Rigg v. Reading & Southwestern Street Railway Co.

• Decision Date: 08 May 1899
• Docket Number: 16
• Citation: 43 A. 212,191 Pa. 298
• Parties: John A. Rigg and William Rebmann v. The Reading and Southwestern Street Railway Company, James W. Shepp, President, James W. Shepp, Daniel B. Shepp, Vincent S. Seltzer, Secretary and Treasurer, and Vincent S. Seltzer, Appellants
• Court: Pennsylvania Supreme Court

43 A. 212

191 Pa. 298

John A. Rigg and William Rebmann v. The Reading and Southwestern Street Railway Company, James W. Shepp, President, James W. Shepp, Daniel B. Shepp, Vincent S. Seltzer, Secretary and Treasurer, and Vincent S. Seltzer, Appellants

No. 16

Supreme Court of Pennsylvania

May 8, 1899

Argued March 1, 1899

Appeal, No. 16, Jan. T., 1899, by defendants, from decree of C.P. Berks Co., Jan. T., 1899, No. 694, on bill in equity. Reversed.

Bill in equity for specific performance. Before ERMENTROUT, P.J.

The facts appear by the opinion of the Supreme Court.

Error assigned was the decree in favor of plaintiffs.

The decree is reversed, and the injunction directed to issue by the court below is dissolved; the bill is dismissed at costs of appellees.

Cyrus G. Derr and John G. Johnson, with them John H. Rothermel and Ermentrout & Ruhl, for appellants. -- The verbal arrangement between Rebmann and the Shepps, under which the Shepps purchased the stock in question for Rebmann and advanced the purchase money and broker's commission therefor, whereby Rebmann agreed that he would not sell the stock without giving the Shepps an opportunity to buy, was based upon a sufficient consideration, and was binding upon Rebmann and Rigg: Hoadley v. McLaine, 10 Bing. 482; Wood's App., 92 Pa. 379; Beach on Modern Equity Jurisprudence, sec 566.

Equity will not compel the specific performance of contracts relating to chattels. The exceptions to this rule are few and the appellees have not brought their case within any of the exceptions: McGowan v. Remington, 12 Pa. 56; Foll's App., 91 Pa. 437; Goodwin Co.'s App., 117 Pa. 514; Edelman v. Latshaw, 159 Pa. 644; Roland v. National Bank, 135 Pa. 598.

The purpose for which Rigg seeks to possess himself of the shares of stock in question is to obtain the control of the Reading and Southwestern Street Railway, and a court of equity will not make a decree for the specific performance of a contract for the purchase of shares of corporate stock when such shares are sought for the purpose of obtaining control of the corporation, especially when such decree would result in placing one of two competing lines of street railway under the control of the company owning the other line: Foll's App., 91 Pa. 434.

Richmond L. Jones and George F. Baer, with them James A. O'Reilly, for appellees. -- The pooling agreement was invalid: Moses v. Scott, 4 So. 742; People v. North River Sugar Refining Co., 121 N.Y. 582; Cook on Stock and Stockholders, sec. 622.

The pooling agreement having been admittedly invalid, and indeed abandoned by all the parties thereto, Shepp should have delivered the Rebmann certificates to Rigg when the demand was made, and, failing so to do, a court of equity will decree the delivery: Gilpin v. Howell, 5 Pa. 42; Forrest v. Elwes, 4 Ves. 492; Payne v. Burke, cited in note, 2 East, 213; Shepherd v. Johnson, 2 East, 211; McArthur v. Seaforth, 2 Taunton, 258; Harrison v. Harrison, 1 Car. & Payne, 412; Greening v. Wilkinson, 1 Car. & Paine, 625; Cortelyou v. Lansing, 2 Caines's Cases, 216; Hart v. Ten Eyck, 2 Johns. Ch. Rep. 117; Clark v. Pinney, 7 Cowen, 681; Mechanics' Bank of Alexandria v. Seton, 1 Peters, 299.

The real owner of stock may compel the nominal owner to transfer the stock to him: Smith v. Lee, 77 F. 779.

Before STERRETT, C.J., GREEN, McCOLLUM, DEAN and FELL, JJ.

OPINION

MR. JUSTICE DEAN:

This case is on the equity side of the court; it is an appeal to a chancellor to reach forth his strong hand and take from an alleged wrongdoer, chattels, unjustly withheld from an alleged clean handed innocent owner. The response to the appeal has been favorable and full. It is, in substance, based on these findings of fact:

One William Rebmann, being the owner of 159 shares of stock of the Reading and Southwestern Street Railway Company, on December 8, 1897, for the consideration of $9,687.74, by written contract, sold and agreed to transfer them to John A. Rigg, his coplaintiff. At the time, the certificates of stock were in possession of James W. Shepp and Daniel B. Shepp, who laid claim to them under a verbal contract of sale made with them by Rebmann ten days before the sale to Rigg, to wit: on November 29, 1897; this alleged prior sale was wholly ineffectual to pass title to, or put right of possession in, the Shepps, therefore, the Shepps were ordered to deliver the shares of stock to Rigg.

Assuming, for the purpose of this issue, these to be the established facts, do they, in the face of other established facts, warrant the interference of equity?

How came these stocks into the possession of the Shepps? Rebmann, one of the plaintiffs, testifies as follows:

"Q. You said they advanced the money to purchase this stock? A. Yes, sir. Q. And isn't it a fact that they said to you that they wanted to increase their influence in the company? A. Yes, sir. Q. And that they would put these shares in your hands? A. Yes, sir. Q. And that you should not sell them to any person unfriendly to them without giving them first chance? A. Yes, sir. Q. Was that said? A. Yes, sir; that was the agreement. I was to stick to the Shepps and that they would stick to me. Q. Was that said at the beginning of these different purchases? A. Yes, sir; I went in with that understanding; that is how I came to get into this affair at all. Q. You knew nothing of this railroad until the Shepps talked to you about it? A. No, sir; I went over the road with Mr. Shepp before it was completed. Q. Before it was completed? A. Yes, sir. Q. The purchase of stock by you was suggested by Mr. Shepp? A. Yes, sir."

James W. Shepp, one of defendants, testified thus:

"Mr. Rebmann started buying shares of the Reading and Southwestern Street Railway Company as early as the fall of 1892 or spring of 1893; it was through my suggestion that he bought shares, and at the time the arrangement was that the shares that he purchased were for our mutual interest, and that at any time he wanted to dispose of his shares they were to come back to either myself or my brother; we asked him to invest because he said he had some money, and we wanted to increase our holdings in the road, and we being friends of his, for that reason we encouraged him to go in with us on a mutual basis. Shares were bought from time to time during 1893 and 1894 at different intervals; we invariably advanced the money to buy the shares, and he would pay us on account as he could. The first sixty-nine shares that we purchased were transferred to him and were in his name on the books of the company; the other ninety shares have never been transferred to him; they never stood in his name; they have always been in my name for the reason that we were not fully paid for them, and for the further reason that we considered them the same as our own, because when Mr. Rebmann wanted his money he could get it at any time for the shares; it was mutually agreed that at any time he needed the money we would return it to him, or, in other words, purchase his stock.

"Q. Was the price at which you were to purchase his stock fixed at any time? A. Prior to November 29, the price was not fixed, but on November 29, the price was fixed at $100 a share. Mr. Rebmann come into our office quite frequently and inquired as to the progress of the road and seemed to be very much interested in it. My brother made him a proposition of $100 a share on November 29, which he told me of the following day. Q. Were you there when the proposition was made? A. No, sir. Q. You were not there on the 29th, when the proposition was made? A. No, sir; I was not there at that time, on that day. Q. Did your brother report it to you afterwards? A. My brother reported it."

The testimony of D. B. Shepp is in complete accord with that of his brother. As to the main fact, that Rebmann's purchases were made with the understanding, that the stock was to be held to promote their mutual interests, -- that is Rebmann, to use his own language, was to stick to the Shepps and the Shepps were to stick to him, and Rebmann was not to sell to unfriendly parties without giving them the first chance to purchase, -- there is no conflict in the testimony; and it is just as undisputed that by reason of...