Opinion
Decided March 23, 1931.
Contracts — Specific performance of contract to form corporation — Relief denied where terms indefinite — Damages recoverable where specific performance denied for indefiniteness — Relief denied unless contract makes precise act clearly ascertainable.
1. Specific performance of contract to form corporation and transfer property to corporation held properly denied, where many matters relating to corporation were left uncertain (Section 8623-12, General Code).
2. Relief by way of damages may be granted at law on many contracts not sufficiently definite to justify specific performance in equity.
3. Specific performance will not be granted to enforce contract unless contract makes precise act, which is to be done, clearly ascertainable.
ERROR: Court of Appeals for Lucas county.
Messrs. Conn Holloway, for plaintiffs in error.
Messrs. Fraser, Hiett, Wall Effler, for defendant in error.
J.S. MacLean and Raymond I. Blanchard commenced an action in specific performance in the court of common pleas, by which they sought to compel the defendant, Cecil M. Fox, in compliance with a written contract between the parties, to form a corporation and transfer to the corporation certain property and rights, and to have five hundred shares of stock of the corporation, being all of the stock, issued to the defendant, and that he return to the corporation 225 shares, and that said corporation be required to issue to the plaintiff MacLean 12 shares of said stock and to plaintiff Blanchard 25 shares thereof. A demurrer to the amended petition was sustained, and the petition dismissed, to which decision the plaintiffs prosecute error.
The amended petition contains averments showing the contract to be as above indicated, and that the plaintiffs immediately following the execution of the contract devoted their time and experience to the development of the business, and that they have performed all of the provisions required of them by the contract, but the defendant refuses to comply therewith. The contract as pleaded contains various provisions which show that many other matters relating to the corporation were left uncertain and indefinite. The articles of incorporation do not appear to have been agreed upon, nor were the terms of any by-laws or code of regulations fixed, covering the many things provided for in Section 8623-12, General Code. The defendant may have found it impossible to induce others to unite with him in forming a corporation, the minimum number of persons who may form a corporation being fixed by statute at three.
If the plaintiffs should prevail, the duty would rest on the court to supervise the formation of the corporation and determine the innumerable matters relating thereto which are not covered by the contract, as was held in Rudiger v. Coleman, 112 App. Div. 279, 98 N.Y.S., 461: "Specific performance of a contract to form a corporation cannot be decreed where the parties to it are hostile and unfriendly, and the by-laws agreed upon at the time of the contract contain little, if anything, showing the terms and details of the proposed incorporation." A new trial of that case was granted, and after the second trial the case again passed up through the courts, finally reaching the Court of Appeals of New York and was decided in 199 N.Y. 342, 92 N.E. 665. The contract between the parties provided for many other matters in addition to the formation of the corporation. The Court of Appeals reversed the judgment of the lower court on the other matters, but held, as shown in the syllabus, that the contract, in so far as it provided for the formation of a corporation, could not be enforced because the parties had not agreed upon a number of matters and they were not specified in the contract. The principle has long been established that relief by way of damages may be granted at law on many contracts which are not sufficiently definite to justify specific performance in equity.
We think it is fundamental that specific performance will not be granted to enforce a contract unless the contract makes the precise act, which is to be done, clearly ascertainable. Many of the things to be done in the formation of the contemplated corporation were left still to be determined by the parties.
Judgment affirmed.
WILLIAMS, J., concurs.
LLOYD, J., not participating.