Grimm v. Franklin

• Decision Date: 26 January 1928
• Parties: GRIMM et al. v. FRANKLIN.
• Court: New Jersey Court of Chancery

140 A. 236

GRIMM et al.

v. FRANKLIN.

Court of Chancery of New Jersey.

Jan. 26, 1928.

(Syllabus by the Court.)

Suit by George J. Grimm and others against Pearce R. Franklin for an injunction. On final hearing. Decree for defendant.

Osborne, Cornish & Scheck, of Newark, for complainants.

John W. McGeehan, Jr., of Newark, for defendant.

BERRY, Vice Chancellor. This bill seeks an injunction against the prosecution by the defendant of four suits at law against the several complainants, all of which suits are for the recovery of attorney's fees alleged to be due to the defendant from the complainants under the provisions of a certain contract of employment between the members of an association of independent jitney owners, of whom complainants were a part, and the defendant. Immediately upon the filing of the bill an order to show cause with restraint was issued and on the return of that order the restraint thereby imposed was continued pendente lite by further order consented to by counsel for the defendant.

This controversy grows out of the following facts, which I find from the evidence submitted at the hearing:

In the early part of 1924 there were forty odd independent jitney men operating busses on what was known as the Springfield avenue route in the city of Newark. There was a spirited competition between the Public Service Corporation and the independent jitney men for control of the jitney business on this route, and the Public Service Corporation was making a determined effort to acquire a sufficient number of the independent busses and their franchises to control the situation. Prior to this time a merry war had progressed between the independents and the Public Service Corporation, which had resulted in relief and protection being sought by the independents through the Legislature. The defendant had been a member of the New Jersey Assembly at that time, and had interested himself actively on behalf of the independents and later became counsel for many of the independent lines in Newark and vicinity. He had achieved considerable success in his work, and had some reputation for accomplishment on behalf of the independents. The Public Service Corporation at the time referred to, however, had begun to make serious inroads on the ranks of the independents, and in the early part of 1924 had succeeded in purchasing at one time twenty-two of the forty odd autobusses and franchises on the Springfield avenue route. The highest price paid for any one of those busses and franchises up to that time was $9,000. This had thrown consternation into the ranks of the independent bus men and particularly those engaged on the Springfield avenue route, and they feared that they would be forced to sell out to the Public Service Corporation at what they considered inadequate prices, and they began to look around for means to restore the morale of the independents and resist the Public Service onslaught, and with this end in view sought the advice of the defendant.

The Springfield avenue jitney men had already organized a corporation which had built a large garage for the housing of the busses of the members and operators on the Springfield avenue lines. The president of that corporation, Mr. Lines, representing the remaining jitney men operating on the Springfield avenue route, of whom there were nineteen, was authorized to consult with Mr. Franklin, which he did, and as a result thereof Mr. Franklin attended several meetings of the association. He was told by the jitney men that they desired to effect some sort of agreement among themselves which would prevent any individual member of the association from selling his bus and franchise to the Public Service Corporation without the consent of all. While the garage was owned by the corporation, of which all of the forty odd jitney men were stockholders, the busses and the franchises were owned by the individuals themselves; the corporation having no interest whatever therein. The defendant advised the remaining nineteen members that the only safe way to accomplish their object was to turn over their busses and franchises to the corporation at an appraised value and take in return therefor stock of the corporation to the amount of the appraised value of each bus and franchise. This the jitney men refused to do because of their lack of trust in one another.

As a substitute for this arrangement the defendant prepared an agreement between the corporation, of which these jitney men were stockholders, officers, and directors, and themselves individually, in which it was provided that each and all of said jitney men would sell their respective busses, good will, and franchises to the corporation at any time before April 25, 1925, for a certain consideration therein mentioned to be paid in stock and notes of the corporation, said purchase price to be determined by appraisers, and the transfer of the franchises to be conditioned upon the approval of the municipalities concerned and the Public Utility Commission. The corporation agreed to purchase said busses and franchises based on the terms set out in that agreement. The sole purpose of this agreement was to hold the remaining nineteen Springfield avenue jitney men together in an organization to resist the efforts of the Public Service Corporation to purchase individual busses on that line, and with a view to raising the selling price of the remaining busses and franchises to an amount equal to their real worth. It was a foregone conclusion at that time that eventually the remaining jitney men on this line, or many of them, would be obliged to sell, but they did not want to sell at the prevailing prices. At the time of Mr. Franklin's engagement, the jitney men were without funds to pay him a fee and asked him to represent them for a contingent fee, and after negotiations it was agreed between them and the defendant that Mr. Franklin should receive from each individual jitney man, as compensation for his services, 5 per cent. of the selling price of the individual busses in excess of the sum of $11,000 when sold, providing that this commission should not apply to sales to the corporation, but should apply to resales by the corporation to the Public Service or other purchaser.

This agreement was in writing, and was signed by the defendant and by the remaining nineteen bus men individually. There was a full and complete disclosure and explanation by the defendant of all facts and circumstances pertinent to this arrangement. There was no deception or misrepresentation. The parties dealt at arm's length, and the complainants, on their own testimony, entirely understood the terms and provisions of the agreement and were satisfied therewith. The agreement between the corporation and the jitney men expired by its own limitation on April 25, 1925. Mr. Franklin explained to his clients that the agreement could be canceled by consent prior to the expiration of that period. He also advised them that in his opinion the agreement of sale could be enforced by the corporation against the individual parties thereto. Following the defendant's employment, he was very active in consulting with and advising his clients, and appeared on numerous occasions before municipal governing bodies and officers, the Public Utility Commission and in court. He notified the Public...