Smith v. Lockwood — 61 N.Y. Super. Ct. 114

Majority

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CHARLES H. SMITH, Plaintiff v. MATILDA F. LOCKWOOD, et al., Executrix, Etc., Defendants.

Headnote

Action for the breach of a written agreement by the testator of defendants.

The agreement provided for the payment of one hundred and fifty shares of capital stock of the Staten Island Water Supply Company, when the water works that the defendants’ testator were building under contract were turned over and accepted by said company. Before the water works had been accepted, and before the completion of the contract in regard to them, defendants’ testator assigned his contract to another party and procured a release from the company.

Held, that on the face of the contract, and from extrinsic circumstances, it appears that the acceptance was referred to only as a date or time of payment of the capital stock. It also appears that the testator was solely responsible for the acceptance never taking place. He could not by his own act dissolve the obligation of the contract, and his executors are liable upon it.

The facts and points in the case appear in the opinion of the court and the arguments of counsel.

Before Sedgwick, Ch. J., Freedman and McAdam, JJ.

Decided May 2, 1892.

Defendants’ exceptions at the trial of the action to the denial of his motion that the complaint be dismissed, and also his motion that a verdict be directed in his favor, were ordered to be heard in the first instance at general term, as also his exceptions to the verdict of the jury, under the direction of the court, for $10,000.

L. L. Van Allen, for defendants, appellants, argued:—

August 28, 1879, the Staten Island Water Supply Co. and John Lockwood & Co. executed an agreement

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for the construction of water works on Staten Island. That agreement was somewhat modified by a supplemental contract, October 5, 1880. November 7, 1881, Lockwood & Co. notified the Staten Island Water Supply Co. that they had transferred their contracts to one E. Patten. The day following, the company, at a meeting of the board of its directors, passed a resolution ratifying the transfer, and releasing Lockwood & Co. Plaintiff was a director of the company, was present at that meeting, and voted for the resolution. April 30, 1880, plaintiff and Lockwood & Co. executed an agreement, a copy of which is annexed to the complaint, in which the latter agree to transfer to the former, upon certain conditions contained therein, three hundred shares of the stock of the company. One hundred and fifty shares thereof were transferred October 22, 1881. The agreement provides for the transfer of the balance, as follows: “ And the remaining one hundred and fifty shares, when the works are turned over to and accepted by said company.” That has not been done, and the amended complaint admits it. {First.) The complaint should have been dismissed. The contract between the parties hereto is definite and certain. The works have not been turned over and accepted by the company. That was a condition precedent, and until its accomplishment, the one hundred and fifty shares were not to be paid. The amended complaint admits that the further performance of the agreement between Lockwood and the company was on the 8th day of November, 1881, “ duly waived.” That was the date on which the resolution was passed, confirming the transfer from Lockwood to Patten. {Second.) The element of estoppel is enforceable in this case. The essentials constituting it—“ declaration made or act done by the party against whom the estoppel is claimed.” “ That the party claiming the estoppel relied upon such declaration or act,” and “ That the party claiming the estoppel would be injured if the

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other party were permitted to retract his declaration, or undo his act,” are clearly applicable. Real Estate Trust Co. v. Balach, 45 Sup’r, 528. In Pickard v. Sears, 6 Ad. and Ell., 475, Lord Denham, says : “ The rule of law is clear that when one by his words or conduct causes another to believe in the existence of a certain state of things, and induces him to act on that belief, the former is concluded from averring a different state of things.” It is not essential that the party sought to be estopped should design to mislead. If his act was voluntary and calculated to mislead and actually has misled another acting in good faith, that is enough. Trustees, etc., of Brookhaven v. Smith, 118 N. Y., 634 .

George L. Cheney, for plaintiff, respondent, argued :

. I. The excuse for non-payment is a default by the obligor himself. The excuse pleaded by Lockwood for not transferring these 150 shares to the plaintiff is, that the works have not been turned over to the company. But when we examine the case, we find it was Lockwood himself who agreed with the company to turn over these works, but who failed to do it, and then, by putting the contract out of his hands, put the performance of thi# obligation out of his own power. The law, however, does not suffer obligations to be evaded in that way.

II. Lockwood could not profit by his own default. Lockwood was under obligation to complete the water works, but failed to do so. Then he secured an extension of time to perform that obligation, and again failed. Then he transferred that contract, in the face of a notice from the plaintiff, and secured a release from the company, and thus obtained a final settlement from the company without turning over the works. By this voluntary non-performance of the act which was to mark the time for paying the plaintiff, Lockwood estopped himself from insisting on its performance. Lee v. Decker, 3 Abb. Ct. of App., 53; Gallagher v.

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Nichols, 60 N. Y., 438 , 448; Risley v. Smith, 64 Ib., 576 ; Home Bank v. Drumgoole, 109 Ib., 63.

III. The plaintiff is not estopped. The defendant Lockwood urged upon the trial, that the company’s action in releasing him and accepting Patten was a defence here; because the plaintiff was a stockholder and director in the company, and was present at the board meeting and raised no objection when the company took that action. This theory, however, is untenable for obvious reasons. In the first place, Lockwood knew exactly what the real facts were, and Was therefore not misled by the company’s action or the plaintiff’s silence. He was present himself at the board meeting as a director, and knew that the plaintiff was present there in the same capacity ; and he has himself testified that the plaintiff at that meeting said nothing, and did not even vote in favor of the resolution. Lockwood knew that the action then taken was the action of the company alone; and he knew that the plaintiff had already given him full notice that the private contract with the plaintiff must be performed, irrespective of any such disposition as was there made of the contract with the company. And the actual transfer to Patten had been made before the meeting. In the second place, the disposition then made of the company’s contract did not involve the abandonment of the plaintiff’s contract. The two obligations were distinct. The liability of Lockwood to the plaintiff on the contract in suit, was no part of his liability to the company on the contract released. His obligation to pay the plaintiff for the past services was not even incident to his obligation to perform for the company the contract to build its works. So the destruction of the latter obligation would not operate to destroy the former. The only point in the private contract which could be affected by the abandonment of the contract to build the works, was the provision fixing the date for paying the final installment;

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and the nature of the effect on that point, as laid down in the cases above cited, is to strengthen the private contract and accelerate the date for payment. In the third place, the plaintiff did not assent, either in fact or by implication, to any modification or postponement of Lockwood’s obligation to pay him the stock. The plaintiff had, on the contrary, expressly refused to assent to any impairment of his right to such payment. He gave Lockwood complete notice that the obligation to transfer the stock would be strictly enforced. The plaintiff’s silent presence at the board meeting, in the capacity of a director, did not operate as an adoption of the company’s action for his own, in the capacity of an individual. He and Lockwood met there as fellow-directors on the company’s business, not as a debtor and a creditor adjusting their private relations ; and Lockwood knew it. Their private affairs could not be intruded in fact, much less by implication, at such a meeting. The plaintiff’s silence as to his private interests, at the board meeting, his not raising those interests there in opposition to the company’s action, was the silence of a director, imposed upon him by the duties of his trust office, and not the independent conduct of a free individual acting in his own behalf. No inferences upon which to base an estoppel could be drawn from such reticence, even if the plaintiff had not given Lockwood the preliminary notice already referred to. Moreover, and quite apart from the director’s duty not to obtrude his personal interests in opposition to the board’s action, the knowledge Lockwood had of the plaintiff’s private rights would deprive the plaintiff’s silence of any effect upon those rights. Failure to object to a proposed wrong never estops the injured party, if his rights were already known to the person invoking the estoppel. Martin v. Angell, 7 Barb., 407 ; Hutchins v. Hebbard, 34 N. Y., 24 ; Viele v. Judson, 82 Ib., 32; N. Y. Rubber Co. v. Rothery, 107 Ib., 310.

The testator in his life-time made, with the plaintiff, an agreement whereby he promised to pay and transfer to the plaintiff three hundred shares of the capital stock of the Staten Island Water Supply Company, the payment and transfer to be one hundred and fifty shares upon payment to him by said company of one-half of the stock to be paid to him, pursuant to the contract with the company, and the remaining one hundred and fifty shares when the works are turned over and accepted by said company.

The action concerned only the last installment of one hundred and fifty shares. The defence was that the works had never been turned over and accepted by the company. The reply to this is satisfactory. Before the works had been accepted by the company the testator, in his life-time, before the completion of his contract, assigned it to a third party with the approval of the company, that at the same time released Lockwood, defendant’s testator.

On the face of the contract, and from extrinsic circumstances, it appears that the acceptance was referred to only as a date or time of payment. The testator was responsible solely, so far as appears, for the acceptance never taking place. He could not by his own act, dissolve the obligation of the contract, and his executors remain liable upon it.

The plaintiff was present at the meeting of the directors who released Lockwood from the contract. But he did not vote for or promote in any way the assent of the company to Lockwood’s assignment of the contract or his release. Nothing shows any assent on his part to the course taken by Lockwood.

Defendant’s exception overruled and judgment ordered for plaintiff on verdict, with costs.