Ellis v. Treat, 236 F. 120

236 F. 120 | 9th Cir. | 1916

GILBERT, Circuit Judge

(after stating the facts as above).

The assignments of error bring in question the sufficiency of the complaint to state a cause of suit, and the propriety of the decree which was rendered thereon. The decree is clearly erroneous, for the reason that it is unsupported by the allegations of the complaint. It does not appear from the complaint that the appellant ever promised or agreed to convey to the appellees Treat and Smith any interest in the mining claims. What the appellant agreed to do was to convey to a corporation thereafter to be formed eight mining claims, in consideration of all the stock of the corporation, and thereafter to transfer to the appellees 20 per cent, of the stock. The decree treats the contract as a contract to convey an interest in real estate, which it is not. It-is an agreement to transfer personal property. No principle of the law of specific performance is more thoroughly established than that the decree must conform to the precise contract made between the parties. A court will not make a -contract for them. 36 Cyc. 789; Gachet v. Morton, 181 Ala. 179, 61 So. 817; Philadelphia & Reading Railroad v. Lehigh Navigation Co., 36 Pa. 204. The fact that the lease of the mining property contained the recital that the appellant and Treat and Smith were the owners of the property cannot be held to estop the appellant now to dispute the appellees’ claim of title. The essential elements of estoppel are lacking. It, is not shown that Treat and Smith relied on any admission of their title by the appellant, or that they changed their position as to the property in any way, and there is no proof that the original contract was ever changed.

It remains to be considered whether, under the allegations of the bill, and the prayer for such other and further relief as may be just and equitable, the appellees are entitled to a decree for the specific performance of the contract which they pleaded. There are several reasons why such relief must be denied them:

1. The contract as pleaded is too indefinite and uncertain to justify a decree of specific performance. It contains no mention of the amount of the capital stock of the proposed corporation, the number or value of its shares, the number of its directors, the place of its business, its powers, or its duration. It is the accepted rule that the minds of the parties must have met upon all the terms of the contract the specific performance of which is sought to be enforced. Pressed Steel Car Co. v. Hansen, 137 F. 403, 71 C.C.A. 207, 2 L.R.A.(N.S.) 1172; Jones v. Patrick (C.C.) 145 F. 440; Williams v. Stewart, 25 Minn. 516; McKnight v. Broadway Investment Co., 147 Ky. 535, 145 S.W. 377; Schenck v. Ballou, 253 Ill. 415, 97 N.E. 704, Ann.Cas.1913A, 251; Talmadge v. Arrowhead R. Co., 101 Cal. 367, 35 P. 1000; Tharp University v. Komus Realty Co., 159 Ky. 386, 167 S.W. 136; Ward v. Newbold, 115 Md. 689, 81 A. 793, Ann.Cas.1913A, 919; Strack v. Roetzel (Okl.) 148 P. 1017.

2. The appellees have never performed the covenants which were to be kept and performed by them. They allege in their complaint that performance was rendered impossible by the stringency of the money market, and the difficulty which would probably have been experienced in selling the treasury stock. There is nothing to show that conditions are any better at the present time, or that the ap.pellees now are, or ever will be, able to sell the treasury stock. While the appellant was to part with 20 per cent, of his stock, which in a sense may be said to represent one-fifth of his mining property, he was to receive, as part of the consideration therefor, the benefit of the proceeds of another 20 per cent, of the stock to be sold by the services of the appellees and applied to the development of the mines. Specific performance is not a matter of right, but rests in the sound judicial discretion of the court, and before it may be awarded, it must appear that the complainant on his part has complied with the substantial conditions of the contract, under the rule that he who seeks equity must himself do equity. Washington Irr. Co. v. Krutz, 119 F. 279, 56 C.C.A. 1; Cronen v. Moore, 210 F. 239, 127 C.C.A. 57.

3. Even if the-contract were specific and certain, we are of the opinion that within well-settled principles which govern specific performance, equity should withhold the specific relief here sought, on the ground that the complaint call? for the performance of acts which require the participation of others not parties to the contract or 'to the suit, such as the execution of articles of incorporation, the election of a board of directors, the adoption of resolutions, and other details of corporate action. A court of equity will not, for instance, compel a corporation to buy in its stock in order to carry out an agreement whereby it has promised to pay for a lease of lands in stock. Smith v. Flathead River Coal Co., 64 Wash. 642, 117 P. 475. Nor will it require the specific performance of an agreement to enter into a copartnership. Pomeroy Specific Performance of Contracts, § 290; Hyer v. Richmond Traction Co., 168 U.S. 471, 18 S.Ct. 114, 42 L.Ed. 547. Nor will it compel a defendant to buy real estate in order to carry out his contract to convey the same. Laubengayer v. Rohde, 167 Mich. 605, 133 N.W. 535.

4. While this is a suit to compel the creation and organization of a corporation, and the transfer of a portion of its stock after issuance, it is, so far as the appellee’s interest therein is concerned, a suit to compel the transfer of stock. It is the rule that a decree for the specific performance of a contract to convey shares of stock in a corporation will be denied unless the facts pleaded and shown present an unusual and exceptional situation in which damages will be inadequate. Bernier v. Griscom-Spencer Co. (C.C.) 169 F. 889. In Bacon v. Grosse, 165 Cal. 481, 132 P. 1027, Judge Sloss, for the Supreme Court of California said: “Undoubtedly it is the general rule that equity will not compel the delivery of specific personal property wrongfully withheld, nor enforce the specific performance of a contract to sell chattels, unless it is shown that money damages for the breach of the obligation would not afford adequate relief. Senter v. Davis, 38 Cal. 450; Harle v. Haggin, 131 App.Div. 742, 116 N.Y.S. 51; Civ.Code, § 3387. .This rule has often been applied tq actions involving corporate stock, the rule declared being that the plaintiff will be denied specific relief in the absence of proof that he would derive some peculiar advantage from the possession of the párticular stock which he seeks to retain.”

The decree is reversed, and the cause is remanded, with instructions to dismiss the same.