238 F. 755 | 2d Cir. | 1916
The plaintiff has obtained an injunction restraining the defendants from prosecuting or taking any further proceedings in an action at law pending in the District Court of the United States for the Southern District of New York, in which they are plaintiffs and he is defendant. This suit was brought originally against George N. Gardiner, the defendants’ testator. After the institution of the suit Mr. Gardiner died, and the present defendants were appointed executors under his last will and testament, and both the action,at law which has been restrained and the present suit were revived in their names as parties in his place and stead.
The action at law was commenced on May 14, 1913, in the Supreme Court of New York,' but was removed into the District Court of the United States for the Southern District of New York on the ground of diversity of citizenship by Mr. Du Pont, defendant therein, who is a citizen of Delaware; Mr. Gardiner being at the time a citizen of New York. The action at law is brought upon a contract alleged to have been made between Gardiner and Du Pont whereby the latter promised to pay to the former, for services rendered and to be rendered in connection with .what is referred to as “the Equitable Building deal in the city of New York,” $100,000 in cash and $100,000 par valué of the common stock of a company incorporated or in process of incorporation for the purchase and carrying out of said deal. It is alleged that the contract is evidenced by a letter reading as follows:
“August 9, 1912.
“Mr. T. Coleman Du Pont, Wilmington, Delaware — Dear Sir: Confirming my conversation with you and recording our understanding in connection with the Equitable Building deal, there is to be paid to Mr. George N. Gardiner a commission, for services rendered and to be rendered, of $100,000 cash and $100,000 par value of the common stock of the company, same to be contingent upon the final closing of the deal now in progress for the purchase of the Equitable site and the erection of a building thereon. The cash commission will be paid out of the first moneys available from the sale of the preferred stock and second mortgage bonds of the company.
“Tours very truly, [Signed] Erank M. Andrews.
“Dear Frank: The above is just as I understand it, and provisions will be made to take care of this as early as possible.
.“[Signed] T. C. Du Pont.”
Mr. Andrews, it appears, was the architect of the McAlpin Hotel in New York City, and he was endeavoring to promote a p'roject for the acquisition of the site of the former building of the Equitable Life Assurance Society at 120 Broadway i'n New York City (which building had been burned down in January, 1912), and for the erection of a building thereon. Andrews also desired to become the architect of the new building. Du Pont had been interested with Andrews in the erection of the McAlpin Hotel, and his aid was sought in financing this new project for the erection of a new building for the Equitable. As other persons were necessary in carrying the scheme through, the services of Gardiner were enlisted.
Du Pont now claims that he signed the statement to which his signature is appended above because of the representations made to him by Andrews that Gardiner’s services were valuable and that the matter
According to Mr. Andrews’ testimony, Gardiner and Du Pont met at the office of Andrews, at which time matters were talked over and a suggestion was made by D;u Pont that perhaps Gardiner would he willing to take his $200,000 in stock, to which the latter replied that he could not afford to take, it all in stock, but that he would be willing to take one-half of it in stock, which Du Pont said was acceptable to him. After arranging with Gardiner, Du Pont turned to Andrews and, according to the latter’s testimony, said:
“ ‘Frank, if you will embody this conversation and agreement in a letter, and forward it to me, I will put my acceptance on the letter and return it to youand turning to Gardiner said: ‘Is that sufficient contract for you, Mr. Gardiner, or do you wish a formal contract?’ to which Gardiner replied that the letter would he entirely satisfactory to him, and that he wished the matter to he given prompt attention, because he had been worrying Mr. Andrews ~for some time to have the matter put in final form, and with a clear understanding, to which request Mr. Du Pont answered that he was as anxious to have the matter off his mind as anybody, and that, if the letter were sent, he would attend to it immediately.”
Ever since the Earl of Oxford’s Case, 1 Ch. Rep. 1, the general right of chancery to interfere by injunction for the purpose of preventing an inequitable use of legal process has been recognized in England; neither is it questioned in the United States. There can be no doubt that a court of equity can restrain an action at law in cases in which the defendant has a defense in equity which he cannot interpose in the law court. But the question presented is whether the alleged fraud used to induce Du Pont to enter into the agreement upon which the action at law is brought is purely an equitable defense, of which the party is not entitled to avail himself in the law court. If it is not, and the fraud can be shown in the action at law, the injunction was improvidently issued.
“Said representations were false, and in fact the said George N. Gardiner had not rendered any valuable services in connection with said deal. Said T. Coleman Du Pont was induced to sign said letter solely upon said representations, and would not have signed the same But for the said representations.”
In the argument in this court it was contended that a distinction exists between false representations and fraudulent representations, and that where the representations are merely false, and not fraudulent, relief can only be had in equity. A false representation may be either innocent or fraudulent. An allegation in a bill that a representation is false is therefore equivocal. And while pleadings are not construed in equity with so high a degree of technicality as at law, still the rule nevertheless prevails, even in equity, that where allegations are equivocal they will be construed most strongly against the pleader. 16 Cyc. 238. So that, if false representations which are innocent are a good defense in equity, and not in law, and those which are fraudulent are a good defense both at law and in equity, and the complainant simply alleges that the allegations are false, the allegation would seem to be insufficient.
But no demurrer was interposed, and no motion was made to dismiss the bill. An answer was put in which denied the allegation that the representation was false, and the case went to a hearing. Testimony was heard, and the District Judge found that the statement made by Andrews to Du Pont, and which was alleged to have been “a false representation,” was fraudulent. The court declares that Andrews’ statement was “false, and false in such a way that it must have been fraudulent, although the nature of, or motive for, the fraud remains unknown.” The District Judge has issued an injunction staying an ac
The attempt, therefore, to restrain the action at law by injunction must fail. No English court is to-day permitted to restrain an action by injunction. The right to do so was taken away by the Judicature Act of 1873, under the provisions of which equitable defenses may be interposed in any action. We have not overlooked the fact that the Congress of the United States in 1915 also passed an act which declares that in all actions at law equitable defenses may be interposed. Act March 3, 1915, c. 90, 38 Stat. 956. That act was, however, not in force when the bill of complaint was filed, which was in May, 1914. The case has been decided, therefore, without reference to it. The result, however, is the same as it would have been, had the statute been applicable.
The decree is reversed, and the injunction vacated, and the case remanded, with directions to dismiss the bill, with costs.
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