YORK V. PAStiAIC ROLLING-MILL CO.
of that suit in consideration of being permitted to share for an individualdebt in the partnership assets; but we need not go into the complications of that subject. This would seem to dispose of the case, but there is still another considerationthat should be suggested as giving strength, at least, to this judgment. Under the most favorable circumstances, courts of equity do not cancel agreements to correct mistake!;!, except where they can restore the status quo, unless there be a most imperative equity that requires a disregard of that rule. GryrMs v. Sanders, 93 U. S. 55, 62. To place the parties in atatu quo would be a very difficult operation in this case, if it were possible to be done at all. The plaintiffs do not offer, either in the bill-and perhaps that would be fatal on demurrer-or at the hearing, to restore the $226.30 received on the compromise. If the settlement be canceled, that money belongs to the firm of Galloway & Burns, or equitably to their creditors, who were parties to the compromise. Plaintiffs surely cannot play fast and loose by keeping the cop.sideration for the release, and at the same time rescinding it; and yet this is ",hat they ask to. do. They ask a judgment against Galloway, or the firm, for the whole of his individual debt, whiCh the frrm has never prOf.llti8ed to pay. less the amount already received; or, at least, a decree for 33i per cent. of the full amount, and to. take the firm's fflont'!!J as a credit on that, etc. It is useless to pursue the subject under such difficulties, with such a pretense of equity as the plaintiffs show here. Dismil!8 the bill at plaintiffs' costs. So .ordered.
1.1. PASSAIC RoLLING-MILL
D. New Jffl'BtIJ!. March 50, 1887.)
CORPORATIONS-STOcK-DELIVERY OF CERTIlrICATE.
. .·The plaiutiff delayed bringing suit till seven years after the defendant's refusal to give him the stock. Held, too long a delay, DO excuse therefor being , shown.
PraWn Stevemrm, for complainant.
H. A. Williams, for defendant.
BUTLER, J. The suit ill virtually for specific performance of a con· tract for the purchase and sale of stock. This view cannot, we think, be avoided, notwithstanding the skillful preparation of the hill, and the able argument addressed to the court in the hope of escaping it. The bill avers ownership of the stock, refusal by respondents to deliver a certificate, and then sets out a contract of purchase and sale as the foundation of complainant's rights. The answer denies the material averments of the bill, and further sets out what the respondents allege to have been the contract, differing essentially from that set up in the b'ilL It then avers that complainant failed to perform his part; that, in consequence, the contract was canceled by agreement, and the complainant's right thus terminated., The court finds the following facts: In the year 1873, or early part of 1874, the resp'ondentB, owners and operators of iron-works, which they had recently improved', and prepared for a more extensive business, entered into a parol contract with the complainant, (who was then in their employment, and considered a superior workman, whose services it was important to retain,) to sell him 28shaies of stock, (worth $5,000,) on terms and conditions there specified. The respondents' object was to identify the complainant with them in interest, and thus secure his continued services in their business. This was the only consideration for the contract On the respondents' part, and was so understood by the complainant. The latter was receiving a large salary, ($3,500,) which was to be continued; and the stock was to be paid for wholly out of dividends, if any were made. After the lapse of some time he became dissatisfied, in consequence of the absence of written evidence of his right, and demanded something to show for it; whereupon the respondents, on the nineteenth of December, 1874, executed and delivered to him a paper in the following terms: "With a view to make Levi D. York personally interested in the success of this company, and with the understanding that his best endeavors thereto will be continued for a time long enough at least to fulfill the intent of this agreement, we, the Passaic Rolling-mill Cowpany, by the handof our president, do agree, in addition to the salarypaidto.said L. D. York, to place.to his credit, under date May I, 1874, twenty.eight shares (28) of our capitlllstock, valued at that date, to the bookfof the company, at five thousand (5,000) . dollars, SUbject to the following conditions, viz.: Said L. D. York is to pay to the said company the value aforesaid, with interest at 7 percent. per annum from May 1, 1874, out of the dividends declared on sa,id spares of stock; the said L.. D. York cannot be but, in case no dividends he1din any other way liable or responsible to the said lJompany for the debt. In case of permanent injury orr deatb, then be or his ,heirs shaH receive the full benefit arising from ownership'of said shares, the same as intended to him if in health. Upon the payment to the company of the value, with interest, said L. D. York, or his heirs, to have and to hold said shares in his . ' . .. WATTS CoOKE, President." . own .handand right. . The complainant received tbis paper with expressions of !latisfaction, and retained it until about the time of leaving the company, in the summer of 1878. The paper must therefore be regarded as conclusive respecting the contract. It was prepared and delivered for the purpose
PASSAIC ROLLING-MILL CO.
of hearingwitness to the terms, at a time when they were fresh in mind, and was accepted and retained by complainant as the only evidence of his right. The attempt now made to get rid of it, and substitute the complainant's recollection of the p!lrol agreement, cannot be listened to. In May, 1875, at the next meeting of stockholders after delivery of the paper, a resolution was adopted, acknowledging the complainant's right under it; and setting aside the stock for delivery when his part of the contract should be performed. .In pursuance of this resolution, the president and secretary filled up a blank certificate in the complainant's name, which remained without severance from the book containing such form. Across it was written an acknowledgment of its receipt by the company, for complainant. This filling up and indorsement of the certificate was a meaningless formality, which left the rights of the parties undisturbed. The contract entitled complainant to the stock on fulfillment of its terms. Up to that time the respondents were to retain it. It was not to become his. Filling up a certificate in his name, and deit to thernselves, leftthe matter precisely as it was before. The appeal to this meaningless (if not foolish) act, as an execution of the contract, need not, we think, receive further notice. The complainant, who stood well with the company, and seemed to have been on intimate and friendly terms with its officers, was allowed to participate in the meetings of stockholders, and to vote on questions arising there. . At these meetings statements were made by the officers of the company of its financial condition, which were discussed by the stockholders, the complainant participating, In August, 1878, the complainant resolved to embark in an adventure abroad, made his l:trrangements accordingly, and gave notice to the company of his intention to quit its employment. His arrangements embraced the withdril."al from their service of several other desirable, skilled workmen. The respondents were seriously dissatisfied with and embarrassed by this movement, and consequently remonstrated against it; reminding the complainant of his agreement, claiming that he was bound to remain, earnestly urging him to do so, and endeavoring to persuade him that the improved prospects of the business justified a conclusion that his interests would be best promoted by remaining. He was firm, however, in the determination to go, having, as he asserted, so bound himself to others that he could not remain. In consideration of the circumstances, it was then agreed that he would abandon his right to the stock, and surrender the paper which he held as evidence of the contract. Conseof August, 1878, the paper was surrenquently, on the dered, and, in the presence of the complainant, was indorsed, "Surrendered and canceled." This indorsement was read to the complainant, who fully assented to it, though declining to sign his name, on the ground that it was unnecessary. The company then canceled the certificate which had been filled up, and distributed the shares among its stockhold.ers. The relations of the parties were thus terminated, and the complainant went abroad, (to South America.) After the lapse of several months he returned, the enterprise in which he had embarked having
Mled.Subsequently he called at the respondents' works, without preferring any claim or complaint. On the third of December, 1879, however, he procured a letter to be addressed to them by his attorney, in the following words: N. J., 3,1879. "The Passaic Rolling-mill CO.-GENTLEMEN: I am in receipt of a letter from Mr. Levi D. York, formerly connected with your company, and· now in Portsmouth, O. Mr. York tells me that in the year 1873 the Passaic Rollingmill Co. placed on their books,.to bis credit, stock amounting in value to $5,000. He says no certificate has ever been given him, which is probably merely an oversight, and instructs me, as his attorney, to request you to send such certificate of stock to me, or arrange a settlement of its value with me. I trust that I shall soon hear from you. "Yours, respectfully, OEO. D. SCVDDER." To this the respondents made answer as follows: " THE PASSAIC ROLLING-MILL Co., "PATTERSON, N. J., December 5. 1879. "Mr. flea. D. SCudder-DEAR Sm: ,Your favor at. hand. We know of no agreement to give Mr. York any stock in our company. We once made an agreement to sell him some, which was canceled by him over a year ago. Whatever failure to keep to agreements there may be is entirely on his side. "Resp'y, W. O. FAYERWEATHER, Treas." Matters thus rested until the twentieth day of July, 1885, when this suit was commenced. . Several important questions are raised by the foregoillgstatement, all of which were earnestly discussed by counsel. The view we entertain of the case, however, renders necessary the consideration of one of them only. That the'complainantagreed, for a sufficient consideration, to surrender his right to the stock, and that this agreement was carried into execution by the return and cancellation of the paper before referredto, is a fact so clearly established as to admit of no doubt. The attempt now made to avoid the effect of the paper, by asserting that the complainant's right did not spring from or depend upon it; that its cancellation, therefore, left the right undisturbed; and to set up the complainant's alleged recollection of the parol. agreement as the foundation of his claim,-does not, as before suggested, seem worthy of more serious consideration than has already been given it. It is further tuged, however, that the agreement to surrender the right was procured by means of fraud. To this-there seems to be more than one answer. It does not appeal' that the respondents were guilty of such fraud. Indeed, it does not appear that they procured this agreement. They did not desire it, except iIi an event over which the complainant had absolute control. On the contrary I they desired and urged him to retain his right, assuring him that it was valuable, and that his interest would best be' 'promoted by continuing his connection with them. The severance of this connection, and all he did in accomplishing it, his own free, voluntary acts. We are unable to discover the slightest evidence of unfairness on the respondents' part· throughout their intercourse
YORK V., PASSAIC ROLLING-MILL CO.
with him. The relations of the parties were not fiduciary in character; they were purely contractqaL The respondents were not, therefore, called upon to furnish the complainant with information, which he did not request, respecting the stock. It does not even appear that they had any of which he was not possessed. He differed with them in judgment regarding its value, rating it very low,' while they rated it high, as they informed him. The assumption that he was ignorant, and did not understand the company's statements of its financial condition, (made and discussed in his presence, at its meetings,) is not justified by anything in the cMe. The company was not prosperous during his connection with it. The testimony of Mr. :b'ayerweather, and others familiar with its condition, leaves no room for doubt of this. No dividends were declared, and the stockholders, who had invested largely, received nothing for their outlay. The books, cited as evidence to the contrary, we do not pretend to understand. . Their statements of surplus, as well as the increase of capital, were doubtless based on improvements in real estate, increase of machinery and tools,valued at cost. This improvement and increase of property were probably the result of borrowing and other increase o,f indebtedness. However this may be, we do not regard the citations from the books as entitled to much weight, when arrayed against the positive and intelligent testimony of the witnesses just referred to. Subsequently to his withdrawal, circumstances changed. The country gradually recovered froIIl the depression consequent upon the panic of 1873. A new field opened for the peculiar and special character of work turned out by the company, and it prospered and made money. This, however, as we have seen" is what the respondents had prophesied to be probable, and urged upon the complainant as a reason why he should retain his stock, and continue his connection. We need not enlarge on the subject. It seems clear that the complainant has himself alone to blame for what he did in the premises. Then, again, if this agreement and its execution (by which the right to stock was surrendered) was fraudulently procured as alleged, the complainant should have proceeded promptly to set it aside, and rid himself of the consequences. !)lstead of waiting seven years before commencing suit, he should have proceeded at once on discovering the fraud, or with as little delay as was reasonably possible. When, after his return from South America, he employed counsel, and asserted his alleged right, it must be presumed he had all the knowledge he possessed when the suit was commenced. He had no occasion to wait until the respondents formally denied his right, in answer to his attorney's demand. He knew beforehand that they denied it; that they stood upon the agreement of surrender, and its execution. We need go no further. For the reasons stated, it seems plain, not only that equity does not require us to annul and overturn the settlement, but that to do so, and thus open up to controversy and litigation the difficult questions arising out of the former relations of the parties, which the settlement was intended to put at rest, would be a serious wrong. A decree must be entered for the defendants, with costs.
FEDERAL REFORTER. GILMER
MORRIS and others.
«(Jt"rouit Court, M. D. Alabama. November Term, 1886.)
JUDGMENT-RES .ADJUDICATA-DllilMISSAL.ON DEMURRER.
Plaintiff filed a bill in a state court which, in effect, asked that he be allowed to redeem certain stock pledged by him with the defendant, a banker, in 187l. On demurrer to the bill, the court sustained the plea that the statute of limitations had run against it, and gave decree "that complainant is not entitled to relief, and that his bill of complaint be, and the same is hereby, dismissed out of this court." In the present suit plaintiff asked for an accounting and for general relief, and set out that' he had pledged the stock in 1871; that in that year part of the stock was sold, leaving a small balance due defendant; that in 1875, 'having formed a partnership, he arranged with defendant that the stock should be retained by him to secure loans and discounts to his firm as well as the balance of the original debt; that suchartangement was reo uewed as to successive firms of which the plaintiff was a partner; that large dividends were received upon the stock; and that from 1875 to 1884 defendant continuously. held, and acknowledged that he held, the stock as a pledge on plaintiff's account. Held, that the ,plaintiff, having merely failed in the first action from the omission of an essential allegation, which was supplied in the second suit, the dismissal waS not a trial upon the merits, and did not operate l1S reB adJudioata, and ,that plaintiff was entitled to maintain his ac· tion.
In Equity. Heard upon the allowartce or defendants' plea. R.O. Brickell, H. O. Semple, and W. A. Gwnter1 fOf complainant. D. S. TrfYJj"H.a. Tompkins, and A. T. London, for defendants. BRUCE, J. The bill was filed September 20,1886, and sets out a pledge as collateral security, in the year 1871, of 120 shares of stock in the Elyton Land Company, by plaintiff, to Josiah Morris, to secure to him the repayment of the sum 0($6,000, which sum Morris had advanced for the purchase money of said stock; that. in the year 1871, one-half of said stock was sold for the sunl of $6,000, leaving a small amount Qr iiiterest due to Morris, and that, in the year 1875, orator formed a partnership with one Donaldson; and desiring-,as he charges in his bill, "to continue his bank account with said Josiah Morris & Co., and to obtain from them, from time to time, some .accommodations by way of loans and arranged and agreed, in the early part of the year 1875, with said Morris, that the said stock should be held by him, not only to secure sucb balance as was due 'him on the original purchase thereof, but also for all indebtedness which the said firm of Gilmer & Donaldson might incur to him, or to his banking firm, * * * and afterwards, and in pursuance of said agreement, and up to the death of said Donaldson, in 1876, the bank account of said Gilri1er & Donaldson was opened and continued, * * * and loans and discounts were made to them from time to time. * * *" Orator says that after the death of Donaldson he formed other business partnerships, and that during the course of said dealings, under the name of Gilmer & Clanton. and Gilmer & Merritt, the saId Morris, through his said bank, as he had done for many years for all of orator's previous firms, extended credits and made loans of money to 'said firms, from time to time, upon the