O'Brien v. Pentz

Stewart, J., delivered the opinion of the Court. The bill in this case admits, that an open, legal and bona fide contract was made between the complainant and Folger, O’Brien, Cannon and Roberts, to transfer to the latter all the title of the former, to certain steamers in the said contract referred to ; but it seeks to have established the provisions of a secret trust, which the bill first alleges was made between complainant and all of the others of the said parties; but afterwards modifies such averment by charging that such secret contract and trust were made — 576 — between the complainant and Cannon and Roberts, with the knowledge of Folger and O’Brien. That, hy this arrangement, although the property in the said steamers had been ostensibly sold and transferred to the said parties, the complainant really retained one-sixth of the same, and now seeks a recovery accordingly. Such claim on the part of the complainant places the parties in- a very different position from the open one indicated hy the public records of the transaction. If sustained, the complainant is to a certain extent, shielded from full responsibility for losses and other liabilities. Its establishment by a Court of equity under the circumstances, would seem to require the most satisfactory and conclusive evidence of its entire legality and justice. We do not understand the testimony as proving that Folger and O’Brien so comprehended the transaction ; and if it could be sustained against Roberts and Cannon, that the former are to be held responsible as contracting parties thereto, or as affected with the knowledge thereof. The secret method of undertaking to secure such right for the complainant, does not strike us as calculated to impress a Court of equity with its entire bonafides. Holding out to the world by placing upon the public record the evidence required by the law, to make known to all the true ownership of the property, but by a contemporaneous secret arrangement between the parties attempting to avoid such conclusion, and in effect treating the record as presenting an erroneous and false view, would seem to be against the principle of public policy. What is it in truth but a fraud upon the public, to undertake to pursue the requirements of the law, making the public record evidence of the transfer of title, as a mere pretext, the more effectually to accomplish the secret scheme of the complainant, to secure rights for himself in utter antagonism to the open and published contract between the parties ? — 577 — The undisguised and undisputed contract between the complainant and Folger and O’Brien, is in utter conflict with the provisions of this secret trust set up in the bill. The two cannot stand together, or the one be modified or qualified by the other, upon the proof that has been adduced. There is no principle to justify a Court of equity in upholding the secret contract to the prejudice of the other. The recognition of the private arrangement made between some of the parties, as alleged, to the exclusion or modification of the open and avowed contract, recognized by all of the parties, would be a strange perversion of the well settled principle applicable in such cases. If this secret contract was made before the open transfer ■of the property, it would be superseded thereby ; — if after, it was made without consideration and nudum, pactum. The interposition of a Court of equity in granting relief by the enforcement of the specific performance of any •contract, is not a matter ex débito justitice, and to warrant its interference, the terms thereof must be fair, and it must be founded on an adequate consideration, and be made under circumstances commending it to the favorable apprehension of the Court. The party seeking its execution must, at the same time, be able to show that he has fully, not partially, performed every thing to be done on his part. The contract must also be mutual and equal in all its parts, and having no circumstances of suspicion as to its bona, fides. Its terms must not be ambiguous, and they must be accurately stated in the bill, and the proof must correspond therewith, so as to leave no room for reasonable doubt, but be such as will enable the Court to measure out exact justice to the parties. The Court cannot undertake to amend the contract, or if it be performed in part by the complainant, leaving — 578 — other parts unperformed, and without any tender of performance on his part, it cannot be carried out in part, and adjusted to that extent. - It must be executed as an entirety, and cannot be arranged in parts. In every case the question must be, whether the exercise-of the power of the Court is demanded to subserve the ends of justice, and unless the Court is satisfied that it is right in every respect,' it refuses to interfere. Geiger vs. Green,. 4 Gill, 472; Waters vs. Howard, 8 Gill, 262; Semmes vs. Worthington, 38 Md., 298. How does the contract with its surroundings relied upon here, stand the application of these well established tests ? The complainant has totally failed to present such a contract for the intervention of the Court; and as set out in the bill has not been sustained by full and adequate proof. The complainant has not shown that he has performed his part of the same, and there is a total failure to show that Folger and O’Brien were aware of the alleged agreement between complainant, Cannon and Roberts, or that they had notice of the same. The contract between Pentz, the complainant, and Cannon and Roberts seems to have been industriously kept a secret, and is incapable of standing the ordeal of equitable examination. In its very inception the witness thereto, recognized as a guard to its fairness and authenticity, did not see the parties execute the same ; but inadvertently attested it upon the representations of others. Obscure and doubtful in its origin, there is no clear light from surrounding circumstances, to show its precise outlines and entire fairness. Considered in reference to the illiterate character of one-of the ostensible contracting parties, Roberts, it lacks that full comprehension of its import ón his part, recognized by the law to give to it full scope and effect. — 579 — Roberts proved to have been an uneducated person, having had unbounded confidence in the complainant, whilst admitting that he signed the papers, supposing they were intended to be executed for another purpose, denies that they were ever read over to him or that he understood their purport as now insisted upon. The witness as has been stated, cannot testify that they were read over to him or that he understood their meaning. Under such circumstances there is an absence of sufficient proof of the execution of the papers, with knowledge on the part of Roberts of their contents. •There is no adequate proof that their existence was known to Polger and O’Brien or that they were cognizant of the purport thereof. The order for payment of part of the earnings of the steamers, from Roberts and Cannon to complainant, which they accepted is totally insufficient to establish such knowledge. To affect them with knowledge of the obligations of the contract, there ought to have been abundant proof that they were apprised of the contents a mere speculation or conjecture that it might have been so, is not sufficient. After the full proof that they had persistently refused to be concerned with the complainant, and strenuously objected to his having any interest in the boats, or that he should hold any right thereto, legal or equitable, it is not a fair presumption that they had acquiesced in any such arrangement; on the contrary its execution was in bad faith to them and in conflict with the title the complainant had conveyed. That they might afterwards agree to have complainant connected therewith, might be true, or a mere statement to soothe the pride of the complainant. It has no force and effect as importing knowledge — on the contrary, conveys quite a different inference. — 580 — To rebut tbe necessary legal effect of the transfer of the title, there ought to have been the clearest proof of the modification of the contract in any respect. It seemed to have been ostensibly between Pentz, Cannon and Roberts, and such a secret understanding between them cannot be held to bind Eolger and O’Brien, without corroborating testimony to that effect. It appears, there were unsettled accounts between the complainant and Cannon and Roberts, growing out of the management of several steamboats held by them, in different proportions of interest; the books relating thereto furnish no very reliable information as to the relative indebtedness of the parties or their exact individual interest in the boats. The complainant was the active manager, either individually or as president of The Individual Enterprise Line — received the profits of the steamers, from their earnings, sale, or insurance money. The other parties also received moneys from time to time from the concern, but what was their precise indebtedness does not appear from the books or accounts, or from ány settlements made. Under the circumstances, it was primarily the duty of the complainant to have caused accurate accounts to be kept, showing at all times the condition of the business intrusted to his control and supervision. And after the alleged contract was made, it was his duty to have industriously applied himself to the ascertainment of the relative indebtedness of tbe parties. After their affairs had become involved in embarrassment, it seems it was deemed advisable to make sale of the steamers, or some part of them. Eolger and O’Brien proposed to become purchasers of an interest, but did not desire to have the complainant associated as part owner of the boats, or to have any connection with the management thereof. The complainant agreed to sell out his interest to Eolger, O’Brien, Cannon and Roberts. — 581 — The contract was made accordingly, between complainant and the said parties, and Folger and O’Brien paid to complainant $30,000, for his half interest in the Highland Light and the whole of the Champion — the other half in the latter was conveyed to Cannon and Roberts. The S. J. Pentz having been mortgaged by complainant, it was stipulated that Folger and O’Brien were to pay $32,500 for one-half of her, with unincumbered title, and the other half to belong to Cannon and Roberts, when they had paid for her. The complainant having received the value of the S J. Pentz, estimated at $65,000 and his half of the Highland Light, $17,500, the whole estimated to be worth $35,000, and $12,500 on the Champion, estimated at $25,000, was in possession of funds therefrom to the amount of $95,000, and this from the concern, which had concluded to sell out. He then had no remaining interest unpaid for, except one-half of the Champion, $12,500, she being estimated at $25,000. The other parties were to pay for the Pentz and to hold the Highland Light and Champion, in equal proportions. Roberts and Cannon so far as they were concerned, assuming they were otherwise square with complainant, would each owe him one-half of that amount, $6,250. But the papers relied upon by complainant, propose to give to complainant one-sixth interest in the entire three boats and their profits, and the only equivalent for this, is the half due him on the Champion, $12,500. That is, complainant’s claim is to one-sixth of the three boats, to wit: S. J. Pentz,.$65,000 ; Highland Light, $35,000, and Champion, $25,000, aggregating $125,000, being $20,833, according to the estimate in the corpus. The inequality of such a trade is so palpable, that it is represented by the bill, that the valuation is low — if so, the one-sixth corresponds therewith. It is further stated or argued that the wharf-rights and privileges, and the good-will of the concern, enhance the — 582 — value; but as to this also, the proposed contract of complainant calls for one-sixth. But there is no evidence that the boats or- property, were worth over the estimate, and probably complainant made a good sale, even if the one-sixth now claimed is refused him. The contract in all its parts does not seem to be equal, . and we discover nothing in it, to commend it to the favorable consideration of the Court, for its specific enforcement, if there were no other objection to it, except its inequality towards Cannon and Roberts. There certainly is no glaring injustice done to complainant, if he fails to have it executed ; on the contrary, much injustice would be done to the respondents by its enforcement. It has been agreed by the parties, that anything found due by complainant to Roberts, or to Folger and O’Brien, his assignees may be set off against anything due by Roberts, or by Folger and O’Brien to him. That the answers may be treated as cross-bills, and that a claim may be rendered in favor of any party to this proceeding, complainant or defendant, for such amount as on a proper accounting, the Court may think them entitled to. The books and accounts have been so loosely kept, that it seems they furnish no definite data of the state of the indebtedness of the different parties. Roberts claims for larger interest in the former steamers held by the parties, Pentz, Cannon and Roberts, and the proof also shows that he received considerable amounts from the concern. Under the open contract between complainant, Cannon and Roberts on the one side, and Folger and O’Brien, Cannon and Roberts on the other, the latter get one-half of the steamer Champion, besides their interest in the Highland Light. — 583 — (Decided 3rd May, 1878.) From the lapse of time, and the obscurity as to the precise condition of their affairs, which the testimony has not satisfactorily elucidated, we find no sufficient ground for changing the condition the parties have made for themselves, under the contract between complainant, and Folger and O’Brien, Cannon and Roberts, and no reliable ground upon which to base a decree, affirming the indebtedness of one to the other. The bill of complaint, and the answers treated as cross-bills under the agreement, will be dismissed. Decree reversed, and bills dismissed.