Opinion
May, 1899.
Warren, Boothby Warren, for plaintiffs.
Dayton Swift, for defendant The American Queen Incorporated.
Edmund Wetmore, for defendant The Stewart Howe May Company.
The dismissal of the complaint as to the defendant The Stewart Howe May Company, entitles that defendant to costs. No attempt was made upon the trial to prove the allegations of the complaint charging said defendant with knowledge of, and participation in, the alleged wrongful acts of the other defendant. The mere disclaimer of counsel for the plaintiffs of any intention to ask for a personal judgment against the defendant The Stewart Howe May Company, was not sufficient to require or justify the withdrawal of counsel for said defendant from further active participation in the case.
As to the controversy between the plaintiffs and the defendant "The American Queen Incorporated", several interesting and perplexing questions arise. The dispute as to the terms of the contract, and the understanding of the parties regarding the same, must be decided in favor of the plaintiffs. The contract speaks for itself, and the letters of the defendant disclose its understanding of the terms of the contract. During the period when said defendant was trying to induce the plaintiffs to consent to the publication of the "S.H. M." advertisement, the former urged every argument and pretext in its favor, except the one upon which it now relies. Neither of said letters contain any reference to Manager Kelly's alleged lack of authority to enter into the contract in suit for the defendant; nor to said Kelly's misunderstanding as to the terms of the contract. It is quite plain that the only view in which said Kelly's conduct can be regarded as measurably consistent with good business morals and common honesty, is that, at the time when he made the contract in suit with the defendant, he had forgotten that there was a contract in existence with the "S.H. M." Company, under which the defendant might be called upon, and compelled, to publish an advertisement of their skirt binding, although it had not previously been called upon to do so.
As there is no evidence in the case disclosing the terms of the latter contract, except that which is given on behalf of defendant, or contained in its letters to plaintiffs, we will give the defendant the benefit of the most charitable view of its position that can be taken, and assume that its manager, Kelly, acted in good faith and under a failure of recollection as to the "S.H. M." contract.
Assuming, therefore, that the contract upon which the plaintiffs stand, is one which the parties undertook to make, and did make, and one which Kelly, as the manager of "The American Queen Incorporated", was authorized to enter into, we are confronted by the interesting question whether the plaintiffs are entitled to the relief which they ask herein.
The relief prayed for is two-fold:
1. That the defendant "The American Queen Incorporated" be required to specifically perform its contract with the plaintiffs, upon condition that plaintiffs carry out the same on their part.
2. That both defendants be restrained from publishing, inserting or causing to be inserted, in the paper published by the defendant "The American Queen Incorporated", the advertisement of the defendant the "S.H. M." Company, or any other persons, firms or corporations of any skirt protectors or bindings with an edge similar to or resembling the edge of Feder's Brush Skirt Protector, or in any manner circulating or distributing the said paper containing any such advertisement, except the advertisement of the plaintiffs from September 1, 1898, to and including the month of March, 1900.
Can the contract between the plaintiffs and the defendant "The American Queen Incorporated" be specifically enforced? We will consider this question in the first instance without reference to the rights of the defendant The S.H. M. Company, reserving the latter branch of the case for separate discussion further on. That the contract in suit is one which the parties had a right to make; that it violates no rule of public policy; and that it is not in restraint of trade seems too obvious for serious discussion. The plaintiffs have the right to advertise where, when and as they please. The defendant "The American Queen Incorporated" has the right to sell all, or any part of its advertising space to one or more advertisers to the exclusion of others. Such a transaction involves a simple business contract in which the general public have no interest. The following authorities amply illustrate the trend of judicial decisions in cases involving questions similar to the one before us: Greenhold on Public Policy, 681; Good v. Daland, 121 N.Y. 1; Matthews v. Asso. Press, 136 N.Y. 333; Leslie v. Lorillard, 110 N.Y. 519; Diamond Match Co. v. Roeber, 106 N.Y. 473.
We cannot enter upon a discussion of the authorities cited by counsel for the defendants upon this branch of the case without transcending the rules of reasonable brevity; nor is it necessary, in view of the result which we shall reach in this discussion.
But it does not follow because the contract in suit is valid, and the plaintiffs may have suffered a substantial injury for which there is no adequate redress at law, that a court of equity can or will enforce specific performance.
There are many cases in which this form of relief is impossible, or so impracticable as to be substantially impossible.
This contract in suit seems to present such a case. It requires the defendant "The American Queen Incorporated" to insert in its paper, and to publish monthly for eighteen months, from September, 1898, the plaintiffs' advertisement to the exclusion of the defendant and of others advertising similar wares. Even if it were possible or proper to prevent the publication of the "S.H. M." advertisement during that period, the court could not assume the burden of superintending the specific performance of the contract with the plaintiffs. That would involve continuous and detailed labor and supervision of which the decree, "couched in the precise terms of the contract itself, would be but the beginning of the judicial work." Fargo v. N.Y. N.E.R.R. Co., 3 Misc. 205, and other cases cited in Standard Fashion Co. v. Siegel-Cooper Co., 30 A.D. 564.
The latter case is relied upon by plaintiffs' counsel as an authority, upholding the right of specific performance contended for herein. As we read that case, both the Court of Appeals and the Appellate Division concur in the doctrine that "Contracts which require the performance of varied and continuous acts, or the exercise of special skill, taste and judgment, will not, as a general rule, be enforced by courts of equity, because the execution of the decree would require such constant superintendence as to make judicial control a matter of extreme difficulty." Standard Fashion Co. v. Siegel-Cooper Co., 157 N.Y. 66.
The recognized exception to this rule is found in cases arising upon contracts relating to the management and control of railroads and other quasi-public corporations, and then only when the public good to be subserved by specific performance outweighs the inconvenience of the courts in attempting to enforce their judgments. All that was really decided in that case was that when a complaint sets forth a good cause of action in equity, it is not demurrable simply because the court may ultimately refuse to exercise its sound discretion in granting the relief prayed for.
But it is contended that even if the plaintiffs cannot have specific performance of their contract, they are at least entitled to an injunction restraining the culpable defendant from profiting by its own wrong.
There would be no difficulty in enforcing the negative covenant of the contract in suit by injunction, if the allegations of the complaint had been sustained by proof at the trial. But the allegation "that the defendant The Stewart Howe May Company knew of the agreement entered into between these plaintiffs and the defendant `The American Queen Incorporated', and that the said defendant The Stewart Howe May Company induced `The American Queen Incorporated' to break its said agreement with these plaintiffs and promised to said defendant `The American Queen Incorporated' to save it harmless against any recovery that might be obtained against said defendant `The American Queen Incorporated' by the plaintiffs by reason of the breaking of said agreement", is utterly unsupported by evidence. On the contrary it appears that the S.H. M. Company had a contract with "The American Queen Incorporated" which antedated the making of the contract in suit. Although the terms of that contract do not appear, the only inference that can be drawn from the evidence on that subject is that it was broad enough to require the publication of the "S.H. M." advertisement which appeared in "The American Queen" subsequent to the date of the contract with the plaintiffs. If, as we have said, there had been evidence to sustain the claim that the "S.H. M." Company was a party to, and participated in, the wrong which was perpetrated upon the plaintiffs, the court would issue an injunction restraining the continuance of the wrong, even though it would not undertake to enforce the specific performance of the contract with the plaintiffs. Standard Am. Pub. Co. v. Methodist Book Concern, 30 A.D. 409; Singer Sewing Machine Co. v. Union Button Hole Embroidery Co., 1 Holmes, 253; Standard Fashion Co. v. Siegel-Cooper Co., 157 N.Y. 66, and cases there cited.
The defendant the "S.H. M." Company is an innocent party to a valid contract which antedates that of the plaintiffs, and which must be broken in order to give the plaintiffs the relief which they ask. In the last analysis it is clear that neither form of relief prayed for by the plaintiffs can be granted without inflicting an injury upon an unoffending third party. To do this would be to build equity upon iniquity. Here lies the distinction between the case at bar and the cases above cited, in which the continuance of a wrongful act was restrained although the courts were powerless to enforce specific performance. Shall then the plaintiffs be sent out of court remediless? This seems inevitable unless it can recover some measure of compensation in damages. The court having obtained jurisdiction of the action, it could award to the plaintiffs such damages as they may be entitled to, if there were evidence upon which to base the same. But there is no such evidence. It may be suggested that the case is one in which no satisfactory rule of damages can be applied. This question is not free from perplexity. But we apprehend that the difficulty is not insurmountable. The case of Wakeman v. Wheeler Wilson Mfg. Co., 101 N.Y. 205, is a very instructive one upon this subject. There the broad and wholesome rule was laid down that "A person violating a contract should not be permitted entirely to escape liability because the amount of damage he has caused is uncertain. * * * The rule that damages which are contingent and uncertain cannot be recovered embraces only such as are not the certain result of the breach, not such as are the certain result but uncertain in amount." In view of the probability that the commencement of a new action at law by the plaintiffs would be met by a plea of res adjudicata on the part of the defendant "The American Queen Incorporated", it seems the plain duty of the court to retain control of the case for the trial and decision of the question of damages if the plaintiffs so elect.
We, therefore, arrive at the following conclusion: That the complaint is dismissed as to the defendant "The Stewart Howe May Company," with costs to said defendant. The complaint is dismissed as to the defendant "The American Queen Incorporated" without costs, unless the plaintiffs shall within fifteen days serve notice of election upon said defendant or its attorneys of record that the plaintiffs propose to try said question of damages, in which event the following questions are directed to be tried by jury.
First. Have the plaintiffs sustained damages by reason of defendant's breach of the contract of July, 1898, between it and the plaintiffs?
Second. What is the amount of such damages?
In case of plaintiffs' election to so try said issue, the cause shall be placed upon the appropriate trial calendar, and after the trial and decision thereof, the cause shall be submitted to the court for its final decision thereon. In the event of plaintiffs' failure to elect to try said issue as aforesaid, findings in accordance with the foregoing views may be submitted to the court.
Ordered accordingly.