Garcin v. Pennsylvania Furnace Co.

186 Mass. 405 | Mass. | 1904

Knowlton, C. J.

The plaintiff, by his bill in equity, seeks first, specific performance by the defendants of a contract for a sale to the plaintiff of most of the property of the defendant corporation. The bill shows that, at the time the contract was to be performed, the defendants were ready and willing to perform it, but the plaintiff was not ready, and was unable to perform, his part. Under such circumstances, specific performance ordinarily cannot be decreed, and never when time is of the essence of the contract. Thaxter v. Sprague, 159 Mass. 397. Carter v. Phillips, 144 Mass. 100. Rice v. D ’Arville, 162 Mass. 559.

The original contract contains this sentence: “ If the second party shall refuse or neglect to complete the purchase at the time hereinafter appointed, this deposit money shall be absolutely forfeited to the first party, and the trust company shall pay over the same to the first party and this agreement and all rights thereunder of the second party shall cease.” It would be difficult to express more plainly the purpose of the parties to fix their respective rights finally by conditions existing at the time appointed.

There was good reason for making time an essential element of the contract. The agreement was not merely for a sale of land whose value would not be likely to change much in a short time, and whose transfer at a particular time, or continued ownership for a while longer would not be likely to be of much importance to the owner. It was a contract for the sale of substantially all the property of the corporation, which, according to the plaintiff’s bill, owned and possessed ore rights, real estate, blast furnaces, iron raw, in process and manufactured, and which was then carrying on business, and had unfilled orders for the delivery of pig iron with about twenty-five different parties, amounting in the aggregate to eleven thousand four hundred and seven tons. The contract was made on August 27, 1902, and the sale was to be consummated on October 1, 1902, and after-wards, by an extension of the contract, on November 5,1902, and the plaintiff was to assume and perform all of these contracts with third persons. It is manifest that, with reference to such property and under such circumstances, time would be likely to be of great importance to the parties.

Moreover, this is emphasized by the second contract, which is an agreement for the extension of the time. This is an assumption and acknowledgment by both parties that time was of the essence of the contract. In this the plaintiff agreed to give $2,500 in cash for an extension until November 5, 1902; that is, the sum of $2,500 which was to be applied as a part payment of the money consideration under the first agreement, was to belong to the defendants under the second agreement, and was not to be accounted for by them as a part of the cash payment. For this extension of time the plaintiff further agreed to put in the hands of the defendants two thousand shares of the stock of the company, which was to be in part payment if the contract was carried out, but was to be forfeited to the corporation in case the plaintiff was not “ able duly to deliver the consideration and perform the agreement set forth in said agreement of August 27th on said November 5,1902.” We hardly see how parties could have expressed more plainly their intention and agreement that time should be of the essence of the contract. The plaintiff is not entitled to have specific performance of the contract, since the failure to perform it at the time appointed was due entirely to his own default. Barnard v. Lee, 97 Mass. 92, 94, and cases cited.

The plaintiff contends that he should recover from the defendants the money and stock, or a part of it, which he deposited under the contract, on the ground that the deposit was made as a provision for security, and not as liquidated damages. The question here is, What was the intention and meaning of the parties. If the fair interpretation of their agreement is that the money and stock should become the property of the defendant corporation as liquidated damages if the plaintiff failed to perform his contract, the plaintiff can have no relief in equity, but the cpntract will be held binding.

Much of what we have said on the other part of the case is equally applicable to this also. In the first agreement it is said that, in the event of non-performance by the plaintiff, not only shall the deposit money be absolutely forfeited to the first party, but that the “ trust company shall pay over the same to the first party and this agreement and all rights thereunder of the second party shall cease.” The second agreement treats this money as having become the absolute property of the defendant corporation by reason of the plaintiff’s failure to perform. This is the interpretation put upon the original agreement by the plaintiff as well as the defendants. The language of the second agreement, as to the stock, is equally clear. In case of default by the plaintiff the “shares shall be regarded as forfeited absolutely to said Pennsylvania Furnace Company acting by its committee free and clear from all demand or equity of said Garcin or any person whatsoever.” This shows that in such a case the plaintiff was not to have any equitable right in the property. There is no avermefit in the bill to show that such a contract would be unconscionable, or even improbable. The actual value of the stock is not stated, although its par value is $100 per share.

We discover nothing in either of the agreements, or in any of the averments of the bill, to j ustify us in treating the money and stock as held merely for the security of the corporation, and we think it plain that the parties intended them to be retained as liquidated damages. Guerin v. Stacy, 175 Mass. 595. Garst v. Harris, 177 Mass. 72, 74. Keefe v. Fairfield, 184 Mass. 334.

Demurrer sustained; hill dismissed.