Rawll v. Baker-Vawter Co.

Clarke, P. J.: On the 6th day of June, 1908, the plaintiff and th® defendant entered into a written contract -under which the defendant employed the plaintiff in the capacity of traveling salesman for the period of two years from the 1st day of July, 1908, in certain prescribed territory at an agreed commission of — 331 — fifteen and one-half per cent. The plaintiff agreed upon his part to maintain the prices for the line of goods manufactured and for sale by the defendant, as stated in the price book or list furnished, and agreed to use his best efforts in pushing the sale of the goods and to visit all sections of the territory assigned to him and to devote his entire time to the sale of the goods of the defendant. The contract also contained this provision: “ Said first party shall not engage, directly or indirectly, either as owner or employee, or otherwise, in the manufacture or sale of loose leaf devices or loose leaf accounting systems within the territory described hereinbefore, in any relation other than as a representative of the said second party for the period of one year from the date of the expiration of this contract.” On the 27th of September, 1909, the plaintiff executed an instrument under seal in the form of a bond in the penal sum of $10,000 which contained the following provisions: “ The condition of the above obligation is such that whereas upon the 6th day of June, A. D. 1908, the parties hereto entered into a certain contract in writing wherein and whereby the said Rawll was employed by the said Company in the capacity of travelling salesman for a period of two years from the first day of July, A. D. 1908, and “ Whereas, the said Rawll has not fully performed the covenants of said agreement by him agreed to be performed, and Whereas, the said Rawll desires to continue his employment with said Company under the terms of said contract until the expiration thereof, and “ Whereas, the said Company is willing that said contract should be continued in full force and effect in accordance with the terms thereof provided the said Rawll makes and executes to it his bond and obligation to faithfully keep and perform all the terms and conditions of said contract agreed by him to be performed, “ Now, therefore, if the said Rawll 'shall do and perform each and all of the covenants of said contract agreed by him to be performed as therein provided and shall save, keep harmless and indemnify said Baker-Vawter Company, its successors, and assigns, and each and all of them, of and — 332 — from all actions, suits, damages, costs, loss or expenses whatsoever including attorney’s fees which shall or may at any time hereafter happen or come to them or either of them for or by reason of the breach or failure to perform by said Rawll of the covenants or conditions of said contract by him to be performed as therein provided then this obligation shall be void otherwise to remain in full force and effect. And the said Rawll hereby covenants and agrees *to and does at the time of the execution of this instrument deposit with the said Company two bonds Numbered 152 and 45 respectively, of the par value of $1,000 each, the same being a part of an issue of bonds of said Company of the aggregate amount of $250,000, as collateral security to this agreement and the said Rawll hereby covenants and agrees that in the event [he] shall violate any one of the covenants in said contract agreed by him to be performed as therein provided, then he shall then and thereby forfeit to the said Company the said bonds as and for liquidated damage's in full satisfaction and' discharge of any claim or claims of the said Company growing out of the breach or failure by him to perform such covenant and the said two bonds shall then and thereby be and become the absolute property of the said Company free and clear of any claim or claims of the said Rawll.” ' Thereafter Rawll resigned from the employment of the company, his resignation to take effect on January 1, 1910. The summons and complaint herein were served on the 7th day of April, 1916. The suit is in equity and the complaint alleges that on the 27th day of September, 1909, the plaintiff was the owner of two bonds numbered 152 and 45 respectively of the defendant company and that on or about the 6th of June, 1908, by contract in writing the defendant duly employed this plaintiff as a traveling salesman for a period of two years from the 1st day of July, 1908, and thereafter, and on or about the 27th day of September, 1909, the defendant procured this plaintiff, during the course of his employment, to deposit with it the two bonds owned by him aforesaid, without any consideration therefor and which defendant received from this plaintiff and undertook to hold the same during the life of the employment”‘”agreement above mentioned as security for the fidelity of this plaintiff in said employment, and the defendant — 333 — agreed to return said two bonds to this plaintiff when his said employment should terminate. That this plaintiff duly performed all of the terms and conditions on his part to be performed until on or about the 8th day of December, 1909, when it was agreed between the parties hereto that the said employment should terminate as of January 1, 1910, and that subsequent to said date plaintiff duly demanded the return of said bonds from this defendant which it refused to surrender, but wrongfully and unlawfully withholds without legal right; that said bonds are still in the possession of the defendant and constitute a peculiar species of personal property which have a special fluctuating value, and that the same were and are accompanied by interest-bearing coupons, which interest or dividends thereon from December, 1909, to December, 1915, amounted to the sum of $650, and was duly collected by defendant to plaintiff’s use, and further amounts since that time, for interest or dividends or both, accrued or accruing have been received by defendant thereon. That defendant claims said bonds of the plaintiff, in its possession, are not in the State of New York or within the jurisdiction of the courts of this State, and without the equitable intervention of this court plaintiff will be without adequate remedy at law. Wherefore he demands judgment directing the defendant to restore to him the said two bonds with all the coupons attached thereto and for the payment of the amount of all interest or dividends earned thereon. The defendant in its answer sets up as a defense that the plaintiff has an adequate remedy at law against the defendant upon the cause of action alleged in the amended complaint and that it is financially solvent and able to respond in damages for the breach of any contract to which it is a party. It also sets up as a separate defense the six years’ Statute of Limitations, and as a further defense it sets up the contract and the bond hereinbefore recited and alleges that subsequently to September 27, 1909, the date of the reinstatement of the contract and the making of the bond the plaintiff again violated said contract as revived and reinstated by departing from the price list therein provided and by — 334 — going into a competitive line in the territory allotted to him to cover before one year had elapsed after leaving the employ of the defendant, and otherwise broke and violated said contract with the defendant as so reinstated and revived. I do not think the plaintiff is entitled to recover for the following reasons: First. The plaintiff testified, under cross-examination, that after the 1st of January, 1910, and early in the year he engaged in the business of selling loose-leaf devices and similar merchandise to that, which he had sold for the defendant in the territory described in the contract, and that he turned said orders for this sort of merchandise over to different firms, and that he became connected with the Safety Systems Company early in 1910, and that he invested in said concern and became an officer thereof, and that they manufactured the loose leaf devices and systems similar to those manufactured by the Baker-Vawter Company. There was uncontradicted testimony by several witnesses that, during the period covered by the restrictions contained in his contract, they purchased from plaintiff, at a lower price than fixed by defendant, similar goods to those manufactured and sold by it." It was also testified that they dealt with plaintiff as representing defendant, and, in one case at least, attempted to rescind said order when it was discovered that the plaintiff was no longer in the employ of defendant. It seems to me, therefore, upon this evidence there was a direct breach of the contract and that plaintiff thereby lost all right, title and interest in the two bonds which he deposited as security for the faithful performance of his contract, which included the agreement not to engage in a similar business for a year after its termination. Second. I think that he cannot recover because he has an adequate remedy at law, either an action in replevin — the bonds in question being in possession of the defendant and having been produced in court on the trial of this action — or an action in conversion. As to such actions, however, the Statute of Limitations has run and, therefore, he was driven to attempt to recover by this action in equity. Having an adequate remedy at law an action in equity will not lie. He attempts to sustain the action in equity upon the ground — 335 — that he is entitled to a specific return of the two bonds sued for because in their nature he could not prove damages. It is well established in this State that an action for specific performance of a contract for the sale, and delivery of personal chattels and, specifically, for the securities, will not lie except under peculiar circumstances. In Clements v. Sherwood-Dunn (108 App. Div. 327; affd., 187 N. Y. 521) the plaintiff, in his complaint for specific performance of a contract for the sale of shares of stock, alleged that the stock of the said company was valuable but was not a listed stock, was not sold in the open market, and had no certain or fixed market value which would furnish a basis for the assessment of money damages, and that an action at law would not furnish to the plaintiff either a complete or adequate or any remedy in the premises, and that unless the defendants were required to deliver to plaintiff the said stock the plaintiff would suffer great, irreparable and irremedial loss and injury. It appeared, however, that the plaintiff had sold some shares at a certain price; that he had offered in writing to sell others at another price and that there had been several sales by others before the trial, and this court reversed the judgment for the plaintiff and was in turn affirmed by the Court of Appeals. In Butler v. Wright (186 N. Y.. 259) the Court of Appeals said: “ The rule is that, as to contracts pertaining to personal property, a party should be confined to his action for damages, unless it appears that he is entitled to the thing contracted for in specie, which to him has some special value and which he cannot readily obtain in the market, or in cases where it is apparent that compensation in damages would not furnish a complete and adequate remedy. But in each case the question as to whether a court of equity will take jurisdiction and grant the relief asked for rests in the sound discretion of the court and it cannot be demanded as a matter of right.” This was followed by this court in Harle v. Brennig (131 App. Div. 742) and in Perrin v. Smith (135 id. 127). In Waddle v. Cabana (220 N. Y. 18) the Court of Appeals carefully considered Butler v. Wright and Clements v. Sherwood-Dunn (supra) and reasserted the rule and pointed out why — 336 — in one case it had reversed the Appellate Division and in the other affirmed it. In the case at bar while the stock is not Usted upon any exchange or curb market the only allegation in the complaint is that the bonds constitute “ a peculiar species of personal property which have a special fluctuating value,” which might be said of any security. The plaintiff himself, however, testified on direct examination: “There has not been any active or open market for them. Q. Do you know for how much these bonds have been sold in the market from the time of your delivery of them to the defendant? * * * A. They have been sold as high as par. Q. How long ago? A. Within a very few months — three or four months ago they sold at par.” And under cross-examination he testified: “ Q. * * * These were not the only bonds of the Baker-Vawter Company of this issue that you ever owned, were they? A. No. Q. How many have you owned during the period of time, say from the first of January, 1908, until the present time? * * * A. I have had more than half a dozen and less than a dozen. * * * Q. You have sold some of these bonds recently, haven’t you? A. I have. * * * Q. How recently was it that you sold them? A. Within the íast two years. * * * Q. Wasn’t it within the last year? A. It may have been; I don’t know. Q. How many did you sell at that time? A. Three or five. * * * Q. What price did you receive for them? A. 80. Q. That is $800 for each $1,000 bond? A. Yes. * * * Q. Did you ever know of any sale prior to the first of January, 1915, at a price higher than $800? A. No—yes, I bought them myself higher than that.” And it is also testified that there are about 250 stockholders. So that it seems to me that there is no basis for an equitable action and that, therefore, the judgment appealed from should be reversed, with costs and disbursements to the defendant, and the complaint dismissed and • that findings inconsistent with this opinion should be reversed and new findings made. Dowling, J., concurred; Smith, J., concurred on second ground; Latjghlin and Merrell, JJ., dissented.