Opinion
05-19-1905
TEETER et ux. v. VEITCH.
Anderson Price, for complainants. Grey, McDermott & Enright, for defendant
Suit for the appointment of a new trustee or a receiver by Eli Teeter and wife against William R. Veitch. Heard on bill, supplemental bill, answer, and proofs. Dismissed.
See 57 Atl. 160.
Anderson Price, for complainants. Grey, McDermott & Enright, for defendant
GARRISON, V. C. EH Teeter was a speculator in real estate and a promoter of corporations exploiting real estate. Emma Teeter is bis wife. Prior to the 28th of January, 1903, through a broker named Runyon, negotiations were had with one Crane for the purchase of a tract of land in New Jersey called the "Crane Farm Tract." William R. Veitch is a stenographer, and is shown to have been employed in his profession at various banks and business houses in New York City. The following agreement was entered into between the parties:
"Memorandum of Agreement made this twenty-eighth day of January, one thousand nine hundred and three, by and between William R. Veitch, of the City, County and State of New York, party of the first part, and Emma Teeter, of the City of Newark. County of Essex, State of New Jersey, party of the second part, and Eli Teeter, of the same City, County and State, party of the third part, witnesseth, whereas the said party of the first part is about to receive title or contracts therefor to various parcels of real estate in New Jersey and New York, to wit:—Thirty-eight acres more or less at Forest Hill, Newark, N. J., known as Crane Farm Tract, also various other parcels according to and as described in a certain contract made by Emma Teeter and the Excelsior Building and Loan Association of New York; and, whereas, under said contract Emma Teeter will cause to be created divers securities and titles to real estate, upon the sale of which cash or other securities will be obtained by the said Veitch: Therefore be it known, that any cash or real or personal property received by the said Veitch arising out of or from any and all the aforesaid transactions are to be held by said Veitch as Trustee only and for such period of time as shall be necessary to perform such parts of the contract betweenEmma Teeter and the Excelsior Building and Loan Association as shall enahle the parties hereto to form a New Jersey corporation with an omnibus charter and capital stock of $100,000, which corporation shall secure from said Veitch all cash or other personal or real property received by him (less any disbursements directed by said Emma Teeter), said Veitch receiving in exchange therefor the capital stock issue except one share issued to each party to this agreement; said Veitch shall then transfer the nine hundred and ninety-seven shares so received to Eli Teeter as Trustee for the following purposes, to wit:—said Eli Teeter shall hold this stock as Trustee for the period of five years (unless all parties hereto shall agree to shorten the period), voting the same at all stockholders meetings and drawing all dividends and disbursing same, viz., twenty per centum to the said William R. Veitch or Assigns, eighty per centum to the said Emma Teeter or Assigns, and upon termination of time period (or prior, as may be agreed upon by the parties hereto), of Trust distributing stock in same proportion to same parties or assigns. * * *
"The parties to this agreement shall constitute the first board of directors of said Company, and said Eli Teeter shall be its president and general business manager, and Emma Teeter its vice president and assistant secretary, and said William R. Veitch its secretary and treasurer: provided, however, that if by death or for any other reason the said Veitch shall withdraw from the company's active service, then in that event any interest of said Veitch hereunder shall be calculated as existing only upon a pro rata basis for the period of his active service and he and his heirs desiring to part with said interest under this agreement or the stock issued thereunder (prior to company's liquidation). The party of the second part is hereby given the first option for three months from date of notice of acquiring the interest of said Veitch at seventy-five (75%) per centum of its book value at one third cash and the remainder in one year secured by the said interests. It is understood and agreed that the parties hereto are to receive an equal weekly or monthly salary to be mutually agreed upon,
"In witness whereof we have hereunto set our hands and seals in triplicate the day and year first above written.
"William R. Veitch. [Seal.]
"Emma Teeter,
"By Eli Teeter, Atty. in fact. [Seal.]
"Eli Teeter. [Seal.]
"O. E. Runyon."
The purpose of the parties was to convert the land into building sites; to pave, sewer, and otherwise prepare the property for residential purposes. On the 24th day of June, 1003, settlement was made with Crane at Newark, and the title to the Crane farm tract was vested by deed in Veitch, the purchase price stipulated to be paid in cash was paid, and Veitch gave a purchase-money mortgage thereon for $22,500 on plot No. 2, having previously also indorsed or made notes, one of $15,000 and one of $5,000. The money which was paid to Crane was raised by mortgaging the property through the Excelsior Building & Loan Association for $50,000, upon which only $38,675 was advanced by the association. Upon returning from making the settlement at Newark, the parties went to the office of Reeves, the attorney for the Excelsior Building & Loan Association, and there Veitch signed the certificate of incorporation of the Urban & Suburban Realty Title Company, which was the corporation provided for in the agreement of January 28, 1903, and to which the title to this property was to be conveyed. That certificate was immediately sent to the Secretary of State, and was immediately returned by him for some correction. It would appear that it got back to New York on the 26th of June. On that day, or the day after, Teeter took with him, he says, the deed, various notices with respect to the first meeting of the corporation, and the certificate of incorporation, now corrected, and went to the business house where Veitch was employed, and requested him to sign the various papers. Veitch asked for time, which angered Teeter, and he took the papers and withdrew. On the 30th of June a notice was served upon Veitch of a meeting to be held on July 1, 1903, at the office of Anderson Price, Esq., the attorney of the Teeters, to perfect the formation of the corporation mentioned. On the day after their return from Newark, or the next day, John Neubauer, a brother-in-law of Mrs. Teeter, met Veitch, and in the course of a conversation it was developed that Mrs. Teeter had quarreled with her husband because of some personal matters between them, and that she was desirous of meeting and having an interview with Veitch. Veitch suggested that the proper place for her to meet him, if she desired to do so, was his residence, and on that evening she went there. While there, in the presence of Veitch and of his wife and his sister-in-law, she made many statements concerning her husband, accusing him of bad dealing and bad faith and bad conduct in many business deals, and warning Veitch against continuing to do business with him. This so alarmed Veitch that he consulted a lawyer, and acted thereafter, he says, under counsel's advice. His counsel, Sayles, and he attended at Mr. Price's office, in pursuance of the notice, at the meeting held on July 1, 1903. Mr. and Mrs. Teeter and Mr. Price were the other parties present. Mr. Price produced the deed to the new corporation and the certificate of incorporation of the new corporation, and requested Veitch to sign the same in accordance with his contract of January 28th. Veitch referred them to his counsel, and the counsel stated that Veitch desiredto withdraw from the whole business, and not to go on, and apparently this ended the meeting. Nothing whatever was accomplished, no papers were signed, and no agreement made.
On the 3d of July, 1903, the original bill in this suit was filed by Mr. Price on behalf of the Teeters against Veitch, in which the agreement of January 28th is set forth, Veitch's conduct in refusing to carry it out is detailed, and it is prayed that either a new trustee be substituted in the place of Veitch, or a receiver be appointed, and generally that equity be done between the parties. A restraining order was granted, and this was served on Veitch in New York. He did not appear formally in this suit at that time. Another meeting was held between the same parties on or about the 7th of July, 1903, at which meeting Mr. Price again requested or demanded that Veitch should carry out his contract by signing the papers, namely, the deed and certificate of incorporation. Veitch, through his counsel, again demurred to signing the papers, again reiterated his desire to withdraw and get out of the whole matter, and the question of the figure to be paid him was discussed. The first suggestion made by counsel for Veitch was that he should receive $12,500, and the final suggestion was that he should receive $1,375. No sum was agreed upon, and the conference broke up in bad spirit. About the 16th of July, Runyon, the broker who had been instrumental in selling the Crane property to these people, having learned of the difficulty into which they had gotten, went to see Mr. Price, and after disclosing to Mr. Price the information which Runyon had, he asked whether the matter could not be adjusted. Price responded that they would not pay any such sums as had been suggested by Veitch's counsel, but said that they would pay as much as $1,500. Runyon conveyed this information to Veitch's counsel, and a meeting was arranged at the office of Reeves, and there the Teeters, Veitch and his wife, and his counsel, Sayles, Runyon, Price, and Reeves met. At that meeting Price explained that the Teeters did not have the $1,500 to pay Veitch, but that if Veitch would execute the various required papers, and lodge them in escrow, to be delivered upon the carrying out of the agreement he proposed, they would, within five days, pay $500 in cash, and would allow the title to one of the lots to remain in Veitch until the balance of $1,000 was paid within six months. This was assented to, and an escrow agreement was drawn, and the papers were executed by Veitch and lodged with the escrow holder. Within 10 days after this meeting $500 was paid to Veitch, the papers were released to the Teeters, the company was incorporated, and the deed vesting title in it was recorded. That deed is from Veitch to the Urban & Suburban Realty Title Company, and conveys all of the land which Veitch acquired by the deed from Crane. It contains the following reservation of title: "Excepting and reserving therefrom a piece of property situated on the easterly side of Second street, beginning at a point one hundred feet south of Montclair avenue and running one hundred feet, and which said plot is one hundred feet in depth on each side and one hundred feet in width front and rear, which said plot is hereby retained by the said William R. Veitch as and for security for the payment within six months from the date of execution of this deed as security for the sum of $1,000, which said sum if not paid within six months said William R. Veitch shall retain said plot of ground as his own property free and clear of all incumbrances thereon."
In August, 1903, the solicitor for the complainants applied for and obtained leave to file a supplemental bill in this suit, and on the 15th day of August, 1903, filed such a bill. That bill sets up the occurrences since the filing of the original bill, and charges that Veitch, in contravention of his duty under the agreement of January 28, 1903, refused to transfer the title as he had agreed, and would not transfer the same until he was paid a sum of money, namely $1,500, and that such payment was extortionate, and that it was complied with under compulsion or duress, and that the complainants are entitled to have the lot of land retained by Veitch held subject only to the proper amount due to Veitch, which the complainants ask the court to ascertain. On the 12th day of September, 1903. the Urban and Suburban Realty Title Company transferred the title to the Crane Farm Tract to John Neubauer, "subject to a certain suit in chancery entitled 'Emma Teeter and Eli Teeter vs. William R. Veitch,'" and "affecting the following described parcel thereof." (Then follows a description of the lot retained by Veitch.) On the same day John Neubauer executed the following paper:
"1 the undersigned hereby certify that upon this the 12th day of Sept. 1903, Emma & Eli Teeter have constituted me as Trustee to receive certain property in Newark, N. J., situate on east side of second street, cor Montclair Ave and fronting 385 ft on said second st—being more particularly shown in deed of Urban & Suburban Realty Title Co to me bearing even date herewith. The conditions of my trust is that I shall at direction of said Emma & Eli Teeter mortgage, sell, lease, or otherwise dispose of same for and at their direction & benefit, receiving such compensation as may be fair and equitable or as may be mutual—agreed upon, and that I personally or by heirs executors, administrators or assigns have no other claim than for such services as I may render as such Trustee.
"In witness whereof I have set my hand & seal the day and year above set forth.
"John Neubauer. [Seal.]
"Witness, Herman E. Gloff."
The defendant insisted at the trial that | the ease could not proceed to a decree for lack of proper parties. At the time that this objection was raised by the defendant it appeared from the proofs that the title had passed to the Urban & Suburban Realty Title Company, and nothing more appeared. Counsel for the complainants, by consent, obtained leave to place in evidence thereafter proofs with respect to this title, and thereafter the deed just mentioned from the Urban & Suburban Realty Title Company to Neubaner and the declaration of trust by Neubauer were placed in evidence.
I think that under the situation now disclosed, it appearing that all of the beneficial interest in the property in question is in Emma and Eli Teeter, there is no necessity for any other party being brought into this suit for the purpose of enabling the court to make a decree therein. The complainants' insistment is that there was paid to the defendant $500 in cash, and that he retained title to a piece of land as a pledge for the payment to him of $1,000 in cash, and that this $1,500 was extorted by the defendant from them. Their prayer is that the court shall ascertain what sum was fair and reasonable for Veitch to receive, and decree that all over that amount must be foregone by him, and that the property shall be freed from further lien, and be decreed to be re-conveyed by Veitch to them when he shall have received the amount fixed by the court.
The defendant's insistments are, first, that he had a right to rescind the agreement on account of the action of Mrs. Teeter, and that he did so rescind it; and, second, that he had an interest in the subject-matter of this agreement, and the complainants bought out or compromised with him concerning that interest for a sum of money which was mutually satisfactory, and that such compromise will not be disturbed; third, that he was not guilty of extortion or compulsion, and that the settlement between the parties should not be disturbed.
With respect to the defendant's contention that he was justified in rescinding the contract because of the conduct of Mrs. Teeter, I find the situation to be this: The agreement of January 28th shows that Mrs. Teeter was the party in interest. She was to see that the titles were conveyed to the defendant, and was to direct what he should do with moneys coming to his hands raised upon the properties, and after he conveyed the properties to the new company she was to receive 80 per cent. of the stock. I think that under these circumstances, if Mrs. Teeter imparted to Veitch her desire to rescind this contract, he would have been justified in acceding to that disposition of the matter, and it would have been very difficult for Mr. Teeter to have interfered with their ending the contract. But since it appears that on the very next day after Mrs. Teeter had visited Mr. Veitch she appears with her husband and counsel and insists that he carry out the contract, I do not think that he can claim that she did rescind; or that, acting upon what she said, he joined in her desire to rescind, and that what he did thereafter can be attributed to that decision. I do not find, therefore, that there is any basis for a conclusion that there was a mutual rescission of this contract.
There are two possible views which may be taken of the circumstances: First. That Veitch, because of the apprehensions caused by the disclosures made to him by Mrs. Teeter, desired to withdraw from the whole matter, and stated this desire to the other parties, who finally agreed to pay him $1,500 for his interest. The other view is that Veitch, without right, demanded the payment of a sum of money to him before he would do that which he had agreed to do in accordance with the terms of the contract of January 28th. If this latter view be correct, such payment was extortion, and under the authorities it could be recovered by those who made it. My difficulty is that I cannot see how, in view of the facts, any decree can be made in favor of the complainants. Certainly none can be so made if it be found that Mr. Veitch obtained the payment and retained the property as security solely as a result of a compromise of the interest which he had in the subject-matter of the contract. It will be recalled that under the terms of the contract Veitch was to receive 20 per cent. of the stock of the new company, was to be made an officer thereof, and was to receive a salary therefrom. Mr. Teeter testifies that he considered the property which they had bought as an extremely valuable one, out of which profits of a very large amount would be made. If his prophetic judgment was good, then the $1,500 paid to Veitch could not by any one be deemed to be an extravagant sum for getting rid of the interest which Veitch had in the future of the scheme. The position, however, which Veitch occupied toward this property, and the future of their joint scheme, and the time at which he made the demand for the payment of money to him, make it difficult to determine that the bargain was one freely entered into by the complainants, and was one which they would have entered into if Mr. Veitch had not held the commanding position which he did. Were I forced to definitely determine upon this single issue, I incline to the opinion that it should be held that this was not a free and willing compromise between parties. equally unrestrained.
The other possible view of the circumstances must, therefore, be considered. In this view, Veitch, as trustee for Mrs. Teeter, had acquired title to valuable property, in which they would be jointly interested after he should convey the same, as he was obligated to do, to a corporation to be formed for that purpose. Without any change in their contractual relations, he refuses to transfer the title as he had agreed to do, unless and untilhe is paid a sum of money. I am of opinion that if the complainants, after having made the payment and submitted to the retention of the piece of land pledged for the future payment, had tendered to Veitch the interest secured to him under the contract, he would have been compelled to have returned the $500, and to have released and relinquished his lien upon the land. In other words, I am of opinion that the $1,500 was a compulsory payment, which could have been avoided by the complainants had they acted promptly. But I do not see how they can now seek to recover back the $1,500 without restoring Veitch to the position where he would have been if the money had not been paid him and he had not relinquished his rights in the subject-matter of the contract of January 28th. That which a court of equity does with respect to extortion or compulsion is to put the parties back where they would have been if the wrongful act had not occurred. If this wrongful act had not occurred, the new company would have held the title, and Veitch would be entitled to his interest in the stock of such new company. It now appears that the new company, in September of 1903, conveyed away all of this property, and that all of the property is now held for the benefit of the complainants. They therefore have gotten this property free and clear of any rights of Veitch, and are not in a position to give to him—nor do they tender themselves as willing to give to him—the interest which was to have been his under the contract of January 28th.
Thus far I assume that the counsel for the complainants agrees with the view stated, because the prayer is that the court shall ascertain how much it is just and fair for Veitch to receive, and that upon their paying that to him he shall be decreed to convey the retained lot. The difficulty here is that there is no testimony before the court from which any conclusion can be reached as to what it is just and fair that Veitch should receive for his interest in the subject-matter. There was considerable testimony about the services that he had rendered up to the time of the making of the contract of January 28th and up to the time of his taking title in June of 1903; but I do not understand that it is proper to consider these services as a thing for which Veitch was to receive compensation. There is no provision anywhere in the contract of January 28th for any compensation to Veitch for any such services, and there is not any proof to show that he was to receive compensation for any such services. The thing of value which Veitch gave up was his interest in the land purchased under the agreement of January 28th; and, as has been before pointed out, this was substantial. To arrive at any conclusion as to what he gave up, and as to what it was worth, the court would have to be informed of the value of the property, its availability for building sites, the amount which would have to be expended upon it, and the possible and probable receipts from the sale of the lots, and numerous other such matters, from all of which the court might have reached some conclusion as to the value, upon the 17th day of July, 1903, of the interest of Veitch in the future possibilities of this scheme. In default of any such evidence— which the complainants should have produced if they desired the court to arrive at any judgment—the court can only leave the parties where it finds them. They agreed that $1,500 was the sum which correctly represented Veitch's interest. The fact that they might have undone this agreement, and recovered back the payment, does not now affect the existing situation. They have practically ratified that which they might have avoided had they acted promptly and differently. The complainants, instead of taking the course which would have enabled them to have repudiated the compromise and recovered the payment, so acted as to make it impossible for them to restore matters, and in the course of this suit have not submitted such proofs as will enable the court to arrive at any conclusion in their favor with respect to the only equity claimed by them.
Under these circumstances I am of opinion that the bill must be dismissed, and I will so advise.