Story v. Norwich & Worcester Railroad

Stores, J. Our view of the facts of this case obviates the necessity of examining many matters of law, which relate to the agreement between the parties, and which, although much discussed, originated solely in different interpretations of the committee’s report. If the transactions of the Norwich and Worcester Railroad Company, and the sub-contractor, Cahill, amount to a combination on their part to prevent the execution of an award, founded on a submission to which they, with the plaintiff and others, were parties, it is not denied that a court of equity should interpose to protect the rights, which such a combination is designed to defeat: first, because equity will prevent the consummation of frauds, and secondly, will enforce specific remedies, of which one party, contrary to justice and good conscience, seeks to deprive another. ■ It is on these principles, that we recognize the plaintiff’s right to relief. By an award, confessedly valid, a large sum is adjudged to be due to the plaintiff from the railroad company, who are ordered to pay it, on demand, together with the legal costs of a suit at law, then pending for its recovery. In case of default, the award authorizes the plaintiff to procure the entering up of judgment, in the suit for the debt so ascertained, and for costs. Although an action at law might have been brought upon this award, a more summary and less expensive remedy was provided by the arbitrators, and to the specific execution of this remedy the plaintiff had an incontestable right. It is this right which the railroad company and Cahill conspired to defeat. It is this right, which the plaintiff now [112] seeks, in a court of equity, to enforce, by soliciting an equivalent remedy. In the suit just referred to, the plaintiff, instead of being permitted to enter up judgment against the railroad company, was nonsuited, against his will and without his knowledge. This was done through the cooperation' of the company and Cahill, the latter claiming to be the assignee of the plaintiff, and assuming to discharge the claim on which the plaintiff’s suit was founded. The circumstances, attending the transaction, impress this cooperation with the character of fraud. An assignment had been executed by the plaintiff to Cahill, of the claim against the company, and an authority to prosecute the suit, already instituted to recover this claim, had been given to the assignee. But this assignment, as appears by the award, was only made tó enable Cahill to apply the necessary portion of the avails of the suit to the payment of his own claim against the plaintiff, and to secure priority to Cahill’s judgment-lien upon the moneys which were due from the railroad company to the plaintiff, and which had been factorized, not only by Cahill, but by other creditors of the plaintiff. The balance of the debt, due from the company, was expressly agreed to be the plaintiff’s property, notwithstanding the assignment, and was consequently awarded to him, in his own right, by the arbitrators. In ascertaining this balance, the arbitrators went behind Cahill’s judgment against the plaintiff', which was taken out by agreement for a larger sum than was really due, and also behind the assignment, which was in terms absolute and unlimited. But this was not only in conformity with the real equity of the case, and understanding of the parties, but, in pursuance of an express authority to the arbitrators, to which all the parties to the submission gave oral, or tacit, assent. For the arbitrators, at the close of the hearing, were requested to apportion between Cahill and the plaintiff, according to the real indebtedness of the latter to the former, what should be found [113] due from the company to the plaintiff. The award was published, and all parties had knowledge of it. At this stage of the transaction which we are reviewing, Cahill receives, and the company pays, in bonds which commanded in market sixty-seven cents on the dollar, the entire debt of the company to the plaintiff, including the sum expressly awarded to the latter in his own right; Cahill discharging the company from all liability to the plaintiff, and agreeing to indemnify against him, and against any right of his, growing out of the award. These facts sufficiently establish the complicity of both parties to this proceeding, in a purpose to defeat the plaintiff’s recovery of the sum awarded to him; both knowing, that the assignment, under which they professed to act, had béen determined to be limited in its intent and operation; that Cahill was incompetent to give a valid discharge of the plaintiff’s entire demand; that the suit of the plaintiff against the company, had been, by the arbitrators, ordered to be controlled solely by him and for his peculiar benefit, and that any discontinuance of it, except with his concurrence, would be unjust to him and tend to defeat his rights. Although the committee, in their somewhat vague report, do not expressly find a fraudulent intent to accompany the acts of Cahill and the company, in discharging the plaintiff’s claim and procuring the nonsuit, or even the manner in which the nonsuit was obtained, yet they do not exonerate these parties from an inference, which is unavoidably made from the facts disclosed. We have no hesitation in deciding that they prove a case of fraudulent combination, not merely to withhold from the plaintiff, the amount which was awarded to him, but also to deprive him of the cheap and effectual remedy, which was provided for him by the award, for the purpose of insuring the recovery of his claim. We have as little hesitation in deciding, as matter of law, that what amounts to fraud is a legal conclusion, to be derived or inferred by courts from established facts. Fraud, indeed, as known [114] to equity jurisprudence, “ properly includes all acts, omissions and concealments, by which an undue and unconscientious advantage is taken of another.” Sto. Eq. Jur., § 187. Many frauds are properly cognizable by courts of law, and it by no means follows, that the mere existence of fraud in a transaction, will bring it either within the independent or concurrent jurisdiction of courts of chancery. It is also true, that the fact that a wrong complained of is the result of confederacy and combination, will not, in all cases and alone, give jurisdiction of the injury to a court of equity. There must be something special in a case of confederacy, to make it a reliable ground of equity jurisdiction. Sto. Eq. PL, § 30. But where several individuals have confederated together to perpetrate a fraud, and a court of chancery, by the exercise of its ordinary functions, can protect a party from the consummation of the fraudulent design, this should be a clear case for the interposition of preventive justice. Moreover, it is well settled, that, if an award provides a party to it with a specific remedy, appropriate to the subject-matter, equity will enforce the specific execution of the award, as readily as it would the performance of an agreement. If the award should merely direct the payment of money, chancery would not be invoked to aid the remedy ; but, if an act is required to be done in specie, the award will be made effectuaj by a decree. Hall v. Hardy, 3 P. Williams, 187. It would seem to follow clearly, that where a fraudulent combination exists, for the purpose of rendering a specific remedy, provided by an award, inoperative or impracticable, the case is, in many aspects, a proper subject of equity-jurisdiction. It only remains to add, that a court of chancery, having once assumed jurisdiction of a matter, will provide the promptest and most effectual remedy which the case requires. We therefore advise the superior court to order and decree, that the defendants shall pay to the plaintiff the amount [115] awarded to him, with interest thereon, and one-half of the costs of his suit against the railroad company, as ascertained by the award, and that the defendant, Cahill, shall pay to the plaintiff that part of the residue of such costs, which, by the award, he was directed to pay, and that execution be issued accordingly. In this opinion the other judges, Waite and Hinman, concurred. Decree accordingly.