Hill v. Haberkorn — 6 N.Y.S. 474

Majority

p. 474

Hill v. Haberkorn.

(Supreme Court, General Term, First Department.

July 9, 1889.)

Headnote

1. Contracts—Equitable Remedy—Evidence.

Defendant, an actress, having no business experience, made a written contract with plain tifi to act under his management for a term of six years, the net profits-

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to be equally divided after the first year, but defendant to have no voice in the management of the business. Shortly before the expiration of that contract, defendant being ignorant of the condition of the accounts, but having full confidence in plaintiff, a new contract was executed for a similar term, expressly declared to be a continuation of the first contract, containing a recital, inserted by plaintiff, to-the effect that defendant was entirely satisfied with plaintiff’s business ability, and with the general outcome of the expiring contract. In an action to enjoin defendant from acting under the management of third persons during the term covered by the second contract, defendant answered that plaintiff had not rendered just accounts of the business during the term of the first contract, and that he had deceived and misled her, and that she did not discover the facts until after the execution of the second contract. Meld that, in view of the trusv relation which plaintiff occupied towards defendant, it was error to exclude defendant’s evidence tending to show his breach of the first contract, as his conduct in that respect would affect his right to equitable relief.

2. Same—Reottals—Effect.

The recital in the second contract to the effect that defendant was satisfied with plaintiff’s business ability, and with the general outcome of the first contract, did not preclude her from insisting that, as she subsequently discovered, plaintiff had not fulfilled his obligations thereunder.

8. Same—Defenses—Return of Consideration.

The case being for injunction, and not involving a question of rescission, it was not necessary that defendant should return the amount received by her under the first contract before she could make the defense of its non-performance by plaintiff.

Appeal from special term, New York county.

This is an action by James M. Hill against Margaret Haberkorn, to enjoin defendant from performing as an actress under the management of any other person than plaintiff. On June 4, 1881, the parties entered into a written contract as follows: “For and in consideration of the sum of one dollar to me in hand paid, the receipt of which is hereby acknowledged, I, Miss M. Mather, of the city of New York, state of New York, by this contract hereby bind and engage myself to Mr. J. M. Hill, of the city of Chicago, state of Illinois, manager, to act under his management the characters which may be allotted me in such plays as he may produce in such cities, and in such theaters, and at such times, as he may direct, and to commence on or about June 4, 1881, and continue during the acting weeks of six (6) years. And I further agree to act and perform under the direction of said J. M. Hill, during the whole term above mentioned, all characters in which I may be cast in a correct and painstaking manner, and to conform to and abide by all rules and regulations of the theater adopted by the party of the second part, and not to play or perform for any other person, gratuitously or for profit, during the above seasons, from the date of this agreement, without written consent. And I further agree that if at any time the said manager, J. M. Hill, is not satisfied with the manner in which I perform the duties for which the said manager has contracted with me in good faith, or if I am, in his judgment, inattentive to business, careless in the rendering of characters, or guilty of any violation of the rules, then I hereby release the said manager from all the provisions of this contract, also from any claim for damages for any accident that may occur to me while in his employ. Margaret Mather. [Seal.] J. M. Hill. [Seal.] Signed in presence of W. W. Bowlbt. 1 hereby accept the above contract on the terms and conditions therein stipulated, and bind myself in return to pay said Miss M. Mather, when services are faithfully rendered as above, (usual performances and holiday matinee performances to constitute a week,) the sum of twenty-five (25%) per cent, of the net profits for the season commencing on or about September 1, 1882, and fifty (50%) per cent, of the net profits each season thereafter; it being understood that the season of 1881 and 1882 shall be devoted to study and general preparation as suggested by the said J. M. Hill. It is further agreed and understood that the said Miss M. Mather is to have no direction in the business, as this is not a copartnership, but an arrange

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ment where the working interest above stated is given as compensation for services rendered; and it is further agreed that should Miss M. Mather, party •of the first part, refuse to fulfill this agreement, or attempt to perform at any other theaters than those selected by said J. M. Hill, then J. M. Hill, party ■of the second part, shall have the right, .by injunction or other legal process, to restrain Miss M. Mather from so performing. In testimony whereof the contracting parties have hereunto set their hands in the city of Hew York this fourth day of June, A. D. 1881. Margaret Mather. J1. M. Hill. Witness: W. W. Bowlby.”

On February 24, 1887, plaintiff and defendant entered into a second contract as follows: “This agreement dated this twenty-fourth of February, A. D. 1887, by and between J. M. I-Iili, of the city of Chicago, and state of Illinois, party of the first part, and Miss Margaret Mather, of the city of Buffalo, and state of Hew York, party of the second part: Whereas, Miss Margaret Mather, party of the second part, has been acting the principal parts in the legitimate drama under the management and direction of the said J. M. Hill, party of the first pare, for a series of years under a contract providing for an equal division of the net profits arising from that business, and each being perfectly satisfied with the result of the experience,—said J. M. Hill with the acting of said Miss Margaret Mather, her loyalty and application to her chosen profession; said Miss Margaret Mather with the business ability of said J. M. Hill,—and the terms of the contract just expiring,—in fact, both.parties hereto, being entirely satisfied with the part that each has taken in the past agreement, and the general outcome thereof, do hereby enter into the following agreement, that is to commence at the expiration of the present contract, viz., June 4, 1887. This second contract, or continuation •of the one now in force, it being upon the same terms, is to cover a period of six years, commencing June 4, 1887, and expiring June 4, 1893. In and for this period Miss Margaret Mather agrees, in consideration of one dollar each to the other in hand paid, the receipt of which is hereby acknowledged, to act under the direction of the said J. M. Hill, and at such times and places •during the theatrical season as he may elect. It is expressly understood and agreed that the said Miss Margaret Mather will act at no time under the management of any other party without the consent of said J. M. Hill in writing expressed. A correct account of receipts and expenditures shall be kept, as in the past, and the books containing such accounts shall be open at any and all times to the inspection of Miss Margaret Mather, or, should she desire a copy of said books, the same shall be furnished her at such times as she may elect by the said J. M. Hill. The personal expenses, excepting railway tickets, of each party to this contract shall be an individual matter, and shall not be entered as expenses in the running of the Margaret Mather Company; all other expenses, such as salaries of the company supporting Miss Mather, printing, advertising, rentals, and in fact all expenditures required in the conducting of the business, shall be taken from the receipts of said organization, and the remaining sums shall be equally divided between the said J. M. Hill and the said Miss Margaret Mather, parties to this contract. A full settlement of the business shall be made at the close of each and every season. In witness whereof we hereunto set our hands and seals this twenty-fourth day of February, A. D. 1887. J. M. Hill. [Seal.] Margaret Mather. [Seal.] Witness: E. Hopkins, Jr.”

At the close of the theatrical season of 1888 a dispute arose between the parties as to the state of the accounts, and, an attempt at amicable adjustment having failed, defendant brought suit for a partnership accounting, but was defeated on the ground that no partnership relation existed. Pending that action, defendant, without plaintiff’s consent, entered into a contract with Gilmore & Tompkins, theatrical managers, to act under their management during the ensuing season. The object of this action is to enjoin her from

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carrying out that contract. The material portion of defendant’s answer was as follows: “(3) And the defendant, upon information and belief, further alleges that the plaintiff, disregarding his said agreement and his obligations as a manager and partner, as aforesaid, has at various times since the commencement of said copartnership to the time of the commencement of this action applied to his own use, from the receipts, moneys, and assets of said co-partnership, large sums of money, which have greatly exceeded the portion and amount thereof which he was entitled to receive and withdraw under the terms of said agreement; that he has charged to account of expenses and disbursements of said copartnership, and to the defendant, large sums of moneys which were laid out and expended upon his own individual account, and were properly chargeable only against himself personally; that he has mingled his own individual account and other business enterprises with the said partnership account; that he has, without defendant’s authority or consent, entered into rash and reckless speculations with the partnership funds, assets, and moneys, and deprived the defendant of her share of the net receipts and profits which properly belonged to her under said agreement; that without the knowledge or consent or authority of the defendant the plaintiff used and applied the copartnership funds and moneys belonging to the defend ant to the purchase of a certain amount of stock, of which the defendant has never had possession. The same always and still remains in the possession of the plaintiff in a theatrical enterprise, in Chicago, in the state of Illinois, known as the ‘ Columbia Theater, ’ and, to induce ,the plaintiff to make no objection when she learned of the same subsequently, the plaintiff falsely represented and stated to the defendant, with the intent to deceive her, that the same was a good investment; that he had taken the theater for a debt from a person'by the name of Hr. McConnell, and that his (plaintiff’s) banker in Chicago was also a stockholder in the same; that to the time the last said agreement of partnership was signed, defendant believed these representations of the plaintiff, and was misled and induced thereby to sign and execute the same, and to continue such copartnership, also relying upon the repeated statements and promise of the plaintiff that he would render to her a full accounting from the beginning, which he has never done; that, as a matter of fact, the said representations of the defendant were false and known by him to be false; that the said McConnell continued to be one of the principal owners in said theater in Chicago, which, had it been known to the defendant, she would have immediately objected to the transaction, as she had been told repeatedly by the plaintiff that the said McConnell was not worthy of confidence; that the said investment or purchase of stock was not in any sense a good one, and the said banker did not own any of the stock, or have any interest therein, or in the enterprise, except as security for a loan made by him; that said stock was and is worthless, and its purchase by the plaintiff with the copartnership money, or moneys belonging to the defendant, was a willfully rash and reckless speculation upon the plaintiff’s part, and made by him for his own personal gain and advantage, to the disregard of the interests of the defendant; that to defendant’s knowledge the plaintiff has neglected and failed to attend to his duties as manager and copartner, as aforesaid; upon information and belief that the said books of account consist of about twelve books, and, upon defendant’s husband and her attorneys attempting to make an examination of them, it was found impracticable to do so, either at the office of the plaintiff or anywhere else; that it was and is necessary that said books of account should be examined by an expert accountant to ascertain their correctness, and to obtain a correct knowledge of the accounts of the said copartnership and of the plaintiff and defendant herein; that the plaintiff, previous to the commencement of this action, was requested to submit the books and accounts of the copartnership to such an expert accountant to be jointly and mutally selected by both parties hereto, which request was refused by him. (4) And the de

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fendant further alleges that said acts and misconduct were without her knowledge and consent, and that she did not learn of the falsity of said representations by the plaintiff in connection with the purchase of said stock until after the signing of the last agreement, and shortly previous to the commencement of the action hereinafter mentioned and referred to; and the defendant further alleges that the plaintiff, with the intent to deceive her, concealed the fact in relation to the same.”

The court (Andrews, J.,) granted the injunction, and defendant appeals.

Argued before Van Brunt, P. J., and Brady and Bartlett, J.T.

King ch Clement, (A. J. Dittenhoefer, of counsel,) for appellant. George Bliss and Frederic P. Forster, for respondent-.

The position which the plaintiff occupied and assumed towards the defendant when he prepared the second contract, and got the defendant to execute it, was one which, in equity and good conscience, demanded from, him a disclosure of any and all facts as to his management under the first contract which, if known to her, might have prevented her from signing. The relation between them was a relation of express trust and confidence. The defendant was not a good business woman, and the plaintiff knew it. She had little or no real knowledge of the condition of the accounts under the first contract when the second contract was executed, and it is evident that she had implicit faith in Mr. Hill up to that time, and relied upon him to act for her interests no less than his own. See 2 Pom. Eq. Jur. § 902. Whether any facts really existed showing that the plaintiff had failed to fulfill his part of the first contract is a question in dispute between Miss Mather—to speak of the defendant by her stage name—and Mr. Hill. It seems plain, however, that her evidence tending to prove the- existence of such facts ought to have been received by the trial court. The true purpose of this action is to enforce a specific performance of the second contract by means of an injunction restraining the defendantfrom acting under any other theatrical manager than the plaintiff. But the second contract was executed before the first one had expired, and is expressly declared to be a continuation thereof. To entitle the plaintiff to a specific performance, or to an injunction which will have the same effect, equity requires that he shall show a fulfillment of the whole agreement on his part—the first contract as well as the second contract, or continuation—up to the time of bringing suit; and this was evidently the view of his counsel, for the complaint expressly alleges a due performance of the first contract by the plaintiff. The defendant denies it, the court finds it, and yet a very large number of questions designed to prove the contrary, and admissible for that purpose, were excluded, against the defendant’s objection and exception. This was error, and, irrespective of the other questions in the case, demands a reversal of the judgment.

The recitals in the second contract, inserted by Mr. Hill, to the effect that Miss Mather was satisfied with his business ability and with the general outcome of the contract just expiring, do not preclude the defendant from insisting that he has not fulfilled his obligations thereunder. She does not seek to vary or contradict the recitals. They were true when made. She was satisfied then; but with subsequent information has come dissatisfaction. Under the circumstances of this case the principles enunciated in Cooks v. Barker, 49 N. Y. 107 , and Kenney v. Aitken, 9 Daly, 502 , have no application.

The plaintiff insists that if the defendant wishes to rescind the second contract on account of fraud under the first she must return the $16,000 which she received under such prior agreement. As to this suggestion, it is to be observed that the question here is not.one of rescission, but whether the case calls for the equitable interference of the court by way of injunction; and, further, that the defendant was paid, not a stipulated salary, but a percentage of the net profits of her performances under Mr. Hill’s management, and

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claims that she has not received all of said profits to which she was entitled. If it be true that the plaintiff had, in part, deprived the defendant of her share in the profits under the first contract, and had committed the other breaches thereof which the defendant alleged in her answer, and in ignorance of which she entered into the second contract, then the plaintiff’s case lacks the equitable elements which must exist to authorize the intervention of the court in his behalf by injunction? Whether the allegations to this effect are true or not cannot properly be determined without considering much of the evidence which was offered by the defendant, but excluded, and in consequence of its exclusion the judgment must be reversed, and a new trial granted.

With reference to another trial it may be well to say a few words in regard to the point made by the learned counsel for the defendant that the contract is not mutually binding upon the parties. We do not think it is bad for want of mutuality. That objection might apply to the second contract if it stood alone, but not when it is considered as a continuation of the first. In the first contract Miss Mather undertook to act under the management of Mr. Hill in such plays as he might produce, in such cities and theaters, and at such times, as he might direct, “to commence on or about June 4, 1881, and continue during the acting weeks of six years.” Mr. .Hill accepted “the above contract on the terms and conditions therein stipulated,” and bound himself to pay Miss Mather 25 per cent, of the net profits for the season commencing on •or about September 1, 1882, and 50 per cent, during each season thereafter. It seems to us that the contract fairly imports an obligation on the part of Mr. Hill to produce plays enough to give Miss Mather employment in “the acting weeks” of every year, which presumably means during the ordinary •dramatic season; but, for th.e reasons previously given, the judgment should be reversed, and a new trial ordered, with costs to the appellant to abide the event. All concur.

Cases cited

Cocks v. Barker 49 N. Y. 107 N.Y. 1872-04-02 p. 478