entirely settled. I should not feel willing to go the length of saying that in any instance a party might file a bill in the alternative, praying a specific execution of the contract, and if that could not be granted, then an issue or inquiry to ascertain the damages ; that would be introducing into this court suits, over the subject matter of which the courts of common law have ample jurisdiction, and can afford ample relief. But there is a wide distinction between mere damages arising from the non-performance of a contract, which damages, may be partly imaginary and partly the result of actual or supposed inconvenience or loss, and the compensation to which a party is justly entitled for repairs or beneficial and lasting improvements made to property, under the faith of an engagement, which is afterwards discovered to be defective in itself, or impossible to be executed by the default of the opposite party. In the one case, the damages can be properly assessed only by a jury, upon an issue of quantum dam-nificatus; in the other, the compensation may be safely ascertained by an inquiry before a master or commissioners, or at the discretion of the court an issue may be awarded. In cases of the latter description the jurisdiction of this court is complete. The party has a clear equity to be restored to the money paid for improvements, which are rendered valueless to him, but greatly beneficial to the owner of the land. It was so held by the lord keeper in Hollis v. Edwards & al. 1 Ves. 159. There the plaintiff, in consequence of a parol agreement for the execution of a lease, had expended large sums on the premises. The statute of frauds was pleaded, and successfully; but no doubt was expressed as to the right of recovering in this court the money expended for improvements. This case does not appear to have been even called in question, and the one before the court is clearly within its principles.

If I had doubts as to the plaintiff’s remedy, I should be inclined to overcome them and give him aid, on the ground that he can only have adequate relief in this court. The improvements put on the premises are permanent and valuable, and it is right that they should be bound for the reimbursement of the complainant. The claim is in equity a lien on the pr operty, and unless it is so considered the complainant may be without remedy. Before a judgment at law could be obtained, such might be the situation of the property and parties, as that the judgment would be altogether nugatory, and the clear right of the complainant defeated.

The second ground of demurrer, to wit, that the executors of Calbraith have no legal right to come into this court to sue as complainants, is not exactly understood by the court. Standing in place of their testator, they have an interest in the controversy. The mortgage of the testator is in their hands, and they have a right to be satisfied’the amount of it out of the property bound by it, or out of the proceeds of said property. Where the letters testamentary were issued, does not appear on the face of the bill. If it shall turn out that they wer e granted without the state, the objection may be taken at another stage of the cause.

Let the demurrer be overruled with costs.