van Name v. Fed. Deposit Ins. Corp.

• Decision Date: 29 November 1941
• Docket Number: 139/3
• Citation: 130 N.J.Eq. 433,23 A.2d 261
• Parties: VAN NAME v. FEDERAL DEPOSIT INS. CORPORATION.
• Court: New Jersey Court of Chancery

23 A.2d 261

130 N.J.Eq. 433

VAN NAME

v. FEDERAL DEPOSIT INS. CORPORATION.

139/3

Court of Chancery of New Jersey.

Nov. 29, 1941.

Syllabus by the Court.

1. One who, seeking to establish an oral contract and to, in effect, enforce its specific performance, prays the intercession of equity to halt the prosecution of an action at law, necessarily submits his motives and conduct to the scrutiny and judgment of equity and must rely upon the exercise of its sound legal discretion.

2. Equity respects the rights and proceedings of co-ordinate tribunals and is always reluctant to interfere with an action at law. It is only when the circumstances disclose that it would be against conscience to permit a party to proceed in the law court that it will interfere by injunction.

3. An injunction is not granted as a matter of right, but its granting or refusal rests in the sound discretion of the court, under the circumstances and the facts of the particular case. It is the strong arm of equity. There is no power, the exercise of which is more delicate, which requires greater caution, deliberation and sound discretion, and which is more dangerous in a doubtful case than the issuing of an injunction.

4. An injunction to restrain a breach of contract often operates as, and effects all the purposes of, a decree for specific performance and, as a general rule, to enjoin one from violating a contract is an indirect method of enforcing its affirmative provisions. The jurisdiction exercised is in substance the same, and the same general rules apply in the one case as in the other.

5. The remedy by injunction is an extraordinary one and may not be awarded to any suitor unless and until his right to it is established by clear and convincing testimony, free of all reasonable doubts. If complainant's asserted right is doubtful or disputed, equity will move cautiously before determining to grant him a remedy by injunction.

6. The burden of establishing the right asserted is upon him who asserts it. It will not suffice for the complainant to leave the proofs in such shape that a reasonable doubt remains, for to doubt is to deny. If the existence of a contract is in doubt or its existence is not proved with that degree of certainty which the law requires, an injunction against a breach thereof will be refused, the relief being improper where it is not clear what acts are to be performed.

7. A party seeking injunctive relief must show himself free from all just imputation of wrongdoing in connection with the matter forming the subject of his application. If the right asserted is an alleged contract right, equity will not enforce it if it has been dishonorably obtained; he who seeks the aid of equity must have done equity in respect to the matter before the court.

8. Silence may be fraudulent: If either party to a transaction conceals some fact which is material, which is within his own knowledge, and which it is his duty to disclose, he is guilty of actual fraud.

9. What is meant by the "meeting of minds" which is essential to the integration of a contract is not determined by the secret but by the expressed intention of the parties, which may be wholly at variance with the secret intention; the obligation of a contractor depends upon his expressed, not his actual, intention.

Suit by Elmer G. Van Name against the Federal Deposit Insurance Corporation to enjoin defendant permanently from proceeding with a suit at law to enforce payment of two notes.

Order in accordance with opinion.

Carl Kisselman, of Camden, for complainant.

Grover C. Richman, of Camden, for defendant.

WOODRUFF, Vice Chancellor.

Complainant seeks to permanently enjoin defendant from proceeding with a suit at law to enforce payment of two promissory notes. It is his contention that defendant's predecessor in title to the notes entered into a contract of compromise which is binding on defendant and should be performed. Defendant admits that, on several occasions, the possibility of a compromise of these obligations was discussed, but insists that there was never an integration of a contract. It charges that its assignor always conditioned any possible compromise of the obligations it held upon equal treatment with all other banks concerned; that complainant secretly intended making and effected more liberal settlements with other banks and that, in consequence, there was never a "meeting of the minds."

Complainant is a member of the Bar and an active practitioner. In 1935 he was in financial difficulties. His principal creditors, with which he had been endeavoring to effect a compromise for several years, were First Camden National Bank and Trust Company, Broadway-Merchants Trust Company, Haddonfield Trust Company, Haddonfield National Bank, West Jersey Trust Company, South Camden Trust Company, and American National Bank. In July, 1935, complainant met with representatives of these creditors in the law office of Henry A. Stockwell who represented Camden Safe Deposit and Trust Company, which institution was then liquidating Broadway-Merchants Trust Company and Haddonfield Trust Company, the original payees of the two notes here involved. It was proposed by the banks that complainant settle with them for $10,000, payable over a period of time, all banks to be treated alike. To this complainant agreed, insisting however that he fix the terms of payment. These terms were submitted by their representatives to each bank and, being unacceptable to several, were rejected.

On November 4, 1935, complainant wrote a letter to C. Russell Briant, Assistant Treasurer of Camden Safe Deposit and Trust Company, submitting an offer of settlement of the two notes with which we are presently concerned. The offer was to pay $30 in cash and $10 monthly thereafter until $840, in all, had been paid. On December 10, 1935, complainant wrote, withdrawing this proposal. Up to this point there is little, if any, disagreement between the parties as to the facts.

Mr. Briant testified that, after December 10, 1935, and before the middle of the month, complainant visited him and proposed a compromise identical with that here sought to be established. It was to pay 15% of principal, 5% in cash and 10% in installments. Mr. Briant then advised complainant that, in his opinion, this proposition would not be accepted by his bank committee. He added: "all banks will have to receive the same as far as we are concerned"; we "would go along provided all banks were treated alike"; "if we accepted it it would have to be the same percentage for all bank creditors and it would be subject to the approval of our committee." Complainant, Mr. Briant testified, replied that, "He felt all banks could be treated and handled alike"; that "he didn't think he would have any trouble making disposition of his claims on that basis"; "he thought it could be arranged with all bank creditors".

Complainant denied this visit and conversation in toto, in fact, declared that, after failure of the negotiations had in the office of Mr. Stockwell, he did not contact Mr. Briant until subsequent to the date of a settlement he made of his South Camden Trust Company note. However, in this interim, and on December 5, 1935, a petition in bankruptcy was filed against complainant; asked if Mr. Briant knew of the bankruptcy, complainant testified, "Yes, I mentioned that to him, and," etc. Also, very shortly after the visit and the conversation are alleged to have taken place, complainant called on Mr. Fletcher and arranged to settle the $1,000 claim of South Camden Trust Company for 15%.

After Mr. Fletcher had received payment and had returned his note to complainant by messenger, complainant personally visited Mr. Fletcher and solicited him to intercede with Mr. Briant. Complainant explained, Mr. Fletcher testified, "that he wasn't able to get anywhere with him, something to that effect." Mr. Fletcher telephoned Camden Safe Deposit and Trust Company and, Mr. Briant not being available, left a message for him. Complainant testified he heard Mr. Fletcher say, "that in my behalf he would make an offer of 15% in settlement of the obligations of the Broadway-Merchants and the Haddonfield Trust, 5% of which, that is, one-third of which was to be paid in cash and the remaining two-thirds on installments, which he set forth, without interest on the new unpaid balance, and asked he be given an answer to that message, and he also said that the West Jersey had settled their obligation, the West Jersey, liquidating the South Camden Trust Company, had done so." Mr. Briant returned the call and he testified that Mr. Fletcher "said his bank had agreed to accept 15% for the indebtedness of Mr. Van Name and wanted to know if we would do likewise, and I told him that I would refer it to our committee and let him know." After submitting the proposition to his committee, Mr. Briant again telephoned Mr. Fletcher. He testified that he "told him we would go along providing we were all treated alike." Mr. Fletcher was a witness and recollected that telephone calls had been made, but could not remember what was said.

When Mr. Fletcher made his first telephone call Mr. Briant's secretary made a written memorandum, which was amplified later by Mr. Briant when he talked with Mr. Fletcher. This paper is in evidence. On it appear the following: "Mr. Fletcher" "Call him this afternoon—or Tuesday morning." "15% settlement. H. Tr. Co., Bwy. Co. 5% cash-now. 10%—monthly payments over a period of time." "W. J. Tr. Co. has accepted the offer." "Amer. Nat. Will, W. J. Tr. has—1st Cam. is taking it up to-day." "O. K."

Immediately after being told by Mr. Briant that his bank would go along provided all banks were treated alike, Mr. Fletcher telephoned complainant. Then, on that day or during the first week of January, 1936, complainant called Mr. Briant on the telephone. Complainant testified: "'Fletcher just called me and said you have accepted my offer of 15%...