630
,FEDERAL REPORTER. JOHNSTON, t1. 'l)IPPE. 1 ((}ircuit (Jourl, N. D. Georgia.
December 19, 1887.)
1.
JURISDIOTION-FEDERAL CIRCUIT COURTS-AMOUNT IN CONTROVERSy-AMEND' MENT.' ' "
!.
Where a bill for thespecillc performance of a contract for the sale of land Is silent respecting the value oHM land in controversy, except that, in the contract sought to be enforced, ft$ price orvalue is fixed at $1.000, an amendment alleging that the present value of the land 18$3,000 brings the controversy, as' to amount, within the jurisdictional limits of the circuit court, as fixed by the act of March 8.1887. SPECIFIC PERFORMANCE-
A written agreement to convey land at the option of the proposed vendee. within a given time and at a certain price, if made upon a sufficient considerthe optlol;1 ation, with, full knowledge 01;1 tb,e part of the that he is 'bound and the other party is not; is such R contract as, though lacking il;1 mutuality of remedy, willbe enforced in equity at the instance of the propol\ed vendee. When the party holding the option signifies his acceptance witb.inthe time limited, and upon tbe.terms stated, of the contract becomes mutual, and capable of enforcement at the instance of either party.I" ' . ; '
'
In Equity. Bill for specific perfot:IOanc'e by ston against R.;B. Trippe, dllfeud.nt. On demurrer. G. A. HQ'Well, for complainant. Hopkiruf& Glenn, for , NEWMA:N) ,enforce the
J. L.John-
by complainant against certain conditional Qr conThe bill, after stating some correspondence arid negotiation between defendant, relative to, the sale, of certain IImd iIi White ,county, by the the' former, alleges that in january', 1887, defendant prepareda,nd executed the written instrument: '" "Georuia,',Ui.tlton Oounty, .This wi4tesseLh, that t1).e signed R. J;J:. Trippe, of said state a1id COI,mty, agrees that if said J. Lamp Johnston. of Charleston,S. C., or anyone for him, pays or causes to be paid to'the said R.B; Trippe, one thousand dollars, on tir p!iforeJaIiuar,Y20, 1888, that the sailtR. B. Trippe, forhimself,his heirs and assigns, covenants and agrees that he will make to, the said Johnston, good and sufficient title to lots ,of land num,l>ers J! a,nd 25, in 3d jlil\trict, White cO\lnty; said state. ,And it is further agreed that if a. draft ·for $5().OO this, day drawn byR. B. rrjppe, w;ith this optionllorid' attached, ispaid at sight, theil, R. B. Trippe will make said title, it nine hundred andftfty dollarS is paid him on or before January 20, 18l:l8';ihaidsunis of money are not paid within the time mentioned, that is, $50.00 on sight draft and $950.00 witIlin twelvemonths from this date, then this bond to be null and void; and it is understood that if the balance of one thousand dollars (i. e., $950.00) is 1l0t paid by January 20, 1888, the $50.00 <,
J'.
'rhis is a bill
of a
to
IReported by W. A. Wimbish, Esq., of the Atlanta bar. That equity will not specifically enforce a contract wanting in definiteness or mutUality, see Bourget v. Monroe). (Mich.) 25 N. W. Rep. 5141. Hall v. Loomis, (Mich.) 30 N. W. Rep. 874' Moses v. MClJlil.in. (Ala.) 2 South. Rep. 741; Recknagle v. Schmalz, (Iowa,) S8 N. W.Rep.S65; Durkee v. Cota, (Cal.) 16 Pac. Rep. 5; Fogg v. Price, (Mass.) 14 N. :m. Rep. 741. I
JOHNSTON V. TRIPPE.
531
paid on flight draft forfeited to said R. B. Trippe, and that this option bond ifl null and void, ,otberwise ot full force and effect. "Witness my hand and Ileal. this Jan uary 20. 1887. [Signed] "R. B. TRIPPE. "Witness: [Signed] "J. H. CURTRIGHT. M. L. COHEN." This instrument wad sent, about the time of its execution, by defendant to complainant by mail to his home in Charleston, South Carolina, and received by complainant. Defendant also drew. on complainant a sight draft for $50, which was sent, with the foregoing written instrument, to Charleston. His draft was honored and paid at once by complainant, and defendant received the $50. Sometime after this, defendant wrote to complainant, saying he had an offer of $1,500 for the land, and offering, if complainant would release him from his obligation, to return the $50 paid him,and to pay complainant $50 in addition, if the other sale was made. In the same letter defendant stated that the bond sent by him to complainant was not legally binding anyway. Complainant promptly,replied,both by wire and letter, to defendant, refusing to release him from his ,obligation to convey the land in pursuance of the befO'l'e stated contl'lj.ct. In. the same letter in which the complainant refused to release,defendant, instructed defendant to submit his deeds tocomplainant'satt0rney, and that, upon their approval by him, complainant would pay the balance.. $950. This defendant failed and refused to do, but wrote complainant that he declined to furriish the titles or convey the land in accordance with his contract; and in the same letter in.closed a check payable to his, order, and indorsed by him in blank, which he tendered as a repayment of the $50. This letter was received by complainant in Nacoochee, (!eorgia, on the night of March 17, 1887. On the next day, March 18th, complainant went to Atlanta, the home of defendant. sought an interview with him, and immediat;ely;returned to him the $50 check which he had received from him; stating to defendant that. he refused to receive it; and defendant now has the check in his possession. Complainant at the same time tendered to defendant $950 in cash, and demanded that defenda.nt make complainant a good and sufficient title to the land in controversy, which tender deflilndant refused, and refused to convey, and repeatedly refused to carry out; his contract with complainant. A tender is made in the bill of $950; and the prayer is for a decree for specific performance against defendant,. with an alternative prayer for damages,in the event specific performance cannot be obtained. An amendment has been filed to this bill, which amendment alleges that the property described in the bill, bargained by defendant to comlJlainant, is now worth the sum of $3,000, and also ;that the damages to complainant resulting from such refusal and the failure of the defendant. to perform his contract, exceed 83,000. To this bill a demurrer has beeD.filed, which demurrer is on two grounds: 'First, that this court hll-snojurisdiction of the subject-matter in the bill stated; and, 8tOO1ld j that the complainant has not shown a right to any .relief defendant.
532
·FEDEnALREPORTER.
The first ground is based upon the fact that the ;amount.in controversy, as shown by the original bill, not sufficient to giVe' this court jurisdiction; the bill having been filed since the passage of the act of March 3, 1887. This objection seems to be obviated by the amendment since filed, fixing the value of the landat $3,000 and the damages at not less than that sum. There was very little discussion upon this point, in the argument, and it was not strongly urged. The serious and main question in the case arises under the second ground of the demurrer, that the complainant has not shown a right to any relief against defendant. The question made is that this contract between defendant and complainant lacks the element of mutuality, which is necessary to authorize a court of equity to decree a specific performance. That is to say, that, as complainant was not compelled by his contract to take the land and pay defendant the remainder of the purchase money, defendant could not be required to carry out the agl'eement. There is ,a: general rule of law, undoubtedly, that this element of mutuality must exist to justify enforcement of specific performance. Fry, Spec. Perf. § 286; Wat. Spec. Perf. § 196. It is also true that there are clear exceptions rule. In Fry on specific performance it is stated in section 291, as follows: "The contract may be of sucha nature as to give a right to the performanceto the one party which it does not give to the other; as,for instance, where a lessor covenants to renew upon the request of his leSsee, or where the agreementis. in the nature an undertaking. But the more accnrate view of such cases as the tirst,-perhaps of all that could be as. wanting mutuality,-seems to be. that they are conditional contracts; and when the condition has been made absolute, as, for instance, in, the case above' stated, by a request to renew, theywQuld seem to be mutual, and capable of enforcement by either party alike." In Wat. Spec. Perf. § 200, in discussing the matter of exceptions to this general rule, the author says: "But it is well settled that au optional agreement to or to renew a lease, without any covenant or obligation to purchase or accept, and without any mutuality of remedy, will be enforced in equity if it is made upon proper eonsideration, or forms part of a lease or other contract between .theparties that may be the true considerat.ion tor it, though such an agreement can perhaps scarcely be called an exception; for, being in fact a conditional cO:ltract, when the condition has been made absolute by a compliance with its terms, the contract becomes mutual, and capable of enforcement by either party. A contract for the sale of real estate, at the option of the vendee only, upon ·election and .notice, may not only.. be specifically enforced, but the refusal. of the vendor to accept the purchase money '!V ill not destroy the mutuality, thougb .the vendee could thereupon withdraw his election." , . . . The decisions upon this question have been numerous, and it has been discussed ably and at length by many courts of high authority. The :case very generally referred to and relied upon to sustain the rule requiring that a contract must be mutually binding.to justify its enforcement, 'is the decision of LordREDEsDALE in<the case·of Lawenson v. Butler, 1 ;Schoales & L. 13. A careftilexamination of that case and the argument and reasoning of the Lord Chancellof·wiU·sliow that the decision was put mainly upon the ground that where parties enter'intoian: agreement,
is
JOHNSTON. 'V. TIUPPE.
533
each supposing the other to be bound thereby, and it transpires that one was not bound, such party could not have specific performance of the contract by the other. He says, in concluding the opinion, (page 21:) "No man signs an agreement but under a supposition that the other party is bound, as well as himself; and therefore, if the other party is not bound, he signs it under a mistake. That mistake be a ground for relief in equity, but is surely nota ground for specific performance. lJnder these circumstances, the impression upon my mind is that I must dismiss the bill. This agreement was signed in mistake. It is manifest that Butler could not have executed a lease in compliance with it; and as he could not, it is manifest that this is not the agreement he meant to sign." From a note to this case, (page 21,) it would seem that the Lord Chancellor was not himself entirely satisfied with the decision, as he proposed that the case lie over until the next day to look into the cases cited, when plaintiff's counsel stated that they were content with a dismissal of the bill without costs, and it was ordered accordingly. These comments upon and citations from this much-quoted case, are not n1f·.de to question the existence ofthe general rule alluded to, but to show that its application, even in its origin, was a matter of difficulty, and its exteQt uncertain. Counsel for defendant relied in argument here mainly on the cases of. Marble Co. v. Ripley, 10 Wall. 339; Tyson v Watt8, 1 Md. Ch. 1i Duval/, v. Meyers, 2 Md. Ch. 401; and Peacock v. Deweese, 73 Ga. 570. In the -case of Marble 00. v. Ripley, other questions were made growing out of ·complex and intricate partnership relations; but one reason why specific performa:1ce should not be decreed was want of mutuality. After stating this as a reason why specific performance should be refused in that case, the court proceeds to give what is termed a "still more satisfactory rea·son for withholding a decree for specific performance." But want of mutuitlity was undoubtedly recognized as applicable to that case. In the later case of Butler v. Thomson, 92 U. S. 412, the court, in the opinion, uses the following language: "There may be an offer to sell subject to acceptance, which would bind the party offering, and not the other party until acceptance. The same may be said of an optional purchase upon a sufficient consideration." The court then alludes toa class of ·cases under the statute of frauds where one party signed a contract and the other did not. The language as quoted seem.s to me to indicate a recognition by the court of offers to sell subject to acceptance, and optional purchases upon sufficient consideration, as exceptions to this general rule requiring mutuality of obligation in the contract. It would be far from clear that Marble Co, v. Ripley, even standing alone, should be regarded as controlling in this case; but the language used in the later ·ease of Butler v. Thomson shows clearly, I think, that that court would not so regard it. . The two cases from the Maryland Chancery Decisions referred to maybe disposed of with the remark that in neither case cited \Vere the facts at all like the facts that are presented in the case now before this court. . In the case of Peacock v. Deweese, the supreme court of .Georgia held that the contract sOllght to be enforced in that c;J.Se lac.ked
534
Fi:DEBAL .'RE:l'ORTER.
the elenlentof mutuality, and stated that as one reason why specific performanoe would not be The court alsQ stated, however, that agreement'isgratuitous, and entirely voluntary on the part of the defendant in error. A court, of equity never decrees a specific performance of a ,voluntary or, gratuitous contract. Code, § 3189. Any fact showing. the contract to be unjust or unfair or against good conscience; justifies the court in refusing to decree a specific performance. Coele, § 3190." The undertaking of the two Dewees in that case was entirely withop:l c()nsieleration to them., Peacock agreed to make such tests of the land forth e discovery of minerals as were " satisfactory to himself." The two Dewees had their land tied up by this option for six months without re<Jeiving any remuneration therefor, and it was evidently the view of the court that the agreement by Peacock to make such tests as were" satisfactory to himself" was not such a consideration as would support the contract. This may be gathered, I think, from the use of the language "voluntary or gratUitous contract." This, then, was an optional agreement'to sell, wholly without consideratiOll. I have thus far given attention principally to the authorities relied upon by the eminent counsel for defendant in this case, without referring to the long line of decisions which, it seems, hold that contracts such as the one before the' court will beenforced; In the case of Fowle v. Ji}eeman,9'Ves. 351, it was held that an agreement in writing for the sale of an 'estate was binding if signed only by the vendor, and followed by direction to his attorney to prepare a proper agreement for both parties to sij;tn. In-the case of Ormond v. Anderson, 2 Ball & B. 363, where the court dismissed the bill upon another ground, the following language was used' in the opinion: . , .. An objection has been made to the execution of tbis agreement, on the ground that it bas not been signed by the plaintiff, and that the defendant could not have enfurced it against the plaintiff. I am very well aware that a doubt entertained by ajndge in this court, of ver.v high authority, [referring to Lord HEDESDALE;, in Lawenson v. Butler,] whether courts of eqUity would specifically execute an agreement where one party only was bound. There exists no provision in the statute of frauds to prevent the execution of suchan agreement; and Sir James MANSFIELD, who certainly had great experil'nce in courts of equity, lays it down in the case of Allen v. net, [3 Taunt. 169,] that a contract signed by one party would be enforced in equity against that party, and that such was the 'daily practice of that court." He proceeds to say that "in a case were the court finds a party who has been and is ,endeavoring to obtain some undue advantage, or has beeh playing what is called C fast and loose,' the court"vould not assist him." In the case of Olason 14 .Johns. 484, the chancellor, after discussing, among other cases, .thOse I have just cited, concludes thus: "I have thought, and often intimated. that tbe weight of argument was in favor of the construQtiQn thliqhe agreement concerning lands, to be enforced in eqUity, should be mutually binding; ami that the one party ought not to be at liberty to enforce, at his pleasure, an agreement which the other W1l8 not entitled to claim. It appearS to be settled (Hawkins v. Holmes, 1 P. Wms.
535
770) that though the plaintiff has signed the agreement he never can enforce
it against the party who has,not signed it. The remedy, therefore, in such cases is not mutual. But,iiotwithstanding this objection. it appears from the review of the cases that the point is too well settled to be now questioned."
In a later case in New York-In re, Hunter, 1 Edw. Ch. 1-the vice'chancellor uses the following language: "In the next place, it is said the covenant to sell isnot mutual, the lessee not being bound to purchase. and that, as this is a' one-sided' agreement. the court will not decree a specific performance. The cases of Pa1'khurlit v. Cortlandt. 1 Johns. Oh. 282. and Benedict ,v. Lynch, Id. 370, have been referred to ,as establishing this point. '." Chancellor KENT there intimated that such was the rulll; but in asubsequeht case in the court of errors-:.CZason v.Bailey. 14.Johi1s. 484-he had occasion to review that opinion. which he found to be erroneous, and admits th'at the point is too well settled the other way to be questioned. The conrt may, therefore, in a proper case" where there is a covenant on one side. and no mutuality, decree a performance. Besides, in a case like the present. it may be peculiarly proper. The rent may have been. fixed at $500 as an inducement to the power of purchasing the property. This is a fair inference." In the of Van, Doren v. Robimon,'16 N. J.'Eq. 256, it is that lithe general principle is that where the contract is incapable of being enagainst one party, that party is equally incapable of enforcing it against the other. But the principle does not apply where the contract, by its terms; gives the one party a, right to th,e performapce, which it does not give to the other party. II A.nd in the case of HowraUy ,v. War18 N. J. Eq.124, after stating the general ruleRS the existence of ljIlutl;lality" ,and that unilateral oroptienal are not favored in the court proceeda: authorities have narrowed this doctrine down to cases in which tbereis n9 other consi4eration. And it is now well Bettled tbatan optional agreement to convey. or renew a lea.se, without any covenant or obligation to or accept. and without any mutuality of remedy, will be in it is made upon propercoTtsideration. orforms part of a lease or 'Otber contract between the parties, that may be the true consideration for it."
A number of cases are then cited by the courtio sustain this view, among them the cases I bavEl just referred to. The language last quoted to me to be a. clear. statement of the cprrect rule in this matter. .In Smith's Appeal, 69Pa. St. 474, the matter before the court being an; optiopal contract for ·the, sale of land" it was held tbat the contract wOl:\ld be enforced. lnthe case ,of Rogers v. Saunders, 16 Me. 92, 33 Dec. 635, the court cites the decision of Chancellor KENT in C!la.son. V. Badley, and stateElthat this appears to be now the generally received ' doctrine. In Vassaultv. E!lwards, 43 Cal. -458,. it is held tbatA proposal to sell real eatate. reduced to writing and signed bythe vendor in 'Yhich he recites that he has sold to tbe yendee the land for a .price naUled. an4has received a certain deposit, all part payment, which the vet:\dor,was to refundJfthe rejected or bad. the Bale to be to a search ·of and approvat Of title; the vendee to have twenty days tor the examination of the title. iB' a 'valid' contract of sale entered into between the platies;" " .
536
FEDERAL REPORTER.
'l'othe same effect is the case of Schroeder v. Gemdnder, 10 Nev. 355. The court, after stating that there are many exceptions to the rule in the cases, ,as to mutuality, says: "We think it may now be considered as well settled by all, or nearly all, of the modern authorities, that a court of equity, in actions for the specific performance of optional contracts and covenants to lease or convey laud, will enforce"the coY-enant, althougp the remedy is not mutual, provided it is shown to have been made upon a fair consideration, or where it forms part of a contract, lease, or agreement, Y'I hich may be ,the true consideration for it." Entering into the discussion of this question, in many of the cases, is thafpart of the statute of frauds providing that contracts for the sale of ;t;n:t,lst be in writing" signed by the party to be charged thereby, or some person by him lawfully authorized. (This law as codified in Georgia, isin section 1950, Code 1882.) It is held in some of these cases that the question should controlled by the language of the statute just quotE*ahd that, as thedmtract need'be signed by onlydne party, viz., the party to be charged thereby, it is only necessary that ,he should be bqun<;l. , see,ms to me, however, that the question of mutuality is one distrnctaridapart [rom any question that might arise under the statute of frauds:n is a matter separate from, if not over and above it, and I have considered'it-in that view. I think it is settled by the above authorities, and others that might be cited, that where an owner of land ,for a sufficient an option or privilege to purgives chase the land within a given time, in writing, with full knowledge of the fact that he is bound and the other party is not, it ,is such a contract 'aswillbe enforced in equity at the instance of the patty holding the option. Does such a contract indeed lack mutuality? The seller, for fair consideration, agrees to giv'e the proposed purchaser a certain fixed time -in which to make the contraetmutual, by'acceptanceof the offer to sell. ,If he accepts withih the specified time, Doth parties are fully, bound. tp.iscase. Here, for a reasonable consideration, the sum Now. , of $50, the defendant agrees that the complainant shall have the privilege o{ buying his land within a year; that is, the defendant sells to him for $50 tha privilege of purchasing the land within a year. That consale by defendantto complainant of the privilege of purchastract, ing, is executed by thepayniEintby complainant of the sum agreed upon. The remain'aerof the contract is conditional upon the complainant's accepting within tl. year the continuing offer of the defendant to sell, him the land.. ,1 See no reason why a court of equity should not enforce such a contract. . On the cOlitrary, it seems to me it would be inequitable to refuse its enforcement. I am clear, therefore, that this case does not come within the dass where lack of mutuality will prevent enforcement oithe contract,and that it does come withinawell-recognized ex, ception to thfl,t fille,of optiqnal sales upon fair consideration. This case .is cOl,lsidered now. ofcpurse; upon the f&ctsas stated in the bill. How it may by what the defeqdant CaD hereafter show must be a matter. fOf fut\1re{)onsideration. My conclusion is that the demurrer must be overruled on both grounds) and it will be ordered accordingly.
CAnPEN'rER V. TALBOT.
537
CARPENTER V. TALBOT
et al.
(Oirc.uit Oourt, D. Vermont. January 17,1888.)
INJUNCTION-PRESERVATION OF PROPERTY-CHATTEL MOhl'GAGES-CONFLICTING CLAIMS.
a.
A bill to enjoin foreclosure of two chattel mortgages on the same property showed no ground for enjoining foreclosure of the first, but showed that the bonds secured by the second were invalid in the hands of the holders. The answer of defendants claiming under the second mortgage was insufficient, and the validity of their mortgage was doubtful; but the use of part of the mortgaged property was necessary to its preservation. Held a proper case to enjoin the senior mortgagee from interfering with such part until his sale, and to enjoin the other defendants from foreclosing until further order.
In a bill to enjoin foreclosure of a chattel mortgage runninp; to trustees and securingbonds to be negotiated by the mort,e:agor, plaintiff alleged facts showing that the bonds issued were illegal, and invalid in the hands of the holders, who were seeking to foreclose through the trustees. The trustees answered, on information and belief, that the had waived the illeg'ality and ratified the bonds, and in like manner demed the facts. The bondholders were not parties, but mip;ht voluntarily have become such. Held, that the answer was not sufficient. 8. COURTS-FEDERAL JURISDICTION-VENUE OF OF MARCH 3, 1887.. lJnder the act of congress of March 3. 1887. a suit by a citizen of Ohio against citizens of Vermont, New York, and Maine, to enforce a claim to property in Vermont, is properly brought in the district of Vermont. 4. CHATTEL MORTGAGES-FORECLOSURE SALE-NATURE OF. A foreclosure sale by a public officer under a chattel mortgage is not a proceeding in a state court wIthin the meaning of Rev. St. U. S. § 720. providing that no injunction shall be gran ted by a federal court to stay proceeding's in a state court, except in certain instances. 3. SAME ENJOINmG FORECLOSURE - ANOTIlER SUlTON MORTGAGE SEOURING Where, in defense to II. bill to enjoin foreclosure of a mortgage, the pendency of another Buit in another jurisdiction to foreclose another mortgage securing the same debt is pleaded. but plaintiff could not. by defending the latter suit, have the relief obtainable in the former. the pendency of the latter is no bar to the former. SAME DEBT.
SAME-PLEADING-SUFFICIENOY OF ANSWER.
6.
TRUS'J'S-"TITLE UNDER-PLEADING.
Plaintiff, claiming as assignee of a lease of personalty running to another as trustee, and to his successors., and not restricting the trustee's power to convey, in a bill to enjoin foreclosure of a mortgage on the property alleged merely that he had acquired the rights of both trustee and beneficiaries. Held a sufficient allegation of title in plaintiff.
In Equity. Bill for injunction. Suit by James W. Carpenter against James R. Talbot, Royce, and Bottum, to enjoin them from foreclosing two chattel mortgages. Under Rev. Laws Vt. § 1977, "the mortgagee" of personal property "may, after * * * condition broken, cause the mortgaged property * * * to be sold at public auction by a public officer. * * *" Under Rev. St. U. S. § 720. "the writ of injunction shall not be granted by any court of the United States to stay proceedings in any court of a state, except in cases where such injunction may be authorized by any law relating to proceedings in bankruptcy." George E. Lawrence, for, orator.