Newark evening star and Newark advertiser. [volume] (Newark, N.J.) 1909-1916, 1914-07-16
VO|DS CONTRACT
| FOR TRANSFER OF
NUTLEY F ACTORY
Vice-ChanceIIor Howell Rules
Against Dininny-Larref
] Deal.

Vice. Chancellor Howell today
handed down decision in which ne
refused to enforce contract far
the transfer of certain factory prop
erty In the Avondale section of Nut.
ley BY Ferral c. Dininny to the Lar
ref Film Company q moving picture
manufacturing concern. In his opin-
ion however, he advises the COM
piainant company to seek damages
against Dininny in a court of law
Inc suit grew out Of certain trans
actions between Mr.. Dininny and
William H. King, a real estate broker
of Newark. Mr.. Dininny, who lives
1on Riverside drive, New York, want
ed to dispose of his Nntley property
and placed 1t In the hands of Mr..
hlng. While discussing the possi-
ollity OF disposing of the real es-
tate or OF making 1t profitable. Mr.
Dlninny and Mr.. King talked of the
possibility of using it for the man.
fracture of moving picture films. Mr.
hing organized a company for this
purpose, and agreed with Mr. Dinin-
ny to pay for the property by turn
ing over to D1ninny $4,000 worth Of
The seven per cent. cumulative pre-
TERED stock and $4,000 Of the COM
mon stock of the proposed corpora
ton. At first the company was to
pc known as the International Film
Company and was to be orvanized
under the laws of New Jersey, but at
the request OF Dininny it was organ
lzed as the Larref Film Company un-
der the laws of Delaware.
But 1t seems that after all of this
happened Mr., Dininny repented of
MS agreement, or found that 1T would
not be sufficiently profitable to him.
lie then entered into an agreement
with the Twombly Car Corporation, a
company engaged in the manufactures
OF cyclecars to lease to them the
premises In suit at rental of $4,000
a year, with the option of purchase
at the expiration Of two years for the
The present suit was then brought
and the Twombly Car Corporation
was made party defendant, its
eJectment from the premises in issue
being sought.
There can be no decree against the
Twombly corporation unless there
can be =. decree against Dininny. and
1 am satisfied that it would be gross
lnequltable to make a decree on
the present bill and the present state
OF facts against Dininny, and this
upon the general ground that IL
would be inequitable, under all the
circumstances. to compel Dininny to
make a deed in accordance with his
contract. / think, therefore, that the
compliments should be RENTED to
their remedy at law by an action for
damages
Ny reason is this. Shortly after
The filing of the certificate of incor-
poration and as part of the plan of
its organization, and for the purS
Pose OF providing for the issue of
stock, the property which appears by
the Dinipny agreement to. be worth
$4,000, and to have been put in by
Dininny at 100000, was valued for
the purposes of the corporation at
$12s,000. In addition thereto there is
In the minute book, at page %, an
original agreement made between
King and the company in which it
Is recited that King has secured con-
tracts of extraordinary value for the
4 purchase OF this property and secur-
ing the services of competent per-
sens to manage the company's bust
ness affai<s. the contracts having
been made between him and a man
named Raleigh and another man
named Hedwig. 1t was thereupon re-
solved that King should turn over
those contracts to the company and
receive therefor $4,000 par value of
its common stock: that Raleigh
should likewise receive $4,000 and
Hedwig $4,000 of the common stock
of the company.
"On the same day King made a con-
tract with the company by which the
company agreed to elect him to the
Office of treasurer for period of five
years at an annual salary of not less
than $1,000 the same to be increased
according to the volume of business
of the corporation. A similar agree
n,ent was made between the company
and Raleigh, and on the same day a
similar contract was made with He'd
wig, who in addition to- salary of
$1,000 for period of five years was
to receive also at the end of that
time upon certain conditions 100
shares of the capital stock of the film
company.
These so-called contracts appear
to me to have been designed merely
for the purpose of furnishing an IL
lusory foundation for the issue of
common stock of the film company;
yet how could they be considered to
be of value to the company as q
basis for issuing stock 1t is not easy
TO see, for the reason that instead of
creating assets they created liabili-
ties. In short, consider the whole
scheme to be fraudulent one and
peHSye IndI. all STOCK lHSued IneTe-
under is likewise fraudulent and void.
Under these circumstances 1t
would be very unjust to Dinniny, al
thought he has participated in the
footing of the company to the extent
of $4,000 of the common stock. to
compel him to go any further in the
enterprise.
Neither will this court enforce a
{, contract where under all the circum-
y stances of the case 1t would be in
equitable to do So A court of equity
will rever permit it's jurisdiction to be
appealed to for inequitable purposes.
The defendants may be unable to
prove any mistake. fraud or accident
In reference to the execution of the
agreement. and yet the conductor the
complainant may have induced such
"a state Of things in relation to the
subject matter of the agreement as
would make it not only proper but
the plain duty of the court to refuse
its aid In enforcing its specific per-
formance."
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