Skinner v. Dayton

The Chancellor. [ * 533 ] The defendants contracted with the plaintiff in his individual capacity. This is the legal interpretation of the contract, as declared by the Supreme Court; and the two answers of the two Whites are explicit as to their intention so to contract. There is no doubt that the covenant of the plaintiff to pay the three instalments, for which the action at law was commenced, is an independent covenant, and there is nothing appearing in the case to show that the plaintiff is not held at law to perform it. What then is the equity which is to control that suit ? It may be said, that White, Taylor White were parties to *the association, and, as such, bound to contribute ratably to all losses and charges. But I do not view the case in that light. They agreed to take two shares of the company stock, at the time the covenant was entered into with the plaintiff, but it was on the condition that they were to be exempted from any assessment which had or should be made, until the machinery was furnished, and the manufactory in operation. The manufactory never went into operation, and, therefore, the case never occurred in which they were to be called on for any assessment, or, in other words, for any contribution; and, as the contract was made with the plaintiff personally, and upon such condition, I do not perceive that he has any equitable claim upon them for a deduction of any portion of his loss from their demand, under the covenant. The taking two shares of the stock ought not, under the circumstances of the case, to have any effect upon the contract. But it may be said, that the defendants W., T. W., were duly informed of the failure of the funds and object of the association, and that they are entitled only to a just indemnity for their services and expenses at the time of the notice. Before we consider this point, it must first be ascertained when such notice was given. The bill charges, that notice, to that effect, was given in May; but this is denied in the answer, and the nature of the information given in May is set forth. The notice given in May by Raymond, accompanied with the explanations stated in the answer, was not sufficient to discharge the defendants from the execution of the contract on their part. It wanted precision and certainty, and the conversation with Raymond left it altogether indefinite. The only notice on which the defendants could, upon any colorable grounds, stay the further performance of the contract, was the one received on the 1 st of August. [533] [ * 534 ] Whether the plaintiff could, under any circumstances, without the assent of the opposite party, rescind or suspend *the contract, is a point I need not now discuss. It appears, that the contract was, in fact, suspended, from and after the 1st of August, by notice from the plaintiff, and acquiescenee on the part of the defendants, in the future discontinuance of the work. The suit at law is only for the instalments then due, and I do not perceive any clear and decided equity against the recovery of those instalments. The defendants, in their answers, aver actual damages, in consequence of the part performance and subsequent interruption of the contract, far beyond the amount of the instalments sued for, and there is nothing in the case to contradict the averment. The defendants have a title at law to the moneys due on the 1st of August, and the failure of the contract did not arise from any default in them. It was the act of the plaintiff, and it does not appear, affirmatively, to be inequitable or unjust, that the defendants should recover the instalments sued for. A legal right ought not to be interrupted, without some certain equity set up against it. I should think there ought to be something more than conjecture, that the 1,900 dollars due at law, exceed an adequate compensation. [ * 535 ] If W., T. 7 W. had disregarded the notice, and gone on, and completed the machinery, according to the covenant, I am not prepared to say they would not have been entitled to have tendered the result of their labor, and demanded the entire sum of 15,120 dollars. I am inclined to think it is not in the power of one party alone to rescind a contract. This seems, indeed, to be permitted under the French law; (Pothier, Traite du Contrat de Louage, § 440—443.) but the language of the English judges is different. (Smith v. Field, 5 Term, 402.) As the defendants discontinued their work after the receipt of the notice, they are entitled, in equity, to a just compensation for the services they had previously rendered, and the moneys expended, and the injuries sustained under the contract. It is urged, however, that the amount of the compensation *ought not to be. taken from the answers, but ought to be accurately ascertained by a reference, or an issue of quantum damnificatus, as it may possibly fall short of the 1,900 dollars, which the defendants are seeking to recover at law. I have felt all the weight due to this consideration, but it appears to me not to be discreet to interfere with the clear, certain claim of the defendants at law, in pursuit of a point of such uncertainty and speculation. [535] [ * 536 ] [533] It is, no doubt, a general principle of the Court, that equity will relieve where a penalty is forfeited, if the case admits of a certain compensation; and the true foundation of the [535] relief is, that when penalties are designed only to secure money or damages really incurred, if the party obtains his money or damages, he gets all that he expected or required. In the cases of Sanders v. Pope, and Davis v. West, (12 Vesey, 282. 475.) it was admitted, upon the strength of a series of authorities, that where covenants are broken, and there was no fraud, and the party capable of giving complete compensation, equity would relieve against a forfeiture for a breach of other covenants than those for non-payment of rent. It is still, however, in all the cases, a forfeiture, or penalty, which is in question. But the instalments in this case were not in the nature of penalties, and the exaction of them is not the exaction of a forfeiture. They were intended as payments for equivalent services rendered, and expenses incurred, pari passu, with the accruing instalments. They were not, by any means, equivalent to the progress of the work, for the machinery was to be completed in one year, and the instalments payable within that time, under the contract, did not amount to a moiety of the stipulated compensation. The bill does not charge any default in the defendants. That is not the ground of the bill. I have a right to presume that the defendants were engaged in the actual and faithful execution of the contract on their part, when they were arrested by *the notice. The answers declare, explicitly, that fact, and the presumption arising out of the terms of the contract itself, is, that the compensation justly due the defendants is, at least, commensurate with the instalments claimed. [536] [ * 537 ] [535] If the suit at law was for instalments payable after the 1st of August, and when the defendants had discontinued their labor and services, the case would present another and different aspect. But I am here called upon to interrupt the assertion of a legal right, upon the mere possibility of an existing equity against a part of the claim; and I do not think, as the case stands, that such an interruption would be a fit and discreet exercise of jurisdiction. “ There is no branch of the jurisdiction of this Court,” says Lord Eldon, in Sanders v. Pope, “ more delicate, than that which goes to restrain the exercise of a legal right. That jurisdiction rests only upon this principle ; that one party is taking advantage of a forfeiture.” But the present case is not one in which the forfeiture is exacted. The instalments are more in the nature of stipulated damages, and it is settled that equity will not relieve against them. (Woodward v. Gyles, 2 Vern. 119. Rolf v. Peterson, 6 Bro. P. C. 470.) In all the cases in which the Court does interfere with the legal right, it must appear clearly, that full compensation can be made so [536] as to render the party perfectly secure and indemnified, and place him in the same situation as if the occurrence had not happened. This is the doctrine laid down in Sanders v. Pope, and it is there admitted that the interference of the Court depends on discretion. I am not very certain that the injury to the defendants by the failure of so great an undertaking, after it had been in a course of performance, is susceptible of clear and definite compensation. There may be consequential damages arising from the loss of other business, which this undertaking dismissed, not easy to be reduced to calculation; and, as the defendants are not in the wrong, and have done nothing that did not arise from their legal rights ; and as I am inclined *to believe, from the contract itself, and from the answers, that their damages are, at least, equal to the instalments claimed, there is no sufficient ground on which I can interfere with their suit at law. I am, accordingly, of opinion, that the motion to dissolve the injunction be granted, and that the costs and expenses incurred in preparing the suit of law for trial, in October last, be paid, after they shall have been duly taxed, out of the moneys deposited by the plaintiff with the register. Rule accordingly.