James v. Yards

• Decision Date: 12 May 1931
• Citation: 256 N.Y. 298,176 N.E. 401
• Parties: JAMES v. ALDERTON DOCK YARDS, Limited.
• Court: New York Court of Appeals Court of Appeals

256 N.Y. 298

176 N.E. 401

JAMES

v.ALDERTON DOCK YARDS, Limited.

Court of Appeals of New York.

May 12, 1931.

Action by Charles C. James against the Alderton Dock Yards, Limited. From a judgment of the Appellate Division, Second Department (232 App. Div. 698, 247 N. Y. S. 1014), affirming a judgment of the Special Term in favor of the plaintiff, the defendant appeals.

Judgments of the Appellate Division and of the Special Term both reversed, and the complaint dismissed.

See, also, 225 App. Div. 675, 231 N. Y. S. 215.

Appeal from Supreme Court, Appellate Division, Second Department.

Clarence K. McGuire and Walter T. Neville, both of New York City, for appellant.

Russell H. Robbins, Reid L. Carr, and Paul Austin Crouch, all of New York City, for respondent.

CRANE, J.

The Alderton Dock Yards, Limited, was a domestic corporation operating a ship repair plant and dry docks in the borough of Brooklyn, city of New York. The capital stock consisted of 25,000 shares of common stock of the par value of $100 a share, which was all owned by Albert H. Alderton and his family, with the exception possibly of qualifying certificates. Alderton was president and treasurer of the corporation, and the plaintiff, Charles C. James, and others having a financial interest in its success constituted the board of directors.

In January of 1926 the directors and stockholders voted that the corporation sell its property on such terms and at such price as should be determined by the board of directors who were authorized, together with the officers, to take the necessary steps to procure a purchaser. On July 12, 1926, at a meeting of the board of directors, a resolution was passed providing for the appointment of an executive committee to be the sole selling agent of the corporation, with power to negotiate and accept in its name bids for the sale of the property. The members of the executive committee were Charles C. James, the plaintiff, and Messrs. Alderton, Davidson, Ritchings and Ackerson. It was also unanimously determined at that meeting that only the directors were to use their best efforts to obtain a purchaser of the property of the defendant, and the compensation for so doing would be paid to whomsoever brought about the sale.

In January of 1926 the plaintiff agreed with the defendant through its president. Albert H. Alderton, the the compensation for his services in obtaining a contract of sale with the Morse Dry Dock & Repair Company would be contingent upon the making of such contract of sale; and he would be entitled to no compensation if he did not succeed in making a contract for the defendant with the Morse Dry Dock & Repair Company; but, if he succeeded, he was to be paid for his said services when payments under such contract, if made, became payable to the defendant after the claims of its various creditors had been satisfied. This agreement was not in writing, but is found in a conversation which James had with Alderton about the time that the negotiations with the Morse Dry Dock & Repair Company were nearing completion. ‘Alderton said to me,’ testified the plaintiff, “Now, before we go any further on this thing, C. C., I think we ought to have an understanding as to what you are to be paid in case you put this deal through.' I said, ‘Well, Allie, I think it is too soon to decide that. We don't know yet whether we are going to put it through. But as we have always agreed, I think whatever is the fair thing when it is accomplished is the thing to pay me. I do not want any money unless you get yours out of this thing. I have stuck with you all the way through, and I am going to try to pull you out. If I can I will expect you to treat me very handsomely. If not, you don't owe me a thing in the world.”

The deal went through, and on April 9, 1926, the Alderton Dock Yards, Limited, sold to the Morse Dry Dock & Repair Company its plant, real estate, business, and good will for $1,400,000; $200,000 of this purchase price was paid in cash, and the rest by assuming and the giving of mortgages. A third mortgage was given to the defendant as part of the purchase price in the sum of $425,000, due and payable on April 9, 1931. After the consummation of this sale, the board of directors proposed to compensate the plaintiff for his services, and offered him $6,000, which he refused. He has brought this action to recover $88,750 as fair and reasonable compensation, arriving at the figure by charging 10 per cent. on the value of the chattels and 5 per cent. on the value of the remainder. The action was commenced on May 28, 1929, the complaint demanding a declaratory judgment, adjudging the value of the plaintiff's services to the defendant, and making the amount a lien upon all sums due and to be paid thereafter by the dock company to the defendant.

At the time of the trial and the decision of the court, July 2, 1930, the third mortgage, securing the only sum due from the dock company to the defendant, had been extended from its due date, April 9, 1931, to April 9, 1936. This fact, found by the trial court, caused it to conclude as a matter of law that the amount of the plaintiff's compensation, $88,750, became due and payable at once. The court, therefore, by its judgment gave the plaintiff a lien in this amount on all moneys due from the dock company, including that secured by the mortgage.

The plaintiff's claim against the defendant is for commission in selling property. The price of the sale was $1,400,000, of which the plaintiff claims 10 per cent on the value of the personalty and 5 per cent. on that of the real estate, making in all a total of $88,750, which he says is reasonable compensation. The contract to pay him any compensation rests in parol, and is denied by the defendant. Whether or not the plaintiff's services are worth the sum claimed, or whether there is any agreement to pay him anything, is a question of fact to be determined upon a trial. This issue would ordinarily be determined by a jury in an action at law. On the face of the plaintiff's testimony, the amount due him was not to be paid until defendant received payment from the dock company under its contract of sale. The times of payment were fixed. Under ordinary conditions, therefore, we would expect the plaintiff to wait until these times had arrived and then demand payment or bring suit. He did not do this, but before the amount of the third mortgage became due brought this action for a declaratory judgment apparently for the sole purpose of procuring a lien upon the purchase price due from the dock company.

Whatever acceleration in practice has been accomplished by the declaratory judgment, it has not widened and extended the equitable lien. The basis for this lien is the same as heretofore; that is, it is dependent upon some agreement express or implied that there shall be a lien upon specific property, or else it is the means adopted for enforcing equities which could not be otherwise established. It is settled law in this state that an agreement either by parol or in writing to pay a debt out of a designated fund does not give an equitable lien upon the fund...