Court Opinion

ID: 6238748
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:39:03.559919+00
Date Added: 2024-06-11T08:58:07.933402
License: Public Domain

Opinion,
Mu. Justice Clabk:
It is a well settled doctrine that equity will not, in general, decree the specific performance of contracts concerning chattels. The reason assigned for this is, that their money value, recovered as damages, will enable the party to purchase others in the market of like kind and quality. In the United States, as well as in England, contracts for public securities, government stocks, bonds, etc., will not be specifically enforced; no especial value attaches to one share of stock, or one bond, over another; the money which will pay for one will as readily purchase another. To this rule there are doubtless exceptions, but the rule is so general in its application that the exceptions are but few: Stayton v. Riddle, 114 Pa. 464. Although a different doctrine may perhaps exist elsewhere, as to contracts concerning stocks and bonds of merely private or business corporations, in the United States the principle seems to be well established by the weight of authority, that they will not be carried into effect in equity except under very special circumstances, such as render the remedy at law wholly inadequate or damages impracticable: Pomeroy’s Eq., 1402. The same general principles govern in contracts for the sale of stocks of this character, as in the sale of other personal property; if the breach can be fully compensated, equity will not interfere; but when, notwithstanding the payment of the money value of the stock, the plaintiff will still necessarily lose a'substantial benefit, and thereby remain uncompensated, specific performance may be decreed: Waterman Spec. Perf., § 19.
In Dungan v. Dohnart, an unreported case, decided at nisi prius and referred to in a note to Railroad Co. v. Stichter, 11 W. N. 325, Mr Justice Agnew, after referring to the cases, said: “In an ordinary contract for the sale or transfer of stock, where there is no fiduciary relation between the parties, no peculiar circumstances attending the stock, and no trust de*535dared or arising by operation of law, or other fact in the contract, which would make a verdict for damages inadequate relief, there is no reason for specific performance other than in every case of a sale of a chattel. The non-delivery or refusal to transfer can be easily compensated in damages.”
The doctrine has in some cases been carried to this extent: that if a contract to convey stock is clear and definite, and the uncertain value of the stock renders it difficult to do justice by an award of damages, specific performance will be decreed: Abb. Pr., N. S., 300; 31 How. Pr., 38; Treasurer v. Commercial Co., 23 Cal. 390. This would appear to have been the view entertained by Mr. Justice Thompson, in Sank v. Union St. Ship Co., a case tried at nisi prius, and reported in 5 Phila. 499. “I incline much,” says the learned Justice, “towards the distinction made by Vice-chancellor Shadwell, in Duncroft v. Albrecht, 12 Sim. 189, between public stocks of a known market value and stocks of a particular company with none in market, and recognized by the Lord Chancellor in DeGex and Jones, 27. The former resembles ordinary property with known values, while the latter resembles more the case of specific or peculiar property, with a value contingent or uncertain, which, it has been held, the only adequate remedy is to give the thing itself: 1 Lead. Cas. in Eq., 757, and 1 Eq. Juris., 724.” Whether the distinction taken in the case cited, may ultimately be recognized to the full extent stated, we cannot say, but the general underlying principle seems to be established, that in a sale of stocks in a merely private or business corporation, when from any proper cause it is plain that the remedy at law is inadequate or damages impracticable, specific relief may be awarded.
As to the case now under consideration, it is fair to assume that the security for the principal investment of $7,000, and for the dividends upon it at the rate of ten per cent, per annum, was the inducement for Wagner to enter into the contract of July 1, 1879; and when, on January 27, 1880, he agreed to waive his right to that security, it was under the special inducement that he was to have, in addition to the shares he then had, seventy other shares on the terms of the latter contract; shares that would ultimately be paid for, if paid for at all, out of their earnings, in instalments equal to *536the excess of the dividends thereon over six per cent, in each year. The contract of 1880 disclosed the special terms upon which the investment was actually made. Wagner was to receive not only the dividends upon the shares he purchased with his original investment, but was entitled, also, from time to time, to such of the seventy shares in dispute as would be paid for by the excess stated; and the title to the seventy shares was actually transferred to him, in trust, under the contract. He held the shares as a trustee; if transferred on the books, the shares must necessarily have been transferred to Mm on the footing of that trust. As they were earned, however, they were to become Wagner’s own shares, freed from the trust, the dividends thereon payable to him, and he was entitled to have such further assurance from Goodwin as would liberate them from the trust, and authorize the transfer to him absolutely on the books of the company. The case is in some respects a peculiar one; Wagner already has the title to these seventy shares; he holds the certificate transferred in writing, and delivered to him by Goodwin; but the transfer being subject to a trust imposed upon them by the parties, he cannot avail himself of them as his own until they are relieved of that trust. The transaction is not therefore a simple sale and purchase of stock. The question presented- is, whether or not the terms of the trust have been satisfied, as to the whole or any part of the seventy shares, to which Wagner already has title; if they have, he is entitled to a transfer to his own use; if they have not, he must still hold the title subject thereto. It cannot be doubted, we think, that equity has jurisdiction in such a case, not only against Goodwin, but against the company, especially as the shares have no recognized market value, and their value, even if ascertained, -would not necessarily, as against either, be the proper measure of damages. The seventy shares, having been transferred to Wagner in trust under the agreement, he was entitled as the trustee to a transfer on the books, and, as dividends were declared from time to time, he was entitled, at his option, to an absolute transfer, discharged of the trust, for as many shares as were paid by the excess of the dividends over six per "cent, annually.
We are of opinion, however, that the agreement of January 27,1880, was only a modification of a particular part of *537the previous contract of July 1,1879. The preamble, which precedes the paper of 1880, clearly shows that the special provision in the first contract, for security to Wagner, was the special subject matter of modification in the second. But the clause which provides, that Wagner “ shall be appointed the superintendent of the said corporation, under a written contract for five years, at an annual compensation or salary of at least eighteen hundred dollars,” would seem to be a provision made in the interest and favor of Wagner. Wagner does not agree in express terms to serve as superintendent for five years, unless perhaps under a written agreement to that effect, and no such agreement was ever made; on the contrary he was elected from year to year, and had no assurance whatever of his continuance in office for five, years. The company was put under no obligation to retain him as superintendent, and he was under no obligation to continue in the company’s service. The parties we think, did not intend their contract to be a guarantee in this respect. If the condition and ownership in the stock had been such that Goodwin was not elected president of the company, at a salary of $6,000, did the parties contemplate that Wagner should be held responsible to Goodwin for that result? We think not; yet this feature of the contract was as certainly obligatory upon one party as upon the other. Moreover, when Wagner tendered his resignation, it was without complaint of anyone accepted; Goodwin himself was present, favored this action of the board, and personally dictated the very complimentary response, which was given to Wagner’s request. He cannot now complain of that which, at the time, he approved, and which was consummated by the company, not only without any objection whatever, but with his full consent.
In the view which we have taken of this case, the testimony of Samuel Wagner becomes unimportant, and the question of his competency of little consequence in the case. Samuel Wagner was, however, without doubt, a competent witness. If he was the legal adviser of any of these parties, he was the adviser of both of them, for the advice he gave was given to both, and the papers he prepared were prepared at the instance of both. The matters communicated to him by either one of the parties were communicated in the presence of the other; *538they were not in their nature private, and therefore could not have been the subject of any confidential disclosure. Wagner seems to have acted merely as a scrivener, and, although of the legal profession, his testimony would not thereby be rendered incompetent.
Upon an investigation of the whole case, we are of opinion that the decree of the learned court is right.
The decree is therefore affirmed, and the appeal dismissed, at the cost of the appellant.