Court Opinion

ID: 5498034
Source: CourtListenerOpinion
Date Created: 2022-01-10 02:55:15.92034+00
Date Added: 2024-06-11T08:33:51.777272
License: Public Domain

Daniels, J.,
(concurring.) It is not deemed absolutely necessary to add anything further for the disposition of this appeal to the reasons assigned by the presiding justice, whose opinion has concluded for the reversal of the judgment affecting the right of the plaintiff to maintain the action. But some further observations are deemed to be appropriate for the purpose of sustaining one of the conclusions which in that opinion has been reached. As to the disposition of so much of the principal appeal as relates to the liability of the executors, nothing further is designed to be stated. But the more important feature of the litigation is that which includes the plaintiff’s right to substantial damages for the non-performance of the agreement or covenant made with him by the defendant Brown and Joseph Seligman, the testator. When this agreement was made, the plaintiff was the president of the Hew York City Underground Railway Company, and prior to that time he owned and had claims against the-company, and a title to subscriptions to its capital stock, and an interest in a contract made with Francis P. Byrne, and owned 60 odd shares of the capital stock of the company. These interests the defendant Brown and the testator were desirous of acquiring, and the object of their transaction with the plaintiff was their assignment and transfer to them. At the time when the agreement was entered into, there had been issued no more than 117 shares of the stock of the company. Other shares had been subscribed for, not exceeding 60 in number, and the defendant Brown and the testator were familiar with and informed of the affairs of the company prior to the making of this contract, and they then knew the fact to be that no more than 117 shares of the stock of the company had been issued, and that the stock subscribed for and not issued did not exceed 60 shares. It was in this condition of the affairs of the company, known to the defendant and the testator, that the contract was entered into by them with the plaintiff; and its construction and effect accordingly are to be ascertained, as far as they may be affected by these circumstances, with this knowledge •existing in the minds of the defendant Brown and the testator. It was in consideration of the assignment and transfer of the interests and the 60 shares of stock already mentioned to them by the plaintiff that their agreement, which is the foundation of the action, was made and entered into. At that *842time an act affecting the charter and rights of the company was before the legislature, and it was covenanted and agreed by this defendant and the testator, for the consideration already mentioned, that, upon the amendments then pending before the legislature becoming a law, they would pay, or cause to be paid, unto the plaintiff, his representatives or assigns, the sum of $27,-500, being the amount owing for advances made, and services rendered, by him to the company, and that they would cause to be delivered to him or his assigns, at the time of the payment of that sum of money, “two thousand shares of the capital stock of the said railway company, which said stock is to be fully-paid stock.” The agreement further provided that, in the event that the amendments should not become a law at that session of the legislature, the defendant Brown and the testator would either cause this sum of money to be paid, and said 2,000 shares of stock delivered, to the plaintiff or his assigns, or they would reassign to him or his assigns the claims, demands, or rights so assigned to them, and transfer to him or his assigns the 60 shares of stock transferred to them, and that this should be done on the day succeeding the close of the legislature of that year.
The bill containing these amendments did not become a law, but it was rejected by the legislature. The defendant Brown and the testator did not, however, on that account, transfer back to the plaintiff the rights and interests acquired through the assignment from him, or the 60 shares of stock received by them, but they elected, as they were entitled to do, to retain the stock and interests assigned to them, and to deliver to the plaintiff the 2,000' shares of the capital stock of the company, mentioned in the agreement. They did pay to him the sum of money which, in the event arising, they had become obligated to pay, but they did not deliver to the plaintiff the 2,000 shares of paid-up stock mentioned in the agreement. But after they had elected to retain the rights and interests and stock transferred to them, and to pay the money, and deliver the 2,000 shares of paid-up stock to the plaintiff, they obtained from the company 2,000 shares of its stock, and delivered that to him as paid-up stock. No part of this stock, however, had been paid for in any manner to the company, and, when the fact was ascertained by the plaintiff, he disaffirmed this part of the transaction by tendering and offering to return these 2,000 shares to the testator, the defendant Brown being at that time absent from the United States, and he then demanded the 2,000-shares of fully paid up stock, which he had become entitled to receive under the obligation created by the agreement. This tender and demand was made in 1874, and it was repeated again in December, 1884, when the plaintiff was informed by the testator that he understood from Mr. Brown’s counsel that all engagements with the plaintiff had been properly fulfilled, and no further notice was taken of his demand and request. Upon the trial of the action the ■plaintiff offered to surrender these shares of stock, as not being those he was entitled to under the agreement, and demanded judgment for so much money as would enable him to obtain 2,000 shares of the paid-up stock of the company. It appeared upon the trial that the debts owing by the company greatly exceeded its assets, and that none of its stock was on the market for sale, and it had no marketable or actual value; and for that reason the referee, by his decision, limited the right of the plaintiff to recover against Brown, the surviving party who had executed the contract, to the sum of six cents. This limitation of the plaintiff’s right to damages is deemed to be unwarranted by the contract, construed, as it should be, in the light of the circumstances attending its execution and delivery. At that time it was known to the defendant and the testator that the stock, in the event of their electing to abide by their right to make its delivery to the plaintiff, could not be obtained by purchase in the market, but must be procured from the company itself. This resulted from their knowledge and familiarity with the affairs and condition of tile company, and it is further indicated by the obligation created in the agree*843ment, that no more than 100 additional shares of stock should be issued by the company without plaintiff’s consent, which consent in fact was not obtained, and that such shares as should be so issued should be transferred to the plaintiff if they did not exercise their option of paying the $27,500 and delivering the 2,000 shares, on the failure of the amendment to become a law. This 100 shares was afterwards immediately issued to John S. Schultze for an indebtedness of the company to him, but no other shares of stock were issued by the company than those which have already been mentioned. There was no source, therefore, from which the 2,000 shares which these persons had become obligated to deliver to the plaintiff could be obtained but from the company itself, and they could only be obtained from it by payment of the amount for which the company was authorized to issue the shares. There was no other way or manner in which these shares could be obtained, and the defendant Brown and the testator were fully apprised of this fact, and yet their obligation was positive and explicit, in the event which has taken place, to deliver the 2,000 shares of paid-up stock to the plaintiff. He became absolutely entitled to these shares, and they as absolutely obligated themselves to deliver the shares; and, as they were to be no otherwise obtained than from the company itself, they as clearly assumed the obligation to obtain the shares from the company, and pay the amount which would be necessary for that purpose, and then deliver them to the plaintiff. In these respects the obligation which was created materially differs from contracts ordinarily entered into for the sale and delivery of property. And the defendant Brown, as the surviving party, whose liability alone is to be disposed of in this action, for the fulfillment of the agreement, was bound to obtain the stock from the company and deliver it to the plaintiff, or pay him so much money by way of damages as would enable him to secure it for himself. That was the clear intent of the agreement.
What the law generally requires the party in default to do for the satisfaction of a contract or obligation is to pay to the other party so much money as will secure to him the ability to place himself in the position which, by the terms of the agreement, he was entitled to occupy. In ordinary cases that would be, where the consideration for the property had been paid, so much money as would enable the party not in default to purchase and acquire the property.entitled to be received by him under the terms of the agreement. That would fully indemnify him for the loss to which he would be subjected by the failure of the other party to perform the agreement. But that rule is inapplicable to this case, for the article which was to be delivered was not one which was dealt with in the market. It could not be obtained by purchasing it from others; but. the only manner in which it could be secured was from the company itself, and then only by paying to it the par value of the shares. The circumstances in this respect were peculiar, for the party not in default could in no other way obtain the benefit and advantage of the contract made with him than by obtaining these shares from the railway company; and, where that is the nature of the agreement, then the ordinary rules applicable to adjustment of differences are not to be followed. Ormsby v. Mining Co., 56 N. Y. 623. What the law designs to secure to the party entitled to the performance of a contract made with him is such a measure of indemnity as will place him in the same position that he would have been in if the contract had been observed and performed by the other party. This subject was quite at large considered in Baker v. Drake, 53 N. Y. 211, and it was there conceded, in deference to the early English authorities, that, in an action on a bond conditioned for the return of government stocks, the party entitled to them should be fully reimbursed for the expense of obtaining them himself; and Gruman v. Smith, 81 N. Y. 25, and Colt v. Owens, 90 N. Y. 368, are in harmony with this right. And so the law was declared to be in Dana v. Fiedler, 12 N. Y. 41. Tljat was a contract for the sale and delivery of “madder, ” and it *844was said in the decision by the court that “in a suit by the vendee against the vendor for non-delivery, his complete indemnity is to receive that sum which, with the price he had agreed to pay, would enable him to buy the article which the vendor had failed to deliver.” .Id. 48. And in Wright v. Bank, 110 N. Y. 237, 18 N. E. Rep. 79, the right of the plaintiff to recover was permitted to extend so far as to include the cost of replacing the article in dispute. And this rule also has the support of Milliken v. McLean, 17 Wkly. Dig. 278, and Scattergood v. Wood, 14 Hun, 269. Cases have been cited and relied upon which were considered by the counsel to restrict the rule of damages so far as to limit the plaintiff to the market value of the stock now in dispute. But the facts in each of these cases are entirely at variance with those controlling this controversy, and iii each of them the rule applied afforded the party not in default all the indemnity he had become entitled to, while in the present controversy that rule would be entirely insufficient for the attainment of this result. Here the obligation assumed by the defendant Brown and the testator, with full knowledge of all the facts, was to deliver to the plaintiff 2,000shares of paid-up stock of this company. There was no other possible mode of obtaining that stock than from the company itself. The knowledge of that fact by the covenantors is clearly evinced by all the circumstances surrounding the making of the agreement, and it must therefore have been intended that the shares should be obtained from that source for the performance of the obligation. The necessity for so obtaining them was known to these individuals, and with that knowledge they positively incurred the obligation to deliver these shares to the plaintiff. That they have not done, and no other rule will place him in the position in which, by the agreement, these persons obligated themselves to place him, than that which will require the payment to him of so much money as he will be obliged to pay for the shares to the company, and in that manner supply himself with the articles he became entitled to receive under the express language of the agreement.
For these reasons, as well as those which have been stated at large in the opinion of the presiding justice, the law requires this judgment, so far as it is in favor of the defendant Brown, to be reversed, and a new trial ordered.
As to the other matters which have been brought into discussion by the appeals taken in this action, they have been fully and completely disposed of in thti opinion already mentioned, and as to them the directions suggested-appear to be those required by the law to be made.