Opinion
No. 40/181.
04-11-1921
CAREY v. BROWN et al.
Dougal Herr, of Hoboken, for complainant. James A. Gordon, of Jersey City, for defendants.
Suit by Elizabeth Carey against Thomas H. Brown and others. Decree for accounting, etc., to be settled upon application and notice.
Dougal Herr, of Hoboken, for complainant.
James A. Gordon, of Jersey City, for defendants.
LEWIS, V. C. The bill is filed to compel the defendants Brown and Reilly to turn over to the complainant 117 shares of stock of the First National Bank of the town of Union, and to restrain its disposition otherwise, alleged to have been delivered to the defendant Brown by one John Conway, in part payment of the consideration for a transfer of certain real estate of which Brown was the equitable owner, but the legal title to which was held by the defendant Reilly. Under the terms of the contract of sale, a deed for the property was to be delivered to Conway upon his performing the conditions therein required of him. Brown says that Conway not only failed to comply with the provisions of the contract within the time fixed, but that ultimately, after the date for settlement had been postponed a number of times to enable Conway to comply, Conway told Brown that he was unable to perform his part of the contract, and that he could not go ahead with it. At that time Brown tendered a delivery of the deed to Conway, but Conway was unable to comply with his part of the contract and accept delivery. Brown thereupon carried the property several years, during a period of great depression in the real estate market, and was unable to dispose of it until some time in the year 1916, when he sold it at a loss. He was also obliged to meet and pay off certain obligations and charges upon the property, and make advances of cash for the benefit of Conway, and to assume certain of his obligations. This is, to some extent, disputed by Conway, but I am inclined to accept the testimony of Brown in this respect. Later Conway assigned whatever interest he may have claimed to have in the stock in question to the First National Bank of the town of Union, and it, in turn, assigned the same to the present complainant, Elizabeth Carey, but without consideration.
The theory of the complainant is that Brown and Reilly, having failed to convey title to the real estate to Conway, and having sold the property to a third person, are not entitled to retain in equity and good conscience the stock which was so deposited by Conway with Brown in part payment of the consideration.
It appears that a short time after the difficulties arose between the parties, in 1912 or thereabouts, a suit in trover and conversion was brought against Brown in the law courts, but that it was discontinued by agreement between the parties, after two complaints filed in the cause had been stricken out by the court, as failing to set forth a legal cause of action.
The present bill was filed on July 12, 1915, and meantime the statute of limitations has run against the right to enforce complainant's claim at law. This, however, wouldpresent no difficulty, in view of the Transfer of Causes Act of 1012 (Supp. Comp. Stat. p. 1252), which permits the Court of Chancery, even when the statute of limitations will bar a suit at law, if a suit has been brought in the Court of Chancery prior to the six years, by mistake, to transfer the cause over to the law court, with like effect as though the action had been originally commenced there within a competent period.
But I am inclined to hold that complainant has not a complete and adequate remedy at law under the circumstances here presented, especially in view of the action of the law court with respect to the suit already mentioned, and I shall therefore retain the bill.
It is urged by the defendants that the present complainant, Elizabeth Carey, has no interest in the subject-matter which will permit her to maintain this action; that the court is without power to substitute other complainants; and that, in any event, laches bar a prosecution of the claim sued upon.
Whatever may have been the disability of an assignee of a chose in action earlier in the history of the law (Pomeroy Eq. Juris. §§ 1280-1284), it seems clear that under our statutes such assignee may now maintain an action upon the chose in action assigned (Practice Act of 1903, § 19 ).
And if a complete determination of the controversy cannot be had between the parties to this suit, the court has the undoubted power, at any stage of the proceedings, to add any party whose presence is necessary to the complete determination of the controversy. Chancery Act 1915, rules 13 and 14 (Supp. Comp. Stat. p. 128, §§ 70 and 71).
I do not think that the rights of third persons have intervened, or that the par ties have failed to proceed in a way that would justify the application of the doctrine of laches to the facts of this case.
This brings us to the consideration of the merits.
When Conway breached the contract Brown was entitled to sue him for the damage he thereby sustained. This damage is indicated above. He did not, however, actually dispose of the property until several years after the breach, and meantime Conway's assignees took action against Brown. Under the Practice Act of 1912 (Supp. Comp. Stat. p. 1205, § 101), and the Chancery Act of 1915 (Supp. Comp. Stat. p. 129, § 86), the defendant may counterclaim or set off any cause of action against the complainant or plaintiff, as the case may be, or against any third party necessary to be brought in.
From the evidence already in the case it seems clear that Brown's loss, resulting from Conway's breach of the contract, is equal to or in excess of the value of the equity in the stock claimed by the complainant, and that he, if he sees fit, could counterclaim against the complainant and the assignors. He, however, may have elected to simply resist the complainant's claim to the extent of defeating her right to the relief she seeks by the bill. That is his privilege, if he so elects. But, in any event, I think that the proper procedure requires a counterclaim by Brown to the extent of the damage sustained by him; for it would be unjust, in my opinion, for Brown to retain the stock delivered to him by Conway in part payment of a consideration that has failed, and at the same time hold the property which was to have been conveyed to Conway for that consideration, or the proceeds realized from its sale to third parties. As against this stock or its value, however, Brown is entitled to charge Conway with the damage resulting to Brown from Conway's breach of the contract. This should be done through the medium of a counterclaim, and to that end the pleadings should be amended accordingly.
If Bxown desires to take an affirmative decree for any excess, it will be necessary to bring Conway in as a party.
On the hearing, complainant requested the court to reserve the right to an accounting, and inasmuch as the testimony with regard to the damage sustained by Brown is somewhat general, and considerably complicated, I think that an accounting should be taken between the parties, when they have been ultimately determined.
The decree will be settled upon application and notice.