28 A.D. 411 | N.Y. App. Div. | 1898
Lead Opinion
In the Case of The New York Bank Note Company v. The Hamilton Bank Note Engraving & Printing Company, upon the cross appeals from portions of an interlocutory judgment sustaining the defendant’s demurrer to the complaint on the ground that it failed to state facts sufficient to constitute a cause of action, many of the questions again pressed upon us were disposed of. (83 Hun, 593.) As correctly summarized in the syllabus: “ If a person purchases from another a printing press, having knowledge of the existence of a contract between the vendor and a third person, whereby the vendor has agreed not to sell such presses except under certain restrictions, such third person is entitled to enforce his contract as .against the vendee, and in an action brought for that purpose is not bound to make any tender. Contracts prohibiting the use of personal property in-a particular way are valid.” It was'further held that in such an action the Kidder Press Manufacturing Company -was a proper party, entitled to be heard, because it involved the question of its right to deal with its property. The Kidder Company was accordingly brought in by an amended complaint, and it now raises the objection that, although it appeared in the action and the casé was tried- upon the merits and a judgment rendered, the court was without jurisdiction. Apart from the consideration of its actual presence in the litigation' and its vigorous contest of the plaintiff’s right to relief, which would seemingly make this a late day to raise the question of jurisdiction, it was made to appear -that the contract between it and the plaintiff was made and signed in Néw York; and, therefore, although both were foreign corporations, the court acquired jurisdiction.
The Hamilton Company insists that the plaintiff’s acquiescence and laches in bringing its action, after full knowledge that the Hamilton Company was purchasing, or about to purchase, machinery and plant for the purpose of printing strip. tickets, is a bar to any relief, upon the principle that, “ where the summary interference of a court of equity is invoked, it must be invoked, promptly,” which principle has been applied in cases where • parties have lain by and permitted large expenditures to be. made in contravention of the rights for' which they- contend. While .the soundness of such a rule is not disputed, it is not
The next question presented is as to the assignability of the contract of October 12, 1891, and as to the right of the plaintiff, as successor to the former company, to maintain an action upon it. It is insisted that it was not assignable, either by its terms or in its nature; that .the assignment vested the plaintiff with no rights as against either defendant, and that upon the dissolution of the plaintiff’s assignor whatever rights it may have possessed died with it. In regard to the first press, which was purchased by the Hamilton ■Company before the dissolution of the plaintiff’s assignor, there was, as against the Kidder Company, at least one breach of contract which occurred before the assignment; and the damages for that
„ In Clarke on Contracts, 530, we find the rule stated as follows “It may.be said generally that anything that. directly or indirectly-involves a right of property is assignable, with the exception that rights and liabilities under an executory contract for personal services, or contracts involving personal credit, trust or confidence, -cannot be assigned.”' In Pollock on Contracts (4tli ed. 425) it is said :■ “ Rights arising out of a contract cannot be' transferred if they are coupled with liabilities. or if they involve a relation of personal confidence such that the party whose agreement conferred those rights must have intended them to be exercised only by him in' whom he actually confided.” And Wharton on Contracts (§ 848, p. 220) says: “ When the assignee of an executory contract can perform. the duty imposed by it as effectively as could the assignor, the fact that this duty is personal cannot be set up by the defendant in a suit by the assignee on the contract.” We think,'however, that it is doubtful whether the element of personal trust is involved' in dealing with an ordinary business corporation, for the reason that such corporation has no personality to receive the trust; its board, and even its managing officers are liable to shift at any moment. In New England Iron Company v. Gilbert El. R. R. Co. (91 N. Y. 167) it is said: “ The matter of .the contract involved no personal relation or confidence between the parties, or exercise of personal skill or science, for the contractor -was a corporation and its work was necessarily to be done through agents or servants.” And in Devlin v. The Mayor (63 N. Y. 17) it was said: “ Parties may, in-
Passing these considerations, however, we think that the decision of the trial court should not be interfered with. By the contracthe plaintiff’s assignor obtained the exclusive right to the use of the Kidder Company’s presses for the purpose of strip ticket printing, and the method of protecting that right was defined. In brief, the Kidder Company agreed to put all its presses under the control of the bank note company. The latter was to dispose of them by making to purchasers leases in perpetuity, containing clauses forbidding the use of the presses for strip ticket printing. • It was explicitly provided that the bank note company should retain the title to the presses, evidently in order to enable it the more effectually to enforce the performance of the covenants. These leases were to be made “ for such money as the Kidder Press Company shall nominate; ” and the bank note company covenanted to “ deliver to the Kidder Press Company the full consideration ” thus fixed by the latter. It is clear, from a reading of these various provisions, that the bank note company was not the sales agent of the Kidder Company, in the ordinary sense. It did not choose customers or fix terms. All this was done by the Kidder Company; and the bank note company had not the slightest interest in these matters. The whole arrangement was made with the sole view of enabling the bank note company to protect its own contract rights. As the contract itself states, the system was adopted as “ the most feasible and proper way to protect the interests of the Bank Note Company in and to the proper control and ownership hereby acquired in the Kidder Perfecting Press.” The bank note company did but act
We' are, however, unable to agree with the learned counsel for the plaintiff that the moneys received from lessees of the presses-did not pass through the hands of the bank note company. A provision already quoted distinctly specifies that the hank note company shall “ deliver ” to the Kidder Company the consideration received. It is true that in a former clause it is stated that the Kidder Company shall sell and “collect the money for” as many presses as it chooses, so long as the bank note company’s rights are protected. But it is plain from the context that the money was to be collected, not directly from the vendees, but through the medium of the bank note company. A general right to sell was conferred, but it was to be exercised in conformity with the arrangement- so carefully defined. The bank note company was thus under a liability to account to the Kidder Company for all moneys received from lessees. We agree that, in general, rights arising out of contract cannot be transferred if they are coupled with liabilities. (Arhcmsas Smelting Co., v. Belden Mining Co., 127 IT. S. 379; Pollock Cont. supra.) We do not think, however, that the general rule applies to the facts of this particular case. The defendants contend that-, as the assignor placed itself under a liability t.o the Kidder Company, the latter had the right to insist upon the responsibility of the company with which it had contracted, and to decline to receive, in its stead that of another company with which it had not contracted. The answer to this is that there was, in truth, no ■such substantial substitution of parties. Technically, the contract was assigned; but practically, it ivas not. The assignment was part of the reorganization, and but a means to that end. With it were assigned all the property and choses in action of the original company, with the exception of one designated claim. The stock of. the new company was distributed ratably among the stockholders of. the old. Technically, the new company was a distinct legal entity from the old ; but to all intents and purposes it was the same concern. It is strenuously urged that the management changed. In fact-,, this is not so. It appears that when the contract was made in
But even if the plaintiff were not entitled to rely upon such a rule of law, the decision of the trial court that the contract was assignable ought not to be disturbed. The question of assignability is one of intent, to be deduced from all the circumstances, and may ■ be controlled by express words in the instrument. So, also, general rules on the subject may be controlled by' special facts. If the terms and subject-matter of the agreement leave any doubt upon the point, no reason is apparent why the difficulty should not be solved, as in any other case, hy a resort to extrinsic proof. We think that the most the defendants can justly claim here is that'such an ambiguity existed upon the face of the contract. To prove the real intention the plaintiff showed that the assignor corporation had, in September, 1890, passed a resolution.authorizing a reorganization under the laws of West Virginia, and that Mr. Kidder, the treasurer of the press company, knew of this resolution before, and at the time of the signing of the contract, and assented to a transfer of the contract to the new company. Mr. Kidder might hot have been able to bind his company by an agreement of this nature, but his knowledge of this fact was the knowledge of the company, for he was very prominent in the negotiations, with the plaintiff and its predecessor, and was the officer who signed the contract sued upon in behalf of the press company. The press company thus knew of the contemplated transfer of the contract before and after it was made, yet it took no step indicating its disapproval, so far as can be
The only remaining question which we think it necessary to dis- • cuss is the question of. damages, and before stating what we think .the correct rule to be, it will be necessary to dispose of an incidental ■question upon which the extent of damages to be allowed must be fixed.
If the. learned trial judge was right in his view that when the Hamilton. Company purchased the first press they knew that there was a subsisting contract between the New York Company and the Kidder Company, but did not know its terms and conditions, and for that reason are not chargeable with any damages for tickets printed on that machine until the date when they became acquainted with such terms and conditions, then it is doubtful whether any •damages would flow from the use of that machine, or as to whether ■its use could be enjoined. If that company, without .notice, had purchased, the machine, it would thereby have acquired an unrestricted right to its use, and it would be exceedingly difficult to formulate a principle upon which it would be liable for damages by reason of knowledge which it subsequently acquired that the machine which it had purchased-without restrictions was subject to a contract which prevented its sale for unrestricted use. We agree with the construction given to the contract between the Kidder Company and the plaintiff’s assignor, that it covered the .sale of the Kidder perfecting press, with or without attachments for printing strip tickets, and if the Hamilton Company purchased a perfecting press, without such attachments, with knowledge of the restriction existing as the result of the contract between the other companies, then it was liable for the damages which it inflicted upon the plaintiff in the use of such press for printing strip tickets. We are, therefore, brought to a consideration of the correctness of the finding of the learned trial judge upon the subject of notice by the Hamilton Company at the date of the purchase of the first press. He has found -that the Hamilton Company knew of the existence of the
Pomeroy, in his work on Equity Jurisprudence (§ 597), says: “ A purchaser or person obtaining any right in specific property is not affected by vague rumors. * * * On the other hand, the proposition is established by an absolute unanimity of authority, and is equally true, both in its application to constructive notice and to actual notice not proved by direct evidence, but inferred from circumstances, that if the party obtains knowledge or information of facts tending to show the existence of a prior right in conflict with the interest which he is seeking to obtain, and which are sufficient to put a reasonably prudent man upon inquiry, then it may be a legitimate, and perhaps even necessary, inference that he acquired the further information which constitutes actual, notice. * * * If, however, it appears that the party obtains knowledge or information of such facts, which are sufficient to put a prudent man upon inouiry, and which are of such a nature that the inquiry; if prosecuted
The-evidence as -to the knowledge of Seebeck, the president of the Hamilton Company, as shown by his letters, seems to us to be conclusive upon the question that if he did not have in mind when the press was first purchased the exact terms óf the plaintiff’s contract, he had sufficient information to put him upon inquiry; arid he was bound, in order to put the Hamilton Company in the posi-' tion of an innocent purchaser, to prosecute his inquiries or ask for the contract.' He' undoubtedly knew that Gray had formerly been an officer of the plaintiff company, and he could have obtained all. the information necessary by asking him. We think, therefore, that the finding, as well as the decree, .limiting the damages with reference to the first machine from the time of the repairing or rebuilding of the attachments by the Kidder Company, should be modified so as to permit the plaintiff’s damages to run from December 29, 1892, the date when the first machine was delivered,, ■instead of from about August, 1893, as provided in the decree.
We think also that the learned trial judge was in error in stating-the rule of damages to be the actual profit, which has been made by the Hamilton Company by the printing by it of ■ strip, tickets upon both presses-purchased of the Kidder Company. 'In.this connection it must be remembered that the Kidder press with the attachments was not secured by patents to which the plaintiff’s assignor became entitled by virtue of its contract; but there were other means open of printing strip tickets, which,, however, required two-operations to" print on both sides. Thus, it was shown that there was a press in the possession of the Hamilton Company for many
Our conclusion, therefore, is that the interlocutory judgment and decree should be modified with respect to the date from which the accounting as to the first machine should begin, and that upon such accounting the measure of damages to be applied should be as herein
Patterson and Bumsey, JJ., dissented.
Concurrence Opinion
I fully concur in the opinion of Mr. Justice O’Brien. Í think, the rule of damages therein laid down is the true one, and that it will be found applicable to any state of facts which may appear before the referee, who ascertains.them. The trial judge has found that the Hamilton Company obtained certain valuable contracts which it could not have obtained except by means of the Kidder perfecting press'. It would seem that, in such cases,-the defendants should account for the whole of the profits .realized, but that would be so under the rule which we have laid down. If a contract could not have been obtained by any other means, then all profits made under it are profits in excess of what could have been made by the use of any other machine, and should be accounted for in full. It was relevant for the trial court to consider the peculiar value'of the monopoly right in deciding whether an injunction should issue, and the fact that valuable contracts were obtained solely through its violation was strong evidence on the point. The whole question of damages, therefore, will be ojien to the referee, who will consider all the facts and apply thereto the rule 'which we have laid down. And that rule may entitle the plaintiff to the entire profits realized upon any contract dependent upon its special circumstances.
I think, also, that a third answer might well be made to the com tention that the contract cannot be enforced by the plaintiff. The Kidder Company should not be allowed to repudiate the contract on this or any other ground without restoring what it has- received under it. The contract distinctly shows- that $1,500 was paid for the monopoly agreement by which it now refuses to abide. If the plaintiff did not acquire' the right to enforce this agreement, it at least succeeded, along with all the other assets of the New. Jersey corporation, to the right to have the money due under or by reason of that agreement refunded. The Kidder Company has not paid or tendered this money. As the New Jersey corporation is practically, if not technically, dissolved, the Kidder Company, if not liable to the plaintiff, seems to have escaped .all the burdens of the agree
Van Brunt, P. J., and O’Brien, J., concurred.
Dissenting Opinion
I do not agree with a majority of the court concerning the question of the assignability of the contract upon which this suit was brought. I think the true construction of that contract indicates that the relation established between' the Kidder Press Company and tlie New Jersey corporation, with reference to perfecting presses thereafter to be manufactured and sold by the Kidder Company, was that of principal and agent, and lienee that such relation was fiduciary and confidential. If that construction is correct, there can be no question that the contract was not assignable. (Rochester Lantern Co. v. The Stiles dk Parker Press Co., 135 N. Y. 209; Arkansas Smelting Co. v. Bielden Mining Co., 127 U. S. 379.) It is conceded that unless such confidential relation is established, in this State at least, the contract is assignable. (Devlin v. The Mayor, 63 N. Y. 8.)
. Entering upon a dissection of the provisions of the contract in suit, we find that all of its' terms were arranged with reference to the sale of one specific press bought by the New Jersey corporation, which press was to be used for the purpose of printing strip tickets. At the same time it was the avowed purpose of the contracting parties, to give to the New Jersey corporation the exclusive control of all perfecting presses to be manufactured by the Kidder Company in the future, so far as to prevent their use by third parties for the printing of strip tickets; or, in other words, that for the one particular purpose a monopoly of use was to- be secured to the New Jersey corporation. Nevertheless, it was within the intention of the parties fo the contract, and they so stipulated, that nothing in its terms was to limit the sale by the Kidder Company of perfecting presses, such as that purchased by the New Jersey corporation, for any purpose, except the printing of strip tickets as they were printed on the machine bought by the New Jersey corporation. As the contract expressly states, it is the pleasure of the bank note company (that is, the New Jersey company), as well as, pre
It will be observed that, notwithstanding the form of expression,the New, Jersey corporation was not, according to this contract, to .acquire the real ownership) of the machines, but only the right to ■control their use.. That is what is meant by “ ownership),” referred to in- the provision of .the agreement now under consideration. The: pamper way referred to, according to the terms of the contract, “ is that whatever sales of this paress or paresses-are made by the Kidder Press Compaany” under the absolute authority which it-has received 'to sell to any one it pleases, “ shall be made to the New York Bank Note Company for the account of the party desiring to use the press' or paresses.” That is to say, the title nominally shall be pant in the New York Bank Note Company. - That company is then to execute a paerpaetual lease to the paurchaser “ for such money as the Kidder Press • Company shall nominate; but the New York Bank Note Compaany shall in nowise part with the title in and to the machine delivered, but shall retain its actual ownership of the
Now, what does that mean? There is no absolute ownership of the press or presses intended, but the New York Bank Note Company is to take a nominal title for the benefit of the Kidder Press Company and to execute leases. That is to say, all the sales made by the Kidder Company to third persons are to pass under the form of leases made by the New York Bank Note Company. For whom ? Certainly not- for the benefit of the bank note company, with reference to its obtaining rents or royalties for the use. They do not stipulate to pay one dollar for any machine, nor to acquire any interest for themselves except the right so to control sales as to prevent the use of the machines for strip tickets. The agreement then goes on to say that this. form of agreement “ it is agreed by the Kidder Press Company, shall be used in whatever sales are made of its Perfecting Presses.” Not one of them is sold to the New York Company. “ And the New York Bank Note Company shall deliver to the Kidder Press Company the full consideration it (the Press Company) may nominate, and the Bank Note Company shall have its own agreements with the purchaser in accordance with the above plan * * * .”
The whole scheme of this agreement, with reference to the parts that have been last adverted to, is that respecting sales made to third parties by the Kidder Press Company of perfecting presses, those sales shall pass through the New York Company as nominal owner, with the right to that company to make terms and conditions of a lease, and the only interest which the New York Bank Note Company can by any possibility have is the curtailment of use. of the machines. And yet, at the same time, the New York Company binds itself to make these lease's, to take a nominal ownership, and to return the consideration — that is to say, whatever consideration it may receive — to the Kidder Press Company. It cannot be said that this is a mere idle form and that the New York Bank Note Company would not receive any consideration or any moneys. That it was contemplated that it should do so is apparent from the fact that there is a specific obligation assumed to deliver to the Kidder Press Company “ the full consideration ” the Kidder Company “ may nominate ” for that press. It seems to me to be perfectly.
Nor can it be said that, the effect of this construction is to be escaped because in the year 1889, in some of the preliminary negotiations connected with the making of the contract, and a year and more before the contract was signed, Mr. Kendall, the president of the New York Bank Note Company, stated to Mr. Kidder that the-New Jersey corporation would, in all likelihood, be dissolved, and-that the business of the company would be reorganized and carried on by a company to be incorporated in West Virginia. No such term is. included in the contract. All matters that were in contemplation between-the parties, as part of the arrangement,, were merged in the contract. Notice to Mr. Kidder of an intention to reorganize the company or to discontinue the New Jersey business, is not notice to the company, because it is perfectly apparent, upon the testimony of Mr. Kendall" himself, that Mr. Kidder had no authority to bind the Kidder Préss. Company by any agreement or understanding to the effect that a devolution of the business of the New Jersey corporation upon another corporation would be -recognized. Mr. Kendall, the president óf the New Jersey corporation, knew that Mr. Kidder had no right to assent to any such arrangement.- He also knew that Mr. Kidder had no right to make the contract of October twelfth, as an individual, or as an officer of the company, without the action of the corporation itself. He swears that he would not accept the contract of October twelfth, by delivery from Mr. Kidder alone. He insisted upon that contract being adopted and ratified by the board of directors of the Kidder Press Company at a formal meeting, before he would accept it or act. under it, or regard .his company or the Kidder Company as bound by it; and even when there was .presented to him a paper signed by every director of the Kidder Company assenting to the contract of October twelfth, he still insisted that there was no enforcible contract made between the parties, and thereupon a meeting was called and held of the Kidder Company directors- in Boston in December, 1889,-when by formal resolution the contract was adopted and ratified and made binding upon the Kidder Company; and not until' then did
I think that under the true construction of this contract, it was-non-assignable, because it established the relation referred to, and . that there was nothing which binds or estops in any way the Kidder Company from insisting upon their defense that the contract was. non-assignable.
Rumsey, J., concurred.
Judgment modified as directed in opinion, and as modified affirmed, without costs.