Havemeyer v. Havemeyer — 45 N.Y. Super. Ct. 464

Majority

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HENRIETTA C. HAVEMEYER, Plaintiff and Respondent, v. JOHN C. HAVEMEYER, et al., Defendants and Appellants.^[1]

Headnote

I. POOLING AGREEMENT.

1. Construction of.—Rights and duties of parties under.

{a) Defendants, owning and controlling a certain amount of a certain stock, and plaintiff, with others, owning a certain other amount of the same stock, entered into an agreement, whereby it was agreed that neither quantity of stock should be sold, unless it was in a sale that included the other, and whereby defendants authorized plaintiff’s agent to sell to P. the stock which defendants owned and controlled, for 75 per cent, of its nominal value, and certain bonds owned by them for 90 percent-. of their nominal amount in cash, if P. should put his offer to pay that in writing; and whereby defendants further agreed that during the negotiation they would neither buy stock, nor do anything else to interfere with the negotiations.

Held,

1. That upon the evidence, taking it most favorably for the plaintiff, the negotiations referred to in the agreement were only those for a sale to P. on the terms specified in the agreement.

2. That upon P.’s declination to purchase on the terms specified in the agreement, and the communication to defendant, by plaintiff’s agent, of such declination, with no intimation that he (plaintiff’s agent), was about to go on with negotiations with P. to effect a sale to him, the negotiations, pending which defendants agreed to inaction were at an end; and defendants were at liberty thereafter . to make such purchases as they might desire.

3. If it is claimed that a purchase by defendant of a quantity

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of the stock pending the negotiations is a breach, plaintiff should show,

(a) That such purchase did interfere with the negotiations.

(5) The damages resulting from the effect of that breach. The damages recoverable would be proportioned to the proved effect of the breach.

4. A letter sent by plaintiff’s agent to P., and answered by P. before the making of the agreement (defendants being ignorant of the letters), in which letter plaintiff’s agent stated to P.: “I desire to work in your interest, and not in the interest of those who have the present control. I desire to sell the stock I control, and though I cannot commit myself just yet, I would sell it, at the average price you pay for the balance, which, with mine, would give you a majority of it. I advise you of this, that you may feel assured that if you contemplate purchasing the road, you may depend on the 10,000 or 12,000 shares I hold. . . . I would willingly assist you, if you think I can, in getting the majority of the entire stock ”—P. in answer says: “Thanking you for kind offers of assistance, we will, if necessary, make use of them ” (the offer contained in the letter of plaintiff’s agent not having been withdrawn) —absolved defendants (who were included among those in control), from any duty or obligation they might otherwise be under in respect of the clause for inaction.

5. The negotiations with P. for a sale on the terms stated in the agreement, having come to an end, nothing remains of the agreement, except the provision that neither lot should be sold without the other.

(a) This part of the agreement (the others having ceased to be operative), could be terminated by either party on notice to the others, and the plaintiff’s request for leave to sell separately, acceded to by defendants, annulled the agreement in this respect.

1. This, though plaintiff, at the time of the request, was not aware that defendants had purchased a large quantity of stock, which, with that before held by them, constituted a majority.

II. Damages, measure of.

1. Combining stock, damages for breach of agreement to.

(a) Value of stock before breach—charge as to.

1. Although the price paid on a sale, which is claimed to constitute a breach of an agreement for a combination of

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stock, is competent evidence of the value before breach, and the judge charged the jury that in determining the market value at the time of the breach, they were at liberty to consider the price paid on the sale claimed to constitute the breach, but were not concluded by it, but should consider it in connection with the other evidence on the subject, yet it appearing that the sale was one which gave to the purchaser a majority of the stock, and the complaint stating that the person who became the purchaser, in making" the purchase, desired to control a majority of the stock, and for that purpose would pay a larger price than after bis purchase could be obtained, and there being evidence tending to prove that without a combination, which would constitute a majority, there was no market value for the stock, and that on a combination of a majority of the stock, a higher price could be obtained, a refusal''to charge “that in estimating damages the jury cannot take into account any mere chance of making uncertain profits, nor any speculative value arising from or depending upon the possibility of the plaintiff combining her stock with that of other persons.”

Before Sedgwick, Speir and Freedman, JJ.

Decided December 1, 1879.

Held,

sufficient cause for a new trial.

Appeal by defendants from judgment and from order denying motion for a new trial.

The complaint stated that Albert Havemeyer died possessed of certain shares of stock of the Long Island Railroad Company. That his administrators, acting by one of them, Henry O. Havemeyer, agreed, in April, 1875, with the defendants, who owned other shares of the stock of the same railroad, that “neither the defendant’s stock nor the Albert Havemeyer stock should be sold, or should unite in a sale which should not include the stock of the other party, unless with the consent of that party that in August, 1875, the Albert Havemeyer stock was partly divided among the distributees of his estate, one of them being the plaint

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iff, and the administrators continuing to hold certain shares which the intestate had held in trust.

That in November, 1875, the said Harry O. Havemeyer, acting for the parties in interest, secured definite proposals from one Poppenhusen for a purchase of the whole of the stock. “He immediately communicated with the defendants on the subject; thereupon the agreement that neither lot of stock should be sold without the other was reiterated between the parties ; and it was further agreed that the said Harry O. Havemeyer, acting as aforesaid, should proceed with the negotiation for a sale to Mr. Poppenhusen ; that the defendant should aid by obtaining the union of other holders, and that if Mr. Poppenhusen were willing to pay at the rate of seventy-five per cent, of the par value, a sale should be made, and that the defendants would.join.”

The breaches of their alleged agreements are that about December 14, 1875, “ an offer was obtained from Mr. Poppenhusen which would have secured to the defendants, and the parties represented by them, at the rate of seventy-five per cent for- their stock. This was communicated to the defendant, and thereupon the defendants, in violation of their agreement previously made, declined to join in the sale.”

Another allegation, which may be taken to be a charge of a breach, wras that subsequently, and on or about January 26, 1876, the defendants did sell to Mr. Poppenhusen, including their own stock and the stock of other parties, making altogether about thirty-five thousand shares, leaving out the Albert Havemeyer stock.

Further allegations, containing matters upon which the plaintiff, at trial, relied, as making a breach, were that while the defendants were professing to co-operate, and werd thus preventing the parties interested in the Albert Havemeyer stock from acting independently to

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effect a sale, they were themselves using the time to, and they did, make an arrangement with holders of stock, with whom they volunteered to communicate for the common benefit, so as individually to represent and control their stock, and particularly the stock which had belonged to Mr. Charlick, “ which was not in the arrangement previously referred to. They thus secured the control of a majority, exclusive of the Albert Havemeyer stock: this enabled them to, and they used it, to defeat a sale, which should include the Havemeyer stock, thus causing to the parties interested in that stock the very loss and jury which it had been the object of the arrangement and agreements between them and the defendants to prevent.”

On the trial, Harry O. Havemeyer, a witness for the plaintiff, who was her agent through the transaction, testified as follows: “in April, 1875, I stated to defendant (J. C. Havemeyer), that I wished to combine it (that is, the Albert Havemeyer stock) with his, with the view of selling it at the earliest possible time, that there was no market for it unless it was combined with enough of the stock to form a majority, and I wished to combine, so that his stock should not be sold without mine, and my stock should not be sold without his, as our influence together was sufficient to control the other fifteen thousand shares so as to form a majority. He stated that he was perfectly willing to enter into such a combination, provided the management of the road should go into their hands.” On his direct examination, he was asked, “ Will you state all that was said on the subject of an arrangement to unite the stock which you represented with any stock which John C. Havemeyer stated he or the defendants represented or controlled, .in that interview % ” His answer was, “We were to unite the stock; I said that I wished to combine my stock with his and the stock he repfésented in these fifteen thousand shares to oust Mr. Charlick

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from the management of the road, to combine it, and that neither part of the stock should be sold without including in the sale the other, to combine it so that when an opportunity offered for its sale, that a majority of the entire road could be sold, and thereby bring a higher price. He said that he was perfectly willing to enter into such a combination, provided I gave him the management of the road. . . .' I said I would consent to that.”

The witness stated that he began negotiations for a sale of a majority of the stock to Mr. Poppenhusen, that in the course of them the defendants had expressed their willingness to sell their stock at seventy-ñve per cent, and certain bonds of railways they owned at-ninety per cent. He said he began these negotiations in September, 1875, and continued them down to December 15, 1875. He further said that on November 24, 1875, he had an interview with the defendants, and that “ I told John I had called to renew our agreement, and that I wanted him to state again, that he would sell his stock at seventy-five cents and his bonds at ninety cents, and I wanted also his brother Henry to say so : that the negotiations had reached a point where they were to be consummated, and I did not wish to have any misunderstanding about it. , . . I said then, John, you authorize me to sell a majority of the stock at seventy-five cents and the bonds at ninety cents. He said he did. I addressed the same question to Henry, and he said yes. I said this is a transaction, that involved $1,250,000 and they must pledge themselves not to have any transaction in the stock in any way ; that they must neither buy nor sell; that the position must remain exactly as it was as in the event of its not being sold, the position was to remain unchanged . . they stated that they would . . all this was acquiesced in.”

The question was then asked, on the direct ex

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amination, “ At that interview, were the terms of what you call the agreement repeated, and if so, what was said upon the subject of what the agreement was ? You said, you wished to renew the agreement ?” The witness answered, “I recall that John stated, 1 Suppose you cannot get the price, suppose the negotiations fall through V and I stated that the affair was to remain as it was, until some arrangement is made, and he stated that was all right.” The witness testified that the defendants required that Poppenhusen’s proposition to buy must be in writing’.

In a deposition taken in another action the witness testified in reference to the interview of November 24: “John G. Havemeyer said that pending the negotiations with Messrs. Poppenhusen, they would have no transactions in the stock in any way, shape or manner, neither buy nor sell, nor do anything to depreciate. I stated the same, that I did not wish to have anything transpire that would interrupt the negotiations, neither were to buy or sell or have anything to do, the situation should remain just as it was. Q. What, if anything, was said about how long any such arraagement should continue; what was said about time in that interview ? A. Pending the negotiations nothing was to be done, no stock was to be bought, no stock was to be sold. Q. Was any period of time mentioned in the interview having reference to any matter; was anything said about time that you now recall in that interview ; I mean about some time in the future ? A. In the event of the sale not being consummated, we were to meet and decide what to do with the stock. Q. I wish to know whether, in reference to any subject mentioned in that interview, you talked over any fixed and definite period of time or number of years, during-which anything was to continue ? A. Nothing was to be done pending the negotiation, that is a matter of time; in the event of their not being successful the

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situation was to remain, as it always had been, until some other arrangement had been made ; that was the understanding. Q. With reference to that, was any number of years spoken of? A. Three, I think. Q. If it was said in that interview what was to be done or what was not to be done for three years or any other number of years, I want you to state to the jury what was said. A. I recollect of something being said about three years. I don’t exactly recollect what it was.’’ On the present trial, the witness was not able to testify that a period of time of the kind referred ,to had been mentioned, or if it had been, to what it was applied.

The testimony in reference to supposed breaches of agreement, by defendant, was in substance, that on ¡November 19, one of the executors of Charlick, on request of defendant, called at the house of defendant Henry H., in reference to the Charlick stock. There was another interview on ¡November 26, or 27. The definite purpose of these interviews, or what was done at them, is not disclosed by the evidence. The plaintiff read as evidence on her own behalf, from the deposition of one of the defendants on this point the testimony: “ We went to learn, first, whether they had been approached for the sale of their stock ; second, what the feeling of Mr. Charlick was toward us, whether friendly, and whether they were willing to sell, and if so, at what price.,” The stock of Charlick’s executors was, after several other interviews, purchased by the defendant on December 11. On Debember 15, plaintiff’s counsel wrote to defendant: “To prevent the possibility of misunderstanding, I think it better to put in writing what passed between us, this morning. What I asked was, whether you desired to join in the sale of the L. I. E. E, Co. Your answer was you did not.” To this one of the defendants made a memorandum: “I declined to join in further

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negotiations for the sale of the L. I. stock I hold and control.”

About January 25, 1876, the defendant sold the stock they owned and controlled to Poppenhusen, for 75 cents on the dollar.

The testimony on which the defendant relied as showing that, if there were an agreement of the kind testified to by the plaintiff’s witness, the plaintiff had committed the first breach, was in substance as follows. Before the interview of November 24, the plaintiff’s agent, H. 0. Havemeyer, had written to Mr. Poppenhusen the following letter :

“Dear Sir :—A Mr. Godefroy has had some conversation with me, regarding the stock held by the estate of the late Albert Havemeyer. Will you be kind enough to inform me, if you contemplate purchasing a controlling interest in the Long Island Railroad? Not knowing Mr. Godefroy, I am not sure that he is authorized to represent you in tipis matter.

“ What you choose to tell me, will be regarded strictly as confidential, as in this matter I desire to work in your interest, and not in the interest of those who have the present control. I desire to sell the stock I control, and could sell it, though I cannot commit myself just yet, at the average price you pay for the balance, which, with mine, would give you a majority of ib. I advise you of this, that you may feel assured, that if you contemplate purchasing the road, you may depend upon the 10 or 13,000 shares I hold.

“The sale of this stock is of such importance to the persons I represent that I would willingly assist you, if you think I can, in getting the majority of the entire stock. An early reply will oblige.

“ Yours truly,

“H. O. HAVEMEYER.”

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On the same day, and before the interview with the defendant on that day, Mr. Poppenhusen wrote to Mr. H. O. Havemeyer:

“In reply to your favor of to-day I beg to say, that Mr. Grodefroy is authorized to act for us, in the matter of L. I. R. R. stock.

“Thanking you for kind offers of assistance in the matter, we will if necessary make use of them.”

The defendants were not informed of this letter or answer.

The explanation by Mr. H. O. Havemeyer of his letter was, that shortly before his writing it he had been told by Mr. Grodefroy, that the defendants would be treacherous to him, and he wrote this letter, that he might proceed to sell the Albert Havemeyer stock, if they were treacherous, or, as stated by the learned counsel for plaintiff, “ he explains that the reference was to the agreement between him and the defendants, which made it impossible for him to sell, and that the letter was written on an apprehension that the defendants intended to act treacherously, so that if they did, he might be in a position to protect himself so far as possible.”

Prom November 24, Mr. H. O. Havemeyer proceeded to negotiate with Mr. Poppenhusen for a sale of the stock and bonds, on the terms limited by the defendants. On December 2, Mr. Poppenhusen wrote to Mr. H. 0. Havemeyer, ‘ ‘ I beg to inform you, that your proposition of yesterday, made to me verbally, cannot be accepted, but that we should be willing to close the matter on the basis submitted to you this morning.”

On the same day, December 2, Mr. H. 0. Havemeyer wrote to the defendants :

“The proposition for the sale of the L.. I. stock

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and bonds to Mr. Poppenhusen has been declined by him, and he has submitted one in return, which I have not submitted to you, for the reason that yon expressed no desire to entertain anything different froth that agreed upon, viz., cash.”

After that time, the defendants gave no authority to Mr. H. O. Havemeyer to sell the stock held or controlled by them, but he made some negotiations with Mr. Poppenhusen on the subject, and received an offer upon terms which the defendants had not agreed to take.

Before the letter of plaintiff’s counsel, written. December 15, Mr. II. O. Havemeyer, on December 14, saw one of the defendants and said, “I have sold the road.” He referred to a sale which he supposed Mr. Poppenhusen would make on other terms than those that had been agreed to by the defendants. The defendant answered, “ Ido not wish to sell.” I remonstrated with him. He said, “I don’t wish to sell.” I said, “Do I understand you to say yon will not sell? ” He said, “I will not sell.” Then I said, “I suppose I am at liberty to sell my stock.” He said, “ You are.” Then I left him. That was the last conversation he ever had with the defendants.

Immediately thereafter, Mr. H. 0. Havemeyer endeavored to sell the Albert Havemeyer stock, irrespective of the defendants’ stock.

At the request of the plaintiff’s counsel, the court charged: “First. If the jury find, from the evidence, that before the election of April 13, 1875, there was an agreement between the defendants and Harry O. Havemeyer, he acting for the parties interested in the Albert Havemeyer stock, by the terms of which the stock represented by Harry 0. Havemeyer and that which the defendants represented that they owned and controlled, should be combined for the purpose of improv

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ing its value by a change in the management of the road, with a provision that neither stock should be sold without including the other—that such agreement was made in view of the danger that either lot of stock might unite in a sale to Poppenhusen, leaving out the other, and that thereby the other would lose the benefit of a sale at a full price, and might become largely depreciated in value ; that in pursuance of such agreement the management and control of the road passed into the hands of the defendants ; that this agreement was renewed in the fall of 1875, after the division of the Albert Havemeyer stock, and the transfer to the plaintiffs of the nine hundred and twenty-six shares, Harry O. Havemeyer still continuing to represent the Albert Havemeyer stock, and that a further agreement was then made, that if a sale could be effected at seventy-five cents on the dollar, the defendants would include the Albert Havemeyer stock and the stock which they owned and controlled, and that the negotiation of such sale should be put in the hands of Harry O. Havemeyer, with a further provision that, during the negotiation, the defendants should neither buy stock, nor do anything else to interfere with negotiations ; and if the jury are further of the opinion that such agreement was broken by the defendants,—then they are responsible in damages for the loss which thereby resulted to the plaintiff. Second. If the jury find, from the evidence, that, while Harry O. Havemeyer, and the parties represented by him, were acting according to the provisions of such agreement, and were negotiating for a sale, the defendants were engaged in making preparations to enable them successfully to break it, and to defeat a sale of plaintiff’s stock ; that, for that purpose, they procured the undivided control of some seven thousand shares of stock held in Philadelphia, that they purchased the Charlick stock, consisting of some nine thousand and odd shares

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at sixty-five ; that as soon as they felt themselves strong-enough to defeat the agreement they refused to unite in the sale, but, instead, made arrangements with other stockholders, by which they were enabled to combine a majority of the stock, excluding the Albert Havemeyer stock, but including the defendants’ purchased stock; that they then sold to Mr. Poppenhusen at seventy-five cents on the dollar ; then the plaintiffs are entitled to recover the difference between the fair cash and market value of the plaintiff’s stock at the time of the breach, and the amount to which the value was reduced by the action of the defendants, with interest.”

The court also charged : “ Th.e plaintiff also claims that on November 24, 1875, after the division of the Albert Havemeyer stock among the next of kin entitled thereto, and the transfer to the plaintiff of her nine hundred and twenty-six shares of stock, the agreement of February, 1875, was renewed, in so far as it-prohibited those interested in the stock derived from Albert Havemeyer and the defendants from selling ox-uniting in a sale which should not include the stock of the other parties, unless with the consent of the other party; that it was further agreed at that time, between Harry O. Havemeyer, as the representative of the Albert Havemeyer stock, and the defendants, that if sale could be effected at seventy-five cents on the dollar, the defendants would include the Albert Havemeyer stock and the stock which they themselves owned and controlled; that the negotiation should be put in the hands of Harry O. Havemeyer, with a further proviso, that pending the negotiation for a sale, the defendants should neither buy stock nor interfere with the negotiation.” And that, “if it be px-oved by the evidence, that such an agreement was actually entered into by the defendants with those who owned and had the right to control the disposition of the Albert Havemeyer stock, and such agreement had not been

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abandoned by the parties, and was subsisting and in force, when the defendants purchased - the Charlick stock in December, 1875, and sold their stock to Poppenhusen in January,'1876, and such purchase and that sale was made without their consent, then there is such a breach of the agreement as will entitle the plaintiff to recover damages.”

The j ury found a verdict for plaintiff.

G. W. Bangs, attorney, F. N. Bangs and John K. Porter, of counsel, for appellants.

J. Hampden Dougherty, attorney, and John E. Parsons, of counsel, for respondents.

An outline of the case is that the plaintiff, and others, were the owners of a quantity of the shares of the stock of the Long Island Railroad Company. The defendants owned and controlled another quantity of that stock. The plaintiff and her associates, acting by an agent, and the defendants agreed that neither quantity of stock should be sold, unless it was in a sale that included the other quantity, and the defendants then authorized plaintiff’s agent to sell to Mr. Poppenhusen the stock which defendants owned and;' controlled, for seventy-five per cent, of its nominal value, and certain bonds owned by them for ninety per cent, of their amount, in cash, if Mr. Poppenhusen should put his offer to pay that in writing. The defendants further agreed that during the'negotiations for the sale, they would neither buy stock nor do anything else to interfere with the negotiations.

Plaintiff’s agent then began negotiations for a sale-on these terms. While they were on foot, the defendants had interviews with the executors of Mr. Charlick, to learn if they would be willing to sell to the defendants stock of the same railroad owned by the executors,

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and on what terms. On December 2, the plaintiff’s agent wrote to the defendants, that Mr. Poppenhusen had declined the proposition for the sale of the stock and bonds, but had submitted5 one in return, which the agent did not submit to the defendants, for the reason that they had expressed no desire to entertain anything different from that agreed upon, viz.: cash. On December 11, the defendants bought from the executors of Charlick, their stock, at sixty-five per cent, of the nominal value. On December 14, the plaintiff ’ s agent, in ignorance of ,the purchase of the Charlick stock, obtained from the defendants leave to sell the stock in which plaintiff was interested, by itself, and proceeded to attempt to sell it without including defendants’ stock.

On January 26, 1875, the defendants sold to Mr. Poppenhusen the stock owned and controlled by them for seventy-five per cent, in cash. The plaintiff claimed that the purchase from Charlick’s executors and the sale to Mr. Poppenhusen, were violations of defendants’ obligations to plaintiff.

After all the evidence was in, the defendants’ counsel moved to dismiss, upon several grounds. One of them was that “even if the pretended agreement was made, continuing and valid, the purchase by the defendants of the Charlick stock on December 11 (the negotiation for a joint sale, pending on November 24, having ended on December 2), was not a breach of such agreement.” They also asked the court to charge, that 1 ‘ the evidence conclusively shows, that on or about December 14, 1875, and before the sale to Poppenhusen, which is complained of by the plaintiff, the plaintiff was by the consent of the defendants released from any further obligation, to hold her stock or keep it out of the market.”

A further request to charge was, that the conduct of the parties after" December 14, 1875, as established by

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undisputed evidence on the part of the plaintiff and given by the witness, Parsons, is inconsistent with the theory, that after that date there was any binding contract or obligation in force between the parties. They also asked the court to charge, that “ the purchase by the defendants, at the time and under the circumstances given in evidence, of the stock known as the Charlick stock, was not a breach of any contract established by the evidence to have been made at any time between the plaintiff and the defendants also, that “ upon the whole case, the defendants are entitled to a verdict.”

Beyond controversy, the complaint does not set out any contract of which the purchase of the Char-lick stock was a breach.

The court instructed the jury to find whether the parties, before April, made any arrangement with a provision “ that neither lot of stock should be sold without-including the other,” and whether this agreement “was renewed in the fall of 1875;” “and a further agreement then made, that if a sale could be effected at seventy-live cents on the dollar, the defendants would include the Albert Havemeyer stock, and the stock which they owned and controlled, and that the xiegotiation for such sale should be put in the hands of Harry O. Havemeyer, with a further provision that during the negotiation, the defendants should neither buy stock nor do anything else to interfere with negotiation.”

Of course, the purchase of the Charlick stock did not violate the provision, “ that neither lot of stock should be sold without the other.” Was it a violation of the other provision, that “during the negotiation the defendants should neither bay stock nor do any- • thing else to interfere with the negotiations ?” By the charge (and upon it the jury found for the plaintiff), the negotiations, during which the defendants agreed not to buy stock and not to do anything to interfere

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with negotiations, were “the negotiations for such sale.” The sale referred, to was one to be made for cash, at seventy-five per cent, for the stock, and ninety per cent, for the bonds, if a written proposition to buy on those terms should be made by Mr. Poppenhusen. The evidence shows that such was the sale, although the charge refers to it as a sale for seventy-five per cent, for the stock alone. The evidence, by the construction most favorable to plaintiff, shows that defendants’ promise referred only to negotiations for a sale of the kind that has been described. The witness, on this point, for plaintiff, was her agent, and he testified: “I told John . . I wanted him to. state again that he would sell her stock at seventy-five cents, and his bonds at ninety cents, and I wanted also his brother Henry to say so ; that the negotiations had reached a point where they were to be consummated.” After testifying to defendants’ consent to this, he continued, “ that they must neither buy nor sell, that the position must remain exactly as it was, as in the event of its not being sold, the position was to remain unchanged.”

It should be here observed, that the complaint did not state or base any claim, upon an agreement “that the position was to remain unchanged.” The plaintiff on the trial did not make any claim upon it; nor did the charge of the court leave it to the jury, or in any way refer to it. Its significance here, is to show, that the negotiations referred to were those for the specific sale mentioned in the testimony.

The witness proceeded to say, “I recall that John stated, ‘ Suppose you cannot get the price; suppose that negotiations fall through,’ and I stated then the affair is to remain as it was, until some new arrangement is made.”

The testimony of the witness on another trial, read on this was, “ I stated to John, that my negotiations for obtaining a bid for seventy-five for the stock, and ninety

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for the bonds would probably be successful, and, in connection with that,” John C. Havemeyer said that, pending the negotiations with Messrs. Poppenhusen, they would have no transactions in the stock in any way, shape or manner; neither buy nor sell, nor do anything to depreciate; I stated the same, that I did not wish to have anything transpire that would interrupt the negotiations.”

The next question is, did the evidence incontrovertibly show that the negotiations had ended, before the defendant bought the Charlick stock on December 11. On December 2, the witness wrote to the defendant this letter. “ Dear sir : The proposition for the sale of the Long Island stock and bonds to Mr. Poppenhusen has been declined by him, and he has submitted one in return, which I have not submitted to you, for the reason that you expressed no desire to entertain anything different from that agreed upon, viz: cash.” It must be seen, that the defendants were notified, that the negotiation for seventy-five cents for the stock, and ninety cents for the bonds in cash, had been ended by Mr. Poppenhusen declining to make the purchase, and making a counter proposition, which plaintiff’s agent did not think worth while even to describe to the defendants.

The letter gives no intimation to the defendants, that the agent was about to go on with negotiations. If he did so, they were new negotiations, for himself, and not authorized by defendant. There is no proof that before December 11, he ever informed defendants that he was continuing negotiations with Mr. Poppenhusen. He testified that he had one interview with the defendants between November 24 and December 14. He dbes not fix the date of this interview, or describe its contents, so that it would appear to refer to negotiations after December 2. On the other hand, his testimony was, that it might have occurred on the Monday after

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November 24. If there were in fact any negotiations of any kind, after December 2, there was no testimony that they were for a sale on the terms prescribed by «defendants, for, whenever the negotiations took place, the only testimony as to their character was such as •could be inferred from their consummation, viz., a written offer by Mr. Poppenhusen to buy on terms, which had not been acceded to, and which the defendants were not bound to accept as the court upon the trial charged. In this way it appeared on the trial by evidence, against which the jury could not find, that the negotiations referred to in the promise, had ended on December 2, and also that the agent of plaintiff had informed the defendants and led them to believe that they had ended. From this time, the defendants were not bound by any agreement to refrain from buying stock.

There was no proof that the purchase of the Char-lick stock, or the bargaining with the Charlick executors for its purchase “ interfered with the negotiation,” to use the words of this charge. No proof was given on the subject. Least of all, was there anything tending to show that this purchase or bargaining had the effect of influencing Mr. Poppenhusen to decline the defendant’s terms. If this had been a ground of a recovery by plaintiff, it would have been necessary to tell the jury that the plaintiff could recover for such damages only as the evidence showed she had suffered from that breach. The damages would have been proportioned to the proved effect of the breach.

Moreover, if the liability of defendant arose from their having “interfered with the negotiations,” the just conclusion from the evidence is that the conduct of plaintiff’s agent was such that the agreement on this point ceased to be binding upon the defendants before any alleged breach by defendants. On the day of the alleged agreement, and before it was made, the

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plaintiff’s agent wrote to Mr. Poppenhusen the letter of November 94, and also received an answer to it. The defendants made the agreement in ignorance of these letters.

The agent of plaintiff testified that that part of the letter which stated “ I cannot commit myself just yet,” referred to his being at that present time bound to sell the stock, inrespect of which he was agent, with the defendants’ stock, and not separately, and that he wrote the letter from a fear that the defendants would be treacherous, and would endeavor to sell their stock apart from plaintiff’s stock. Whatever was the1 motive, and if good or otherwise, the letter informed Mr. Poppenhusen that in case the plaintiff’s agent ceased to be committed, he would sell to Mr. Poppenhusen the large amount of stock he controlled, which was, in fact, about one-third of a majority of the stock, and would assist him in getting enough besides to make a majority, and would act against “those in control,” which phrase included»the defendants. He knew the fact, that it was in Mr. Poppenhusen’s power to release him from his committal to defendants, by refusing to buy on the terms which defendants had prescribed, and whicli he Avas about to present. He thus influenced Mr. Poppenhusen’s mind against agreeing to defendants’ proposition. He presented a motive that was unfavorable to deféndants, and Mr. Poppenhusen’s answer, that if necessary he would act upon the kind offer, shows the effect.

In substance, the agreement of defendants to allow the plaintiff’s agent to negotiate for a sale of defendants’ stock, was, as argued by the counsel for defendants upon the trial, “a mere authority to Henry O. Havemeyer.” Its tenor professed or purported no more. There was no antecedent obligation of defendants to sell their stock, or to place it in the hands of plaintiff’s agent for sale. The plaintiffs agent or the plaintiff

p. 484

had no interest in the subject matter of the authority ; that is, the defendants’ property. In this way the plaintiff’s agent became defendants’ agent to negotiate, and was bound to the utmost fidelity to defendants, and could not rightfully continue to be agent after a violation of any of his obligation. The plaintiff was bóund by his acts.

If the arrangement be considered as an agreement, its promises were mutual. The letter referred to was a first violation of the agreement, and was such a breach that, thereafter, the agreement came to an end, and therefore the defendants ceased to be bound by it. Or if it be considered only as an authority to an agent, his violation of his duty as agent terminated his power to bind his principal, or to continue to act for him.

It was suggested that, as the letter was sent and answered before the arrangement of November 24, it could not be a violation of the agreement then made. But the effect was operative, after the negotiation began, as the answer to the letter shows. It is for the effect that there was responsibility. The offer contained in the letter was not withdrawn, but, as it contemplated, remained in the hands of Mr. Poppenhusen, to await the result of the negotiation of defendants’ proposition.

After the arrangement in respect of the sale, on defendants’ terms, ceased to bind the defendants of the so-called agreement, remained only the provision that neither lot of stock should be sold without the other. This did not forbid any purchase that either party chose to make. Either party might bring it to an end at pleasure, before a breach. Giving to it the greatest force that can be claimed for it, either party could end it by notice. Its benefit to the parties was, that it tended to give an opportunity for the sale of the two lots of stock together ; but it did not bind either party to make a sale. Either party- could obtain the power

p. 485

to sell separately, by a notice ending the agreement. Without going into the question of whether the arrangement possessed the constituents necessary by law to a contract, or, particularly, of whether there was sufficient consideration, it will not be doubted that the only consideration that sustained the contract was the mutual promise not to sell separately. When the promise ceased to be mutual, the contract ceased. By the undisputed testimony, plaintiff’s agent had failed to bring about any arrangement which could include defendants’ stock, upon the terms which the defendants rightfully demanded. There was no prospect of future co-operation. All efforts had been exhausted. On December 15, the agent acting for plaintiff asked defendants if he were at liberty to sell, separately, the stock he acted for. The defendants, by assenting, gave the liberty. This was nothing else than an annulling of plaintiff’s promise, which was the consideration to 'defendants. It, in. fact, annulled the agreement, for that was a mutual promise. It was not less than a notice by plaintiff that the mutual understanding was to end, and as to defendants, the parties to whom the notice was given, they might treat the agreement as then ended.

It was argued that such a construction should not be given, because, at the time, the plaintiff’s agent did not know that the defendants had bought the Charlick stock. It cannot, however, be inferred that, if he had known it, it would have made him the less desirous to have the power of acting apart from the defendants. But, without going further in this direction, it is sufficient to say that, from views already expressed, it results that the defendants were under no obligation to inform plaintiff’s agent of the Charlick purchase. After plaintiff’s agent had received permission to sell her stock, he attempted to sell it by a negotiation, and in a manner that was inconsistent with the exist

p. 486

ence of an agreement, that the two parcels of stock should not be sold separately. As the agreement came to an end on December 14, the defendants could rightfully sell, on January 27, ■ to Mr. Poppenhusen, their own stock, without including the plaintiff’s.

I am further of opinion, that the court should have charged, as requested by defendants’ counsel, that “in estimating damages, the jury cannot take into account any mere chance of making uncertain profits, nor any speculative value arising from or depending upon the possibility of the plaintiff combining her stock with that of other persons.”

The court charged, in accordance with the former decision of the general term, that the measure of damages would be the amount in which the market value of the plaintiff’s stock was lessened by a breach of the contract by defendants. The general term expressed the opinion that the defendants’ sale to Poppenhusen was some evidence of market value. And on this trial the court said to the jury : “ The measure of damages for a breach by defendants of this contract, if there was such an agreement, would be the amount of any depreciation, in the fair cash and market value of the plaintiff’s stock, occasioned by the breach. You are to determine, from the evidence, what was the market value at that time, and you are at liberty in this connection to consider the price paid by Poppenhusen, as bearing upon that subject. ' You are not, however, concluded by such a price in estimating the value, but you may consider it, in connection with the other evidence on this subject.” It stood then, in this wise: the jury was charged that they might find, if the evidence justified it, that the sale to Poppenhusen ivas a breach; that they must find what was the market value before the breach, taking as some evidence the price paid by Poppenhusen, and then what the market value was after the breach.

p. 487

This sale, as some evidence of market value, was evidently of serious practical importance. It had a tendency to increase the amount of damages to the extent that the price paid represented in the minds of the jury—real market value. If that price paid was, in fact, above market value, the jury should have disregarded the excess. If there were facts tending to show that this sale was brought about by considerations on the part of Poppenhusen, which could not have influenced the market generally, the jury should have taken those facts, in connection with their conclusion from the evidence, as to the probability of the plaintiff having been able to make a sale, of a kind like the one to Poppenhusen. The jury should have found whether it was probable that the plaintiff, or those associated with her, could have procured a sufficient amount of the stock to be a majority of the stock ; and also to what extent the price given by Poppenhusen was influenced by the sale being of a majority. If the evidence satisfied the jury that Poppenhusen would not have paid the price he did, unless for a majority of the stock, and it was only possible that the plaintiff could have procured a majority, or her chance to do it was only speculative, the jury, in using the sale as evidence, should not have enhanced the market value by such part of the price paid, as came from the fact that a majority was sold. In other words, to the extent that it was only possible or speculative whether the plaintiff could have made a sale like the one to Poppenhusen, the jury should have disregarded the price paid by Poppenhusen.

Some facts that appeared in the case may be adduced here. The complaint stated that it was well known by the parties “that one Adolph Poppenhusen and others co-operating with him, desired to purchase a majority of the stock of the company, and that he would pay for a majority a much larger price than

Concurrence

p. 488

after liis purchase could be obtained for the other stock,” and further, “that by the action of the defendants, the Albert Havemeyer stock has been placed in a minority of the stock of the company and its market value has been made worth, not to exceed twenty per cent, of its par value, instead of seventy-five per cent., at which it could have been sold if the defendants had not been guilty, &c.” The plaintiff’s agent' gave testimony of the market value before the agreement which was applicable by the jury to the time immediately before the breach. He testified that he told the defendants, that without a combination, there was no market value for the stock ; and again, that there was no market for it, unless it was combined with enough- of the stock to form a majority ; and. again, that a majority of the entire road could be sold and thereby bring a higher price.

There was, therefore, some evidence for the jury, that to get the price afterwards paid by Poppenhusen it was necessary to secure control of a majority, and it would have been a substantial aid to the jury to instruct them, that the damages were not to be founded upon a speculative chance that the plaintiff might have been able to offer a majority for sale.

For these reasons I am of opinion that there should be a new trial.

Judgment reversed, and new trial with costs of the appeal to the appellant to abide the event.

Speir, J., concurred.

I concur in the reversal upon the ground last stated in the opinion of Judge" Sedgwick, viz. : that it was error to refuse to charge, as requested by defendants’- counsel, “that in estimating damages, the jury cannot take into account any mere chance of making uncertain profits,

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nor any speculative value arising from, or depending upon the possibility of the plaintiff’s combining her stock with that of other persons.”