Lyle v. Addicks

• Decision Date: 23 August 1901
• Citation: 62 N.J.E. 123,49 A. 1121
• Parties: LYLE v. ADDICKS.
• Court: New Jersey Court of Chancery

49 A. 1121

62 N.J.E. 123

LYLE

v. ADDICKS.

Court of Chancery of New Jersey.

Aug. 23, 1901.

Bill by Robert W. Lyle against J. Edward Addicks to enforce the specific performance of a contract. Decree advised.

Otto Crouse, for complainant.

Sherrerd Depue, for defendant.

EMERY, V. C. This is a bill for the specific performance of a written contract alleged to have been made by the defendant for the purchase of debts or claims held by complainant and others against an insolvent corporation, the purchase of shares of stock of this corporation, and for the execution of a general release of claims held by defendant against complainant. The affairs of the insolvent corporation, the Staten Island Terra Cotta Company, were in the course of settlement in insolvency proceedings pending in this court, the defendant being one of the two receivers. The defendant was also the holder of the majority of the stock and of the mortgage bonds of the company, and was its largest creditor, his claims amounting to nearly 90 per cent. of the whole indebtedness. Complainant, who had been connected with defendant in the management of the company, previous to the insolvency held 396 shares of the stock, and had proved a claim against the company for over $30,000. Defendant desired to bring about a settlement of the company's affairs by means of a purchase of its assets by himself, and their subsequent transfer to a company to be organized by himself, or under his control, and defendant proposed to submit to the court an offer for such purchase. Defendant desired complainant's services in bringing about this reorganization, and the agreement in question purported to be made for the purpose of securing these services of complainant and for the settling of all demands of either party against the other by general releases to be executed and delivered upon both sides. The agreement dated June 14, 1897, after reciting this desire of the defendant, as the majority stockholder and bondholder of the company, and its largest creditor, to effect this reorganization, and his intention to make the offer to the court, and his desire to have complainant's assistance in the reorganization, provides on defendant's part: (1) That he will make the offer within 20 days; (2) that, if the offer is accepted, he will cause a corporation to be formed forthwith, to which the property and assets in the hands of the receivers will be transferred; (3) that on the consummation of the purchase and transfer, defendant will cause three notes of the new company to be given, payable to complainant's order, for $5,000 each, dated on the day of the transfer, and payable, respectively, one, two, and three years from the date of the transfer, and indorsed by John V. Bacot George L. Record, and defendant, in the order named, with interest from date; and (4) that at the time of giving the notes defendant will execute a proper instrument releasing complainant from any and all claims or demands which he may have against him. Following this recital and the defendant's agreements, the complainant on his part, "in consideration of the premises, and upon the fulfillment of the promises and agreements made by the party of the first part" agreed (1) to execute and deliver to the defendant a release from all claims (except on the notes of the new company) which complainant may have against the said company or defendant; (2) to purchase and assign to the defendant the claims of William Lyle and of Frederick Haffe against the Terra Cotta Lumber Company; (3) to sell, assign, and transfer to defendant all his stock of the company, amounting to about 396 shares; and (4) to give his services in bringing about a reorganization. The agreement which was under seal was signed by the complainant, and upon defendant's part, in his name, by Asa W. Dickinson, as his attorney in fact. The answer denies the authority of Mr. Dickinson to sign the agreement, and the first question to be decided is one of fact whether the defendant authorized Mr. Dickinson to sign it as his attorney.

Without going into details, I will merely state that my conclusion reached upon the oral examination before me, and confirmed upon reading over and again considering the evidence bearing upon the issue, is that the complainant has satisfactorily made out, by the clear weight of evidence, that the agreement was signed by Mr. Dickinson as defendant's attorney, and by virtue of express previous authority given to him by defendant. The authority was given by a letter signed by defendant, which was, according to the evidence of three credible witnesses, produced at the time of the execution of the agreement, and from the terms of which it was substantially drawn, except in the respect that the provision for "interest from date" on the notes was not contained in the letter. As to this, the understanding between the parties was that the letter did not contain express authority to add the Interest clause, and that, if the defendant repudiated this part of the agreement, complainant would not insist upon it. Defendant, according to his own statement was within a week informed by Mr. Dickinson of the execution of the agreement; and, while he now says that he then told Mr. Dickinson that he (Dickinson) had no authority to sign an agreement for a general release, he did not then, or at any time previous to the hearing in this cause, specially object to the provision relating to interest, nor is any objection on that account made in the answer in the cause. Defendant's objections, made, as he says, within a week, to Mr. Dickinson, appear to have been confined to his authority to execute an agreement for a general release. There does not appear to have been any direction by defendant to Mr. Dickinson to notify complainant of any...