Source: http://masscases.com/cases/sjc/236/236mass138.html
Timestamp: 2019-04-20 10:33:55+00:00

Document:
EASTMAN MARBLE COMPANY & others vs. VERMONT MARBLE COMPANY.
Present: RUGG, C.J., DE COURCY, CROSBY, PIERCE, CARROLL, & JENNEY, JJ.
The bar of a suit by a judgment of a court of competent jurisdiction in another suit for the same cause of action between the same parties or those in privity with them extends not only to those matters which were pleaded or litigated in the earlier suit but also to those which might have been pleaded or litigated; but, if the later suit is upon a different cause of action, the bar raised by the judgment in the earlier suit is limited to those matters which actually were litigated and determined.
(3) The judgment in the Vermont suit was conclusive only upon issues therein actually tried and determined.
(4) The plea must be adjudged bad as a matter of law.
Whether, under modern equity pleading and practice, the earlier rule prevails that the filing of a general plea is a waiver of a general demurrer, was not determined in a suit where a plea was filed "by consent" and "without waiving . . . demurrer," and where the trial judge, stating that he was of opinion that an interlocutory decree should be entered adjudging the plea insufficient and overruling the demurrer, reported the case to this court for determination.
to show the contrary, that the parties intended to act in accordance with the law.
Recitals in a contract, that it was made with a view to stopping certain "controversies" between the parties as to certain land and certain "prosecutions " which had been "threatened" because of illegal attempts to remove bounds, and a certain conspiracy to deprive one of the parties to the contract of a right to exercise an option to purchase certain land, do not as a matter of law render the contract illegal, because they do not necessarily mean that the parties by their contract sought to stifle criminal prosecutions.
(3) The contract was void as being in violation of the rule against perpetuities and the rule against restraints on alienation.
If a suit in equity cannot be maintained to enforce specific performance of a contract creating an equitable interest in land because the contract is in violation of the rule against perpetuities and of the rule against restraints on alienation, neither can such a suit be retained for an assessment of damages resulting front a breach of the contract.
The questions presented and determined in the suit above described have nothing to do with options for purchase or renewal contained in leases.
which was the predecessor of and bore the same name as the defendant, and two of its official agents, parties of the first part, and the plaintiffs John W. Howe and Harry T. Buck, parties of the second part, they having assigned their individual interest therein to the plaintiff Eastman by an instrument dated February 18, 1904, and their successors also having made such assignments by instruments dated May 7, 1917, Eastman in turn assigning such interest to the plaintiff corporation on July 16, 1917. The substance of the contract is described in the opinion.
"1. The alleged contract [of July 18, 1892] . . . does not purport to be authorized by the board of directors of the defendant and is not duly executed nor properly attested as the contract of the defendant, and does not bear any seal purporting to be the corporate seal of the defendant.
"(a) Said alleged contract recites that it is in compromise of certain prosecutions threatened by the parties of the second part, to whose rights the plaintiff claims to have succeeded, against the defendant and others, parties of the first part, by reason of alleged removal of landmarks and monuments marking the boundary line between their respective lands, and in settlement of a claim by the parties of the second part that the defendant and others had been guilty of a conspiracy to acquire the disputed territory from the parties of the second part.
"It is therefore illegal and no action lies upon it.
"(b) Said alleged contract appears upon its face to have been procured by duress of threatened prosecutions for the crime of removing monuments designating the boundaries of the disputed land against this defendant and other parties desirous of avoiding the threatened proceedings.
"It is therefore unenforceable and no action lies upon it.
part, is in violation of the rule against perpetuities, is against public policy, unenforceable, and void.
"(d) Said alleged contract being an agreement by the parties of the first part to convey lands at any time within twenty-five (25) years from July 18, 1892, at the option of the parties of the second part, is an illegal restraint upon alienation, is against public policy, and void.
"(e) Said alleged contract being an agreement by the parties of the first part that neither they nor the said Fant shall dispose of or in any way injure or encumber said premises before the expiration of said period of twenty-five years is an illegal restraint upon alienation, is against public policy, and void.
"(f) Said alleged contract being an agreement by the parties of the first part that they will not enter into any deal directly or indirectly for the acquisition of any interest in certain lands for the period of twenty-five years, and by the parties of the second part that they will not acquire certain other lands for said period, is against public policy and void.
"Wherefore, in respect of all the relief sought by the plaintiff thereunder, the said contract is wholly unenforceable and void."
On the same day that the defendant filed its demurrer by consent, it also filed "by consent" a "Plea in bar to the whole of the substituted bill of complaint," which recited that it was filed "Without waiving its demurrer." The grounds of the plea were that the subject matter of the substituted bill was res judicata by reason of the proceedings and final decree in a suit in the chancery court of Rutland County in the State of Vermont, described in the opinion.
The plea and the demurrer were beard by Braley, J. Material allegations in the pleadings are described in the opinion. The single justice was of opinion that an interlocutory decree should be entered overruling the demurrer and adjudging the plea to be insufficient; but at the request of the defendant he reported the case to the full court for its determination.
The case was argued at the bar in December, 1919, before Rugg, C. J., De Courcy, Pierce, & Jenney, JJ., and afterwards was submitted on briefs to all the Justices except Braley, J.
B. B. Jones, for the plaintiffs.
F. H. Nash, for the defendant.
RUGG, C. J. This is a suit in equity whereby the plaintiffs seek to obtain the specific performance of a written contract to convey land containing marble quarries and located in West Rutland in the State of Vermont. The contract bearing date July 18, 1892, purports to have been signed by the Vermont Marble Company, a New York corporation, predecessor of the defendant, a Vermont corporation, which, together with two of its officers or agents constitute the party of the first part, and by John W. Howe and Harvey T. Buck, to whose rights the corporate plaintiff alleges that it has succeeded by assignment from Howe and Buck to the plaintiff George P. Eastman and from Eastman to the plaintiff the Eastman Marble Company. The contract purports also to be signed by other parties not here concerned. Since the two others joined with the Vermont Marble Company as parties of the first part to the contract both were its officers or agents, for convenience reference hereafter will be made to that corporation alone as the party of the first part. For convenience also reference will be made to Howe as including both himself and his associate.
The contract recites (1) that the Vermont Marble Company claims ownership to nine tenths interest in the Clark lot, so called, adjacent to a lot known as the American lot, by conveyance from one Fant; (2) that Howe, by assignment of an agreement dated May 8, 1890, held an option to purchase said nine tenths interest; (3) that the Vermont Marble Company, well knowing of that outstanding contract and option, nevertheless in defiance thereof and without the knowledge of Howe, obtained from the owner of said nine tenths of the Clark lot a conveyance thereof by deed of May 27, 1890; (4) that controversies had arisen between the parties as to the divisional line between the American lot and the Clark lot and prosecutions had been threatened by reason of removal by one Robinson, an agent of the Vermont Marble Company, of monuments marking the boundary between the two lots; and (5) that Howe believed the Vermont Marble Company and others, including Robinson, its agent, were conspiring to purchase the Manley lot so called lying next northerly of the Clark lot, well knowing that the owners bad given to Howe on March 3, 1892, an option to purchase it and the remaining one tenth interest in the Clark lot.
tions; (2) that the divisional line between the American arid Clark lots shall "be and remain as it originally existed prior to the above mentioned removal or removals" of the bounds " and as, it was originally laid out on the land," namely, a line parallel with and about sixteen and one half rods south of the Blanchard and Mead line, with references to two plans, one known as the Brown plan, dated in September, 1866, and the other as the Green plan, dated in July, 1873; (3) that the parties will join in making deeds for the reformation of the record descriptions contained in former deeds, to conform to the divisional line thus agreed upon; (4) that the Vermont Marble Company will at any time within twenty-five years at the option of Howe and his associate and their assigns convey to them nine tenths interest in the Clark lot for $2,800 with interest and taxes; (5) that the Vermont Marble Company will "not enter into any deal" for the acquisition of any interest in the Manley lot or in the remaining one tenth of the Clark lot, but that, if owing to previous arrangements it should acquire interests, then it will hold them for a like period of twenty-five years and convey them upon demand to Howe and his associate and assigns upon payment of the amount paid therefor with interest and taxes.
The bill alleges the acquisition of the remaining one tenth interest in the Clark lot and of the entire Manley lot by the Vermont Marble Company contrary to the terms of the contract, tender by the plaintiff of the amount due to the Vermont Marble Company in accordance with the terms of the contract, and demand for conveyance, refusal by the Vermont Marble Company to make such conveyance and denial by it of the validity of the contract, and concludes with appropriate prayers for specific performance of the contract or in the alternative for the assessment of damages for breach of the contract.
The defendant demurred to the bill and also filed a plea. The case comes before us on a report. The sufficiency of the plea is considered first.
and one Clement, whose title was for the benefit of Eastman, from quarrying marble on the Fant lot (which is another name for the Clark lot), and for accounting and other relief. Eastman and Clement filed an answer to that suit and also a cross bill whereby they asserted ownership in themselves to the parcel of land twenty rods in width lying south of the divisional line established by the alleged contract of July 18, 1892, as the line between the American lot and the Clark lot. Answer was filed to the cross bill and the case went to trial.
(a) The north line of the Mead farm, which was also the boundary between it and land of Benjamin F. Blanchard, is not open to controversy. The litigation proceeds upon the footing that that is fixed.
Vermont Marble Company (two thirds in 1905 by deed of John H. Mead and another, and one third by deed of Eastman in 1911 pursuant to the order contained in the decree of a court of chancery), is ten rods in width and its southerly line is distant southerly from the north line of the Mead farm ten rods and is parallel therewith.
rods in width southerly of and adjacent to the Manley or Morgan lot and its southerly line is distant southerly from the north boundary of the Mead farm twenty rods and is parallel therewith.
(d) This southerly line of the Clark or Fant lot is also called by the chancellor the present "pin line," because it is marked in part by three iron pins in a line between two marble posts, one post being set substantially at each end of that boundary line. The two marble posts and the three iron pins marking this boundary line all were put in place before 1890.
ground as have been indicated). Neither of the defendants, Eastman and Clement, has ever had a deed of any land north of a line parallel with and twenty rods south of Mead's north line, other than the deeds herein mentioned and made a part of these findings of fact." These deeds manifestly refer to those by which Eastman acquired certain interests in that land, interests subsequently conveyed to the Vermont Marble Company.
(f) Neither Eastman nor Clement nor their predecessors in title "ever occupied or possessed land north of a line parallel with and twenty rods south of Mead's north line," prior to the deed from Howe to Eastman of May, 1903.
(g) Further findings of the chancellor relate to the Brown plan and the Green plan and the surveys upon which they were based. It is not necessary to narrate them in detail.
The chancellor made an order for a final decree establishing the boundary line between the American lot owned by Eastman and the Clark or Fant lot owned by the Vermont Marble Company as the line marked by the two marble monuments at the east and west ends and running through the three iron pins, forever restraining Eastman, his servants and agents, from trespassing upon land of the Vermont Marble Company to the north of that line and directing the payment of substantial damages. The case then went to the Supreme Court of the State of Vermont and is reported in Vermont Marble Co. v. Eastman, 91 Vt. 425. In an exhaustive opinion by Mr. Justice Watson the decree of the chancellor was affirmed.
alleged contract of July 18, 1892, was obtained on May 6, 1917, such was not the fact, and that in truth lie knew of its existence before that date. It was thereupon found by the chancellor as a fact that said alleged contract of July 18, 1892, was not newly discovered evidence and upon motion of attorneys for Eastman and Clement, the supplemental bill was dismissed and a final decree entered in accordance with the mandate of the Supreme Court.
"The proper office of a plea is . . . to present some distinct fact, which of itself creates a bar to the suit, or to the part to which the plea applies, and thus to avoid the necessity of making the discovery asked for, and the expense of going into the evidence at large." Mr. Justice Gray in Farley v. Kittson, 120 U. S. 303, 314. Newton v. Thayer, 17 Pick. 129, 132. The question is whether the fact of the Vermont adjudication, in connection with all the circumstances disclosed on the record, is a bar to the maintenance of the present suit.
The main force of the plea in the case at bar is that the findings and judgment in the Vermont suit constitute a bar to the maintenance of the present suit. It rests in essence upon the doctrine of res judicata. The bar of a judgment in another suit for the same cause of action between the same parties, or those in privity with them, extends not only to that which was pleaded or litigated in the earlier suit, but also to that which might have been pleaded or litigated. Newburyport Institution for Savings v. Puffer, 201 Mass. 41, 46. But if the second suit is upon a different cause of action, the bar of the earlier judgment is limited to that which was actually litigated and determined. Virginia-Carolina Chemical Co. v. Kirven, 215 U. S. 252, 257. The parties to the present suit manifestly are not the same as those to the Vermont litigation. The present plaintiff has been incorporated since the termination of the Vermont suit. While the parties to the present suit are not the same as those to the Vermont litigation, they are privies so far as concerns the alleged contract. The present plaintiff holds all its rights under the alleged contract of July 18, 1892, by assignment from Eastman, who was a party to the Vermont suit. It is obviously and necessarily a privy with Eastman as to all matters arising out of and dependent upon that contract. Hart Steel Co. v. Railroad Supply Co. 244 U. S. 294, 298.
suit was the continuing trespass by Eastman upon land of the Vermont Marble Company. The issues raised by the pleadings in that suit were the title of that company to the Clark or Fant lot and the trespasses of Eastman thereon. The chief controversy there litigated centred about the precise location of the line between the American lot and the Clark or F ant lot. The alleged contract of July 18, 1892, was not referred to in the pleadings upon which the trial was had, wherein the findings of the chancellor were made as to the true location of the Clark lot. The first reference to that contract is in the supplemental bill in the nature of a bill of review. The only adjudication with reference to it is that it was not newly discovered evidence with reference to the trial of that suit. The alleged contract of July 18, 1892, constitutes the basis of the suit at bar. Specific performance of that contract is the relief sought by the plaintiff. Thus it appears that the causes of action upon which the two suits rest are not the same, but different. The rule of res judicata applicable under these circumstances is that "when the second action between the same parties is upon a different cause of action from the first, then the judgment in the former action is conclusive only upon those issues which were actually tried and determined." Foye v. Patch, 132 Mass. 105, 110, 111. " If the second action was upon a different claim or demand, then the judgment is an estoppel ,only as to those matters in issue or points controverted, upon the determination of which the finding, or verdict was rendered.' Cromwell v. County of Sac, 94 U. S. 351, 353." Bates v. Bodie, 245 U. S. 520, 526. Eastman v. Cooper, 15 Pick. 276. Arnold v. Arnold, 17 Pick. 4. Radford v. Myers, 231 U. S. 725.
matter directly adjudged in the Vermont suit and it binds the parties to the suit at bar notwithstanding the contract. The defendant strongly relies in this connection upon the finding of the chancellor to the effect that the Vermont Marble Company was "a purchaser in good faith for value of the land which it claims to own in this suit without notice of right or a claim of defendants " in that suit, who are joined as plaintiffs here, or "any of their predecessors to any part thereof," with exceptions not here material, a finding with reference to the Fant lot or the Clark lot. The size and precise boundary lines of that lot were established by the chancellor. The Clark lot as thus established is different in location and size from that described in the alleged contract. Upon familiar principles that finding and opinion are to be interpreted in the light of the issue as framed by the pleadings. Reinman v. Little Rock, 237 U. S. 171, 179. The issue framed by the pleadings in the Vermont case related wholly to legal title to real estate. No question was raised by the pleadings upon which a finding as to good faith of the Vermont Marble Company in its acquisition of title was necessary. On the question of title as disclosed by the record of the Vermont case, the point whether the Vermont Marble Company was "a purchaser in good faith for value of the land" which it claimed to own was of no consequence. Such a finding may have been pertinent to some contentions mooted at the trial and hence included within the decision of the chancellor. However that may be, there is no averment in the plea concerning the law of Vermont. Hence it must be assumed to be the same as that of Massachusetts. Parrot v. Mexico Central Railway, 207 Mass. 184, 191-194. Under the law of Massachusetts upon,the issues raised by the pleadings in the Vermont case, the finding to the effect that the Vermont Marble Company was it a purchaser in good faith for value of the land which it" claimed in the Vermont suit to own would not be res judicata against the plaintiff as to the contract of July 18, 1892, here in suit. That contract was not in the issue at that time, and that finding of the chancellor, whatever its force in that suit, cannot be thought to have been made with reference to any such issue as is raised in the present cause.
forth in the finding of the chancellor in the Vermont case, are not such as of themselves on their face to render unenforceable the contract. Whether there is such a difference as to affect the identity of the subject matter of the contract must be determined upon a trial. See Dzuris v. Pierce, 216 Mass. 132, 135, and Percival v. Chase, 182 Mass. 371.
The alleged contract, if presented as evidence in the Vermont trial and found genuine, would have been decisive in favor of the contentious of Eastman. His failure to offer it in evidence at that trial where it was not in issue on the pleadings does not as matter of law prevent him from relying upon it as an independent cause of action. Of course the plaintiff as the assignee of Eastman can enforce its obligations only so far as it is not at variance nor inconsistent with the matters in issue and adjudged in the Vermont suit. But subject to the adjudications of that suit as to the matters in issue on the pleadings in that suit, the plaintiff is not barred from prosecuting whatever rights it may be able to prove arising out of the alleged contract of July 18, 1892. The plea is therefore bad.
Without pausing to discuss the point whether under modern equity pleading and practice the earlier rule prevails that the filing of a general plea is a waiver of a general demurrer, we consider the questions raised by the demurrer, since these have been reported by the single justice.
no binding force. Taylor v. Jaques, 106 Mass. 291. A contract susceptible of two meanings, one lawful and the other not, will be supported rather than defeated. The presumption is, in the absence of something to show the contrary, that the parties intended to act in accordance with the law. Presumptions are in favor of innocence and legality. Guernsey v. Cook, 120 Mass. 501. Collector of Taxes of Boston v. Rising Sun Street Lighting Co. 229 Mass. 494, 497.
The recital in the contract concerning a conspiracy stands upon the same footing. That word does not necessarily import a crime. The alleged criminal aspect of the contract is not made certain by the clause that it shall not be recorded nor made public. That might have been inserted from innocent motives.
It is urged that this contract is void because in violation both of the rule against perpetuities and of the rule against restraints on alienations. That contention is grounded on the express covenant to the effect that conveyance shall be made of the real estate by the Vermont Marble Company upon demand at any time within twenty-five years from the date of the contract and upon the necessary implication that there shall be no other conveyance at all during that period.
These two rules, as pointed out by Mr. Gray in s. 2a of Rule against Perpetuities (3d ed.), are "modes adopted by the Common Law for forwarding the circulation of property which it is its policy to promote." A common form of the statement of the rule against perpetuities is that executory limitations or interests are void unless they take effect ex necessitate and in all possible contingencies within a period not exceeding twenty-one years after the termination of a life or lives in being at the creation of them. Minot v. Paine, 230 Mass. 514, 522, and cases there collected. See Gray, Rule against Perpetuities, (3d ed.) s. 201. It is an essential characteristic of an estate in fee simple that it shall be alienable and free from restraint in that particular.
ministrators and assigns of each party. It concerned real estate and purported to create important interests therein quite apart from the clause as to conveyance to Howe. The clause relating to purchase by and conveyances to Howe cannot be excised from the instrument, dissociated from its context and treated as if it were a separate, distinct and independent option unconnected with other clauses. It must stand or fall as a part of a single document with a defined consideration covering all matters of agreement. Such a clause in such a contract, in the light of the other clauses, must be held to create an equitable interest in land.
We think that this agreement, so far as concerns a right to specific performance, was void as being in contravention of one or both of these rules. The agreement purports to create an equitable interest in land. It is not a mere option. It is in the form of mutual covenants. It purports to create an absolute right to be exercised within twenty-five years and imposes an immediate restraint upon alienation by the owner for a like period. It is in that respect unenforceable under the rule. Winsor v. Mills, 151, Mass. 362. London & Southwestern Railway v. Gomm, 20 Ch. D. 562, 576, overruling Birmingham Canal Co. v. Cartwright, 11 Ch. D. 421. Savill Brothers, Ltd. v. Bethell,  2 Ch. 523, 540, 541. Barton v. Thaw, 246 Penn. St. 348. Woodall v. Bruen, 76 W. Va. 193. H. J. Lewis Oyster Co. v. West, 93 Conn. 518.
The foundation of the rules against perpetuities and against restraints upon alienation is that it is contrary to the spirit of our institutions that titles to real estate be tied beyond the period fixed so as to stifle free exchange. Therefore deeds to that end are held void.
It is contended that, even if specific performance of the contract must be denied because of these rules, yet damages may be recovered for breach of the contract against the maker.
difficulty in supporting an action against it for breach of such a contract as this. London & Southwestern Railway v. Gomm, 20 Ch. D. 562. But we pass that point by.
4 H. L. Cas. 1, at page 125. It was held in Manchester Ship Canal Co. v. Manchester Racecourse Co.  2 Ch. 352, at page 360, that apart from a validating act of Parliament an agreement between two corporations to the effect that one should have first refusal to buy land belonging to the other used as a race-course should it cease to be so used or be proposed for use for dock purposes, "would be clearly void for perpetuity, because there is no limitation in point of time." In re Rosher, 26 Ch. D. 801. Hope v. Mayor & Aldermen. of Gloucester, 7 De G., M. & G. 647. See 51 Sol. J. & W. R. 648, 669; 54 Ibid. 471, 501. There seems to us to be an irreconcilable inconsistency in refusing to enforce specifically covenants concerning an interest in property which violate the rule against perpetuities and yet at the same time enforcing an action for damages for refusal to perform such a covenant. Since it is settled that such covenants cannot be enforced specifically, it must follow that damages cannot be recovered for such refusal. Any other conclusion would afford simple and direct means, at least for corporations which ordinarily have unlimited existence, through the form of options to buy covering long periods and binding heirs and assigns, to circumvent the rule against perpetuities and restraints upon alienation. Since such contracts are held to create 91 no interest in the property" (Thacher v. Weston, 197 Mass. 143, 147, and cases collected 39 Cyc. 1238, note 19), there would be no difficulty in enforcing such agreements either by specific performance or by action for their breach no matter how long might be their term. The mischiefs would easily arise against which those rules were established.
The contention that an action for damages lies for breach of a contract which violates the rule against perpetuities is supported by the decision of Warrington, J., in Worthing Corp. v. Heather,  2 Ch. 532, and gains some color from what was said in South Eastern Railway v. Associated Portland Cement Manufacturers, Ltd.  1 Ch. 12. See also Gray, Rule against Perpetuities, (3d ed.) s. 330c. So far as these decisions conflict with the conclusion here stated, we are not disposed to follow them.
court of appeal, but by construing the deed as creating an immediate easement by exception or by reservation under principles summarized with collection of authorities in Childs v. Boston & Maine Railroad, 213 Mass. 91. For another ground upon which the Cement Company decision may be thought to stand, see 27 Law Quar. Rev. 154, 155.
There is nothing in the decision in Winsor v. Mills, 157 Mass. 362, at variance with this conclusion. In that case real estate was held upon a trust which in some of its terms violated both the rule against perpetuities and the rule against restraints on alienation. A bill in equity was brought by the executors of one beneficiary, who was also the trustee, seeking to sell the real estate, the defendant being the other beneficiary. The invalidity of those portions of the trust violative of these two rules of property was declared, but relief to the plaintiffs was made conditional, according to the opinion of a majority of the court, upon the view that it would be inequitable to give relief to the plaintiffs unless they were willing to perform the agreement of their testator with the defendant affording the latter opportunity to purchase upon terms stated in the original agreement. That was a quite different proposition from allowing the maintenance of a direct action for damages for breach of the agreement.
The question presented on this record has nothing to do with options for purchase or renewal contained in leases. See in this connection Mann, Crossman & Paulin, Ltd. v. Registrar of Land Registry,  1 Ch. 202, and cases collected in 27 Yale Law J. 885.
The result is that an interlocutory decree should be entered sustaining the demurrer on grounds 2 (c), (d), (e) and adjudging the plea insufficient.

References: v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v.