Gray v. Bowen — 23 N.Y. Super. Ct. 67

Majority

p. 67

John A. C. Gray, Plaintiff and Appellant, v. Henry C. Bowen, Defendant and Respondent.

Headnote

1. In a written stipulation entered into during the pendency before a Referee, of trials in several actions, it was agreed by one of several plaintiffs and one of several defendants in such actions, that such trials should “proceed at once, be determined with all practicable dispatch, and .be fully ended, and judgment entered therein, on or before ” a certain day thereafter. Also, “ in case the judgments in both such actions shall both be in favor of the defendants therein * * as a compromise ” that such defendant should secure to such plaintiff, the payment of a certain sum, by installments, by giving his bond therefor; and that such plaintiff should pay the costs of such actions, and on payment of the bond, indemnify the defendants therein against the claims on whiclj they were brought, and transfer to such defendant certain securities and evidences of such claims.

Held, That the entry of such judgments on or before the day fixed in such stipulation, in case they were in favor of the defendants, was not a condition precedent to the right to demand the execution of such bond by such defendant.

2. An agreement by a plaintiff, with one of several defendants, that the cause shall be tried without delay, and if the defendants prevail, the defendant entering into the agreement shall pay the plaintiff a certain sum, and receive an assignment of the claims and securities on which the action is brought, is valid. The plaintiff’s stipulation to transfer the securities, is a sufficient consideration for the defendant’s promise to pay, in the contingency contemplated. Nor is such agreement void on grounds of public policy.

(Before Moncbief, Robbbtson and Monbll, J. J.)

Heard, October 15;

decided, November 29, 1862.

The relief demanded in this action, was to enforce an agreement on the part of the defendant, that- he would execute and deliver a bond to the plaintiff, and to recover payment of the amounts which would have become due thereon.

In 1856, the defendant became a special partner in a limited partnership known as the firm of Ely, Bowen & McOonnell; that firm failed, and in February, 1858, executed an assignment of their property to Isaac 0. Kendall, to pay all the creditors of such firm.

Prior to December, 1860, the plaintiff became the owner, or had the control of certain promissory notes of, and

p. 68

claims against such insolvent firm, amounting to $106,000 and upwards, such notes being given by them before their assignment. Prior to that date, he also commenced two actions in this Court; one against the defendant, upon some of such claims, seeking to charge him as a general partner of the firm of Ely, Bowen & McConnell, in which other persons were joined as plaintiffs, and the other members of such firm were joined as defendants. The other, in which the present plaintiff and others were plaintiffs, and the present defendant, and the- general assignee, (Kendall,) were defendants, was brought to set aside the assignment before mentioned.

While such actions were pending, and before the same had been brought to trial, the present plaintiff and defendant signed the following stipulation, entitled in both of such actions, and dated the 1st of December, 1860.

It is agreed by and between the above named plaintiff, John A. 0. Gray, and Henry C. Bowen, one of the defendants in the above two actions, to settle all the claims and obligations involved in said actions, and other claims and notes now held, owned and controlled by said Gray, (a schedule whereof is hereto annexed,) amounting in all to the sum of one hundred and six thousand dollars and upwards, as follows: The case now on the calendar of the Superior Court, and all issues therein embraced, are to be referred to Henry Mcoll, Esquire, as sole Referee, to hear and determine, and report thereon; the reference therein, as well as in the other ease against Kendall and others,

p. 69

shall proceed at once, and be determined with all practicable dispatch, and be fully ended, and judgment entered therein, on or before the first day of February next; and in case the judgments in said actions shall both be in favor of the defendants therein, then it is further agreed, as a compromise and settlement of all claims involved in said actions and between all parties therein, and specified in said schedule, that said Bowen will pay and secure to said Gray the sum of twenty-seven thousand dollars, by the bond of said Bowen for that sum, dated January 1st, 1861, and to be conditioned to pay the sum of nine thousand dollars, on or before the 1st day of April, 1861, and the balance in sums or installments of two thousand dollars each, payable on the first days of each month succeeding the month of April, and commencing on the first day of May next, with interest on all unpaid sums, from said first day of January; and the said Gray agrees to pay all costs and expenses in said suit and the trials thereof, except the costs of the defendants’ attorneys therein, which said defendants are to pay; and said Gray hereby undertakes and agrees to indemnify the said Bowen and the defendants in said action against all claims, demands and liabilities whatever, upon, on account of, or connected with the said notes and claims in said schedule, and to deposit all of said notes and claims, and the evidences of such claims, in the hands of William Allen Butler, Esquire, to be held by him and delivered up to said Bowen, to whom the said notes and claims, and all rights and property therein, are hereby assigned and transferred upon the payment of the said bond; and it is further agreed, that all questions of difference arising under this agreement shall be submitted to and decided by the said Butler, and that his decision shall be final and binding upon both parties hereto, William H. McOonnell having been released from all personal liability on said notes and claims.

Dated New York, December 1st, 1860.

Jno. A. C. Gray

H. C. Bower.

p. 70

At the time of such stipulation, the action brought against the defendant and his partners, had been referred to the Referee mentioned therein, and its trial was then pending before him. The trial proceeded before such Referee, and in the course, of it he was attended by both parties and their counsel. He made his final report in favor of the defendants, in both actions, but not until June, 1861, and on the 25th of that month, .judgment was entered in their favor. Nothing was done in such actions before the Referee, by either party, except the examination of one witness, until the early part of'April, 1861, when the trial was proceeded in, after various adjournments. It was concluded in the. beginning of June. During such reference the plaintiffs’ counsel notified, the defendants’ counsel that'he was proceeding under .such agreement, to which .the latter assented. . Ho evidence, was offered either of any delay by the plaintiffs’ counsel, except'his omission to proceed in such trials, or of any attempt by the defendants’ counsel to expedite them. Mr. Butler, the arbitrator proposed in such agreement, was notified by the plaintiff and defendant of the settlement, a day or two before the stipulation was signed, and of the intention to' place -in his hands the securities mentioned therein. . They were so placed^ apparently at various times, until asíate as March, 1861. It did not appear whether any of them weró not or were so deposited before the 1st of February, 1861. The plaintiffs’ counsel in such actions, was prevented by illness from proceeding in the trial thereof, until April, 1861. •

This action was tried before a single Justice, at Special Term, without a Jury. Upon such trial he found, in his decision, as facts, £he making of the agreement contained in the stipulation in question, the recovery of judgments in June, 1861, in the actions mentioned therein; a demand on defendant for the bond mentioned therein, and a tender to him of such a bond for execution, and the defendant’s refusal to give it, and also a demand of the sums provided to be paid thereby. He also found, among other things,

p. 71

that such trials did not proceed at once, nor were they concluded and judgments entered therein with all practicable dispatch; nor before the 1st of February, 1861. Also, that the time mentioned in the agreement was important to the defendant, and was of the essence of the contract and not caused by his default; and that the securities specified were not placed in Mi;. Butler’s hands until March, 1861; and that the plaintiff gave no indemnity beyond the agreement, and that no submission of any matters in dispute, were offered to Mr. Butler. The Court placed its decision in favor of the defendant, solely upon the ground that time was of the essence of the contract, and the agreement not being performed within the prescribed time, the plaintiff could not maintain the action, and accordingly granted judgment dismissing the complaint.

From that judgment an appeal is now taken.

Joshua M. Tan Cott, for plaintiff, appellant.

I. The judgment erroneously assumes that the stipulation as to time is a condition. Also that the stipulation was made by Gray, and not by both parties, whereas it is mutual. The decision also erroneously assumes, that time (as to entry of the judgments) was of the essence of the contract, whereas it was not. (See Dumond v. Sharts, 2 Paige, 182; Add. on Cont., [ed. of 1847,] 197; Adams’ Eq., 88; 1. Sugd. on Vend., [10th ed.,] 406, 429-435; 1 Story’s Eq., § 776.)

Again, even if time had been a condition, or of the essence of the contract, it could be and was waived. An act inconsistent with an intent to insist upon a condition, waives it. (Young v. Hunter, 6 N. Y. R., 203; Carpenter v. Blandford, 8 B. & Cr., 575; Smith v. Trowsdale, 77 E. C. L. R., 83.)

(1.) There was an express waiver by Bowen’s counsel. And his retainer authorizes this. (Thomas v. Harris, 3 Hurl. & N., 961; Gibbs v. Ralph, 14 Mees. & W., 804.)

(2.) Bowen treated the' contract as in force, and took a

p. 72

benefit under it, by receiving the Referee’s fees from Gray. (Penniman v. Elliott, 27 Barb., 316 ; Bennett v. Judson, 21 N. Y. R., 238.)

(3.) The circumstances are sufficient evidence of waiver.

(4.) The record in Gray v. Kendall, introduced by the defendant, conclusively proves Bowen’s waiver of time and affirmance of the compromise. (Cutler v. Wright, 22 N. Y. R., 472.)

Edwards Pierrepont, for defendant, respondents

I. A suitor in equity who seeks to enforce specific performance, must show performance on his own part, and that the agreement is equitable. (Colson v. Thompson, 2 Wheat., 336 ; Acker v. Phœnix, 4 Paige, 305.)

II. There is a total failure of performance on the plaintiff’s part.

III. Time was of the very essence of this contract; the judgment which was, to have been entered “ on or before the 1st of Feb.,” was not entered until the last of the following June, and without fault of the defendant. (Mitchell v. Wilson, 4 Edw., 697 ; Wells v. Smith, 7 Paige, 22.)

IV. The plaintiff did not give the indemnity to Bowen and the other defendants, as he agreed to do; nor did he submit the matter to Wm. Allen Butler, Esq., or offer to submit it; nor did he even place all the notes in Mr. Butler’s hands until after the time had passed for the entry of the judgment, as agreed.

V. That in case of difference, there should be a submission to Mr. Butler, and thus save the harassment and injury to the credit of the defendant which a suit might cause, was an essential part of the agreement, and without which Mr. Bowen could never have been induced to sign the contract.

VI. But the agreement itself is void, and can never be enforced in a Court of equity.

1. It is without consideration, and it is not under seal.

2. There is no mutuality. Gray does not agree that

p. 73

judgment shall go against him at all. (Chitty on Cont., [10th Am. ed.,] 14; German v. Machin, 6 Paige, 288.)

VII. This was not a settlement of an honest suit, for if judgment went for the defendant, then, surely there was nothing for him to settle. (Ford v. Adams, 2 Barb., 349 .)

VIII. The whole contract is illegal, against public policy and void. The law will leave the parties where they have placed themselves; it will not aid either party. (Hooker v. Vandewater, 4 Denio, 349 ; Hilton v. Eckersley, 32 E. L. & Eq., 198; Mount v. Waite, 7 Johns., 440 .)

This case turns upon the solution of two questions:

First. Whether the entry of a judgment in favor of the defendants in the two actions mentioned in the agreement in question, before the 1st of Eebruary, 1861, was a condition precedent to the plaintiff’s right to the bond of the defendant therein specified.

Second. Whether such condition was waived.

The reasons for not considering the entry of such judgment by the day fixed to be a condition are numerous and weighty. No qualification of such time is expressly affixed to the giving of the bond, the only condition attached is “ in case the judgments in both actions are in favor of the defendants.” The stipulation as to the time of entering the judgment is entirely separate and independent, and applies as well to a judgment in favor of the plaintiffs as of the defendants; no duty is imposed upon either of entering it up. At all events, it hardly contemplated the entry by the plaintiffs, of a judgment-in favor of the defendants, after a trial, so as to give the present plaintiff a right to such bond. If the object had been simply to facilitate the defendants in such actions, in obtaining judgment in their favor, it is difficult to conceive why both parties were to remain exposed to the hazard of a litigation. An immediate retraxit would have answered every purpose of that kind. The right to go on in such actions and endeavor to make the defendants liable, was evidently retained, therefore, for

p. 74

the plaintiff’s benefit, as was also- his right to the bond, if defeated. Yet, the prospect of getting such bond was held out as an .inducement for him to relax his efforts. He could make his election at any time to abandon his action, or his right to the bond of the defendant. • If it was within the duty and power of any one, therefore, to expedite the judgments, in order to complete the obligation to give the bond, it was that of the plaintiff.

Even if such stipulation, however, had expressly required the plaintiff to procure such judgments to be entered by a fixed day, unless the giving of such bond was made expressly to depend on that act, it would not be a condition precedent. Most of the cases in regard to the independence of such stipulations have arisen on charter-parties or agreements to pay freight. An agreement by the plaintiff that his vessel should sail by the next wind, was held on demurrer to the defendant’s plea of his not so sailing, not to make his so sailing a condition precedent to a right to a sum of money agreed to be paid by the defendant, if he went such voyage and returned. (Constable v. Cloberry, Palm., 397; Bornmann v. Tooke, 1 Camp., 377). A like decision was made in regard to an agreement to sail by the first convoy, where the defendant’s agreement was in consideration of “everything before mentioned.” (Davidson v. Gwynne, 12 East, 381.) A like decision had been made in regard to an agreement to sail on or before a certain day. (Hall v. Cazenove, 4 East, 476.) .It was noticed, in the case from Palmer, that the words were not “if the plaintiff would sail by the next wind” the defendant would pay. In Davidson v. Gwynne, (ubi sup.,) it was said that the voyage was the main object, and the sailing by the first convoy a mere covenant sounding in damages, which was also the view taken in Hall v. Cazenove, (ubi sup.) In the present case, the rendering judgment for the defendants is evidently, as well as expressly, the main object and consideration for giving the bond. The time is a mutual covenant, the only sanction for which is, either giving damages or power of resisting a postponement.

p. 75

Another consideration which strengthens this view is that, besides the recovery of judgment by the defendants, the plaintiff was to pay the costs of the suits, and deposit certain securities with a third party, (Mr. Butler,) to become the defendant’s property. ¡No time was fixed for those acts, and, unless the defendants succeeded, the plaintiff was not bound to do them at all. He clearly was under no obligation to do them by the first of February; yet they were as much rendered conditions precedent, as the recovery of the judgment. Doing within a reasonable time is not sufficient, since the defense is the failure to enter on the exact day. ,The entry of such judgments, after the day fixed, clearly could not preclude the plaintiff from all rights under the agreement, since the mere entry at any time secured under it the defendant’s right to indemnity against the claims in such actions. (Kingdon v. Cox, 2 C. B., 661 ; 15 L. J., [C. P.,] 95; Payne v. Banner, 15 L. J., [N. S.,] 227.) Time, therefore, could only have been.of the essence of the contract, if it had been entire and indivisible that the bond was only to be given in case the plaintiff .procured judgments, to be entered against Mm and his co-plaintiffs, paid the expenses, and transferred the securities by the day fixed. (Addison on Cont., [2 Am. ed.,] 875.) As the contract stood, it was not.

I do not see that the plaintiff’s want of original ownership of the claims sued, on, the effect of such actions on the defendant’s standing, or that of his firm, can have any bearing on the rights of the parties. The right to buy and collect notes was a legal one. If a speedy determination of such actions was important to the defendant, he should have served it by an agreement more effectual for that purpose, or by pressing it on. If he-is injured, and the stipulation be one on which an action can be maintained, he has his remedy for it. As things occurred, he acquiesced in a delay from December to April, without a movement on his part. The illness of his adversary’s counsel was no excuse for his delay.

Unless the record in such former actions be evidence of

p. 76

a waiver of any condition, (Cutler v. Wright, 22 N. Y. R., 472,) the evidence of it is slight. There is no precision in the testimony of the plaintiff’s attorney as to the time of his notifying the attorney for the defendant, of his proceeding under the agreement in question. The payment of the Referee’s fees was a voluntary act, and it does not appear by whom the judgments were entered up. If, by the defendants, it might amount to a waiver, upon the principle of Havelock v. Geddes, (10 East, 564,) where employing a vessel, before the acts required to put her in a certain condition were done, was held to be a waiver of the doing of such acts as a condition precedent to such employment.

The agreement to transfer, or indemnify the defendants against, claims amounting to $106,000, was a sufficient consideration for the promise to give the bond. If the defendant succeeded in procuring the recovery of judgments in his own favor, he was entitled, under such agreement, to such transfer, upon tendering such bond, which was of far less amount, without regard to the' time of recovering such judgments. It was, in'fact, a stipulation not to appeal; the entry of the judgments was to be sufficient, and the defendants could have enforced the contract forthwith. Bor is it sound to say that if judgment went for the defendant, there was nothing left for him to settle. The plaintiff would have still retained his claim for a share of the estate, against the partners and assignee of the defendant, which would, in this case, become the property of the defendant by such transfer.

I do not find in such agreement any of the elements of a perversion or obstruction of justice, or the due administration of the laws. The parties to an action have a right to dispose of any rights to result from it, as they may think proper. The plaintiff had a right to agree to allow judgment to be taken against him by default, or on an omission to sustain his claim. The defendant had a right to agree to hold out to him the prospect of receiving his bond, as an inducement for the plaintiff to relax his efforts, and

p. 77

both parties had a right to agree to make the exchange of securities for such bond depend on the result of such action.

The foregoing views would be sufficient to enable the plaintiff to recover in an action at law against the defendant the value of the bond, as damages for not performing his agreement. He has also a right to join the equitable action, to compel the execution of the bond with the legal one for damages upon it, if executed according to the terms of the agreement. (N. Y. Ice Co. v. N. Western Ins. Co., 23 N. Y. R., 357. For these reasons, the judgment must be reversed, and a new trial had. The costs are to abide the event.