General Securities Corporation v. Welton

• Decision Date: 14 May 1931
• Docket Number: 6 Div. 752.
• Citation: 135 So. 329,223 Ala. 299
• Parties: GENERAL SECURITIES CORPORATION v. WELTON.
• Court: Alabama Supreme Court

135 So. 329

223 Ala. 299

GENERAL SECURITIES CORPORATION v. WELTON.

6 Div. 752.

Supreme Court of Alabama

May 14, 1931

Rehearing Denied June 25, 1931.

Appeal from Circuit Court, Jefferson County; Wm. M. Walker, Judge.

Bill for specific performance of a contract by William L. Welton against the General Securities Corporation. From a decree overruling a demurrer to the bill, respondent appeals.

Affirmed.

Murphy Hanna, Woodall & Lindbergh, of Birmingham, for appellant.

Fitts Boyle & Fitts, of Birmingham, for appellee.

THOMAS J.

Respective counsel say the exact case has not been decided by this court.

The bill is for specific performance. Demurrer was overruled as to the bill as a whole and each and every aspect thereof. City of Birmingham v. Louisville & N. R. Co., 216 Ala. 178, 185, 112 So. 742.

In determining the propriety of such a decree, the inadequacy of a legal remedy is a primary consideration. If the character of the property be such that the loss of delivery per the contract will not be fairly compensated in damages, based upon an estimate of its market value, the general rule is that relief may be had in a court of equity. Jones v Newhall, 115 Mass. 244, 15 Am. Rep. 97. Inadequacy of legal remedy was the subject of Safford v. Barber, 74 N. J. Eq. 352, 70 A. 371; Manton v. Ray, 18 R.I. 672, 29 A. 998, 49 Am. St. Rep. 811.

In Lewman & Co. v. Ogden Bros., 143 Ala. 351, 360, 42 So. 102, 5 Ann. Cas. 265, the rule is thus declared: "The right to specific performance turns upon whether the plaintiff can be properly compensated by an action at law. Ordinarily the innocent party to a breached contract is entitled only to compensatory damages obtainable in an action at law; but, if, due to exceptional circumstances, an action at law cannot afford adequate relief, equity will specifically enforce the contract, if its terms are such that they do not impose upon the court any difficulty in enforcement, and the contract in other respects does not violate the rules pertaining to actions for specific performance, and there are no facts or circumstances connected with the inception or continuance of the contract which would render it contrary to equity to require its specific performance."

To like effect was Southern Iron & Equipment Co. v. Vaughan, 201 Ala. 356, 78 So. 212, L. R. A. 1918E, 594; Montgomery Enterprises v. Empire Theater Co., 204 Ala. 566, 86 So. 880, 19 A. L. R. 987; Dilburn v. Youngblood & Co., 85 Ala. 449, 5 So. 175.

Mr. Pomeroy deals with the remedy of specific performance of contracts as to personal property, saying it is purely equitable, given as a substitute for the legal remedy of compensation, whenever the legal remedy is inadequate or impracticable. "In the langauge of Lord Selborne: 'The principle which is material to be considered is, that the court gives specific performance instead of damages only when it can by that means do more perfect and complete justice.' (Wilson v. Northampton, etc., Ry., L. R. 9 Ch. App. 279, 284). The jurisdiction depending upon this broad principle is exercised in two classes of cases: 1. Where the subject-matter of the contract is of such a special nature, or of such a peculiar value, that the damages, when ascertained according to legal rules, would not be a just and reasonable substitute for or representative of that subject-matter in the hands of the party who is entitled to its benefit; or in other words, where the damages are inadequate (Board of Com'rs v. A. V. Wills & Sons [D. C.] 236 F. 362); 2. Where, from some special and practical features or incidents of the contract inhering either in its subject-matter, in its terms, or in the relations of the parties, it is impossible to arrive at a legal measure of damages at all, or at least with any sufficient degree of certainty, so that no real compensation can be obtained by means of an action at law; or in other words, where damages are impracticable." 5 Pomeroy on Equity Jurisprudence, § 2166.

See note citing Gould v. Womack, 2 Ala. 83, where it is said:

"The question then is, has the complainant made out such a case as will call into active exercise, the extraordinary power of this Court, to enforce a specific performance. The jurisdiction of the Court is not compulsory, but discretionary. The question is not, what the Court must do, but what it may do, under the circumstances, 12 Vesey, Jr. 331. So in the case of Seymour v. Delancey, 6 Johns. Ch. [N. Y.] 222, Chancellor Kent says, 'It is a settled principle, that a specific performance of a contract of sale, is not a matter of course, but rests entirely in the discretion of the Court, upon a view of all the circumstances.' The same effect, are the opinions of Lord Somers, Lord Macclesfield, and other eminent English Chancellors.

"The case just referred to, of Seymour v. Delancey, underwent an examination in the Court of Errors of New York, and the question, whether the Court had a discretion to order or refuse a specific performance of executory contracts, was considered by C.J. Savage, who examines at great length, and with much ability, the leading English and American cases on this subject, and thus sums up the result of his examination. 'On the whole, therefore, I am of opinion, that on the question of decreeing specific performance of executory contracts, the Court of Chancery must exercise its discretion; not an arbitrary, but a sound judicial discretion. If the contract be free from objection, it is the duty of the Court to decree performance. But if there are circumstances of unfairness, though not amounting to fraud or oppression, or if the inadequacy of consideration, be so great, as to render the bargain hard and unconscionable on either ground, the Court may refuse its aid, and leave the parties to contest their rights in a Court of law.' 3 Cow. [N. Y.] 521, 15 Am. Dec. 270." 65 A. L. R. 90.

The insistence as a general rule made by appellant is not an arbitrary rule-that equity will decree specific performance of contracts relating to real estate, and will refuse to decree specific performance of contracts relating to personalty-and is not in accord with the later and better view. The fact is that the general rule is an application of the fundamental principle upon which the remedy of specific performance is based, viz., that equity will decree the specific performance of a contract whenever it is made to appear that an action at law for damages would be an inadequate or impracticable remedy. And in this jurisdiction the specific performance of contracts will be decreed when, under all the circumstances of that case, such action and decree better subserve the ends of justice; and it will be denied when, from a like view, it appears that it will produce hardship or injustice to either of the parties. 65 A. L. R. 69; Ellis v. Burden, 1 Ala. 458; Casey v. Holmes, 10 Ala. 776; Carlisle v. Carlisle, 77 Ala. 339; Blackburn v. McLaughlin, 202 Ala. 434, 80 So. 818; Martin v. Baines, 217 Ala. 326, 116 So. 341. The consideration must likewise warrant that action. Alabama Central Railroad Co. v. Long, 158 Ala. 301, 48 So. 363; Christian Church at Pilgrim's Rest v. Littleville Camp, 185 Ala. 80, 64 So. 9; Day & Barclift v. Stewart, 202 Ala. 229, 80 So. 289; Gay v. Fricks, 211 Ala. 119, 99 So. 846. And the following statement of our rule is comprehensive (65 A. L. R. 58): "In the exercise of its discretionary powers to determine when the equitable relief of specific performance may be invoked, one of the general rules formulated and followed is that this equitable relief will not be granted if, under the circumstances, either because of the inequitable character of the contract or other reason, the result of the specific enforcement of the contract would be harsh, inequitable, oppressive, or unconscionable." Ellis v. Burden, supra; Casey v. Holmes, supra; Blackwilder v. Loveless, 21 Ala. 371; South & North Ala. R. Co. v. Highland Ave. & Belt R. Co., 98 Ala. 400, 13 So. 682, 39 Am. St. Rep. 74; Sherman v. Sherman, 190 Ala. 446, 67 So. 255 (oral inequitable contract); Boylan v. Wilson, 202 Ala. 26, 79 So. 364; Wiggins v. Sullivan, 219 Ala. 186, 121 So. 731 (rule stated, contract held not oppressive or inequitable).

We will advert to general authorities that are cited by counsel. The case of Butler v. Wright, in the Appellate Division of the Supreme Court of New York, 103 A.D. 463, 93 N.Y.S 113, is cited by appellant as authority for the proposition that the mere fact that the value of the stock, which is the subject-matter of the executory contract relating to personal property, is not readily ascertainable does not render the remedy at law inadequate; was later and again considered in Butler v. Wright, 186 N.Y. 259, 78 N.E. 1002, 1003, by the Court of Appeals, and was reversed upon the ground that it was impossible to say as a matter of law that the facts proved by the complainant did not entitle him to the relief granted. In reaching this result the Court of Appeals commented as follows: "It will be observed that the agreement which the plaintiff seeks to have specifically performed was in its character executory, and that, upon its breach, the plaintiff had the right to resort to such remedy as the law afforded, and the question now arises as to whether a court of equity should entertain jurisdiction and compel specific performance, or whether he should be remitted to a court at law to recover the damages which he has sustained. The rule is that, as to contracts pertaining to personal property, a party should be confined to his action for damages, unless it appears that he is entitled to the thing contracted for in specie, which to him has some special value, and which he cannot readily obtain in the market, or in cases where it is...