Welling v. Crosland , 129 S.C. 127 ( 1924 )

I concur with Mr. Justice Watts, and for the further reason that I do not see how even the Court of equity, with its great power to adjust rights, can decree specific performance.

Take Mr. McColl, to illustrate. He has been good. The record does not show that he has paid or offered to pay, but it would have done no good to him nor the plaintiffs. So far as the record shows, he is ready to pay his $12,500. If he pays his proportion, what is he to get?

The plaintiffs ask to stand on three papers — the contract of sale, the partnership agreement, and their deed to Crosland Tyson, trustees. It is perfectly manifest that the Court has no right to require the plaintiffs to execute to Mr. McColl a deed to one-twentieth of the land, or one-twentieth interest in the whole tract. It is manifest that the Court can neither require the plaintiffs to execute such a deed or Mr. McColl to accept it, if tendered. The agreement was for a trust deed, and the Court cannot substitute a conveyance in fee to Mr. McColl for the equitable interest for which he contracted. It is also manifest that, unless each and every party to the copartnership agreement shall put up his $12,500, the trust deed will not be delivered and the Court cannot require it. The plaintiffs are asking a Court of equity to allow them to stand on a contract made for their benefit, and to stand on it for the sole purpose of destroying the trust it created. I do not see how the Court of equity can grant the request. That would not be specific performance. It would be making a new contract.

II. It is said that this case is saved from the class of speculative contracts by the provision that, if they shall decide to carry on the business of farming, or renting to tenants, it may be done. I am inclined to think the point well taken, but it in no way helps the cause of the plaintiffs, but, on the contrary, is utterly destructive of their right to specific performance.

When the defendants entered into their contract to buy the land and sell again, and share in the profits and losses, they became copartners. Edwards v. Johnson, 90 S.C. 90;72 S.E., 638. When the contract further provided that the land might be used for carrying on farming operations or renting out to tenants, and all profits and losses divided between the parties, there can be no doubt that the defendants became copartners. Now a contract to become partners is not subject to a decree of specific performance. Lindley on Partnership (5th Ed.). Vol. 2, p. 475:

"If two persons have agreed to enter into partnership, and one of them refuses to abide by the agreement, the remedy for the other is an action for damages and not, excepting in the cases to be presently noticed, for specific performance. To compel an unwilling person to become a partner with another would not be conducive to the welfare of the latter, any more than to compel a man to marry a woman he did not like would be for the benefit of the lady."

The excepted cases do not apply here.

The connecting link between the contract to purchase and the deed offered is a copartnership agreement that is not subject of specific performance. I know of no rule of law or equity, and I certainly am not disposed to establish a rule, that allows a party to a contract, or a party for whose benefit a contract is made, to take such part of a contract or consolidated contract as is for his benefit, and repudiate those features he does not desire. The plaintiff is seeking to use the copartnership agreement to secure a standing in Court, and then asks the Court to utterly destroy it. If specific performance be adjudged, and any of the copartners cannot or do not comply, then the interest of such defaulting copartners must be sold. To whom shall it be sold? It may be that the purchaser will be one who is persona nongrata to the others. What will be the status of the purchaser anyhow? Does he buy one-twentieth of the land? No, there is no such agreement. The Court can only sell the interest of the defaulting partner. Under the terms of the consolidated contract, upon which the plaintiffs must stand to get any relief, the defaulting partner had the right to one-twentieth of the proceeds of sale of the land, one-twentieth of the profits of the farm, or one-twentieth of the rents, to be determined by the terms of the contract. The disposition of the property was to "be determined by threefourths in amount of the stockholders." Like all copartnerships, the right to manage the business was a matter purely of personal trust and confidence. That could not be sold and an unacceptable partner cannot be forced upon another. Courts of equity sometimes make their righteous indignation felt by the erring parties to a contract, but it must be remembered that there is one party to this contract upon whom even the plaintiffs cannot frown. Mr. McColl has made no resistance. The plaintiff's financial interests are greater, but his (Mr. McColl's) rights are no less sacred to a Court of conscience. What is to become of Mr. McColl? He certainly has clean hands. There is only one way.

Lindley on Partnership (5th Ed.) Vol. 2, p. 475:

"To decree specific performance of an agreement for a term of years would involve the Court in the superintendence of the partnership throughout the whole continuance of the term. As a rule, therefore, Courts will not decree specific performance for a partnership."

This contract may have continued indefinitely. It seems to me that the action, so far as it is for specific performance, should be dismissed. As to the action for damages, it should be transferred to Marlborough County.

Courts of equity have never decreed specific performance in hard cases. The plaintiffs have their land and have always had it. They have also a $10,000 bonus. If they had alleged that they could have sold it to others and the sales (to real purchasers and not other unfortunates) have failed by reason of the violation of this contract to purchase, the position would have appealed to the Court of equity, but they have not so alleged.

Mr. Justice Hydrick, in one of his many excellent opinions, said that Courts should not be ignorant of or refuse to recognize matters of current history that were known to every one.

It has also been said by another "that communities, as well as individuals, go crazy at times." Such a time occurred in 1920. Forty-cent cotton upset us. The boll weevil was rapidly approaching, and the nearer it came the higher went the price of cotton lands. Many of our most progressive and thrifty citizens were obsessed with the idea that cotton would go higher still. Speculation in lands was wild and all too nigh universal. The price of cotton went down and with it the price of land. Lands were not worth the boom prices after the boom had past. Vendors who had contracts of sale demanded the contract price. They came into the Court of equity and demanded that the vendee be required to comply with their contracts. If the Court of equity had granted their demand, then, as the price of lands had fallen and the vendee could not pay the boom prices, there would have been a sale of the land at much less than the contract price and a judgment for the deficiency taken. This judgment for a deficiency would, in many instances, have paralyzed the activities of the judgment debtor. This state was in danger of a financial slaughter of its most thrifty citizens. In that emergency the Court of equity said, "No; we will not be a party to this slaughter. We have a discretion in specific performance and we will in our discretion, refuse specific performance. You may go into a Court of law and allow a jury to say what your loss has been. "For once the Courts of law could do justice, when a jury could say how much the vendor had lost; but the Court of equity under specific performance would do a great wrong, bound as it was by the letter of the bond. It was demanded of the Court of equity that it given the pound of flesh, for no other reason than that it was so nominated in the bond. When the Courts of equity shall decree specific performance for no other reason than that it is so nominated in the bond, it should change its name, because it has departed from its traditions and done despite to the memory of its chancellors. The broken contract was not ignored, but the parties were sent to a jury who could say what the vendor had lost.