Zabarsky v. Flemings

• Decision Date: 26 June 1943
• Docket Number: No. 306.,306.
• Citation: 32 A.2d 663
• Parties: ZABARSKY et al. v. FLEMINGS et al.
• Court: Vermont Supreme Court

32 A.2d 663

ZABARSKY et al.

v.FLEMINGS et al.

No. 306.

Supreme Court of Vermont.

May 4, 1943.

Reargument Denied June 26, 1943.

Exceptions from Court of Chancery, Chittenden County; Henry F. Black, Chancellor.

Suit by Harry D. Zabarsky and another, copartners doing business as the St. Johnsbury Trucking Company, against Edward C. Flemings and another for an injunction and specific performance. On exceptions to the overruling of a demurrer to the bill.

Affirmed and cause remanded.

Before MOULTON, C. J., and SHERBURNE, BUTTLES, STURTEVANT, and JEFFORDS, JJ.

Bove, Billado & Dick, of Rutland, Horace P. Moulton, of Boston, Mass., and John D. Carbine, of Rutland, for plaintiffs.

George L. Agel and A. Pearley Feen, both of Burlington, for defendants.

SHERBURNE, Justice.

This cause is here before final decree upon exceptions to the overruling of defendant Marcell's demurrer to the bill of complaint. The bill alleges the following facts: At all times material defendant Flemings was engaged in interstate trucking. Under the Federal Motor Carrier Act of 1935, 49 U.S.C.A. § 301 et seq., he was required to bring certain proceedings to secure the benefit of claimed rights under the Act. His procedure to secure these rights was late and inefficient, so that in May, 1939, his ability to secure such rights was in doubt. On May 29, 1939, he signed and gave to the plaintiffs an agreement of that date relating to certain operating rights being sought of the Interstate Commerce Commission, and reading as follows: “I am selling all my freight rights with the exception of my furniture business to the St. Johnsbury Trucking Co. of St. Johnsbury between Boston and Burlington, Vt., and Albany, N. Y., and Burlington, Vermont, for the sum of one hundred dollars ($100) received deposit of ($5.00) five dollars. Ninety-five ($95) to be paid when my rights are proven”, and was paid $5 pursuant to the terms of the agreement. On March 9, 1942, the Interstate Commerce Commission issued a compliance order, so called, to take effect April 24, 1942, confirming to him the rights described in the above agreement. This order was not final since it was subject to be reopened for reconsideration by any of the parties to the proceedings before the Commission, and on April 20, 1942, a petition to reopen was filed by certain rail carriers, so that the order does not fully and finally prove the rights. While waiting for Flemings to prove his rights, on May 21, 1942, the plaintiffs discovered that Flemings and defendant Marcell had made an application to the Commission, docketed on May 13, 1942, that Flemings might receive permission to sell and transfer his said operating rights, and later the plaintiffs discovered that attached to the petition was a bill of sale dated April 10, 1942, in which Flemings purported to sell to Marcell, subject to the approval of the Commission, his regular route as described in the above agreement. The plaintiffs stand ready to perform their agreement with Flemings when his rights are proven. The bill alleges that the plaintiffs have no adequate remedy at law, and that it is probable that Marcell will operate under the franchise purchased, which will result in competitive disadvantage to plaintiffs gained by the fraudulent acts of Flemings. The bill prays for a temporary injunction that the defendants be enjoined from proceeding further in the prosecution of the joint application before the Interstate Commerce Commission, and seeks to have the bill of sale dated April 10, 1942, adjudged to be null and void, to have the plaintiff's agreement with Flemings specifically performed, and that both defendants be ordered to discontinue their proceeding before the Commission for the approval of the sale to Marcell. The grounds of demurrer briefed are, that the bill of complaint alleges no equities in favor of the plaintiffs from Marcell, and that he is a bona fide purchaser and the bill of complaint makes no claim to the contrary.

[1] No claim is made that the plaintiffs hold anything but an equitable interest under their agreement with Flemings, so the only question for determination is the nature of the interest held by defendant Marcell, for, if he holds only an equitable interest also, the plaintiffs' right being prior in time is deemed the better in right. Island Pond Nat. Bank v. Lacroix, 104 Vt. 282, 300, 158 A. 684, and cases cited. The doctrine which protects a bona fide purchaser for value and without notice of existing equities has no application where the rights of a vendee lie in an executory contract. It does not apply where the legal title has not been conveyed. Villa v. Rodriguez, 12 Wall. 323, 20 L.Ed. 406; Island Pond Nat. Bank v. Lacroix, supra.

Transactions for the purchase of the properties of one interstate carrier by another are within the scope of sec. 5(2) (a) of the Interstate Commerce Act, 49 U.S.C.A. § 5(2) (a), which provides: “It shall be lawful, with the approval and authorization of the Commission, as provided in subdivision (b) *** for any carrier *** to purchase *** the properties, or any part thereof, of another.” Subdivision (b) provides: “Whenever a transaction is proposed under subparagraph (a), the carrier or carriers or person seeking authority therefor shall present an application to the Commission. *** If the Commission finds that, subject to such terms and conditions and such modifications as it shall find to be just and reasonable, the proposed transaction is within the scope of subparagraph (a) and will be consistent with the public interest, it shall enter an order approving and authorizing such transaction, upon the terms and conditions, and with the modifications, so found to be just and reasonable.”

The application of defendants Flemings and...