Lead Opinion
In June, 1881, the plaintiff railroad was in process of construction, and on the 13th of that month the plaintiff made with the defendants’ testator, Cornelius K. Garrison, a contract whereby, among other things, the said Garrison agreed to purchase "5,000 tons of English steel rails, deliverable in San Francisco atas early a date as reasonably practicable, and to sell to the plaintiff the rails so bought, upon arrival of each shipment at San Francisco, upon receiving in cash the actual cost to him of said rails, and the further sum of $100,000 in first mortgage bonds of said company. Garrison further agreed to purchase the fastenings for said rails, and to deliver the same at San Francisco, at the same time, which were to be paid by the company in the same manner. The company agreed to deposit with Garrison, as a guaranty for the performance of the contract on their part, 3,000 of the first mortgage bonds of the company for $1,000 each, of which Garrison was to retain 100 as above stated, and to hold the remaining 2,900 until the company had taken and paid for the rails and fastenings including interest and all proper charges.' The contract also contained a provision that the company might withdraw any part of said bonds on paying to said Garrison 60 per cent, of their par value. The company further agreed to give to said Garrison the same bonds in full-paid stock of the company upon the 100 bonds already mentioned, that they would be entitled to prorate with the most favored purchaser of any of said company’s bonds. Garrison further agreed to loan to the company an amount equal to the difference between the cost to him of said rails and fastenings and $200,000; the bonds deposited with him as above being held as security for such loan. The company further agreed to purchase from Garrison the 100 bonds already mentioned, together with the pro rata of stock, and pay him therefor $100,000 at any time he might elect to sell the same to them. Under the fifth article of this agreement the plaintiff deposited with Garrison 3,000 bonds. On the 21st of July, 1881, the company received back 400 of said bonds.
It was claimed by the plaintiffs that between the 13th of June and the 13th of August, 1881, Garrison took no steps to purchase the rails or other supplies referred to in said agreement, though the plaintiff’s president nod requested that the same should be furnished. On the 13th of August, 1881, at
“Ear and in consideration of one hundred thousand dollars in bonds of the Oregon Pacific Bailroad Company, and six hundred shares full-paid stock (the receipt whereof is hereby acknowledged) paid by the Oregon Pacific Railroad to C. K. Garrison, the within agreement is hereby canceled and satisfied, and the Oregon Pacific Railroad Company hereby acknowledges the receipt of twenty-five hundred bonds, of one thousand dollars each, being the remainder of the three thousand bonds mentioned in the agreement hereto annexed.
“New York, August 13th, 1881, C. K. Garrison.
“T. Egerton Hogg.”
The agreement of June 13th was accordingly canceled, and the 600 shares of stock and the 100 bonds referred to were retained by Garrison. The plaintiff thereafter paid to Garrison, or his assignee, during his life-time, the interest coupons on the 100 bonds so delivered to him semi-annually, and for over two years after his death paid the interest to his executors in the same way. The first of these payments was made on the 1st of October, 1881, and the last on the 3d of October, 1887. Cornelius K. Garrison died on the 1st of May, 1885. His son William B. Garrison, who held his power of attorney, died on the 1st of July, 1882, and Mr. Mortimer Ward, who succeeded William B. Garrison as attorney of said Cornelius K. Garrison, died on the 13th of August, 1884.
In October, 1887, this action was brought to recover the said 100 bonds, or for their value in case a delivery could not be had; the ground of recovery claimed upon the trial being that the consent of the company to the delivery of the bonds to Garrison had been obtained by duress. The answer of the defendants denied the right to the recovery of the bonds, and upon the trial the plaintiff moved that a verdict be directed for it upon the ground that the contract of June 13th had been broken on the 13th of August, and that Cornelius K. Garrison had no rights under it remaining to him, and, accordingly, he never acquired any ownership of the bonds in suit, and the title to them was now in the plaintiff, and that the alleged contract of August 13th was obtained by duress of plaintiff’s goods, and accordingly void. And upon the further ground that the alleged contract of August 13th was not executed by the plaintiff nor by its authority, nor was it ratified by the plaintiff after execution, and accordingly did not bind the plaintiff. The plaintiff then requested the court to charge the jury as follows: (1) That if they find that nothing was done by C. K. Garrison prior to August 13th, in performance of the contract of June 13th, and that he then compelled the plaintiff’s president to surrender the 100 bonds sued for, and to sign the alleged contract of August 13th, as a condition of returning to the plaintiff the rest of the bonds, they must find a verdict for the plaintiff. (2) That if they find that the agreement of August 13th was executed without the authority of the plaintiff, they must find a verdict for the plaintiff. (3) That there are no facts in this case operating as an estoppel against the plaintiff to prevent it from reclaiming the bonds by reason of anything that happened after August 13th. The court refused so to charge, whereupon .the plaintiff asked that each of the following questions be submitted to the jury, viz.: (1) Whether, prior to August 13, 1881, C. K. Garrison ever took any steps in performance or
It is claimed upon the part of the plaintiff that the evidence shows that under the contract of June 13, 1881, although by its terms Garrison was required to act with diligence, yet he had done nothing, up to August 13th, towards its fulfillment; that he had been repeatedly requested by the president of the plaintiff to take steps for the fulfilling of the contract, and that finally the president, not being able to ascertain that Garrison had done anything under the contract, had purchased the rails to be provided under the Garrison contract upon his own credit, and furnished them to the company, and that he had an interview on the 13th of August with Mr. W. B. Garrison, who represented Cornelius K. Garrison, in which he details a remarkable conversation. This conversation was to the effect that he told Garrison that he had called at the office the day before to notify him that the earnest application he had made to purchase the rails had been disregarded, and that he had purchased the rails himself, using his own credit, and providing the. banker’s credit to pay for them on the other side; that William B. Garrison, replied; “Yes, I have been so advised by C. K. Garrison, and we are glad of it, and you have relieved us of a great burden. ” Mr. Hogg then said: “lam very glad of that, if I have relieved you of a great burden, because I would have relieved you long ago if you had been frank with me, and told me that you did not intend to order those rails.” And he said: “How, having done that, you have broken this contract.” William B. Garrison replied, “Of course, we have;” and further said: “I intended to break it. I have never beeñ in sympathy with what C. K. Garrison has done. I intended to break it.” Mr. Hogg then said: “That is all very good. I cannot trace where you have done any business with it. How, I.want you to surrender to me the bonds you hold as a guaranty for the fulfillment of your portion of this contract. ” Mr. W. B. Garrison then said: “I will surrender you 2,900 of those bonds.” Mr. Hogg asked: “Why not surrender the whole 3,000?” “Be
Upon an examination of this contract of August 13th, this peculiar feature will be observed that according to his own theory when Hogg is canceling the contract he is acting individually, but when he is receiving the bonds he is acting for the plaintiff; and this theory is based upon the fact that he seems to have signed the contract individually, and not as president. The contract expresses the receipt of a consideration from the Oregon Pacific Railroad Company, the cancellation of the contract because of that consideration, and the receipt by the company of the 2,500 bonds, being the remainder of the 3,000 mentioned in the agreement of August 13th. Mr. Hogg in his testimony expressly states that he was not acting on behalf of the company, and that he refused to act upon behalf of the company, and yet he received the 2,900 bonds on behalf of the company. He testifies that he told Garrison so, and that Garrison said lie did not care anything about the release of the company; that he wanted Hogg’s individual release, etc. And yet we find, by the minutes of the executive committee of the plaintiff, that a meeting of such committee was held on the 13th of August, 1881, at which Hogg was present, and that a resolution was passed by which the president, Hogg, was authorized to negotiate with Garrison for the cancellation and abrogation of the contract existing between him and this company, with power to close the transaction on the terms proposed, in his discretion. How, it is clear from this resolution that other negotiations had been had between Hogg and Garrison, in reference to the cancellation of this contract, and that Garrison had stated his terms; that Hogg had submitted the proposition to the executive committee, and that the committee, having power so to do, the board of directors not being in session, authorized theopresident to accept the proposition, and to cancel and abrogate
It is well settled that it is not necessary, in order to uphold a promise based upon the surrender and compromise of a claim, to show that it is a valid claim or one that could be enforced at law. A promise made upon the settlement of disputes and to prevent litigation is made upon a good consideration. The settlement of a doubtful claim will uphold a promise to pay a stipulated sum, or do any other lawful act. White v. Hoyt, 73 N. Y. 505. And Mr. Chitty, in his work on Contracts, (volume 4, p.45,) says: “And there can be no. doubt that the resignation of a colorable claim, conflicting with that of another person, and the settlement of the dispute between the parties without suit, constitutes a good consideration. ” It therefore appears by documentary evidence, and which m ust control in view of the nature of the evidence given by Mr. Hogg on behalf of the plaintiff, and his evident want of memory as to the transaction to which he was testifying, that this agreement of August 13, 1881, was entered into as a settlement between Garrison and the plaintiff; of the claims which had arisen out of the contract entered into on the 13th of June, 1881, and it is too late for us to try, or attempt to try, the contro
Now, it appears that from the 1st of October, 1881, to the 3d of October, 1887, inclusive, the plaintiffs paid regularly the interest coupons upon these-bonds. This long acquiescence is attempted to be excused by evidence from Mr. Hogg, who testified that prior to the 1st October, 1881, he called upon Mr. William It. Garrison, and told him that the coupon interest on the 1st of October was maturing, and that he did not intend to pay the same; that they had some further conversation in which Mr. Garrison repeated the statement that they had not done anything to earn these bonds, (being seemingly particularly careful, according to Mr. Hogg’s testimony, to decry his own title thereto, on every occasion when he saw Mr. Hogg,) and promised that, if the coupons should be paid, they would form a syndicate and take a large portion, if not the whole, of the bonds, provided they could earn their proper compensation out of it, and tarn these bonds and this interest, and that in consideration of his attempting to do that, Mr. Hogg paid the coupons, and continued to do so up to the time of his death, while he was trying—and he* did try, as-"Mr. Hogg says—to form a syndicate, and that Mr. Ward, after W. B. Garrison’s death, continued his efforts. But although AVard died in August, 1884, and all attempts to form a syndicate then ceased, in any event the coupons seem to have been paid up to October 3, 1887, three years thereafter. °If these coupons were paid upon the agreement of Garrison that he would form a syndicate for the disposal of plaintiff’s bonds, then a new contract was entered into confirming the old; and if this new contract was not fulfilled, the only remedy of the plaintiff rested upon the new contract, because after the old contract had been deliberately confirmed, it could no longer be rescinded for duress. This acquiescence, subsequent to the alleged breach of the contract to form a syndicate, is entirely unexplained, is entirely inconsistent with the theory that Garrison procured these bonds by duress, and should be held now, in view of the fact that all the parties who represented the interest of Mr. Garrison, and had personal knowledge of these transactions, are dead, and cannot contradict the statements made by Mr. Hogg upon the stand, to preclude the plaintiff from now attempting to rescind the contract under which the bonds in question were received. The plaintiff could not wait for the purpose of seeing how the new agreement was going to turn out, but was bound to act at once.
Another objection is made to the plaintiffs’ recovery, and that is that there has been no offer to return the 2,500 bonds received at the time of the execution of the contract of August 13th. A party seeking to rescind a contract must not only act promptly on discovering the ground of rescission, but must, restore or offer to restore whatever he has received under the contract. Schiffer v. Dietz, 83 N. Y. 300; Gould v. Bank, supra. He may not wait for the purpose of seeing how the contract is going to turn out, 'and determine whether he may not receive a benefit from it, but he must at once act upon the discovery of the facts authorizing the rescission, and return all that he has received thereunder. These principles are undoubtedly correctly stated. But the rule does not apply where, if the contract sought to be rescinded had
. Bartlett, J„ concurs.
Concurrence Opinion
I concur with the presiding justice, and desire to add some additional considerations to those which he has so clearly stated. It seems to me that the plaintiff proceeds upon an extreme view of the facts. Upon the evidence, it is by no means, as contended throughout, substantially a case of property obtained, so to speak, by a highw’ayman, and restored in. part upon.