76 A.D. 534 | N.Y. App. Div. | 1902
. This action was brought to secure, in effect, specific performance of an alleged agreement made by the defendants, other than MacNabb, for the settlement of a large amount of indebtedness held
The-judgment appealed from awarded to plaintiffs substantiállytlie relief asked above.
It is urged upon this appeal, as it was upon the trial below, that there are various reasons why said judgment should not have been awarded. The main reasons advanced in substance were and are= that nó such definite agreement of settlement was reached ás to permit of an action for specific performance ; also, that there was not. sufficient consideration moving to the defendants, and especially the-defendant Emma M. Jones, to furnish the basis for . -compulsory- . enforcement thereof • also, that, within the legal privileges possessed by them so to do, the defendants Eoughead and Emma M. Jones» revoked their consent for the delivery by the defendant MacNabb of' the various transfers which had been placed in his hands in escrow and terminated the arrangement under which he held the same;; also, that the plaintiffs- lost their right to have the alleged agreement of settlement carried out through the violation by one of their number of its obligations through issuing an execution against the: property of Jones and Eoughead while negotiations were pending.
We think that the evidence was sufficient in behalf- of plaintiffs-to authorize and sustain the judgment, and that the same should be-affirmed.
Eor some time prior to November 23, 1901, ■ the defendants» Edward A. Jones and David Eoughead were engaged as copartnersUnder the name of Excelsior Machine Company in carrying on a-manufacturing business in or near the city of Buffalo. • Eoughead.
As the result of these facts and conditions, a meeting of the plaintiff creditors was called for November 23, 1901, at the office of the counsel for appellants in the city of Buffalo. It was largely attended by them, and the members of the debtor copartnership and Mrs. Jones were also present, or represented by counsel. There seems to have been a pretty thorough discussion of the situation, attended
Prior to this time the Metropolitan-German Bank claim- herein-before referred to had been put in suit and judgment and an execution thereon delivered to'the sheriff of Erie county.- Such delivery of said execution was accompanied with instructions to the sheriff in substance not to do anything thereupon, and for sometime nothing was done. On or about January twentieth or twenty-first, however, a deputy sheriff did go to the factory" of the former copartnership and make a very informal and probably inadequate purported levy under said execution. He did not take any actual possession of the property and in "fact seems to have done nothing more than walk into the factory, come away again and make an indorsement upon his execution. The referee has distinctly found, aS we think upon sufficient evidence, that no harm was caused by these steps. "What was done was in violation of instructions given to the sheriff when the execution was issued and the result of confusion and inadvertence. Subsequently, and upon January-twenty-seventh, said bank withdrew said execution and executed a satisfaction of its judgment.
About five o’clock upon the afternoon of January twenty-fifth, Mr. and Mrs. Jones and Koughead served upon the chairman of the
Upon forwarding to Albany the certificate of incorporation prepared it was learned that the name of “ Excelsior Machine Company ” adopted, had already been so taken by some other corporation as not to be available, and there was a general consent by or in behalf of all parties interested that the name should be changed to Buffalo Excelsior Machine Company.”
Mr. Sprague,’the chairman of the creditors’ committee, had spent some time in preparing a purported draft of the mortgage and by-laws to be executed and adopted by the corporation. He had communicated with the counsel of the appellants with reference to the same, but through absence of the latter or other cause they had n ot been actually submitted to such counsel for examination.
There was little conflict in the evidence as to the foregoing facts, -and the important ones were expressly found by the referee. Upon them and certain others, hereafter to be referred to in more -detail, are presented various questions through the defenses which are ■earnestly and elaborately urged by appellants’ counsel to plaintiff’s right to recover.
Passing for the moment the contention that no agreement was ever reached between the litigating parties of sufficient completeness and definiteness to allow the courts to enforce specific performance thereof, and assuming at this point that said contention is not well
It was, of course, a fundamental feature of the negotiations and agreement between the plaintiffs and appellants that none of the-former should seek to enforce collection of its claims by hostile proceedings. It is insisted that there was such a levy under the execution issued upon the judgment recovered by the German .Bank of Buffalo as violated the rights of appellants and entitled them to> discontinue and cancel all- negotiations and agreements. Their notice, served Upon January twenty-fifth, terminating all negotia- ' tions and agreements, was founded upon the act in question, and the same has already been referred to. We do not think that it furnished a sufficient or valid reason for' withdrawal and termination, by defendants of their engagements. The attorney for the bank: explicitly instructed the sheriff not to make a levy, When he found that, in violation of these instructions, a deputy had gone out to the-factory to make a levy he ordered him away, simply saying that as long he was there he might as-well make an indorsement upon hisexecution. Wé do not believe that any valid levy was made, and it. ■seems to be clear that what was done in that direction was in disobedience of orders and the result of inadvertence and confusion. We do not see or believe that the slightest injury resulted to appellants from the acts in question. Long before this day it had become pretty thoroughly advertised through the proceedings set forth in this record that the defendants, through the criminal proceedings of one of them- had secured large loans which the firm could not pay, and the compromise and adjustment of which in some way was necessary to secure the continuation of business. Suits had been brought and judgments recovered, and it is not possible, in our opinion, that the act of the sheriff complained of occasioned any additional injury to the standing or position of the firm or furnished any equitable ground for revocation by appellants of > the acts by them up to that time done in the way of settlement. •
Of course the really material interest involved in this litigation and appeal is whether the defendant Emma M. Jones is to part with the property deeded to her by her husband and transfers of which to the proposed corporation she placed in escrow January eighteenth. It is insisted by the appellants-that there was no agreement between
• Before the meeting of plaintiff creditors was called in November none of the defendants Jones and Roughead was free from interest in the conditions which surrounded or confronted them. Edward A. Jones had been guilty of such fraud in procuring loans in behalf of the copartnership from the plaintiffs as beyond any question subjected him to liability in actions of tort with the usual incidents of civil arrest. The other copartner, Mr. Roughead, held property which undeniably was subject to the claims of the plaintiffs, and unless those claims could in some manner be adjusted* destruction of the copartnership business in which he was interested ■and bankruptcy for himself were inevitable. Mrs. Jones was in the record possession of certain property from her husband. It is asserted that her ownership thereof was based upon the good and valid consideration of her engagement to marry. Upon the other ■ hand, the property which she had thus obtained was purchased with copartnership funds and originally was subject to the payment of plaintiffs’ debts. Its transfer away from them to her under the circumstances in this case was at least an equitable fraud by her husband. Litigation thereover was to say the least a possibility not: beyond the bounds of reasonable contemplation.
Under such circumstances, by and in behalf of said persons plaintiffs were invited to come to Buffalo to confer upon the situation. As the result of such a conference the plan was proposed which, it is true, called upon the defendants to surrender property which possibly the defendant Emma M. Jones might have been able to hold. But as a condition and consideration of such surrender 'immunity from prosecution was secured, the business in which appellants were directly or indirectly interested was to be preserved,
Under all of these circumstances we do not think it can be said, as argued by the appellants’ counsel, that there was no consideration underlying and upholding defendants’ promises and agreements and that they had the right to terminate and cancel the same at any time. Under the views which we have expressed upon this pointy the escrow agreement and deposit were simply a part and in performance of the general agreement between the parties. The escrow receipt was an advantage to appellants in that it limited the time for performance by plaintiffs of their part of the agreement to two weeks. Independent of such limitation, the plaintiffs would doubtless have had a reasonable time in which to comply with the terms of appellants’ offer and agreement.
If, however, we are wrong in our conclusion that the deposit by appellants in escrow of their transfers was in performance of and
We think, therefore, that there was such a compliance by the plaintiffs with the conditions under which appellants’ transfers were
We come finally to the remaining and more complicated question raised by the contention of appellants, that the minds of the parties never met in an agreement sufficiently definite and complete to form the basis of this action for specific performance, and to compel the delivery of appellants’ transfers and assignments as part performance thereof.
In support of this it is urged in the first place that the letter issued by the creditors’ committee under date of November 27, 1901, was a mere informal and tentative suggestion of a plan of settlement of the difficulties in which the parties found themselves and which, if received with favor, was thereafter to be followed by a formal and original agreement. And in the second place, it is said that, if this last proposition is unsustained, still many details were left incomplete and never fixed and defined up to the time when this action was brought.
We disagree with this contention in both of its branches.
Appellants’ counsel has referred to the circumstances which attended the issuing of this letter of November twenty-seventh, and to many phrases used therein tending to support, as claimed, his position. It is impossible within reasonable limits to take up and review all of these circumstances and expressions. We think that a consideration of the entire instrument, sent out as it was with the approval and concurrence of the appellants, duly manifested by their written instrument, justifies the conclusion that it was a proposition in their behalf of settlement, which, when accepted by their creditors, ripened into an agreement setting forth the general features of a plan of adjustment, although still leaving various minor features to be settled.
In considering the second branch of appellants’ contention, that no completed agreement was ever reached, we are to test its correctness by the facts as they existed when appellants’ transfers were delivered upon January 18,1902. It may be conceded, for the sake of argument, that if the efforts and negotiations of the parties had ceased with the issue of the letter of November twenty-seventh, there would not have been a sufficiently completed agreement to sustain this action. But after that the creditors, through a com
Here again it is impossible to follow and comment at length upon all of the steps and negotiations of the parties. It is perfectly apparent that the one feature of the plan of. adjustment, which in the minds of the parties overshadowed all others in importance, was the organization of the corporation which was to act as the medium of carrying out the agreements of the parties. Practically all of the essential features of the settlement of the indebtedness between the parties were to be performed by means of this corporation. And in reference to the latter again, the delicate question over which the parties much contended was as to the organization of its board of directors, each side being sensitive as to its representation therein. Finally this was agreed upon, and a certificate of incorporation duly executed at the same time with appellants’ transfers, which fixed the name of corporation, the amount of its capital stock, the personnel of its board of directors, etc. This certificate,, as stated, was actually executed and thus disposed of, and actually fixed many of the details of the plan between the parties. In addition to this, the parties, by their various written instruments, had agreed upon many details of the conduct of its business by said corporation which might properly be the subject of by-laws which were to be executed by and for it. Thus we find specific and most explicit arrangements as to the signing of checks, as to the methods of keeping its books, as to the duties to be discharged by the two former copartners, Boughead and Jones, and as to other matters. Provision was also made for the disposition of the capital stock to be issued, and which, as hereinbefore stated, was to be the compensation to Mrs.' Jones and Boughead for the property transferred by them to said corporation.
But especial stress is laid upon the fact that the instrument of November twenty-seventh contained the statement that a number of carefully prepared provisions were to be incorporated into the agreements to safeguard and protect the interests of the creditors, and that sufficiently definite agreements were not reached between
So far as the first criticism is concerned, it might be answered that the carefully prepared provisions referred to were to safeguard and protect the interests of the creditors, and no creditors are complaining at the absence of such provisions; but, as we have already suggested, we think that the demand for these provisions was fully met by the agreements reached between the parties prior to January eighteenth, and that, especially when the parties agreed upon the directors who were to have control of the corporation and its management, they obviated any necessity for further provisions in this, respect.
When we turn to the consideration of the bonds and mortgage h> be executed, we find that most of their details were absolutely and. definitely fixed. They were to be executed by the new corporation. The mortgage trustee had been duly designated and agreed upon. The property to be covered by the mortgage was ascertained and fixed. The amount of the bonds was fixed by a reference to debts set forth and referred to in the original proposition of November twenty-seventh, and which were to be retired by the bonds. The terms of payment and the rate of interest were all fixed. It is suggested that the place of payment had not been designated, but in the absence of such designation we think that the general practice and the rules of law applicable to the payment of obligations would obviate any difficulty. Provision was made for the whole amount of the bonds becoming due in case the installment in any year was not paid. It is true that provisions for insurance, payment of taxes, funding of rents, payment of interest and current caring charges upon incumbered properties, and for the sale or exchange thereof by the mortgage trustee, for the release of the capital stock held by the mortgage trustee, and against undue expenditures for betterments or improvements pending the term of liquidation were somewhat general.
We think that this, if not necessary, was at least proper and did: not destroy the completeness of the agreement between the parties for the purposes of this action. Under the practice and the principles of law applicable thereto, the form of a corporation mortgage and bonds and of the provisions usually and ordinarily inserted
Taking the view which we have expressed in regard to the facts of this case, the legal conclusion naturally follows that plaintiffs are entitled to the relief sought by them. The general principles which govern a court of equity in extending or withholding the relief of specific performance are neither intricate nor obscure. The difficulty in any instance must mainly arise in the application of well-understood and established principles to the facts of that particular case. If, upon the evidence presented to us upon this appeal, we had been convinced that important and essential provisions of an attempted or purported agreement between the parties had been left undetermined, the case would at once have come within those authorities cited in behalf of the appellants where specific performance has been denied. A court of equity cannot make contracts in behalf of parties which they intend to make for themselves, and it is very obvious that such a court cannot enforce specific perform
We think that the judgment entered upon the report of the referee is subject to criticism in one respect. Concurrent with the delivery by plaintiffs of their notes and evidences of debt to Messrs. Boughead and Jones, the corporation organized by the parties was to issue bonds for such indebtedness secured by a mortgage upon the property conveyed by the instruments in escrow. The agreement of the parties provided that such mortgage should contain certain clauses with reference to insurance, taxes, etc. The judgment entered provides simply that the bonds should be secured by a mortgage upon the property in question. We think these clauses should be so modified as to provide that the mortgage securing the bonds in question should contain the various clauses and conditions agreed upon by the parties.
As so modified the judgment should be affirmed, with costs,
McLennan, Seeing, Williams and Daw, JJ., concurred.
Judgment modified and as modified affirmed, with costs. The form of the order and decision to be settled before Mr. Justice His-cock upon two days’ notice.