Court Opinion

ID: 7111324
Source: CourtListenerOpinion
Date Created: 2022-07-24 12:26:43.109778+00
Date Added: 2024-06-11T16:13:45.259803
License: Public Domain

Bishop, J.—
*468employment: breach; remedy. i Contract or *467It will be observed that the plaintiff firm *468is not seeking a recovery in tbe way of damages growing ont of a breach of tbe contract alleged. Tbe relief prayed for is in the nature of a demand for specific performance, and, secondarily, for an accounting to ascertain tbe amount that bad become due under tbe contract, and for judgment. Tbe contract was one for personal services to be rendered. We know of no rule under wbicb future performance of a simple contract of that character can be enjoined or enforced by a decree of court. In all such cases tbe parties are remitted to a law action for damages. But in view of what is presently to be said this point need not be elaborated upon.
empIoymen?: termination by legislative enactment. As tbe plaintiff firm does not claim to have solicited or made sales of any stock since July, 1900, tbe daté of tbe last settlement, it must be understood that tbe demand fox' an accounting is predicated upon that provision of the contract under wbicb plaintiffs , . , „ . _ were to be paid fifty per cent, of tbe expense . . . r fund arising out of payments on stock sold previous to that date. Proceeding upon this assumption, we have for determination tbe question whether, in view of the change in tbe situation dictated by tbe subsequent act of tbe Legislature, there remained to plaintiffs any enforceable right under the contract. Tbe statute in force at tbe time of the making of tbe contract authorized the creation of an expense fund substantially as provided for in tbe articles of incorporation and by-laws ®f tbe defendant association. That tbe parties in making their contract had in mind such provisions of tbe statute, as well as tbe laws of tbe association, must be accepted as true, and this to begin with. Now, by a further provision of the statute enacted prior to the organization of tbe defendant association, and in'force at the time of tbe contract in question, it was provided that such corporations, in common with all others, should at all times' be subject to legislative control to tbe extent that tbe rights and powers, granted thereto “ may be at any time altered, *469abridged, or set aside by law, * * * whenever the General Assembly shall deem necessary for the public good.” Code, section 1619 (Code 1873, section 1090). With respect to such provision, the presumption authorized by law need not be indulged in. The parties themselves gave recognition thereto, and made their contract to depend as to its terms and the enforceability thereof upon the continuance of the laws then in force, and subject to be affected by any future legislation upon the subject.
' Now, the act of the Twenty-Eighth General Assembly in effect worked a repeal of the former statute authorizing the creation of an expense fund. .After such act took effect there was no longer any right to levy á fixed charge upon stock or stock payments for such purpose, or otherwise to set apart moneys to be devoted to the payment of expenses, whatever the source from which the same were derived. The provision is simply that “ all expenditures and expenses for management and conducting the affairs of said association * * * shall be paid from the receipts of interest, premiums, and other sources of profit.” The act provides for a limitation upon the amount which may be thus expended — as applied to the defendant association being two and one-half per cent, on its assets as shown by its last annual report. The defendant amended its articles of incorporation and bylaws to bring the same into conformity with the change thus made in the statute. Consideration of the foregoing must make it manifest that with the taking effect of the amenda-tory statute it became impossible for the defendant to carry out its contract by making payments conformably to the terms thereof as written. By general acceptance the expression “ expense fund ” means a fund set apart and dedicated to expense purposes. The defendant no longer has an expense fund which it can divide with plaintiffs, either voluntarily or under stress of judicial decree. True, it is still authorized to meet the current expenses of conducting its business, ,but this it may do only by drawing upon moneys on hand derived *470from profit sources, and in a sum sufficient for that purpose, observing always the limitation prescribed in the statute. We think it must be said that the situation in which the parties find themselves placed is one contemplated by the provisions of their contract. 'Proceeding upon this assumption, it must also be said that the plaintiff firm is in no position to complain. And. this not only because of such provision in the contract, but by virtue of the prevailing doctrine that a change in the law which makes the performance of a contract impossible or illegal operates to release the obligor from his obligation to perform. Brady v. Insurance Co., 11 Mich. 425; Cordes v. Miller, 39 Mich. 581 (33 Am. Rep. 430); Jones v. Judd, 4 N. Y. 412; Wharton on Contracts, sections 297, 305; 9 Cyc. 629.
This must be true, as otherwise relief could be granted only upon the hypothesis that the power is lodged in the court to-make a new contract for the parties, and to require of the defendant that, without reference to the amount actually needed by it to pay current expenses, it must draw from profit sources the full sum of two and one-half per cent, on all its assets traceable to payments on stock sold by the plaintiff firm, and make division thereof on a moiety basis. There is no authority that recognizes the existence of such power in the courts. Moreover, as we think, any attempt, however made, to divert the profit fund of the association to the extinguishment of a contract obligation in character as here claimed under the guisé of current expense, would be an act in contravention of both the letter and the spirit of the present statute. It follows that the court, as presided over by Judge Prouty, erred in finding that the contract had been breached, and in holding that in view of the extinguishment of the expense fund, compensation could be made by resorting to moneys in the hands of the association derived from profit sources.
Counsel for appellees point out that the moneys sought to be recovered by the plaintiff firm in this action had actually *471been earned prior to July, 1900; that nothing remained to be done thereafter but to make quarterly settlements and payments. In view of this it is said that, if the act of the Twenty-Eighth General Assembly is to be given effect as contended for by appellant, -the same is violative of the Constitution, in that the result would be, as applied to this case, to impair a fixed contract obligation. In our opinion, the contention is without force. As we have already seen, the right was reserved in the Legislature to change the law at pleasure, and thereunder it might go so far, even, as to legislate such associations out of existence. The parties contracted with such provision as to the right and authority of the Legislature staring them in the face. More than that, they made it a part and parcel of their contract. But, if this were not so, it must be said that the obligation of the defendant to pay was conditioned upon its having a certain fund out of which to make payment. In no event could plaintiffs be heard to assert that they were possessed of a claim ripe for judgment until it had first been made clear that a fund existed out of which, by the terms of their contract, they were entitled to be paid.
II. At a later term of the court the matter involved in the counterclaim pleaded by defendant came on for trial, Judge McHenry presiding. The judgment of dismissal was based upon the insufficiency of the evidence to support the allegations of such counterclaim. .We have read the record in full, and we agree that the trial court had no warrant for reaching any other conclusion.
From what we have said it follows that in respect of the first appeal the interlocutory decree must be, and it is reversed; in respect of the second appeal, the judgment dismissing the counterclaim must be, and it is, affirmed.
Reversed on first appeal; affirmed on second appeal.