Safford v. Barber

• Decision Date: 16 May 1908
• Citation: Safford v. Barber, 74 N.J.Eq. 352, 70 A. 371 (N.J. Ch. 1908)
• Parties: SAFFORD v. BARBER.
• Court: New Jersey Court of Chancery

70 A. 371

74 N.J.E. 352

SAFFORD

v. BARBER.

Court of Chancery of New Jersey.

May 16, 1908.

(Syllabus by the Court.)

Bill for specific performance by James B. Safford against John C. Barber. Defendant filed a general demurrer to the bill. Demurrer overruled.

Gilbert Collins, for complainant.

Charles D. Thompson, for defendant.

WALKER, V. C. The bill in this case alleges: That the Standard Car Truck Company, a corporation existing under and by virtue of the laws of the state of New Jersey, was organized with a total amount of capital stock of the par value of $150,000; the shares being $100 each. That the defendant, who was one of the organizers of the company and its principal stockholder, received 1,490 out of the total issue of 1,500 shares, and, upon the incorporation of the company became, and has continued to be, one of its directors and its president. That the defendant, Mr. Barber, persuaded the complainant, Mr. Safford, because of the hitter's extensive acquaintance with railroad organizations throughout the country, to enter into the employment of the Standard Car Truck Company for a period of three years; the complainant to be paid his necessary expenses and the sum of $7 for each truck he should succeed in getting various railroad companies to put upon its cars, and, in addition, the defendant was to give to the complainant $25,000 worth, par value—that is, 250 shares—of the full paid capital stock of the company, and to have the complainant elected a director therein, to all of which the defendant agreed, and the company thereinafter, upon the request of the defendant, ratified the employment of the complainant and provided for his compensation as above stated, and he was elected one of the company's directors. That for upwards of two years the complainant continued successfully in the active discharge of his duties under the terms of his employment with the company, and while so in the employ of the company, and while he was performing his services, and without his consent or without legal justification, the company discharged him from its employment, notwithstanding his protests and his insistment that he should be allowed to continue his duties during the remainder of the term of his employment under the contract. That while the complainant was employed by the company, and at different times, the defendant delivered to him in all 35 shares of the company's capital stock, and no more. That the business of the company is now (1901, when the bill was filed) valuable and sells for almost par. That the defendant has failed and neglected to carry out his part of the agreement with the complainant, namely, to deliver him the balance of the stock of the company, although often requested so to do. That the defendant still has and possesses sufficient of the capital stock of the company, full paid, to carry out his contract with the complainant. That the defendant brought about and influenced the discharge of the complainant from the company which he (the defendant) controls. That the defendant claims and pretends that, because the complainant did not perform the services for the company for the entire period of hiring (three years), that he (the defendant) is exonerated and relieved from delivering any further stock to the complainant. The defendant was served personally with subpœna in this state on January 2, 1901, and the cause slept until October 21, 1907, when the complainant took an order on him to plead, answer, or demur within 30 days after service upon his solicitor of a copy of the order. On November 4, 1907, the defendant applied for and obtained an order for security for costs, the complainant being a nonresident of New Jersey, and, security being given, the defendant on December 2, 1907, filed a general demurrer to the bill. Counsel for the defendant asserts that the demurrer to the bill raises the question of want of equity, and that the want of equity is that the complainant has an adequate remedy at law. This was the only proposition discussed upon the hearing.

Rule 209 of this court requires that every demurrer, whether general or special, shall distinctly specify the ground or several grounds of demurrer. It has been held, however, that, notwithstanding the rule just mentioned, a simple statement of want of equity, in the usual language of a general demurrer, will constitute a sufficient specification of the ground of the demurrer in cases where the court finds, on looking at the complainant's bill, that his right to relief is doubtful or uncertain; but where the defect is obscure or latent to such an extent that the court, on inspecting the complainant's bill, cannot readily discern it, there the demurrant will be required to make a more explicit statement of the ground on which his demurrer is founded. Essex Paper Co. v. Greacen, 45 N. J. Eq. 504, 19 Atl. 406; Parker v. Stevens, 61 N. J. Eq. 163, 47 Atl. 573; Goldengay v. Smith, 62 N. J. Eq. 354, 50 Atl. 456; Demarest v. Terhune, 62 N. J. Eq. 663, 50 Atl. 604; Larter v. Canfleld, 59 N. J. Eq. 461, 494, 45 Atl. 616. However, under the same rule (209, formerly 225), the grounds of demurrer must be specified even where the defect in the bill is plain, if that defect be collateral to the main issue. Van Houten v. Van Winkle, 46 N. J. Eq. 380, 20 Atl. 34. In this case (Van Houten v. Van Winkle) the defendant under a general demurrer relied upon laches as a cause appearing upon the face of the bill which showed a lack of equity. Chancellor McGill remarked, at page 386 of 46 N. J. Eq., page 30 of 20 Atl.: "I will not say that the laches exhibited by this bill is not readily discernible, but I am most decidedly of the opinion that within the letter and spirit of the rule it was the duty of the demurrant to indicate that it was because of laches that he demurred. Not only should specification be made where the defect in the bill is obscure, but also even where it is plain, if it is collateral to the main case made by the bill, as it is in this instance." As no objection was made to the form of the demurrer, it was sustained.

It is at least doubtful, to my mind, whether the question of adequate remedy at law is not collateral to the main case, the same as laches was held to be in Van Houten v. Van Winkle, ubi supra; but, be this as it may, it seems that legal remedy, when relied upon for cause of demurrer in a chancery suit, must be specified as a cause of demurrer. Bishop v. Waldron, 56 N. J. Eq. 484, 40 Atl. 447; same case on appeal, 58 N. J. Eq. 583, 43 Atl. 1098. In this case (Bishop v. Waldron), it is stated by Chancellor McGill (at page 487 of 56 N. J. Eq., page 488 of 40 Atl.) that the statute under which the complainant's bill was filed did not require any allegation to the effect that it was not in the complainant's power to put to rest the claim of the defendant with reference to the complainant's lands by one of the ordinary processes of the law. Nevertheless, it was squarely decided (at page 486 of 56 N. J. Eq., page 488 of 40 Atl.) that the ground relied upon by the demurrant that the bill did not allege that the complainant cannot attack the claim of the defendants by suits at law—that is, that the complainant has no adequate legal remedy—was objectionable under the rule which requires that the particular grounds upon which it rests shall be specified as construed in Essex Paper Company v. Greacen, and Van Houten v. Van Winkle, ubi supra. Chancellor McGill, in this connection, remarked: "The grounds taken at the argument could have been distinctly stated in the demurrer in intelligible propositions." If this is the test, then the rule would seem to be this: Where the case made by the bill—that is, where all the facts, taken together—make a case in which it is doubtful if the complainant be entitled to relief, the bill may be assailed for want of equity under a general demurrer; but where the want of equity springs out of some concrete proposition, whether collateral to the bill, strictly speaking, or whether involved in the main case, then the cause of demurrer must be specified.

While I hold that the demurrer in this case is bad for want of specification of the cause upon which the alleged lack of equity is rested, nevertheless, as the question of the sufficiency of the bill was fully argued upon the demurrer, I will decide that question also. Counsel for the defendant urges specific performance of a contract for the purchase or sale of stock will not be decreed where the stock is purchasable on the market or has a money value which may be readily computed, and cites 26 Am. & Eng. Ency. of Law (2d Ed.) p. 122. This is undoubtedly a correct exposition of the law; but the stock of a commercial or industrial corporation, which is usually a close corporation, so called—that is, one owned and controlled by a coterie of individuals—is usually not for sale, and has no market value. The bill in this case alleges that the defendant organized and controls the corporation whose stock the complainant seeks. It is a "close corporation." I think the complainant's case falls more nearly within that other rule stated in 26 Am & Eng. Ency. of Law (2d Ed.) p. 122, namely, that where the corporate stock to which the contract relates is not procurable in the market, and its pecuniary value is not readily ascertainable, specific performance will, as a rule, be decreed, especially where the court acquires jurisdiction of the action on the ground that there is an action to enforce a trust.

In Adderly v. Dixon, 1 Sim. & Stu. 608, 610, Sir John Leach, V. C, said: "A court of equity will not generally decree performance of a contract for the sale of stock or goods, not because of their personal nature, but because damages at law, calculated upon the market price of the stock or goods, are as complete a remedy to the purchaser as the delivery of the stock or goods contracted for, inasmuch as, with the damages, he may purchase the same...