Noah v. Webb

The Vice-Chancellor. The power of this court to compel bonds and other instruments in the nature of securities to be given up and pancelled is hot to be disputed. And in the exercise of this power, so far as the point of jurisdiction is concerned,- it matters not whether such instrument could or could not be enforced' at law, nor whether it is void upon its face or shown to be void by evidence aliunde. Still, the power will not be exercised in evei-y case of the kind.- It rests in sound discretion. Before a bill for cancelling an instrumentan such cases will be sustained, the filing of it must appear, from the particular facts and circumstances of the case, to have been expedient and proper. The case of Hamilton v. Cummings, 1 J. C. R. 517. contains a clear exposition of the principles by which this court is governed on the subject. The questions which seem naturally to present themselves in the present case are these : 1. Is this bond void upon the face of it as being against public policy ? ' -2. Is it a bond which has ceased to be of any force or obligation by events occurring subsequent to its execution 1 And, if either of these questions shbuld be determined in the affirmative, then, 3. Is there enough to warrant the relief which the bill seeks to obtain ? I. The first question has been raised in argument. But the 0 bill does not attempt to claim relief upon the ground of the bonds being originally void. I shall, nevertheless, proceed to examine it very briefly. It is undoubtedly the policy of the law not to permit persons tq be placed under general restraints of trade, even by their own acts or agreements, although the same may be founded upon a valuable consideration. Still, an agreement which creates only a partial or particular restraint, is valid, if entered into upon a good and adequate consideration. The law on this subject, as ' applicable to all cases of restraint, whether — 609 — arising from grant, custom, bye law or the acts or agreement of parties, was very clearly stated by Chief Justice Parker, (after-wards Lord Chancellor Macclesfield!) in Mitchell v. Reynolds, in B. R. 1 P. W. 181. He there held, that a bond conditioned not to. exercise a certain trade within a particular parish during the term of five years was good: it appearing by the recital in the bond, that the obligor had assigned to the obligee a lease of the premises where the obligor had previously carried on the business, which he stipulated not to follow in the same parish within a given time. Here was a sufficient consideration to support the bond; and the restraint was a limited one. In Davis v. Mason, 5 T. R. 118. Lord Kenyon considered the above case as settling the law ; and applied the same principle to a bond given by one surgepn to another, who, in consideration of being taken into business with the obligee as an assistant, bound himself not to exercise his professional skill and business on his own account within the distance of ten miles for "the space of fourteen years. And this bond was also held to be a valid one. The case of Chessman v. Nainby, 2 Stra. 739; S. C.1 Bro. P. C. (Toml ed.) 234, is to the same effect. There, a judgment of the common pleas in favor of the validity of a similar bond was affirmed by the king's bench as well as in parliament. The court of chancery, acting upon the same principles, gives effect to agreements in restraint of a particular trade or business, where the same are founded upon a sufficient consideration ; and a specific performance will be decreed: Bryson v. Whitehead, 1 Sim. & S. 74. This court also protects purchasers of the goodwill of a trade who have paid a valuable consideration for it against any interference of the vendor which may be contrary to good faith and the honest understanding of the parties, although there may be no bond or covenant to restrain them: Harrison v. Gardner, 2 Madd. 198 ; Shackle v. Baker, 14. Ves. 468; and Crutwell v. Lye, 17. Ib. 336. The present case seems to be very analogous to several of — 610 — those which I have referred to; and, upon the sanie principles* it is manifest the bond in question was not void in its inceptian. It does not profess to restrain Mr. Noah generally from establishing another newspaper nor entirely from exercising his editorial talents. It only restrains him for a limited timo and within a certain space ; and the consideration is to be found in- the price given for the purchase of the newspaper and the good will of the establishment which evidently formed part of the contract and passed to the purchasers.) The price which was paid must be deemed to have been an adequate consideration for the whole until the contrary appears. I have no doubt upon this part of the case. 2. The next question depends upon the effect which Mr. Noah’s repurchase had upon the bond and covenant. Upon its taking place, he entered into the possession as joint owner with Mr. Webb; and became vested with all the rights of Mr, Tylee in every thing relating to the concern. The obligor thus succeeded to the rights of one of two joint obligees in the subject matter of the bond. I speak now of the legal operation of the bill of sale, laying out of view the mortgage given at the same time to secure the greater part of the purchase money. The latter circumstance, I apprehend, may make an essential difference in the view of a court of equity. Considering, then, Mr. Noah as the legal owner of a moiety in the place of Mr. Tylee, and in possession of all his rights and interests, it is very clear the effect of it defeats altogether any . remedy at law, upon the covenant or bond, for any breach subsequently committed. No action could be brought upon either of those instruments, except in the joint • names of the persons to whom they were given, so long as they should live. If the covenant were now broken or the condition of the bond no longer observed, and an action were brought, it would be liable to the objection that the obligees had no longer a joint interest: one of them having long before parted with his ownership in.the subject matter and not being damnified by any acts which might be deemed a violation of the terms of those instruments. And should it-be shown, for the purpose of obvi — 611 — Siing this objection, that the action was brought by or in behalf of an assignee or assignees (and admitting that courts of law do protect the rights of assignees of dioses in action and permit actions to be prosecuted for their benefit,) yet, any such assignee of this bond or covenant, in tracing his titlp, would be obliged to show it came through Mr. Noah himself, at least asj to a moiety of which he was once the owner, and that too of a covenant made by himself and of a bond in which he was the principal obligor. When these facts were made to appear, there would be an end to the action. And when once the right of action upon the bond and covenant was suspended or gone, it would be gone for ever. While Mr. Webb and Mr. Noah were joint proprietors, no suchaction couldhavebeen sustained : because the former could not have sued in his own name alone for the injury done to him individually. There could have been no such severance of the remedy. The contract was to two jointly. A suit in the names of both would, in effect, have been a suit as respects one party in interest against himself: an anomaly, indeed, an absurdity which the law cannot tolerate. Here, then, was a complete suspension and, I may say, an extinguishment of the right of action at law: for it was not revived by Mr. Noah’s selling out and Mr. Webb becoming the sole proprietor,, although the bond remained uncancelled. A new obligation should have been required and given, in order to have preserved a legal remedy to the latter, provided the restraint was intended to be continued : and as Mr. Webb did not take this precaution, and as the present assignees, under the assignment from him, have no other rights or greater powers than he -possessed, they cannot, by any possibility, resort to a legal remedy, should Mr. Noah now throw off the restraint and entirely disregard his previous stipulations. There are other views which might be presented upon the principle of a class of cases where suits have been brought " upon bonds of indemnity, given to partners and a change of the parties in interest has taken place before forfeiture or breach and where the question has arisen, how far the bond — 612 — was available in favor of the new or succeeding parties : See 3 Wils. 530 ; 1 T. R. 287, 291; 12 East. 400. But it is unnecessary tor me to examine the doctrine m those cases. The present appears to me'very distinguishable, on the ground of Mr. Noah’s becoming, as it were, a substituted obligee of the bond. This circumstance appears to create an insurmountable obstacle to the prosecution of any action at law; and so far the bond has become unavailing. 3. But another important question remains; ought the court therefore to interfere and decree .a surrender .of the bond? There are many cases in the books to show, that although the obligation and penalty are gone and the legal remedy is lost, yet, so far from ordering the bond to be given up, the condition of it will be regarded in the light of an agreement and its performance enforced. An examination of a few of the cases will sufficiently elucidate the principle upon which this court proceeds. The case of Acton v. Pierce,2 Vern. 480. S. C. Prec. in Ch. 287, may be regarded as the leading one. The bill was filed by the widow of John Acton against his heir and mortgagee to have the benefit of a bond out of his real estate. This bond had been executed to her previous to and in contemplation of her marriage with [John Acton ; the condition of which was to leave her one thousand dollars if she survived him. Her claim was placed upon the ground that, although the bond was released or extinguished at law by the intermarriage, yet it subsisted not only as an agreement but as a specialty in equity ' and bound the real assets of the obligor. And it was so decreed by Lord Keeper Wright. The same bond had shortly before come in question in the court of king’s bench; in an action against the widow as administratrix of her deceased husband, where she set up tira right of retainer as a creditor by virtue of the bond ; and the question was, whether it was not discharged by intermarriage of the obligor and obligee ? The judges differed in opinion. Holt, G. J. appears to have considered the bond extinguished ; but the other two judges — 613 — held the contrary, saying, that as nothing was to be performed during the coverture and as the bond could not be forfeited so as to give a right of action until after the husband’s death, the marriage was only a suspension and not an extinguishment of the debt. They took the distinction, (and which is clearly recognized in other cases) between a present contract creating an immediate liability and indebtedness or a duty which might accrue during the coverture and one entirely executory, intended to secure a debt or duty to accrue after the death of the husband. The first are discharged and extinguished by the marriage; while the latter are not: Gage v. Acton, 1 Lord Raym, 516 ; 1 Comyn. R. 67 ; 1 Salk. 325. Whatever differences may have existed in the minds of those judges as to the effect of a marriage upon that species of bond and however well settled the law may have since become on the subject by the unanimous opinion of the court in Melbourne v. Ewart, 5 T. R. 381, it can make no difference in the principle upon which a court of chancery acts. This may be gathered from Acton v. Pierce: fór there (as particularly reported in Free, in Ch.) it is evident the decision proceeded upon the assumption, at least, that the effect of the marriage was to take away the remedy at law, since it was urged on the part of the heir that by the marriage the bond became void at law, and on the other, that although by the marriage it lost its force in point of law, yet, in equity, it would have the same power as before and bind the husband and it was to be considered in equity not only as an agreement in writing but as a bond which was binding upon the heir. And the Lord keeper was of the latter opinion. The case of Cannel v. Buckles, 2 P. W. 242, before Lord Macclesfield about twenty years afterwards, was, to the same effect. A feme sole had given a bond in two hundred pounds to her intended husband, with a condition, in case the marriage took place, that she would comvey all her lands to the husband and his heirs. They married. The wife and her issue died; and so did the husband afterwards. A bill was then brought by the heir of the husband against the heir of the wife to have — 614 — the lands conveyed ; and although the bond was admitted to be void in law upon the notion of the husband and wife being one person and he could never have sued her at law, yet the bond was held to be sufficient evidence of the agreement in equity and the marriage a valuable consideration to support it. A specific performance was decreed. There are numerous other cases growing out of covenants and agreements entered into between husband and wife, without the intervention of trustees, where, although void in law •or such as courts of law cannot recognize, the court of chancery has interposed its authority to enforce performance. Instances of this sort are to be found in Haymer v. Haymer, 2 Vent. 343 ; Purson v. Fenton, 1 Vern. 408 ; and Harvey v. Harvey, 1 P. W. 125. But I have not met with any case where this court has refused to interfere and decree performance ; or where it has directed,a bond or covenant to be giv•en up, if the same has been fairly entered into and upon a sufficient consideration. ■ • There is another class of cases to which I would refer; ' where bonds or covenants which.have become defective or void in law are aided in equity.' Thus, a bond given by two, binding themselves jointly and not severally. One dies ; and the surviving obligor afterwards becomes bankrupt. Here, because the parties were not bound severally as well as jointly, there is no legal remedy against the representatives of the •deceased obligor. The liability as to him ceased at his death, •and the whole debt then devolved upon the survivor. And yet, as the money for which,the bond was given had been borrowed by both of the obligors, equity holds them not only jointly but severally liable and considered they meant to be thus bound; and, upon a bill filed by the obligee against the ■ -representatives of the deceased obligor to have satisfaction out lof his estate equity will grant relief accordingly: Bishop v. Church, 2 Ves. Sen’r. 100, 371. The ground on which the court assumes to act in such cases is, that of mistake in drawing the bond in this form ; and will, •therefore, consider a joint bond given for a debt which was — 615 — contracted by two, a joint and several one : Thomas v. Fraser, 3 Fes. 399. But if there is no ground to infer mistake in the instrument, as, if one party is only a surety for the other in a bond or covenant for indemnity, the same will not be considered as joint and several, unless it be so expressed. The extent of it will be measured by the words which are used : Sumner v. Powell, 2 Meriv. 30; affirmed, 1 Turn. & R. 30. In Bishop v. Church, ante, Lord Hardwicke, at page 373, refers to Acton v. Peirce and some other cases : and approves of the reason the court has gone upon, namely, that although the obligation and penalty of the bond may be gone at law, yet the condition is considered an agreement which is liable to be enforced in equity. It is unnecessary for me to go further into the examination of cases on this subject. Those already adduced are sufficient to show, that the habit of this court is not to cancel bonds or other instruments because they have no validity as matters of legal obligation or cognizance. On the contrary, it is an essential part of equity jurisdiction, and which this court is constantly in the practice of exercising, to treat such instruments as agreements and lend its aid in enforcing them as such, wherever they appear to be fair in all respects and founded upon a ■ sufficient consideration. Instances, however, may occur in which the, court may be called upon to exert its authority in an opposite direction and order instruments of this kind to be given up and cancelled. But, the justice, propriety or necessity for the measure must be very apparent. The party claiming it should show clearly and beyond all reasonable doubt not only that the instrument is void in law and can never be enforced there, but that in equity also it never ought to be enforced or attempted to be made use of for any purpose against him. These, I am satisfied, are the only safe rules for the government of this court in the exercise of this very important part of its jurisdiction. The case before me is not brought within them: ' for, although no action at law can, in my opinion, be sustained upon either the bond or the covenant for any thing Mr. Noah may — 616 — choose to do, still, I am by no means certain an application to this court would not be sustained in behalf of the assignees to • t • • compel him individually to observe the condition of his bond and the terms of his covenant and restrain him from doing any act in violation of them. The assignment from James Watson Webb to the defendants Stephen H. Webb and Daniel E. Tylee is very broad and coipprchensivc. It appears to have been intended to pass every thing constituting the newspaper establishment as well as any collateral and incidental rights which Mr. Webb might have had. There is one other consideration which I cannot but think must in equity have some weight and influence in this view of the subject. I refer to thfe mortgage to Mr. Tylee'; and which he still holds unsatisfied. It appears to me, a strong equity arises as between him and Mr. Noah, to the effect that nothing should be done by the latter to lessen in any way the value of the security, which there is reason to infer was accepted upon the faith of the restriction Mr. Noah was then under and which it may be supposed was intended to remain binding upon him until, at least, the mortgage was discharged. As mortgagee, for the purchase money, by a mortgage given at the same time with the, bill of sale, he may be considered as retaining an equitable ownership in the establishment. 1 How far these circumstances may be important upon an application for any injunction hereafter, if one should be -made, I will not now determine. It is sufficient for me here to say, they have entered into the consideration of the case ; and for the reasons I have attempted to assign, I am satisfied there is not enough to warrant me in granting the relief which is prayed/or in the present bill. The assignees ask, by their answer, for an injunction in this suit to restrain Mr. Noah from setting up or publishing any other newspaper pursuant to his bond and covenant. I shall not, however, undertake so to interfere upon the present pleadings. All I can do is to dismiss this bill, with costs.