Lehigh Valley R. Co. v. Andrus

• Decision Date: 19 February 1920
• Docket Number: No. 46/478.,46/478.
• Citation: 109 A. 746
• Parties: LEHIGH VALLEY R. CO. v. ANDRUS.
• Court: New Jersey Court of Chancery

109 A. 746

LEHIGH VALLEY R. CO.

v. ANDRUS.

No. 46/478.

Court of Chancery of New Jersey.

Feb. 19, 1920.

Suit by the Lehigh Valley Railroad Company against John E. Andrus. On motion for preliminary injunction and counter motion to set aside process. Both motions denied.

Collins & Corbin, of Jersey City, for complainant.

Edward O. Stanley, Jr., and Pitney, Hardin & Skinner, all of Newark, for defendant

BACKES, V. C. The complainant is the tenant of lands on the water front at Bayoune, under a lease made June 5, 1889, for the term of 60 years, at a rental of $4,250 per annum for the first 20 years, payable quarter-yearly in advance, and for each 10-year period thereafter at a rental to be fixed by arbitrators, landlord and tenant each to select one, and the arbitrators to select an umpire in case they could not agree and—

"If for any cause a valid award fixing rentals shall not be made and delivered at or within the times above limited, then the landlord may recover by action from time to time at law or in equity a fair quarterly compensation for the use and occupation of the demised premises."

The complainant and defendant duly appointed arbitrators to appraise the rental of the 10-year period beginning June 5, 1919. The arbitrators were unable to agree upon an award or an umpire, and this without fault on the part of either complainant or defendant. The complainant asks this court to determine the rental.

On June 6, 1919, after the bill was filed, the defendant sued the complainant in the Supreme Court of New York for use and occupation for the first quarter year—June 5 to September 5, 1919—laying the damages at $17,067.75. The case was at issue and on the trial list when the defendant here was ordered to show cause why he should not be re strained from further prosecuting his action. Whether this order should be made absolute or discharged is one of the questions to be decided.

The bill presents a cause for equitable relief. It is not to be likened unto a bill for specific performance of a contract for the sale of land at a price to be fixed by arbitrators. There the contract is executory. The award is of the essence of the contract, and equity will not appoint arbitrators to complete the contract for the purpose of enforcement. That is well settled. McKibbin v. Brown, 14 N. J. Eq. 13; Woodruff v. Woodruff, 44 N. J. Eq. 3-19, 16 Atl. 4,1 L. R. A. 380; Davila v. United Fruit Co., 88 N. J. Eq. 602, 103 Atl. 519. Here the substance of the contract is the demise and the covenant to pay rent, and the tenant has been in possession. The method set up for ascertaining the rental is subsidiary and incidental, of form and not of substance; and, having proved abortive, the court will substitute itself for the arbitrators. Dinham v. Bradford, 5 L. R. Ch. App. (1869) 519, is an illustration. There it was agreed that one partner should purchase, at the close of the partnership, the share of the other, at a valuation by two persons. Trouble arising between the partners, no arbitrators were appointed, and a bill was filed for a valuation. The defendant relied on the doctrine that an agreement for sale, price to be fixed by arbitrators, with nothing more, cannot be carried into effect by the court. Lord Hatherley, L. C, said:

"This case is not like that of the sale of an estate, the price of which is to be settled by arbitration, but is a case in which the whole scope and object of the deed would be entirely frustrated if the court were to apply the well-known doctrine to the present circumstances. In cases of specific performance the matter is very plain and simple. One person agrees to sell his estate in a given way, and no rights are changed by the circumstance of that method of selling the estate having failed. The estate remains where it was and the money where it was. But here * * * it is much more like the case of an estate sold and the timber on a part to be taken at a valuation, the adjusting of matters of that sort forming part of the arrangement but being by no means the substance of the agreement. In such cases the court has found no difficulty. If the valuation cannot be made modo et forma, the court will substitute itself for the arbitrators. It is not the very essence j and substance of the contract, so that no contract can be made out except through the medium of arbitrators. Here the property has been had and enjoyed, and the only question now is: What is right and proper to be done with regard to settling the price?"

Other cases adduced in which the doctrine was applied, some of which in circumstances are peculiarly like the one under consideration, are Grosvenor v. Flint, 20 R. I. 21, 37 Atl. 304; Cooke v. Miller, 25 R. I. 92, 54 Atl. 927, 1 Ann. Cas. 30;' Insurance Co. v. Stephens, 214 N. Y. 488, 108 N. E. 856, L. R. A. 1917C, 809; Kaufmann v. Liggett, 209 Pa. 87, 58 Atl. 129, 67 L R. A. 353, 103 Am. St. Rep. 988; Springer v. Bordeu, 154 Ill. 068, 39 N. E. 603, affirmed 210 Ill. 518, 71 N. E. 345; Lowe v. Brown, 22 Ohio St. 463; Tobey Furniture Co. v. Rowe, 18 Ill. App. 293; Kelso v. Kelly, 1 Daly (N. Y.) 419.

Nor is the above-quoted provision reserving to the landlord the right to sue quarter-yearly for use and occupation, in default of an award, a thing apart from the main covenant for a rental based upon a 10-year appraisal. It furnishes no distinct and independent "cause" of action for use and occupation, but simply gives a "right" of action in a contingency for a "fair quarterly compensation." In other words, it is only a facility for an emergency recovery of a fair quarter-yearly installment of a 10-year valuation, pending substituted proceedings in equity. The breaking down of the arbitration scheme in no wise impairs the overriding contract of rental at a ten-year term rate, and a recovery at law, upon a miscarriage of arbitration, would simply be taken into account as a credit, upon the appraisal when made, as it is to be made, in this suit. That seems to me to be the single function of the provision, and my view is borne out, to some extent, by the practical construction given it by the landlord by his suit to recover for a quarter year's use and occupation in advance of such use, an impossible thing extra the contract.

The power of the court to enjoin the prosecution of a foreign suit is unquestionable and conceded. Margarum v. Moon, 63 N. J. Eq. 586, 53 Atl. 179. The point elaborately argued in the briefs is whether the case is one in which the power ought to be exercised. The admonition running through the authorities is to exercise it sparingly. Where the court of a sister state has jurisdiction of the subject-matter and the parties, equity will not interfere unless upon a clear showing that the process is being used in an unconscionable manner—oppressively—as instanced in Standard Roller Bearing Co. v. Crucible Steel Co., 71 N. J. Eq. 61, 63 Atl. 546 or, as was there said, "unless the case involves some equitable element which it cannot apply." See Shaw v. Frey, 69 N. J. Eq. 321, 59 Atl. 811. Chancellor Pitney, in Bigelow v. Old Dominion Copper Mining & Smelting Co., 74 N. J. Eq. 457, 71 Atl. 153, said:

"On general principles, equity will not interfere with the right of any person to bring an action for the redress of grievances—the right preservative of all rights—except for grave reasons, and on grounds of comity the power of one state to interfere with a litigant who is in due course pursuing his rights and remedies in the courts of another state ought to be sparingly exercised. The courts of New Jersey ought not to assume, directly or by indirection, any appellate jurisdiction over the courts of Massachusetts, nor proceed in giving judgment here upon the idea that the courts of that commonwealth are in the least degree incompetent or unwilling to do full and complete justice in all cases that are fairly within their jurisdiction."

I cannot find in the circumstances of the case any equitable ground for enjoining the suit. That the Supreme Court of New York has complete jurisdiction of the issues raised before it, and of the parties, is undeniable. The issues there and those of this bill are not identical. Though the controversies involve the same subject-matter and a decree in this suit would settle the rights of the parties conclusively, there is no conceivable legal theory upon which the defendant can be enjoined to forego the determination of his claim for a quarter year's rent (either as an integral part, or...