Gulbenkian v. Gulbenkian, No. 93.

• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
• Writing for the Court: SWAN, CLARK, and FRANK, Circuit
• Citation: 147 F.2d 173,158 ALR 990
• Parties: GULBENKIAN v. GULBENKIAN et al.
• Docket Number: No. 93.
• Decision Date: 17 January 1945

158 ALR 990, 147 F.2d 173 (1945)

GULBENKIAN
v.
GULBENKIAN et al.

No. 93.

Circuit Court of Appeals, Second Circuit.

January 17, 1945.

Jerome Katz, of New York City (Morris L. Bower, of New York City, of counsel), for appellant.

Thomas A. McGrath, of New York City, for appellees.

Before SWAN, CLARK, and FRANK, Circuit Judges.

SWAN, Circuit Judge.

This is a suit upon a contract dated March 25, 1937 between the plaintiff and the defendants. The contract names

147 F.2d 174

Haroutiune Gulbenkian party of the first part, his son Edward, party of the second part, and his nephew Nerses (the plaintiff) party of the third part. It recites that the three parties constitute a partnership, known as Gullabi Gulbenkian & Co., in which Nerses Gulbenkian has a threesevenths interest; that a New Jersey corporation named Gulbenkian Seamless Rug Co. is indebted to the partnership for loans in the sum of $535,000; and that all of the capital stock of the corporation (for brevity hereafter called "Seamless") is owned by members of the Gulbenkian family, with the exception of a small amount owned by the manager of Seamless.¹ By the terms of the contract the partnership was dissolved and the interest therein of Nerses was transferred to Haroutiune and Edward, and they agreed to pay therefor in installments the sum of $410,000. Such payments were duly made to Nerses and no controversy exists as to them. The controversy arises under article 4 of the contract wherein it was agreed that Seamless "shall be reorganized" so that its "capitalization" shall consist of 5,000 shares of first preferred stock, all to be issued to the defendants, 1500 shares of second preferred stock, of which 900 shares were to be issued to the defendants and 600 shares to the plaintiff, and such an amount of common stock as the defendants might determine. The full text of article 4 is set forth in the margin.² No reorganization having been effected and the defendants having refused to proceed with it, the plaintiff in November 1939 brought the present action praying that the defendants be compelled specifically to perform the agreement and for such other relief as the court may deem proper. Federal jurisdiction rests on diverse citizenship, the plaintiff being a British citizen resident in London and the defendants being citizens and residents of the state of New York. The case came to

147 F.2d 175

trial in October 1943 and at the close of the plaintiff's evidence the court ruled that he was entitled to neither specific performance nor damages. From the judgment of dismissal the plaintiff has appealed

In denying specific performance we think the district court ruled correctly. It is well settled that for the granting of specific performance the contract must be sufficiently certain in its terms to permit the decree to state with some exactness what the defendant must do. Williston, Contracts, Rev.Ed. § 1424; A.L.I., Contracts, § 370. For failure in this respect a contract to form a corporation has been denied specific enforcement by the New York courts. Rudiger v. Coleman, 199 N. Y. 342, 92 N.E. 665; Perrin v. Smith, 135 App.Div. 127, 119 N.Y.S. 990. The difficulties which the court would encounter in framing a decree for specific performance in the suit at bar are made evident by the contract itself. The reorganization is to "be had in such manner as may be determined" by Mr. Henderson, counsel for the plaintiff, and Mr. Gallert, counsel for the defendants; if "said counsel deem it advisable", the reorganization may be had by getting judgment against Seamless on its $535,000 indebtedness to the partnership and transferring the assets through execution sale to a new corporation; the reorganization is to "be conducted under the joint supervision" of said counsel. They shall decide whether any class of stock be given a par value and, if so, what it shall be. The defendants are to determine the amount of common stock and how it is to be distributed, subject only to the right of the plaintiff if any is distributed to existing stockholders of Seamless, to be treated in the same way. This provision apparently contemplated that some distribution of new common stock might be made to existing stockholders who were not parties to the agreement in order to obtain their consent to the reorganization. The agreement expressly provides that it shall evidence a consent by the parties "to such reorganization as said counsel shall determine to be advisable"; and each party agreed in article 8 to execute any documents which either Mr. Henderson or Mr. Gallert may deem necessary or advisable. By the foregoing provisions the parties reserved to themselves or their respective counsel a large measure of discretion as to how the recapitalization of Seamless should be effected and just what it should be. Upon these matters, which cannot be regarded as unimportant details, the counsel never came to agreement before Mr. Gallert's death, on January 18, 1939, although he had caused the Watson plan to be submitted to Mr. Henderson on September 3, 1937.³ That a court decree could bring about agreement seems unlikely.

The death of Mr. Gallert, the plaintiff urges, does not present an insuperable obstacle to specific performance of the contract since the court could direct the defendants to select another attorney to act with Mr. Henderson as provided in the contract. It is argued that an analogy may be found in Meacham v. Jamestown, F. & C. R. R. Co., 211 N.Y. 346, 105 N.E. 653, Ann.Cas.1915C, 851, where functions vested by the contract in a named engineer were held to be performable by a successor after his death. We may assume without decision that the death of Mr. Gallert would not be an insuperable obstacle, if compulsory specific...