167 F. 47 | 8th Cir. | 1909
(after stating the facts as above). The complainants pray in their bill, and the orders challenged grant, a temporary injunction against the violation by the defendants of the contract of May 4, 1908. The act of Congress which confers jurisdiction of appeals from orders granting or continuing injunctions provides that an appeal may be taken where “upon a hearing in equity” such an order is made (Act April 14, 1906, c. 1627, 34 Stat. 116 [U. S. Comp. St. Supp. 1907, p. 208]), and counsel insist that these orders are not appealable, (1) because they grant an injunction until the further order of the court, but an injunction until the further order of the court is equally appealable with one until a time certain, and (2) because when the defendants presented their affidavits and letters in answer to the order to show cause why the injunction should not issue against them, the court declined to hear these affidavits and letters or to hear counter affidavits which were not prepared and hence do not appear in the record, and granted the injunction without regard to these proofs for the purpose of maintaining the existing state of affairs until the validity and construction of the contract could be judicially determined at the final hearing of the suit. But the affidavits and letters presented by the defendants constituted admissible evidence in their behalf in opposition to the order for the injunction. Either party may read pertinent affidavits and admissions at such a hearing. Equity Rule 5§; Bates on Federal Equity Procedure, § 534; 3 Daniel!, 275,. 297. These affidavits and letters were introduced in response to the order to show cause at the proper time in the presence of the court and counsel, and at the hearing upon which the court decided to grant the injunction. A hearing by a federal court in equity at which the admissible evidence of a litigant is disregarded and an order or decree is rendered against him is no less a hearing in equity than one in which his evidence is considered, and the orders granting the injunction were appealable.
Moreover, whether the court below considered the affidavits and letters or not, the appellate court may not lawfully disregard them.
The injunctional orders in this case are unique. They enjoin the defendants from interfering with such management and control of the Shubert Theater by the complainants “as is granted unto complainants in and by the written instrument set out in plaintiffs’ petition,” and they enjoin the complainants from interfering with the management oí the theater, “except Linder the exact terms specified in the contract made between the parlies,” declare that it is the express object of the orders “to compel a strict observance of the rights granted by and the obligations incurred by the terms employed in the contract until its validity or invalidity may be determined on full proofs by final decree,” and that in case dispute should arise between the pardes, application may be made to the court for temporary construction of the contract and for further orders. When these orders were made on September 14th and September 23d respectively, the record was replete with proof that an irreconcilable conflict had arisen between the parties over the construction of the contract before the suit was commenced; and on October 2, 1908, upon further application, the court ordered that Woodward should exercise the powers of general manager of the theater and of its business, “subject, however, to the provisions of the contract in all respects”; that the defendants’ treasurer should exercise the powers of a treasurer; that disputes about claims for expenses should be determined by a special master who was appointed by the order; and that the purpose of the order was “to preserve the status of the property and require the operation and conduct of the business of the Shubert Theater in strict accordance with the contract between the parlies.” It is clear from a review of these orders that their legal effect was to enjoin the defendants from committing any breach of the terms of the agreement of' May 4. 1908.
Xu injunction against the breach oí a contract is a negative decree of specific performance of the agreement, and the general rule is that: the power and the duty of a court of equity to grant the former is jncr.sii.red by the same rules, principles, and practice as its power and duty to grant the latter relief. 4 Pomeroy’s Equity Jurisprudence (3d Ed.) § 1341; General Electric Co. v. Westinghouse Elec. & Mfg. Co. (C. C.) 144 Fed. 458, 463; Welty v. Jacobs, 171 Ill. 624, 631, 49 N. E. 723, 40 L. R. A. 98; Chicago Municipal Gas Light Co. v. Town of Lake, 130 Ill. 42, 60, 22 N. E. 616. This, like most general rules, is not without its exceptions, under which injunctions may be lawfully issued to restrain the performance of specific acts in violation of agreements whose specific performance the courts would not completely enforce, as where certain acts violative of an agreement con
The specific performance of a contract by a court of equity is not a matter of right. It rests in the discretion of the court, not in its arbitrary whimsical will, but in its sound judicial discretion informed and directed by the established principles, rules, and practice of equity jurisprudence. Hennessey v. Woolworth, 128 U. S. 438, 442, 9 Sup. Ct. 109, 32 L. Ed. 500. Nor are these principles 'and rules and this practice hard, fast, or without exception. They are rather advisory than mandatory, and the application of the rules and of their exceptions to each particular case as it arises is still intrusted to the conscience of the chancellor. Yet these principles and rules and this practice serve to inform the intellect and to enlighten the conscience,
Specific performance will not ordinarily be decreed in favor of a party to a contract against whom the court cannot efficiently compel its performance. The obligation and the remedy under the contract must be mutual. 2 Beach on Contracts, 885, and note 1; Marble Co. v. Ripley, 10 Wall. 339, 358, 19 L. Ed. 955; Fry on Specific Performance of Contracts (3d Ed.) §§ 440, 441; Welty v. Jacobs, 171 Ill. 624, 49 N. E. 723, 40 L. R. A. 98; Lancaster v. Roberts, 144 Ill. 213, 223, 33 N. E. 27; Chicago Municipal Gas Light & Fuel Co. v. Town of Lake, 130 Ill. 42, 60. 22 N. E. 616; Ogden v. Fossick, 32 L. J. Eq. (N. S.) 73; Buck v. Smith, 29 Mich. 166, 18 Am. Rep. 84; Richmond v. R. R. Co., 33 Iowa, 422. There are exceptions to this rule, as where the specific performance of the complainant’s covenants which are not susceptible to enforcement by the court has been completed before he institutes his suit. Burnell v. Bradbury, 67 Kan. 762, 764, 74 Pac. 279; Bigler v. Baker, 40 Neb. 325, 333, 334, 58 N. W. 1026, 24 L. R. A. 255; Green v. Richards, 23 N. J. Eq. 32, 35; Boyd v. Brown, 47 W. Va. 238, 249, 34 S. E. 907. But in the case at bar the complainants have not substantially performed their part of the contract, nor can they do so for more than four years to come. There are authorities in which courts have sought and found some reason or excuse in the particular facts of cases to take them out of the rule, as in Jones v. Williams, 139 Mo. 1, 92, 39 S. W. 486, 40 S. W. 353, 37 L. R. A. 682, 61 Am. St. Rep. 436, and Joy v. St Louis, 138 U. S. 1, 50, 11 Sup. Ct. 243, 34 L. Ed. 843. But it is both unreasonable and unjust for a court of equity to constrain one party to an agreement to specifically perforin it when it is without power to compel the other party to do so and he may escape its performance at will, and the general practice as well as the weight of authority sustains the rule.
The amusement company agreed by the fourth, seventh, eighteenth, and nineteenth paragraphs of the contract that it would supervise and control without charge, and that Woodward should manage for $50 per week, the Shubert Theater, subject to the orders and directions of the Shuberts, that Woodward would approve the hookings of the theater, and that its funds should be deposited to the credit of the Shuberts’ account by a treasurer appointed by them. Neither the amusement company nor the court, however, lias the power to efficiently compel Woodward to do any of the things here required to be done by his personal services, because he is not a party to the contract, he has not agreed to do as the contract recites, and because, if he had signed and agreed, the examination and approval of the bookings and the suitable management of the theater are personal acts whose rightful performance requires special knowledge and experience in the business of operating theaters, and the exercise of skill, discretion, and cultivated judgment, and in the end rests wholly in the will of Woodward. Courts of equity have no efficient means, and therefore will not ordinarily attempt, to constrain an individual lo perform personal acts which require special knowledge and experience and the exercise of
It is true that where the performance of negative- covenants, express or implied, will tend to constrain the performance of positive covenants for personal services, an injunction may sometimes lawfully issue for that purpose, but neither the amusement company nor Woodward is subject to any negative covenant in this case, whose performance would tend to cause Woodward to approve suitable bookings and to disapprove those which are unsuitable, or to manage the theater wisely and well, and there are no efficient means by which a court of equity could compel him to do so.
Counsel argue that the contract of the amusement company was not that Woodward, the individual, but that Woodward, as its' president, should manage the theater and approve the bookings; that these acts were not to be his personal acts, but those of the corporation, and that it may perform them by its agents. But the clear terms of the contract, the provision that the amusement company shall receive no compensation for its supervision, and that the Shuberts shall pay the individual Woodward $50 per week, conclusively negative this contention. There is no logical way of escape from the conclusion that there is a lack of mutuality of remedy upon this contract between the amusement company and the Shuberts, and that there is neither mutuality of obligation nor of remedy between Woodward and the Shuberts; and as it is impossible for a court of equity to so constrain the will of Woodward as to make him rightly exercise his will, his cultivated judgment, his skill, and his discretion in the specific performance of this contract, the court ought not to compel the defendants to perform it.
Again, the enforcement of the specific performance of the contract in hand will necessarily entail upon the courts through many years the supervision and direction of a continuous series of acts, many of which will present the question whether or not they accord with the contract, such as, what bookings should be approved or disapproved, how many and what persons should be employed to operate the theater, how the intricate details of the business of the theater should be conducted, how its operation should be advertised, and many other unforeseen issues which the complicated performance contemplated cannot fail to raise. It is conceded that a court of equity has ample power to determine all these questions and to conduct this business by its receiver, or master, and that it will sometimes enforce the performance of contracts where the performance involves more intricate details, or longer periods of time, where the other equities of the complainant in the case, or the public interest, are controlling. But in the absence of such public interest, or such controlling equities, or of clear evidence that irreparable injury will probably result to the complainant if it withholds the relief sought, a court of equity does not constrain, and it ought not to compel,' the enforcement of the specific performance of a contract which cannot be consummated by a speedy, final decree, but which involves the supervision of a continuous series of acts which must extend through a long period of time and which will require the exercise of special knowledge, judgment, and experience. The brevity
The issue of an injunction, like the .specific performance of a contract, rests in the judicial discretion of a court of equity. It is not a matter of right, and the application for it is addressed to the conscience of the chancellor. It is an indispensable condition of a decree for the specific performance of a contract and of the issue of an injunction against its breach that the moving party has not been guilty of a substantial violation of it himself, lie who seeks equity must come into court with clean hands. Marble Company v. Ripley, 10 Wall. 339, 358, 19 L. Ed. 955; Taussig v. Corbin, 142 Fed. 660, 667, 73 C. C. A. 656, 663. Did the record in this case at the time the injunction was issued -.how that the complainants had complied with their stipulations contained in the contract? The seventh paragraph of the agreement is that tire amusement company will take general supervision and control of both (heaters and of the business in connection therewith, and that it will make no charges cor its services in so doing. The fourth paragraph stipulates that Woodward is designated its representative at a salary of $50 per week, and that he is designated by the Shuberts as their r-presentative ai a like salary to be the general manager of the enterprises. “but said representative to be subject to direction and orders from the second party [the Shuberts] hereto.” These two paragraphs must be read and construed together, because they are in the same contract and relate to the same subject. All their provisions must be harmonized and given effect if possible, but if there is any conflict be tween the sentence in quotation,,which was written into the contract by the fllmberts after the writing was prepared by the amusement company, and the other provisions of 1he contract, the former must prevail, as ihat to which the especial attention of the parties was directed and as the expression of their final intent. Pike’s Peak Hydro-Electric Co. v. Power & Mining Machinery Co. (C. C. A.) 165 Fed. 184. Thus read, the legal effect of these paragraphs is that the amusement company will supervise, control, and manage the Shubert Theater by means of the personal services of Woodward, subject to and in accordance with tlxe directions and orders of the Shuberts. And this is the rational interpretation of the entire contract, for it is incredible that the Shuherts intended and agreed to part with all direction and control of their theaV'r end of its business while they bound themselves to pay about $20.009 a j’car rent for it, guaranteed to book and play 30 weeks in each season therein tinder a penally of $1,000 per week, and agreed that the surplus funds derived from its operation should be paid into a general fund with the surplus from the Wood Theater, and that the profits and losses of both should be divided between the parties.
By the second paragraph of the contracts the Shuberts covenanted to cause their theater “to be carried on and conducted as a place of amusement where the highest price of admission should be $1 and the
Woodward asked permission of the Shuberts to change the midweek matinee at their theater from Wednesday to Thursday. They refused the permission and directed him to hold the matinees on Wednesdays, but he disobeyed their direction and made the matinee days Thursdays. In defiance of the direction of the Shuberts, he discharged the watchman and musical director whom they had employed for their theater, and hired other employés.
The eighth and the eighteenth paragraphs of the contract contain stipulations that the Shuberts should appoint a treasurer of their theater, to be under the supervision of the amusement company, which should not have the power to discharge him, and that all the funds of the theater should be deposited by this treasurer to the credit of the Shuberts’ account, and that the surplus should be distributed at the end of the season. The effect of these provisions was that the treasurer appointed by the Shuberts was authorized to receive and to deposit the funds of the Shubert Theater to the credit of the Shuberts’ account; that the Shuberts, the owners of this account, should themselves, by their treasurer or otherwise, pay the necessary expenses of the theater out of this fund, and at the end of the year pay the surplus into the general fund that was to be divided. The Shuberts appointed Mr. Miller the treasurer of their theater, and directed that he should receive and deposit all the funds of that theater, and should draw the checks and pay therewith the necessary expenses thereof after the bills therefor were approved by Mr. Woodward. But Mr. Woodward and the amusement company insisted that Woodward alone should determine and pay the expenses of the Shubert Theater, and that they would not permit him to divide this responsibility with Mr. Miller; and Mr. Woodward wrote to the Shuberts that “as long as I am manager of your theater in Kansas City, under the signed contracts, I shall at all times insist upon my right to sign all checks and handle the house along the same lines as I handle every other house with which I am connected.” Thus it may be seen that the complainants had violated the contract between the parties before they commenced this suit. They did not come into the court with clean hands. After these violations of the orders of the Shuberts had been committed, they took possession of their theater, discharged some of the employés whom Woodward had hired, and, when Woodward personally appeared and claimed possession of and remained in the theater with the Shuberts, they discharged him as the manager of the theater for disobedience of their orders and insubordination. The complainants then applied to the state court in this suit for an injunction, and that court issued a temporary restraining order whereby the Shuberts were forbidden to interfere with the management, possession, or control of their theater by the complainants, and, under this order and the orders from which this
One of the principal purposes, and perhaps the main effect, of the orders granting and continuing the injunction, and of the order appointing Woodward manager of the Shubert Theater, is the prevention of the discharge of Woodward by the Shuberts and his maintenance in charge of the defendants’ theater as their manager: Before this suit was commenced he had disobeyed the rightful orders of the defendants relative to the scale of prices for admission to the theater, to the hiring of employés, and to the midweek matinees, and relative to the control and disbursement of the fund derived from the theater, and the defendants had good cause to discharge him, and, even if they had no cause, injunction is not the proper remedy for his wrongful discharge. A court of equity is without power to compel Woodward to perform the duties of manager of this theater, because he has never made any agreement to perform them, and because the discharge of those duties requires the rendition of personal services which involve tiie exercise of cultivated judgment, taste, and experience, and, where a court is without power to compel an employe to serve, the general rule is that it may not enjoin his employers from discharging him. Mair v. Himalaya Tea Co., L. R. 1 Eq. Cas. 410, 415; Bainbridge v. Smith, 41 Chan. Div. 462, 474, 475; Davis v. Foreman, 3 Chancery, L. R. 1894, 654, 656; Pickering v. Bishop of Ely, 2 Younge & Collyer’s Chancery, 249, 266; Coburn v. Cedar Valley Land & Cattle Co. (C. C.) 25 Fed. 791, 793.
In Stocker v. Brockelbank, 20 L. J. Eq. (N. S.) Cas. 401, 408, the complainant, a patentee, had granted to Brockelbank & Co. an exclusive license under his patent, and had covenanted to serve them as general manager of their business for 12 years; and they had agreed that he should have the general management of their business during that time, that they would pay him 40 per cent, of the net profits during the time, and a gross sum at its end. They discharged him during the time, and he applied for an injunction. The chancellor denied the application, and said:
“Is there any instance (I am not aware of any — none has been cited; though my attention has been called at other times to questions of this nature. Í do not recollect any) where it has been supposed that a contract of luring and service could be made the subject of an application to this court, if the employer claimed the right to discharge his agent, or to dismiss his servant or his manager, or by whatever name the party to perform the service is to be denominated? I do not recollect any instance of any attempt on the part of a cotirt of equity to compel the employer to retain the servant, agent, or manager, and not to forbear to leave him to his remedy at law for the breach of it. I know of no such case, and I shonld be surprised if that principle could be recognized by the court; for consider what the effect would be: How is it possible for an employer or an agent to go on in the intimate connection which such a contract is calculated to create? They are lo bo on the same premises, acting in the management of the same business in tins case; and if there is mutual dissatisfaction, well or ill founded, it is perfectly clear that a management, conducted under such circumstances, must tend very much to the prejudice of the concern — in this caso, I think, particularly.”
The complainants allege that their damages will be irreparable if an injunction does not issue, but the only damages they plead are those, the amount of which is not stated, resulting from changes in their business, the nature and extent of which they do not set forth, made for the purpose of performing the contract, and the prospective profits from its performance, which they aver “will probably be very large, exceeding perhaps $350,000.” But the defendants will lose as much by the ioss of profits as will the complainants. The complainants are not the owners of and they have no interest in the Shubert Theater, except their interest in these profits, nor are they primarily liable to pay the rent or the other expenses of its operation. On the other hand, the defendants own the the.ater; any depreciation of its value, of its reputation, of its income, falls primarily upon them. They are bound to pay $30,000 a year rent for its operation; they have agreed to book and play it 30 weeks in each season, or to pay a penalty of $1,000 for each week less than the 30 which it is booked and played. The change of the midweek matinee, the disobedience of the defendants’ orders fixing the scale of prices and directing the employment and discharge of servants, the general insubordination of their manager, and the pregnant fact that the management of the complainants is that of parties with comparatively little interest in the theater, while that of the defendants is the management of the owners of it, of those who have the largest interest in its income and its prosperity and the greatest responsibility for its rent and expenses, have forced the mind to the conclusion that a greater wrong and injury is likely to be inflicted upon the defendants by the issue and maintenance of the injunction and the order appointing Woodward the manager of this theater than is likely to fall upon the complainants by refusing to issue or to maintain the injunction or the order.
Counsel for the complainants invoke the familiar rule that a preliminary injunction maintaining the status quo may properly issue, and that an appellate court will not disturb it, when the questions of law or fact to be ultimately determined in the suit are grave and difficult, and injury to the moving party will be immediate, certain, and great if it is denied, while the loss or inconvenience to the opposing party will be comparatively small and susceptible to full indemnification by a bond if it is granted. City of Newton v. Levis, 25 C. C. A. 161, 163, 79 Fed. 715, 717; Lehman v. Graham, 135 Fed. 39, 43, 67 C. C. A. 513, 517; Massie v. Buck, 128 Fed. 27, 31, 62 C. C. A. 535, 539. But this rule is not applicable to the case in hand, because the record at the time the injunction issued proved that greater wrong and injury was likely to be inflicted upon the defendants by issuing than the complainants would probably suffer from withholding it. And the
This bill is for an injunction to prohibit the breach of a contract, and by that means to enforce its specific performance. Its equity is strenuously assailed, and it seems to be wanting. The question thus presented has accordingly been considered with care, and the conclusion is that there is no equity in the bill which entitles the complain - ants to the injunction for which they pray, because there is no mutuality of obligation between Woodward and the defendants; because there is no mutuality of remedy between the amusement company and the defendants, for the reason that the court is without power to compel the beneficial exercise by Woodward of his trained judgment, taste, and experience in the management of the theater and the approval of its bookings for which these parties contracted; because it would be an unwise and unusual exercise of the authority of the court, if it has such power, to prohibit the defendants from discharging Woodward as manager; and because the relief sought cannot be granted by a speedy final decree, but the attempt to give it must entail upon the courts through many years the supervision and direction of a continuous series of acts involving intricate details which will require the exercise of judgment and special knowledge or experience, and there are no public interests or controlling equities which require the court to assume so burdensome a task.
For the same reasons, and because the complainants first broke the contract, because the issue and maintenance of the injunction and of the order appointing Woodward manager of the theater of the defendants are likely to inflict greater wrong and injury upon the defendants than the complainants would suffer from the withholding of these orders, or their reversal, they may not be sustained.
The court below will not be directed to dismiss the bill, because this suit was not at issue when some of the orders here challenged were made, and the bill may have been amended, or it may be susceptible
It is so ordered.
And it is further ordered that the mandate in this case be remitted to the court below ten (10) days after the filing of this opinion.