Case Name: Reuben Skinner, appellant, against John White and Marvin White, who are impleaded with Randolph Taylor, Abraham Dayton, Reuben Wheeler, William Raymond, Jun., Nathan H. Raymond, Abner P. Hitchcock, and Nathan Doane, respondents
Court: New York Court for the Correction of Errors
Jurisdiction: New York
Decision Date: 1819-03-31
Citations: 17 Johns. 357
Docket Number: 
Parties: *Reuben Skinner, appellant, against John White and Marvin White, who are impleaded with Randolph Taylor, Abraham Dayton, Reuben Wheeler, William Raymond, Jun., Nathan H. Raymond, Abner P. Hitchcock, and Nathan Doane, respondents.
Judges: 
Reporter: Johnson's Reports
Volume: 17
Pages: 282–294

Head Matter:
*Reuben Skinner, appellant, against John White and Marvin White, who are impleaded with Randolph Taylor, Abraham Dayton, Reuben Wheeler, William Raymond, Jun., Nathan H. Raymond, Abner P. Hitchcock, and Nathan Doane, respondents.
ties, both par-quL-cTsuch'aii interest in its neither of them right to have thecontract foi-filled And \t one of the parties refuse to proceed lurther * Where an exec-utory contract has been entered into, so as to become binding on the par-so that the other is disabled ing his part of the contract, u is a violation oi the contract, for which Ae par-tv may have his action to recover damages who has been tire cause of the of the contract.
A court of against penalties and forfeitures where the case admits of a certain compensation.
A. covenanted with B>., in April, j83o, to make certain machinery, in dhe year, at a certain price, to be paid in instalments: on the 1st of August following, B. gave notice to A. that he could not go on, and that the contract was abandoned: and A. {the covenants being independent) brought an action at law against B. to recover the instalments due before the 1st of August, he having abandoned the work, because of the inability of B. to pay the sums according to the agreement.
Hold. that, on B.’s confessing judgment in the suit at law. with leave to A. to enter it up, that the injunction which had been issued by the Court of Chancery should be continued until the hearing, and that proceedings be had in that court, either by a reference to a master, or by an issue at law, to ascertain the damag'es sustained by A., by the non-execution or rescinding of the contract : the answer of A. to the bill of B., alleging that the instalments due on the 1st of Angustfnnd sued for at law, did not exceed a just compensation for their damages in prosecuting the work to the 1st of August, and in the loss of their profits on the work, not being sufficient to rebut the equity on which B. relics for relief, by having on a judicial inquiry into the facts, the damages ascertained by a master, or on an issue of quantum tlamni‘ Jicatus.
Where an answer to an injunction bill denies all the circumstances upon which the equity of the bill is founded, on a motion for dissolving or reviving the injunction, credit is given to the answer,
APPEAL from the Court of Chancery,' The appellant filed his bill in the court below, stating that he and the respondents, Dayton, Wheeler, W. Raymond, N. H. Raymond, Hitchcock, Doane, and Ira Hall, on the 18th of April, 1815, formed an association for manufacturing cotton yam and cloth, and entered into articles of agreement for that purpose, subscribed by them respectively. The association was denominated “ The Granville Cotton Manufacturing Company.''' The stock of the company was to be divided into 20 shares, and the stockhoid-ers, on a certain day, were to elect a president and two directors ap ]east but not more than four. It was agreed, among ^ ^ other things, to be the duty of the president to appoint a general accent to purchase stock, vend goods, and, under the o * o. J J • direction of the ^president and directors, to transact all business, &c. Each person, at the time of subscribing, was to pay pen dollars, and, from time to time, such assessments as should be made by the president and directors, or forfeit his sjjareS- The shares were subscribed for by the appellant 1 .. 77 , J , 1 J. . and the respondents, lhe appellant was elected president, ff Randolph and A. P. Hitchcock, directors, and A'. II. R. ’ ' 7 treasurer.
Qn the 25th of April, 1815, an agreement was entered into between the respondents, J. white, JÍ. laylor, and M. white, an(j ⅛6 president and directors of the company, by which White, Taylor, and White promised and engaged to make and deliver at the factory, at Granville, of the best materials, and of the best workmanship, twelve, throssel frames, (describing tiiem,)to wit, six frames, in the month of October then next, |,iid six other frames, on or before the 1st of May, 1816, lad the appellant and W. R. and A. P. H. in behalf of the company, engaged to pay White, Taylor, and White, 15 dollars for each spindle, or 15,120 dollars, as follows, to wit, 900 dollars in 35 days, and 500 dollars in every 30 days thereafter, until all the machinery is in full operation, at which time the balance due W, T. and IV. was to be paid.
The president and directors had raised, by assessments, about 1100 dollars; and on the 27th of April, 1815, they laid another assessment on 18 shares, of 50 dollars each. A. D., J. II. and R. W. paid their assessments, amounting to 350 dollars, but all the other associates refused to pay their assess-Itoents, and suffered their shares, with all previous payments* ttt become forfeited. The president and directors, within thirty days thereafter, gave notice, in writing, to W., T. and . W., that, by reason of the forfeiture of these shares, the company would not go on with their factory, and that the contract made with them could not be performed on the part of the .president and directors. N. II. R., who delivered this notice ⅛ W., T. and W., was answered, as the bill stated, but which was denied in the answer, that they had made no contract for machinery, but had done something toward the frames.
⅞: The bill further stated, that since the forfeiture of the shares, |he appellant had, out of his own funds,, paid 217 dollars *and 94 cents, which had not been reimbursed ; that the company iad become insolvent; that one of the associates had absconded, another was imprisoned for debt, and the partnership had been dissolved, and its debts were to be settled by M. White. That in August, 1815, W., T. and W. brought an action in the Supreme Court, against the appellant, for a breach of covenant contained in the above agreement; and the plaintiffs, in their declaration, alleged breaches in the non-payment of 900 dollars within 35 days, 500 dollars on the 29th of June, and 500 dollars on the 9th of July, 1815. That the appellant pleaded, that the agreement was executed by him and the two .directors, in their capacity of directors and agents of the company, a,nd not otherwise ; and that on a demurrer to this plea, ;%e Supreme Court gave judgment against the appellant, TRat the appellant gave notice to the other partners of the spit, but they declined doing any thing, and that Ira Hall had since died intestate. The bill prayed, that the defendants plight be decreed to repay the appellant the 217 dollars and íSá.cents; that the agreement might be delivered up to be canceled, and an injunction issued to stay all further proceedings at law, and for relief generally.
M,. and J. W., in their answers, admitted the execution of tlife agreement, but denied that they agreed or expected to look to the company for the performance, but relied on the liability and responsibility of the appellant. That they received the letter or notice of May, 1815, &e. That immediately after the contract, they commenced the work on the machinery, and continued it until the 1st of August, 1815, when they received a letter from the plaintiff, which convinced them that he did not mean to perform the contract, and which they considered as amounting to a notice of an abandonment of it, and a refusal to perform it. That the work and materials furnished, at the expense of 3,300 dollars, had become useless, and not worth 400 dollars, &c.
The chancellor, after hearing the cause, on the 28th of August, 1817, ordered the injunction, staying the proceedings *at law, to be dissolved. From this decretal order the plaintiff appealed.
The chancellor assigned his reasons : (See 2 Johns. Ch. Rep. 526. 537.)
Henry., for the appellant.
Buel and Van Vechten, for the respondents, M. and J. White.
For the appellant, it was contended, that being wholly reme-diless at law, he was, therefore, entitled to relief in equity. The contract on the part of W., T. Sf W. not having been executed, and the covenants to do the work, and to pay the price, being independent, there is nothing at law to prevent the recovery of the whole price, even if the work had been altogether undone. Unless a court of equity, therefore, can interpose, this most manifest injustice would be the consequence, that payment of the whole price may be exacted, without any equivalent. The jurisdiction of the Court of Chancery to afford relief where the work is entirely done, is indisputable; and it is equally so, where the work has been only in part performed. The covenants being independent, each party is bound to performance, and W., T. and W. might have proceeded and finished the machinery, notwithstanding any notice of the intentions of the other party, and they would, then, have been entitled to the whole price. But having, themselves, voluntarily stopped short in the execution of the work, natural justice can demand no more than that they should be indemnified for what has been actually done.
As an indemnity is all that can be equitably demanded, and the extent of that, indemnity is not only uncertain, but disputed ; the parties in interest ought not to decide upon it for themselves ; but it should be ascertained either by a jury, on on an issue of quantum damnificatus, or by a master, on a refer ence to him for that purpose.
Again ; though this may not, literally speaking, be a case of forfeiture, yet, if it is to be regarded in a strict legal point of view, as authorizing the exaction of the whole price, #without any possibility of mitigation, it is, in spirit and effect, a forfeiture of the hardest and worst kind. For, if the principles on which the injunction was dissolved are sound, the respondents might sue for further instalments, and, in answer to any bill for relief, allege that the damages they had sustained exceeded the amount demanded, and thus their avarice be the only limit to their exactions.
A court of equity, as to its power of giving-relief, is not confined to cases of strict forfeiture or penalties only ; but it has interfered and relieved when the breach of an agreement is not wilful or fraudulent, where compensation can be made; and especially in a case of this kind, in which the insisting on the literal fulfilment of the contract would be, in the highest degree, unjust and fraudulent. (1 Madd. Ch. Tr. 29. Eaton v. Lyon, 3 Fescy, Jun. 690. 693.) There are numerous cases to be found in which equity controls contracts, contrary to the letter of them, and affords relief, though there is no forfeiture or penalty. (Neivland on Cont. 251. Ambler, 331. 4 Com. Dig. 406. Cond. 2. (¿. 1. 4 Bro. Ch. 415. 2 Johns. Rep. 614. 3 P. It ms. 307.)
Again ; the instalments agreed to be paid, being a part of the price of the machinery, cannot be deemed in the nature of stipulated damages; besides, the respondents themselves, by claiming damages far beyond the instalments, do not allow such a construction. But even if the instalments were to be deemed stipulated damages, there is the same necessity for an apportionment of them according to the work performed, or injury sustained ; and which must be done by a jury, or on reference to a master.
It may be said, that if a suit should be brought for further instalments, the case might present a different aspect, so as to entitle the appellant to relief. But it is against the general policy of the law, to put parties in a situation which must lead to further litigation, when the whole subject of controversy can as well be determined now, and perfect justice be done to the respondents. The bill contains a prayer for general relief. The dissolution of the injunction is general and unqualified; and not only throws open the door to future litigation, but the acknowledged insolvency of the respondents puts it in their power to recover, and receive *their whole demand at law. It is equivalent to a dismissal of the appellant’s bill, who, if he should disprove the answers of the respondents, consisting of matters in avoidance, which they are bound to establish, would not be able to get back his money, and can, therefore, have no inducement to prosecute his suit further.
Fo • the respondents, it was argued, that the appellant, having asked (or specific relief, could not have relief generally.
The non-performance of the contract in this case was owinu to the failure of the appellant to pay the money according t. his agreement. The respondents had commenced their work in good faith, and were compelled to stop for want of the stipulated advances. The answers are conclusive on the subject. On the question as to continuing or dissolving an injunction, full credit is to be given to the answer; and if the equity oi the bill is denied, the injunction must be dissolved. (2 Madd. Ch. 285, 1 Johns. Ch. Rep. 444.) If, then, the failure to perform the work has been occasioned by the default of the appellant himself, he cannot set up the non-performance as a defence. (3 Johns. Rep. 531. Doug. 674. 1 Fonbl. 391. li 1. ch. 6. sec. 2. note C.) There is nothing unreasonable in these covenants, requiring advances to aid the party who is to perform the work. (Cunningham v. Morrell, 10 Johns. Rep. 203.) The respondents claim nothing more than what was due to them for what they had done, when they were compelled to stop. They went on faithfully until August, and what they claim in their suit at law, is only for the instalments due on the 1st of August, or 1,900 dollars, which is not a compensation for what they had done ; the wages of the workmen employed, and the materials purchased, amounted to above 3,000 dollars. There is no force, then, in the argument of the appéííantis counsel, that the whole price may be exacted.
Courts of equity do not interpose by an injunction to restrain proceedings at law, unless to prevent manifest wrong and injustice, as in cases of forfeiture and penalties. It is a power which that court exercises with great caution, and *only in cases where it becomes indispensable to protect a party against fraud, accident, or mistake. (1 Madd. Ch. 31. 109. 111. 12 Vesey, 289. 16 Vesey, 406.)
Again ; the appellant did not enter into this contract as a mere agent. He had no authority to bind the company. I!' he is not liable to the respondents, no person can be made responsible. The Supreme Court have so decided. (13 Johns. Rep. 307. 2 Caines, 254. 5 East, 148. 1 Fonb. B. I. ch 4. see. 17. p. 292, 293—296.)
Again; the respondents only claim compensation for what they had done before they stopped the work. The instal-ments are in the nature of stipulated damages. (1 Madd. Ch. 33. Newland on Contracts, 312. 316. 2 Bos. §• Pull. 353.) The court is not bound to make a new contract for the parties. (1 Madd. 30, 1 Burr. 2228.) It is not a case admitting of adequate compensation ; the injury resulting to the respondents is uncertain. (12 Vesey, Jun. 287. Ambler, 322. i 27.) Unless the instalments due exceed a fair compensatiorij: they do not amount to a penalty. Equity does not rescind a contract, unless the party who has performed part can be placed in statu quo. (1 Fonb. Eq. ch. 6. s. 3. 385. s. 1. s. 2, 3. s. 4. Hare v. Groves, 3 Anst. Rep. 687.)
Spencer, Ch. J. This appeal is from an order of the Court of Chancery, dissolving the injunction staying proceedings at law upon a contract It appears that a suit, at law was brought Vén this contract, against the appellant for three instalments, amounting to 1,900 dollars, and the Supreme Court decided, that the appellant was responsible at law on the covenants con-tamed in the agreement; and the object of the bill, so far as relates to the present question, is for relief, with regard to the damages claimed by the appellant.
The answer admits, that about the first of August, 1815, the respondents received a letter from the appellant, couched in such terms as convinced them that the appellant did not intend to perform the agreement on his part, and that, thereupon, the completion and all further proceeding in making the machinery were abandoned by the respondents.
#The answer proceeds to state the number of hands employed by the respondents, the great expenses incurred, and the profits which would have been made, had the work gone on, and had the appellant fulfilled his part of the agreement; and if these facts are to.be regarded on this occasion, as conclusively true, then, beyond all doubt, the amount claimed in the suit at law would not have exceeded a fair indemnity to the respondents.
1 entirely agree with the chancellor, that the appellant’s covenant to pay the instalments, was an independent one ; and I am equally clear, that, after an executory contract has been entered into, so as to become binding on the parties, both parties have acquired such an interest in its execution, that neither of them separately can devest the other of his right to have the contract fulfilled ; and if either of the parties stop short in the execution of the contract, and refuse to proceed any further, so that the other party is disabled from performing his part of the contract, it is violated, and an action lies to recover damages against the party who has been the cause of its non-execution, After the notice given by the appellant, that payment would not be made according to the agreement, and that the company would not go on with their factory, the respondents had their election either to proceed and complete the machinery, or to consider the contract rescinded, and to stop short in their work. They elected, however, at the lime already mentioned, fully and finally to suspend their work, so that, thereafter, all idea was abandoned, that the machinery would be made, or that the factory would be built.
H cannot be doubted, that when the contract was entered into, both parties intended its entire and faithful fulfilment. The payments were to precede the completion of the machinery, as a means of enabling the respondents to fulfil their stipulations : nnd, consequently, they had a right to demand and enforce the payment of that part of the price of the work and materials, which was agreed to be paid before the completion of the whole, without reference to the progress of the work. But after the month of August, 1815, the contract must he considered as rescinded and abrogated, by the mutual agreement of the parties; for the one #party says, we cannot pay the instalments and do not intend to build the factory ; and the others say, then we abandon the work, and actually do abandon it.
It appears to me, that from this period, the contract assumed a new aspect; the respondents could no longer insist on the stipulated payments as due them, and could avail themselves no further of the contract, than as a means of recovering the damages actually sustained by a refusal on the part of the appellant to fulfil his part. In the view of a court of equity, the payments agreed to be made assumed the character of penalties, and ceased to form any criterion to regulate the amounl of the damages. The payments being the estimated value of the machinery when completed, and in full operation, when ii was ascertained that the machinery was never to be completed, how can it be that the appellant was to pay according to an established standard, when that standard no longer existed ?
It would be highly inequitable to allow the respondents to recover on these covenants, as independent ones, when they admit that they never intend to entitle themselves to be paid, and never mean to fulfil their part of the contract; and th( respondents ought not to insist on more than a just equivalent for their labor, materials, and loss of profit, which can readily be ascertained by an issue, or by reference to a master.
There can be no doubt of the jurisdiction of a court of equity to relieve against forfeitures, under such circumstances. If 1 am incorrect in the positions thus far, I perceive no possible relief for the appellant, against a recovery at law for ail the stipulated payments, to the amount of 15,120 dollars, and the interest thereon. And if the argument applies to any of the stipulated payments, it applies to all of them.
The remaining question is, whether the appellant’s equity, arising out of the facts I have stated, to be relieved, on compensating the respondents for the damages actually sustained, is rebutted by the facts disclosed in the answer, which show that the damages sustained are equal to the instalments claimed in the action at law. I am of opinion, that the answer does not deprive the appellant of his #equity to have the damages legally ascertained. It is a general and well settled principle, that if the answer denies all the circumstances upon which the equity of the bill is founded, the universal practice is, as to the purpose of dissolving or not reviving the injunction, to give credit to the answer. (2 Mad. Ch. 285.)
The answer does not deny the circumstances upon which the equity of the appellant’s case is founded, but, on the conti in admits them. The equity is, that the contract has been n - scinded, that the respondents are suing at law to recover sums of money agreed to be paid as the price of certain works which wore to be finished, and that the respondents have abandoned the work, and do not intend to finish it, in consequence of the appellant’s inability to pay the sums agreed to be paid. These circumstances are admitted, and the respondents set up, in avoidance of this equity, that their damages in prosecuting the ::Work as far as they did, and in the loss of contemplated profits, fs equal to the instalments sued for at law; and thus they set tip their opinions, and circumstances irrelative to the equity on which the appellant relies, to deprive him of all relief, by a judicial examination into the facts.
I am not aware that the principle I adopt will operate injuriously to the respondents. The Court of Chancery will take care that they be fully remunerated for all the damages and losses they have sustained: and although it would be hazardous to lay down any general rule as to the damages, 1 must say, that I should consider the profits which might have been made, as a legitimate head of damages.
The appellant cannot avail himself of that part of his bill which seeks for contribution as against the respondents, for they are in no sense liable to it, for the reasons expressed by the chancellor. My conclusion is, that the order dissolving the injunction be reversed, and that the injunction be continued, on the appellant’s confessing judgment in the suit at law, with leave to the respondents to enter it up; and that proceedings be had, by reference to a master, or an issue at law, to ascertain the damages sustained by the respondents, by the rescinding of the contract.
Vide 13 Johns. Rep. 307. Skinner v. Dayton, 19 Johns. Rep. 513. 5 Johns. Ch. Rep. 351.

Opinion:
*Y vn-.s, J.
The important and material facts set forth in the bill, upon which the appellant's equity is founded, are not dfenied in the answer. On the contrary, it is admitted, that the contract was rescinded on the first of August, 1815; but the respondents state, that the amount of damages for which the appellant is liable, far exceed the instalments sued for, so that the question presented is, whether, under the circumstances disclosed by the bill and answer, he is entitled to relief: for, if he is so entitled, then the injunction ought to have been continued or modified.
If the facts and circumstances constituting the appellant's equity, as stated in the bill, had been denied by the respondents. the dissolution of the injunction would have been correct and proper ; but the mere estimate in the answer of the respondents, that the damages sustained exceed the amount of the instalments claimed, clearly showing matter in avoidance, which they are bound to establish, and which the appellant might, disprove, I am inclined to think, was not sufficient ground to dissolve the injunction ; the inquiry, then, must be pursued, whether, from the bill and answer before us, the appellant is entitled to the relief sought for.
The chancellor's reasoning is conclusive in my mind, that White, Taylor & White, as parties to the association, were not bound to contribute rateably. to all losses and charges. They did, to be sure, agree to take two shares of the company stock , at the time the covenant was entered into with the appellant; but it was on condition, that they were to be exempted from any assessment which had or should be made, until the machinery was furnished, and the manufactory in operation. This never took place. The case, therefore, never occurred, when they could be called upon for any assessment.
It is clear, that the covenant of the appellant to pay the three instalments, for which the action at law was commenced, is an independent, covenant, which he was held at law to perform ; and if the respondents had proceeded in the prosecution of the work, and performance of the contract, on their part, equity could not have interposed to prevent a recovery of the whole amount to be paid ; because it is not *in the power of one party alone to rescind the contract; but as such performance cannot be pretended, and although the respondents cannot be blamed in desisting, in safety to themselves, from proceeding in it, yet the contract must be deemed to have been rescinded by mutual assent, which places the rights of the parties under it on different grounds.
There can be no doubt, if the work on the machinery had never been commenced, and nothing done under the contract, that on an attempt at law to recover the instalments, a court of equity would have afforded relief; and I can see no reason why the appellant is not entitled to relief, where the contract has been partially performed, especially where so inconsiderable a part , of the work had been done at the time of rescinding. It does not destroy the appellant's claim to relief, to say, that the contract would have been fulfilled, if the instalments had been regularly paid, because the failure of payment was inevitable, and not under the control of the appellant; the source from whence the payments were to have been derived, was known to both parties ; and, having failed, it is evident that the disappointment must have been equally unexpected to both, because the respondents, although, technically speaking, they contracted with the appellant, individually, yet they must have known that the payments were to be drawn from the assessments to be made ; for they signed the articles of copart-nership on the express condition or stipulation against assessments on themselves, until the factory should be in operation. The appellant is, therefore, not chargeable with fraud or collusion, and cannot, on that account, under the circumstances of the case, be deprived of the required relief. I do not mean to be understood as urging, that because the respondents acquiesced, and discontinued their work, after the receipt of the notice in August, they are not entitled to a just compensation for their previous expenditures, with regard to the machinery ; on the contrary, a perfect indemnity ought to be extended to them, the ¡measure of which, however, being uncertain and contested, I object to its being decided by the respondents, according to their own appraisement, in their answer ; for they would thus, although parties in interest, be made judges in their own cause. The ^compensation and damages can be fairly and satisfactorily ascertained in another way ; and it ought to be done by a jury, on an issue of quantum damnificatus, or by a master on reference, giving the party, in either case, an ample opportunity to be heard. A determination thus made by judgment of law, would be altogether unexceptionable, and consonant to the soundest principles of equity.
The general principle is well established, that equity.will relieve where a penalty is forfeited, by decreeing to the party his actual damages ; (12 Vese-y, 282. 475.) but where the damages are stipulated, it is settled, that equity will not relieve against them. (2 Vernon, 119.) In the case before us, the instalments being a part of the price or value of the whole machinery to be made, shows most conclusively, that they cannot be taken in the nature of stipulated damages ; but if even they were to be so considered, they must of necessity be apportioned according to the injury sustained ; and to say that this apportionment can be made by the party interested, would be extending a principle, as to the effect of an answer, which would not unfrequently be attended with manifest injustice. I am inclined to the opinion, that according to the principles on which it appears to me the injunction was dissolved, the respondents, on prosecuting for the amount of the remaining instalments, in their answers to other bills which might be filed for relief, would not be precluded from doing away the equity, by swearing that the damages exceeded the amount of those instalments. It is therefore peculiarly fit and proper, that the inquiry, as to the damages, should be made in the manner before stated, by which the points in controversy would be determined, in a manner more satisfactory, in settling the rights of the respective parties.
I cannot accede to the principle, that a court of chancery is restricted, in giving relief, to cases of absolute'-iorfeiture or penalty only. Relief may be granted against the breach of an agreement not wilful or fraudulent, where a full compensation can be made, so as to render the party perfectly secure and indemnified, and place him in the same situation as if the occurrence had not happened ; especially, when it approaches so near to a case of forfeiture as the present. *Maddock, in his Treatise, (I Madd. Equ. p. 28.) says, " at law a covenant must be strictly and literally performed ; in equity it is sufficient. if it be really and substantially performed, according to the true intent and meaning of the parties, as far as circumstances will admit; but if by unavoidable accident, if by fraud, by surprise or ignorance not wilful, parties have been prevent ed from executing it literally, a court of equity will interfere, an(l, upon compensation being made, the party having done every thing in his power, and being prevented by the means alluded to, will give relief." In Eaton v. Lyon, (3 Ves. jun. 692.) the same doctrine is maintained. In the present case there could have been no full performance, because the contract had been rescinded; but suppose the appellant had advanced two thirds of the price of the machinery, and after the work had advanced to a certain extent, say one tenth of what was to be done, he had given notice of the failure of the funds to be derived from assessments, from which he expected to be reimbursed, and to be enabled to pay the balance due on the work when completed, and the respondents, in consequence of this notice, had desisted, but, afterwards, claimed to retain the amount received, would not equity relieve as to the portion of the work unfinished ? And would not this attempt to retain the whole amount paid, be a claim, in the nature of a forfeiture, sufficient to authorize a court of chancery to interfere ? It certainly would be so considered ; and if I am correct in the principle stated, it is equally applicable to the present case, which, as the covenants are independent, in a strictly legal sense, would authorize an exaction of the whole price, without regarding a deduction for the part not performed. There is no essential distinction between the two cases, and it must, therefore, be viewed by a court of equity as a case in the nature of a forfeiture, although not literally so.
My opinion, accordingly, is, that the decretal order of the Court of Chancery be reversed, that the cause be remanded, with directions that the injunction be continued, to the end that the damages sustained by the respondents may be ascertained in the manner before stated, by which the amount of the recovery must be controlled.
#Platt, J.
The covenant to furnish the machinery, and the covenant to pay for it, are admitted to be independent covenants; and the equity set up in the complainant's bill has a double aspect: First, as against the respondents, White, Taylor 8f White, the bill charges, that they are asserting their claim at law for part of the price included in the three first instalments of the contract; that White, Taylor fy White have not, at any time since the execution of the agreement, performed any part of it, on their part; and that they are utterly insolvent: so that if they should be allowed to recover the price of the machinery, or any part of it, there can be no remedy for a breach of the covenant on their part; and, secondly, that if the appellant is obliged to pay the amount recoverable at law, in the suit against him, the other original associates may be compelled to contribute.
The chancellor has dissolved the injunction; and thereby decided, that upon the bill and answer merely, the suit at law for those instalments ought not, as a preliminary measure, to be restrained.
The general rule is well established, that if the answer denies explicitly and positively, the grounds on which the equity of the bill rests, the injunction to stay the remedy at law must be dissolved. I see nothing in this case to form an exception to that rule ; and if so, the answers of John White and Marvin White, directly responsive to the gravamen of the bill, do expressly, and most strongly, deny the complainant's equity.
They deny that they contracted with the appellant merely as agent of the manufacturing company ; and swear, that they relied upon his individual responsibility alone, in making that contract.
They deny (if that were material) that they ever received notice from the appellant of his intention to abandon the agreement, until after the three first instalments became due. And they swear, that instead of neglecting to fulfil the contract on their part, as the bill charges, they commenced the performance of the agreement immediately after it was made; that they employed twenty workmen besides themselves, in manufacturing the machinery; that they prosecuted the work in good faith; and that, at the #time when the appellant gave them notice of abandonment, (1st of August, 1815,) they had actually expended in labor and materials, for that machinery, upwards of 3,000 dollars; and which had so depreciated, as not to be worth more than 400 dollars, at the time of filing their answers. The injustice and hardship complained of in the bill is, that White, Taylor &f White were taking an unfair advantage, and abusing their legal rights under the independent covenants, by suing for the three first instalments, without having performed any part of the contract, and not having earned any thing, as a consideration or equivalent for those in-stalments : this was an essential and indispensable allegation in the bill, without which no injunction would have been granted ; the prayer for an injunction would have contained no equity, if the bill had not charged the fact, that White, Taylor &f White had not proceeded in the execution of the agreement pari passu with the stipulated payments. The answers are, therefore, on that point, strictly responsive to the bill; and they positively, explicitly, and circumstantially, deny that allegation. The respondents confess their insolvency ; but swear, that it has been occasioned solely by the appellant himself, in refusing to fulfil that contract. These answers we are bound to take as true, in respect to the injunction, in this stage of the cause; and if so, the right of these respondents to recover 1,900 dollars, with interest, as established at law, seems to me to be perfectly consonant with the principles of equity.
Whether the respondents will be entitled, in any form, to recover damages beyond the instalments which fell due under the contract, before it was mutually abandoned by the parties, or on what principles any ulterior claims are to be adjusted, are questions not before us on this appeal.
March 31st.
My opinion is, that the. decretal order for dissolving the injunction ought to be affirmed.
Childs and Hascall, Senators,
were of the same opinion. ^y¡ t[le ot]ier senators concurred in the opinions delivered by Mr. Justice Spencer and Mr. Justice Yates, that the decretal order of the chancellor ought to be reversed: It was, thereupon, ordered, adjudged, and decreed, that #the order dissolving the injunction be reversed, and'that the injunction be continued until the hearing, on the appellant's confessing judgment in the suit at law, with leave to the respondents to enter up the same; and that proceedings be had in the Court of Chancery, either by a reference to a master, or an issue at law, to ascertain the damages, if any, sustained by the respondents, by the non-execution or rescinding of the contract, on the part of the appellant, to the end, that the respondents levy those damages only on execution : and it is further ordered, &c. that the record be remitted, <fcc.
Decree of reversal