Sweeney v. Foster

• Decision Date: 08 June 1911
• Citation: 112 Va. 499,71 S.E. 548
• Court: Virginia Supreme Court
• Parties: SWEENEY. v. FOSTER et al.

112 Va. 499

71 S.E. 548

SWEENEY.

v.FOSTER et al.

Supreme Court of Appeals of Virginia.

June 8, 1911.

1. Contracts (§ 324^*)—Action—Adequacy or Remedy at Law.

An action by one acquiring by contract the right to purchase corporate bonds lodged with a committee appointed by bondholders, brought against the committee selling the bonds to another in violation of the contract, to recover a specified sum, is an action on a legal claim, and a suit in equity is not maintainable.

[Ed. Note.—For other cases, see Contracts, Cent. Dig. § 1550; Dec. Dig. § 324.*]

2. Assignments (§ 117*)—Action by Assignor.

Under Code 1904, § 2415a, providing that when the legal title to any claim for the enforcement of which equity has jurisdiction is in one person, and the beneficial equitable title is in another, the latter may sue, etc., one who acquired by contract with a committee of holders of corporate bonds the right to purchase the bonds, and who assigned the contract to a third person for a valuable consideration, could not maintain an action against the committee selling the bonds to another, without first obtaining a reassignment of the contract from the third person, not appearing in the action, and not served with process; the committee and the third person refusing to reassign not acting in concert.

[Ed. Note.—For other cases, see Assignments, Cent. Dig. §§ 189-191; Dec. Dig. § 117;* Parties, Cent. Dig. § 8.]

3. Equity (§ 94*) — "Necessary Parties" — Who are.

All persons who are interested in the subject-matter of a suit, and who will be affected by the results thereof, are "necessary parties."

[Ed. Note.—For other cases, see Equity, Cent. Dig. § 252; Dec. Dig. § 94.*

For other definitions, see Words and Phrases, vol. 5, pp. 4720, 4721.]

4. Cancellation of Instruments (§ 3*)— Right to Relief.

To justify a rescission of a contract, the facts must show that plaintiff is entitled in equity to the relief, and the court must be able substantially to restore the parties to the position which they occupied before they entered into the contract.

[Ed. Note.—For other cases, see Cancellation of Instruments, Cent. Dig. §§1, 5; Dec. Dig. § 3.*]

5. Assignments (§ 129*)—Actions —Necessary Parties.

A committee of holders of corporate bonds contracted to sell the bonds on specified terms to a third person, who assigned the contract to an assignee, paying a valuable consideration, and acquiring the absolute title to the contract. The third person subsequently recognized the assignment. The committee sold the bonds to another. Held that, in an action by the third person against the committee for damages for making the sale, the assignee was a necessary party, without whose presence justice could not be done to the committee.

[Ed. Note.—For other cases, see Assignments, Cent. Dig. § 219; Dec. Dig. § 129.*]

Appeal from Law and Chancery Court of City of Norfolk.

Suit by A. L. Sweeney against S. L. Foster and others. From a decree of dismissal, complainant appeals. Affirmed.

Wm. L. Royall, for appellant.

D. Lawrence Groner and Tazwell Taylor, for appellees.

CARDWELL, J. A. L. Sweeney filed the bill in this cause against S. L. Foster, W. T. Simcoe, and W. O. Cobb, of Norfolk, Va., and Frank T. Zell and J. W. Van Dyke, of Philadelphia, Pa., as defendants. Foster, Simcoe, and Cobb, upon whom there was personal service of process, demurred to the bill on a number of grounds, which demurrer was sustained. Whereupon complainant filed his amended bill, to which there was a demurrer by the same defendants, which likewise was sustained, and the amended bill dismissed, to which order dismissing the amended bill this appeal is taken. The defendants Zell and Van Dyke, being nonresidents of the state of Virginia, have never been personally served with process to answer either the original or amended bill, nor have they ever appeared in this cause.

The following statement of the facts to be gathered from the allegations of the amended bill is sufficient to enable us to pass upon the demurrer thereto sustained by the trial court, and which ruling is the only assignment of error requiring our consideration, to wit:

The Bay Shore Terminal Company, a local street car company operating in and about Norfolk, Va., had created a mortgage on its property to secure $500,000, the amount of its negotiable coupon bonds, $178,000 of which had been issued and were in the hands of the public. It had also made notes, aggregating an additional large sum, which weresecured by the deposit of a large portion of the remaining unissued bonds as collateral security. Being unable to meet its obligations, the road was placed in the hands of receivers by a federal court, and the holders of the greater portion of the $178,000 of bonds just mentioned, for their mutual protection, appointed a committee, consisting of Foster, Simcoe, and Cobb, with whom the bonds of such holders as joined therein were deposited, under the terms of a power of attorney, by which the committee was authorized, as they saw fit, to dispose of the same, and to make any contract with respect thereto for the benefit of their principals.

The amended bill of Sweeney alleges that subsequent to the appointment of the committee he entered into an agreement with them, dated September 12, 1905, whereby he was given the right to purchase all the bonds lodged with the committee at a certain stipulated price, and that after entering into this alleged contract he entered into negotiations with one Charles A. Burr, of Philadelphia, Pa., whereby Burr was to procure the capital, and in consideration thereof was to have an interest in any profits that might be made in the transaction, and to whom the contract was assigned as an evidence of good faith. It is then alleged that after the assignment of the contract to Burr, and after the latter had promised all parties in interest, including Sweeney, to carry out the contract, he put off the matter from time to time, and finally proved untrue to the employment, in that he undertook to purchase the interest of the individuals who had pooled their bonds, and thereby sought to render the contract between them and the complainant, Sweeney, impossible of fulfillment; that subsequently, and after the discovery of Burr's bad faith by Sweeney (though the time is not stated), Burr reassigned the contract to Sweeney, and then, according to the allegations of the amended bill, the complainant Sweeney's alleged contract was never carried into effect, but in the latter part of January, 1900, the committee disposed of the bonds to Edward B. Smith & Co., of Philadelphia, who paid for and used them in the purchase of the railroad at the foreclosure sale which followed. It is further alleged that subsequently to this Sweeney, through his attorney, endeavored by a bill in chancery to enjoin the committee from carrying out the contract with Smith & Co., but the injunction was refused, and the bill asking for the injunction was never filed; that subsequently to that the same or a similar bill was filed in the court of law and chancery of the city of Norfolk, but was dismissed by Sweeney, without any effort being made to prosecute it.

It further appears from the amended bill that in April, 1906, Sweeney assigned his contract with the committee to one Frank D. Zell, as agent for John W. Van Dyke, and received a large sum of money in payment on the contract of assignment, and that subsequently, while the title to the contract was still vested in Zell, Sweeney brought suit in a federal court in Pennsylvania against Smith & Co., as well as against Zell and Van Dyke, the purpose of which was to require Zell and Van Dyke, for reasons set out, to reassign the contract—that is, the contract between Sweeney and the committee—to Sweeney, to enable the latter in the same suit to obtain a decree against Smith & Co. for certain alleged profits they were supposed to have made out of the bonds purchased from the committee. Smith & Co. and Zell and Van Dyke demurred to that bill, and the demurrer as to Smith & Co. was sustained, upon the ground that there was no legal liability upon them to Sweeney; and their action in the purchase of the bonds was fully approved, which ruling was affirmed upon appeal by the United States Circuit Court of Appeals of the Third Circuit, and also by the United States Supreme Court, in denying the application...