Equitable Gas Light Co. v. Baltimore Coal Tar & Manufacturing Co.

| Md. | Mar 11, 1885

Alvex, O. J.,

delivered the opinion of the Court.

This is a bill filed by the appellee, the plaintiff below, for an injunction, and for specific performance of a contract set forth in the hill. The injunction was granted, and, upon answer filed hy the defendant, an appeal was taken from the order granting the injunction. We are to enquire therefore whether, upon the allegations of the hill, assuming that they will he supported hy proof, there is such case stated as justified the Court in granting the injunction ? And this depends upon the antecedent question whether, upon proof of the allegations of the bill, there will he such case presented as will justify the Court in decreeing specific performance of the contract alleged.

The contract alleged in the hill is, that on the 14th of Eeb., 1882, the defendant agreed to sell to and allow the plaintiff to take away all the coal-tar that might be produced at the defendant’s gas works in the city of Baltimore, for and during the term of five years from that date, for a stipulated price per gross ton, payable four months from the 20th of each month. That this contract, at the time the terms thereof were agreed upon, was not otherwise reduced to writing than in the form of a mere memorandum in a pocket memorandum hook of the president of the plaintiff company, and that such memorandum was not signed hy any one for or on behalf of the defendant. It is alleged that the terms of the contract, as briefly noted in the memorandum-made at the time, were expressly assented to hy the vice-president, then acting as president, of the defendant company; a'nd that it was then and there distinctly agreed that the terms of the contract thus agreed upon should he reduced to writing in proper form, and he signed hy the parties thereto ; and to that end it was agreed that the president of- the plaintiff should have the contract prepared in writing for the signatures of the proper officers of the respective parties: That such contract was, in due time, prepared in duplicate form, one of which duplicates was signed hy the president of the plaintiff company, and both duplicates were submitted to and left with the president of the defendant for execution, and that said president approved of the contract thus prepared, and promised that it should he signed forthwith by the proper officers 'of the defendant. That the plaintiff, supposing that the contract had been duly signed on the part of the defendant, and confiding in the good faith of its officers, failed to call for the .duplicate that was, or should .have been, signed on the part of the defendant, but proceeded at once to carry out tbe terms of the contract on its part, by taking away the coal-tar from the works of the defendant, and paying therefor as required by the terms of the agreement; and that it has continued so to take away and pay for such coal-tar down to the time of filing the bill.

It is then alleged that the defendant, through its president, in Bov., 1882, notified the plaintiff that the latter should pay a higher price for the coal-tar than was agreed upon by the contract recited, or otherwise it could not get the coal-tar ; but tbe plaintiff refused to accede to such proposition, and insisted upon the observance of the terms of the contract: That the plaintiff then demanded the production of the written contract, which was supposed to have been signed by the proper officers of the defendant, but which demand was refused, under the profession of ignorance of the existence of such contract. It is then charged that the written contract left with the president of the defendant was either signed on behalf of the defendant and afterwards fraudulently withheld by its officers, with the view of obtaining an undue, and fraudulent advantage of the plaintiff, or such officers had purposely refrained from signing such contract, with the fraudulent intent of deceiving .the plaintiff, and of keeping the matter within their own control, to enable the defendant to extort from the plaintiff a higher price for such coal-tar than that agreed upon in the contract. It is then alleged, that in June, 1884, the defendant gave notice to the plaintiff that the latter would not be allowed to take away any more of the coal-tar after the last day of that month; and the bill then proceeds to charge, that if the defendant is permitted to evade or escape from the obligation of its contract, and be allowed to sell and deliver the coal-tar to other parties, the plaintiff will thereby suffer great and irreparable damage, -for which no adequate^ redress or remedy could be obtained at law, for the reason that the plaintiff is engaged in the manufacturing of certain articles for which the coal-tar is a necessary material, and relying upon the contract with the defendant, the plaintiff has contracted for the sale, in advance, of all the products that can be made by it from the coal-tar to be obtained from the defendant’s gas-works for the next twelve months; and as a supply of such coal-tar cannot he otherwise obtained in the city of Baltimore, it would he impossible for the plaintiff to fulfil its contracts otherwise than by purchasing the coal-tar in other and distant cities, and transporting the same at great expense and loss, the amount of which it is impossible to estimate in advance, &c.

Upon these allegations the plaintiff prays that the defendant may be required to produce in Court the written contract prepared and left with its president to be signed, and if not already signed on behalf of the defendant, that the latter be required to execute the same as originally contemplated; or, if the duplicates be lost or destroyed, that the defendant, by its officers, he required to sign the original memorandum made at the time the terms of the contract were agreed upon, and which is filed with the hill as an exhibit. The plaintiff also prays that the contract, as set forth in the hill, he specifically enforced ; and that the defendant, in the meantime, he restrained by injunction from disposing of the coal-tar to any third party; and for general relief.

It is very clear that the contract alleged, unless evidenced by a sufficient writing, is within the prohibition of the fifth clause of the fourth section of the Statute of Frauds, of 29 Charles II, ch. 3, which declares that no action shall he brought “ upon any agreement that is not to he performed within the space of one year from the making thereof,” unless such agreement, “ or some memorandum or note thereof shall he in writing, and signed by the party to be charged therewith, or some other person thereunto by him lawfully authorised.” Here the memorandum made of the contract, not being signed by the party sought to be charged, is not sufficient to charge the defendant at law; yet the contract is not void. The statute only interposes a prohibition to maintaining an action thereon. But it seems to be regarded as a settled principle, that the equity of part performance, to entitle the plaintiff to specific execution of contracts within the Statute, does not extend to contracts within the prohibitory clause just recited, when such contracts, not being evidenced by writing, relate to personal service, or the subject-matter of them is the sale and delivery of mere personal chattels. Pom. Spec. Perf. of Contr., secs. 99, 100; Britain vs. Rossiter, on Appeal, 12 Q. B. Div., 123, referred to with approval by the Lord Chancellor and Lord Blackburn, in the recent case of Madison vs. Alderson, 8 App. Cas., 474, 490.

But in this case there is a preliminary question that may relieve the case of the difficulty just stated, and that is, whether, upon the allegations of the hill, in respect to the fraudulent withholding of the written contract,- or the fraudulent refusal to sign such contract, in accordance with the express agreement alleged, a Court of equitv should not exercise jurisdiction, either to require the contract to he produced, if signed, or if it he not signed, that the defendant he required to produce and execute the written contract, prepared and left to he signed, in pursuance of the express agreement in that behalf. This agreement was, according to the allegations of the hill, of a distinctive character, and was looked to by both the contracting parties at the time as essential to the security of their rights. To allow either of the parties to evade its liability and to get the advantage of the other by resorting to such a fraudulent subterfuge as that charged upon the defendant, would he against all equity and Conscience, and such as no well-adjusted system of jurisprudence could tolerate. The authorities, we think, fully warrant a Court of equity in the exercise of its jurisdiction in such case, to enforce the production of the contract fraudulently withheld to the injury of the plaintiff, or to enforce the due and proper execution of the contract, if such execution he fraudulently and without justifiable excuse delayed, to the injury of the plaintiff. In the case of Stoker vs. Wedderburn, 3 K. & J., 403, an application for specific performance of a contract, the proposition was fully acceded to by Vice-Chancellor Wood, that where there was an agreement to execute a deed or other instrument containing certain provisions, the Court would order the execution of such instrument, without regard even to the question whether or not its provisions were such as the Court could decree them to he specifically performed, the object being to vest in the parties the legal rights which they had mutually agreed to confer on each other. And the enforcement of such principle is not by any means of a novel or doubtful character, or of unfrequent occurrence. Taylor vs. Fire Ins. Co., 9 How., 390. If, therefore, the allegations of the bill, in respect to the withholding, or refusal to execute the contract, he established by proof, this Court is of opinion that the defendant should he decreed to produce or to execute the contract in manner and form in accordance with the agreement and understanding of the parties.

And this being done, the question then arises, whether the contract is of a nature that a Court of equity will specifically enforce it; for it seems to he a well settled general rule that the Court will not interfere by injunction to restrain the breach of a contract for the sale and delivery of chattels which it could not specifically perform. In such case the party injured hy the breach of the contract is left to his remedy at law. Fothergill vs. Rowland, L. R., 17 Eq., 132.

It is certainly a well recognized general principle by Courts of equity that they will not decree specific perform-' anee of contracts for the sale of goods and ehat±®ls,~not however because of the' nature of the property, the subject-matter of the contract, but because damages at law, calculated on the market price of the goods and chattels bargained for, furnish, in ordinary cases, an adequate redress to the purchaser for the breach of the bargain by the vendor. 2 Sto. Eq., sec. 717; Sullivan vs. Tuck, 1 Md. Ch. Dec., 63. But there are many exceptions to this general rule, founded principally upon the inadequacy of the remedy at law in the particular case, or the special and peculiar nature and value of the subject-matter of the contract. In the 2d vol. of Story’s Equity, sections 718 to 725, the general rule, with the exceptions thereto, will be found fully discussed, with reference to all but tbe very recent cases. And among the cases forming exceptions to the general rule, there is one stated of a contract for the sale of 800 tons of iron, to be paid for in a certain number of years by instalments, of which specific performance was decreed ; for the reason, as supposed by the author, that, under the particular circumstances of the case, there could be no adequate compensation in damages at law; for the profits upon the contract being dependent upon future events coirlcLnat.- be -eorrectiy estimated- in an award of present damages. And so in the case put by Lord Hardwicke, in the case of Buxton vs. Lister, 3 Atk., 385, and repeated by Judge Story, as an apt illustration; a man may contract for the purchase of a great quantity of timber, as a ship-carpenter, by reason of the vicinity of the timber, and this may be well known and understood on the part of the seller; and in such case a specific performance would seem to be indispensable to justice. And so Mr. Pomeroy in his excellent work on Specific Performance of Contracts, sec. 15, p. 20, states it as a well settled principle in the doctrine of specific performance, that a contract for the sale and delivery of chattels which are-es- — _ <^nliak ÍEnspeciejfco the-plaintiff, and which the defendant can supply, while Spo' one else can, will be specifically enforced. In such case the plaintiff could not be indemni-\ fled by any such amount of damages as he could recover at law.

In this case the allegation is that the coal-tar contracted to be supplied by the defendant is indispensable to the business of the plaintiff, and that the latter cannot otherwise obtain a supply in the City of Baltimore, and that if the defendant were permitted to withhold the supply, the plaintiff would be subjected to great additional expense and labor in procuring the material from distant cities. This gives the material a special and peculiar value to the plaintiff in Baltimore, and makes it specially inequitable in the defendant to refuse to perform its agreement. As was said by the Chancellor in Sullivan vs. Tuck, supra, it would be impossible, or at all events extremely difficult, for a Court of law to give the plaintiff adequate damages, that is, to determine andjneasure the amount of damages which the plaintiff may sustain in the future, by the refusal to allow it to take away the material from the defendant’s works, in fulfilment of the contract. The contract, therefore, according to the allegations of the bill, being one of a nature proper to be specifically enforced. the Court will interfere hy injunction to restrain the defendant from otherwise disposing of the subject-matter of the contract, though the negative obligation not to otherwise dispose of the material may be only implied from the positive terms of the agreement. This principle is abundantly established by repeated decisions. Wolverhampton, &c., R. Co. vs. London & N. W. R. Co., L. R., 16 L. R., 433, 440; De Mattos vs. Gibson, 4 De G. & J., 276; Le Blanch vs. Granger, 35 Beav., 287; Holroyd vs. Marshall, 10 Ho. L. Cas., 191, 210, per Lord Chancellor Westbury. We shall therefore affirm the order appealed from, with costs in this Court to the appellee.

(Decided 11th March, 1885.)

Order affirmed, and coMse remanded.