Freeman v. Hartfield

This action is brought to recover damages for the breach of an express contract for services alleged to have been rendered by plaintiff to defendant, at defendant’s request, between January, 1907, and September, 1907.

According to the plaintiff’s statement the services had relation to the reorganizing and the extension of defendant’s business. Specifically they consisted of the negotiating and closing of agreements with one Solari and one Bolognesi for the forming of a corporation to undertake said business, the actual forming of the corporation under name of Hartfield, Solar! & Co., the securing and closing of certain contracts between said corporation and certain steamship lines, and advising the defendant in connection with all of these matters and other matters, and conducting various negotiations in the United States and Europe in defendant’s behalf.

The proposed corporation was organized with an authorized and issued capital stock of $100,000, consisting of 1,000 shares, of the par value of $100 each share. The stock was issued for about $20,000 cash and certain agreements and services rendered. For his services the plaintiff alleges that defendant expressly agreed to pay him 200

The plaintiff then alleges a failure on defendant’s part to keep this agreement, and a consequent dispute between them, resulting in the making of a new oral agreement in settlement of their dispute on the 11th of September, 1907, by which new agreement the defendant agreed to give the plaintiff 50 shares of the said capital stock forthwith, and if, and as soon as, the business of the corporation was profitable, to give plaintiff an additional 50 shares, and that both defendant and Solari would serve the corporation without pay as before, and that all of the net profits would be distributed annually among the stockholders, and plaintiff would get 10 per cent, of the dividends, and that during the term of the said contracts with the steamship lines the plaintiff would be employed as counsel and attorney by said corporation, and be paid a reasonable compensation for those services. The plaintiff then alleges that he agreed to accept this new agreement and shares of stock in lieu of his rights under the former agreement and in settlement of the dispute between the parties.

The plaintiff also alleges that defendant owns, and has owned since the formation of the corporation, more than a majority of the stock, and that he and Solari controlled almost all of the stockthat the contracts with the steamship lines are still in existence, and with several years to run; that the business of the corporation is and has been very profitable (setting forth net profits for various years); that defendant has transferred 50 shares of said capital stock to plaintiff, but refuses to deliver the other 50 shares, although demanded in 1908 and thereafter. The plaintiff also alleges that various sums of money specified have been received from the corporation by Hartfield & Solari for salaries, etc., as officers, which sums were voted to themselves by themselves, or by their nominees on the board of directors. Due performance is alleged by plaintiff, and he demands judgment for $75,000 damages.

The defendant admits the rendition of services by plaintiff at defendant’s request substantially as alleged, but he denies that he agreed to give plaintiff 200 shares of the capital stock of the corporation, and he denies that he and Solari agreed to serve the corporation without compensation. He also denies that a dispute arose between the plaintiff and defendant, and that in settlement of the dispute on September 11, 1911, he agreed to give the plaintiff 50 shares of said capital stock forthwith, and an additional 50 shares when the business became profitable, and to serve the corporation without pay, and employ the plaintiff as counsel and attorney of the corporation. The trial resulted in a verdict for the defendant.

In his bill of particulars the plaintiff states that the agreement sued upon was made at the Waldorf-Astoria Hotel on September 11, 1907; that it was oral, but that a written memorandum of some of the

“The Waldorf-Astoria, New York.

“Memo, of Oral Agreement Between Hartford & Freeman.

“H. agrees to give him 5000 in stock in H. S. & Co. and like B.’s agreement assure him that there will be no salaries to officers.

“H. agrees he shall have a V7th interest in Blyn pier matter.

“II. agrees to hold him atty. La Veloce Line at advance so far as he can and do his best to secure him retainers as attorney by other two lines.

“H. agrees to keep him a director and counsel and attorney of II. S. & Co., as long as II. controls majority of stock or company, and get Freeman all business he could as long as he renders faithful service.

“H. agrees to do this in payment of services, and F. agrees to accept the agreements of H. in payment of his services. Wm. Hartfield.”

The gist of the action was the recovery of the value of the additional 50 shares of stock and its past earning; the breach being the refusal of defendant to deliver to the plaintiff the extra 50 shares of stock.

[1] The main question before the jury was as to the terms of the agreement made on September 11, 1907, at the Waldorf-Astoria Hotel. The defendant claimed that he agreed to give plaintiff only 50 shares of the capital stock referred to. The plaintiff claims that the defendant agreed to give him 50 shares forthwith, and 50 shares when the business of the corporation became profitable. The defendant claimed that the agreement was written, and is set out fully in the memorandum referred to above; while the plaintiff contends that the agreement was oral, and that only a part of it appears in the memorandum.

Concededly the agreement, whatever it was, was arranged at a conversation between the plaintiff, his mother, and the defendant at the Waldorf-Astoria on September 11, 1907. The plaintiff and his mother gave their version of the transaction, and the defendant gave his version. They differed as to the circumstances under which the plaintiff was to get the additional 50 shares of stock claimed by the plaintiff ; the plaintiff asserting that he was to get the additional stock when the business became profitable, and the defendant claiming that at this interview he said he might give the plaintiff the additional stock as a present in his discretion, if the plaintiff behaved himself. The defendant further testified that, when asked to put in writing this conditional promise to make the plaintiff a present of 50 shares, he refused to do so, because it was no part of the agreement. The plaintiff, on the other hand, testified that defendant said he would give the additional stock as soon as the business was profitable, but refused to put that promise in writing, whereupon he, the plaintiff, refused to sign the memorandum, or to accept the paper signed by defendant as a memorandum, of the agreement, because it did not contain the whole agreement. Mrs. Freeman, plaintiff’s mother, testified to the same effect. Thus was presented a clear issue of fact for the determination of the jury—the terms and scope of the agreement.

The probability of the truth and accuracy of the plaintiff’s version of the transaction was thus a fact which the plaintiff had a right to prove. Nevertheless the court excluded as immaterial most, if not

“I did exclude and keep out of the case, so far as I was able, all matters relating to the value of the services that had been rendered, and the various negotiations back and forth of the parties, and their claims; the reason being that this action is brought upon a contract of compromise.”

We think the court erred in keeping this evidence from the consideration of the jury. Had the jury been allowed to consider it, they might have found therefrom the improbability of plaintiff’s agreeing to take' only 50 shares, with only a chance of getting 50 more, in view of the extent, nature, and value of the services rendered, and in view of the alleged prior offers and agreement of the parties. There is ample authority in support of the admissibility of the evidence which was excluded. Dodge v. Weill, 158 N. Y. 346 , 53 N. E. 33 ; Barney v. Fuller, 133 N. Y. 605 , 30 N. E. 1007 ; Whitney Co. v. Stevenson, 17 App. Div. 224 , 45 N. Y. Supp. 552 .

[2] Concerning the memorandum signed by defendant at the meeting at the hotel, the plaintiff testified that he refused to sign it, because it did not contain the whole agreement. His mother testified in substance to the same effect. The defendant testified that plaintiff did not refuse to sign the memorandum, but that plaintiff wrote it and handed it to defendant to sign, that he signed it and left it there, and that it contained the complete agreement. Notwithstanding this conflict of evidence as' to the signing of the paper, the court charged as follows:

“Ordinarily, where a contract is made between parties and signed only by one, it is necessary that there should be shown an acceptance of that contract by the other party, by its delivery to him and his retention of it in his possession. But in this case I charge you that the plaintiff, having prepared the contract in his own hand, and having presented it to the defendant for signature, that when the defendant signed it and left it upon the table, it became a binding contract, without further evidence of its acceptance on the part of the party who had physically written it in his own handwriting; and, to avoid it, something more was necessary for the plaintiff to do. That was to notify the defendant that he had no right to rely upon the fact that he, the plaintiff, had prepared that contract as expressing his ideas of what the agreement that they had then reached was.”

We think this instruction was erroneous, in that it disregarded the fact that the evidence as to the circumstances under which the paper was signed was conflicting, and that it was for the jury, not the court, to say whether the paper became a binding contract as signed. If the jury believed the testimony of the plaintiff, the memorandum did not

[3] We also think that the court’s charge as to the duty of an attorney when dealing with his client was inapplicable in the circumstances of this case. While the law requires the utmost good faith on the part of an attorney in dealing with his client, that principle is applied in cases where the attorney is seeking to enforce a contract and the question before the court is whether the terms were such as ought to be enforced. The question does not arise where the attorney is trying to establish the existence of the contract. We think the charge in this respect was likely to mislead the jury and prejudice the plaintiff.

We think the judgment and order should be reversed, and a new trial granted, with costs to appellant to abide event. Order filed.

CLARKE, P. J, and SMITH, J., concur. McLAUGHLIN and DOWLING, JJ., dissent.