Rice v. Wilson
Rice v. Wilson
Opinion of the Court
The matter now before the court ■for decision is an application for a preliminary injunction in a suit in equity wherein John V. Rice, Jr., a citizen of New Jersey, is'complainant, and Joseph R. Wilson, a citizen of Pennsylvania, and Rice Gasoline Rock Drill Company, a corporation and citizen of Delaware, hereinafter referred to as the drill company, are defendants. Rice seeks to restrain, until the further order of the court, Wilson from voting 2,400 shares of the common stock and 600 shares of the preferred stock of the drill company, alleged to have been fraudulently obtained from him by Wilson, at any of its meetings; from selling or disposing of the said shares of common and preferred stock or transferring or attempting to have, transferred the same on the books of the company, or otherwise exercising any right therein as owner thereof, and the company from transferring or allowing to be transferred on its books the said shares of common and preferred stock now standing in Wilson’s name, or from receiving, accounting, or in any way considering any votes cast at any meeting of the company by virtue of or representing the said shares of stock. The bill prays, among, other things, that Wilson be declared to have received the said shares of common and preferred stock as the property of and for the benefit and use of Rice; that Wilson be decreed to assign, set over and return the same to Rice; that the'title of Rice in and to the same be quieted and confirmed; that the same be entered on the company’s books in Rice’s name; and that the company issue to Rice - out of the stockholdings of Wilson in the company certificates representing the said shares of common and preferred stock. Rice alleges in the bill that Wilson obtained from him the shares of stock in question by “fraud, artifice and misrepresentation,” and avers in substance, among other things, that on or about December 15, 1912, Rice retained XVilson, who is a practicing attorney at law, as counsel to represent him in certain business disputes with one Harris Hammond; that on or about December 16, 1912, Wilson represented to Rice that it would be advisable and necessary to secure, as associate counsel with him, Morgan J. O’Brien, stating that O’Brien, owing to his eminence at the Bar, would be of great value in securing an advantageous settlement of the matters in dispute between Hammond and himself, and further
In opposition to tilt contention of Rice, Wilson claims that it was not at any time understood or agreed between him and Rice that O’Brien should be paid one-half of the $25,000 fee or any part of it, but that in case of litigation glowing out of the matters in dispute between Rice and Hammond, Wilson would call upon O’Brien for assistance owing to his ability and professional standing, and that no-such litigation having occurred O'Brien was not employed by Wilson except with respect to the giving of, advice as to the form of the adjustment and settlement between Rice and Hammond, for which ad
“One evening about December 1912 Mr. Rice decided to retain Joseph R. Wilson, one of the respondents above mentioned, as counsel to look after his interests in the settlement with Mr. Harris Hammond. Mr. Wilson came to Mr. Rice’s house in the evening. There were present Mr. Wilson, Mr. Rice and myself in the livingroom at the Bonaparte Park Mansion. Mr. Rice and I both stated to Mr. Wilson the differences existing between Mr. Rice and Mr. Hammond. Mr. Wilson thereupon' stated that this was an important case in his estimation, and that there were two ways in which the matter should be handled, namely, either to file three bills in equity, or to handle it in a diplomatic way, and he said that he knew just the man in New York City to associate with him, and mentioned the name of Morgan J. O’Brien, Esq., a practicing lawyer of New York City, stating that he had been for many years the presiding judge of one of the courts in New York City. A few evenings subsequent to this I saw Mr. Wilson upon his return from New York City, and Mr. Wilson said to me, ‘Mr. Thompson, I am so anxious to win this case that 1 have associated with me Mr. Morgan J. O’Brien, one of the biggest lawyers in New York City, a man who was for thirty years the presiding judge of a court in New York City (the name of which he mentioned but which I have forgotten) and I am going to pay him one-half of my fee.’ ”
Rice’s sister in her affidavit states:
“During the latter part of January, A. D. 1912, X was visiting my brother at the Bonaparte Mansion at Bordentown, New Jersey, and there learned that certain business disputes between my brother, John V. Rice, Jr., and Harris Hammond were approaching a settlement. Joseph R. Wilson, one of the respondents in the above entitled cause, was present and acting as my brother’s attorney and discussed with my brother, the said John Y. Rice, in my presence, the terms of said settlement I expressed amazement at the amount of the fee for legal services, it being stated as twenty-five thousand dollars, when the said Joseph R. Wilson stated to me that Morgan J. O’Brien had been* associated as counsel with him, and had acted as my brother’s counsel in the difficulties between him and the said Harris Hammond, and that because of Mr. O’Brien’s great legal learning and standing as a member of the Bar he could not be obtained as counsel except upon the payment of a large amount of money, and that the proposed fee of twenty-five thousand dollars was to be shared between the said Morgan J. O’Brien and the said Joseph R. Wilson.”
Helen A. Flynn in her affidavit states that the letter shown in Exhibit E attached to the answer of Wilson was typewritten by her at Wilson’s dictation, and at his request signed by Rice. I attach little or no importance to the last mentioned affidavit. Wilson in paragraph 12 of his answer had erroneously stated that the letter disclosed in Exhibit E was in the handwriting of Rice, but subsequently in an amendment to his answer states that the error was occasioned by a fnistake on the part of his counsel who drafted the answer, in confusing “the aforesaid letter of February 10, 1913, with the previous letter of January 7, 1913, a copy of which is appended to the answer marked Exhibit C,” Wilson failing to notice the error prior to verifjdng the answer. Rice in the letter contained in Exhibit E, however, and addressed to Wilson, states:
*165 “This is to certify that the settlement made to-day is in complete compliance witli the agreement of settlement made by you with Mr. Hammond, January 6, 1913, and is satisfactory in every way to me.”
It does not directly or indirectly refer to* the contested point whether Wilson agreed with Rice to pay one-half of the stipulated fee to O’Brien. With respect to the affidavit of Mary Graham Rice, it is proper to say first, that she is the sister of Rice, secondly, that she states that the business disputes between Rice and Hammond were approaching a settlement in the latter part of January, 1912, some eleven m'onths before Rice retained Wilson as his counsel, and thirdly, that she does not impute to Wilson any statement that O’Brien was to receive one-half of the agreed f,ee or any other proportion, but only that the fee was to be shared between O’Brien and Wilson. T am satisfied that the affiant omitted the essential qualification that Wilson would secure the services of O.’Brien only with respect to any litigation that might arise in New York. The affidavit of Thompson lends some support to the contention of Rice, but is outweighed and refuted by Wilson's answer in connection with the affidavits of William McK. Morris and Morgan J. O’Brien in connection with documentary evidence in the case. Morris, who is the vice-president of the First National Bank of Bor dent own, and secretary and treasurer of Morris and Company of Groveville, New Jersey, states in his affidavit:
“I was present on the night of December 18, 1912, when John Y. Rice, Jr., retained Joseph R. Wilson as counsel in his case against Harris Hammond. It took place in the Bonaparte Mansion at Bordentown. Rice sent his ear for me, and I arrived at the mansion a little after 8:00 p. in. Rice took ine at once into the sitting-room where Mr. Wilson was sitting, and presented me to him. Mr. Wilson and Mr. Rice discussed the case in my presence for nearly four hours, and Mr. Wilson mapped out, his plan of action. At the expiration of time, Rice asked me to go into another room, and he told me that he had agreed to pay Mr. Wilson twenty-five thousand dollars to represent him against Hammond. * * * I told Rice that I thought the fee was a big one. He praised Mr. Wilson higher than the skies, and said that he was the man to got him out of his diifieulties, as he had done before when his previous cases looked almost hopeless, and that lie was willing to pay him that fee. He said, ‘Why, if ho wins against Hammond, that fee won’t be anything.’ He said that Mr. Wilson had gone over the case with him thoroughly, and had spent an entire day and a night and until 2:00 o’clock the next morning going over it with him. í: * After this was completed Mr. Wilson said to Rice, ‘Our agreement should be in writing,’ and Rico said, ‘Well, you write it out and I will copy it.’ He got a pencil and paper and Mr. Wilson wrote out two forms of letters, in one of which Rice retained him a:; counsel, and in the other stated that he was to receive a fee of twenty-five thousand dollars. Rico took these two drafts, prepared by Mr. Wilson, and went into another room, and came back with them both written in his own handwriting. I know this because Mr. Wilson handed them both to me to read. During the discussion between Mr. Wilson and Mr. Rice, before Rice took me out of the room, Mr. Wilson said that if any Court work was necessary in New York that he know Judge Morgan J. O’Brien who stood very high, and he could go to him if necessary, but that he had every confidence that he could handle this alone, without the assistance of anybody. He said, ‘I may decide to go over the case with Judge O’Brien before seeing Hammond.’ This was the only reference made to Judge O’Brien. I have read a bill of complaint by Rico against Wilson in which he says that' Morgan J. O’Brien was to have half the fee. Nothing was either said or suggested with respect to Judge O’Brien being associate counsel with Mr. Wilson, or that any part of Mr. Wilson’s fee was to go to him.”
“My first knowledge of the matters recited in the bill of complaint aforesaid was derived through an interview on or about December 20, 1912, in my office with Mr. Wilson. ■ Mr. Wilson first interviewed me alone and explained to me that he had been retained by Mr. Bice to represent him in certain negotiations and litigation if necessary in connection with certain controversies between Bice and Harris Hammond of New York City. He showed me his contract with Bice in writing, whereby Bice undertook to pay him $25,000 for his- professional services to be rendered in connection with these matters. He stated to me that in the event of litigation in New York City he might require my assistance in association with him, and would like to feel he could call upon me for such service should it be necessary. He stated to me that whatever service he might require of me in connection with these matters, he would compensate me for on a basis satisfactory to me. Mr. Wilson subsequently called to see me on a number of occasions and advised me of the progress he was making in his negotiations with Mr. Hammond. Mr. Wilson subsequently informed me that he had effected an agreement of adjustment between Messrs. Bice and Hammond that was satisfactory to all parties. I had no part, however, in the negotiations or consummation of this agreement. * * * My relations with the whole matter were personal and professional with Mr. Wilson as his associate, and in no sense did I enter into official relation with Mr. Bice as his counsel. I had no claim for services against Mr. Bice, and have never made any. I look to Mr. Wilson for my compensation and am satisfied with the adjustment which I have made with him respecting the same.”
Wilson in his affidavit of March 13, 1915, subsequently denies that he ever had any conversation with Mary Graham Rice respecting the fee. which Rice had previously agreed to pay him, or respecting his professional relations with O’Brien, or that he at any time discussed with C. Fisk Thompson either his fee or the association of O’Brien with him in representing Rice against Hammond or that he said to Thompson that he was going- to pay O’Brien one-half of his fee or any part thereof.
While, as above appears, there is conflict in this case between the affidavits filed in behalf of the respective parties, and also between the bill and answer, a decided and controlling preponderance of the evidence, including that which is documentary, is against the contention of Rice that Wilson deceived or practiced any fraud upon him touching the employment of O’Brien in connection with the adjustment of the matters in dispute between Rice and Hammond. Exhibit A attached to the answer sets forth a letter of Rice addressed to Wilson dated December 18, 1912, in which Rice says:
“I hereby employ and retain you as chief counsel in al] my affairs relating to my business transactions and disputes with Harris Hammond, with full power to compromise, settle and adjust the same as fully as I could do myself, hereby ratifying and confirming anything that you may do in the premises, and binding myself to abide thereby.”
In a supplementary letter of Rice addressed to Wilson on the same day (Exhibit B) he said:
“In consideration of your acceptance of my appointment of you as chief counsel, to represent me in all my affairs relating to my business transactions and disputes with Mr. Harris Hammond of New York and Bordentowni son of John Hayes Hammond, I hereby agree to pay you a fee of twenty-five thousand ($¿5,000.00) dollars, on the settlement of such business transactions and disputes, whether the settlement be effected by suit and judgment or decree of*167 the court or by compromise, anil irrespective of the time consumed, be it short or long.”
In a letter signed by Rice and addressed to Wilson January 7, 1913, shown in Exhibit C attached to the answer Rice says:
“It seems impossible J'or me to express in words my appreciation of your marvelous ability in so quickly and successfully settling all the disputes and rtiflioultles between Mr. Harris Hammond and myself, in connection with the Bcwparte Park property at Bordcntovn, the Rice Gas Engine Company and the Rice Gasoline Rock Drill patents, involving nearly $4,000,000. You have brilliantly earned your fee of twenty-five thousand dollars, and this is not the limit of my appreciation. Among other things, I offer you a directorship in the Rico Gasoline Rock Drill Company and also invite you to be its chief counsel, and again expressing my eternal gratitude for your great achievement in my belia If, I am always your friend and debtor.”
It appears that this letter was the result of a request on the part of Wilson that Rice should give him a letter of appreciation of what he had done for him; that Rice began to write such a letter and that Wilson interrupted him and said it would not do; that Rice asked Wilson what he wanted him to say and Wilson told him he must write a strong letter; that Rice then asked Wilson if he would write it, stating that he, Rice, would copy it; that thereupon Wilson wrote the letter and Rice copied it as written by the former for Rice’s signature. In reference to this letter Rice in the same affidavit says:
“I bad been under a considerable strain owing to business worries at tbe t imo, and on tbe night in question was extremely nervous and upset, owing to such business strain, and also to excessive drinking, in which. I bad been indulging for some time on account of the strain I was under. I was so relieved when Mr. Wilson told me (bat all my business disputes with the said Hammond had been settled advantageously to me, that I was glad to sign, in my then condition, any letter that Mr. Wilson presented to me.”
Whatever may be said or thought of the taste displayed by Wilson iti thus securing from Rice the above letter, the fact remains that there is no denial by Rice of the truthfulness of its statements; nor is there any claim made by Rice that he did not know or fully appreciate the contents of the letter he thus signed. Further whatever may have been the nervous condition of Rice on that occasion it is to be observed that in his affidavit made over two years afterwards he expressly recognizes that “all my business disputes with the said Hammond had been settled advantageously to me.” In that letter there is not a hint or suggestion as to the association of O’Brien with Wilson in I he settlement of the matters in dispute or of any right on the part of O'Brien to receive any portion of the $25,000 fee. On the contrary the tenor and spirit of the letter are inconsistent with such an idea, Rice saying. “You have brilliantly earned your fee of twenty-five thousand dollars.” But in whatever light the letter of January 7, 1913, might be viewed, aside from other documentary evidence, it must be taken in connection with the letters contained in Exhibits A and B and in affidavits on behalf of Wilson. No documentary evidence is disclosed in the case, other than that contained in Exhibits A, B, and C, touching the employment by Rice of counsel to adjust his matters in dispute with Hammond. If it be true that Rice had been led to believe that the employment by Wilson of O’Brien was a matter of
The motion for a preliminary injunction must be denied, and the restraining order dissolved, with costs.
Reference
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- RICE v. WILSON
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- Syllabus
- 1, Equity A bill In a suit, founded on fraud must aver particularly the facts constii uling the fraud. ¡Fd. Note.—For other cases, see Equity, Cent. Dig. §§ 323-330, 333; Dec. Dig. 141.] 2, Equity 348—Evidence—Fraud. Fraud justifying relief in equity must be strictly proved. ¡Ed. Note.—For other cases, see Equity, Cent. Dig. §§ 20, 728-730; Dee. Dig. 348.] 3, Cancellation of Instruments 25—Grounds—Fraud. A court of equity will not rescind a contract for fraud, where the position of the parties has been so altered by the execution of the contract, in whole or in part, that they cannot be restored approximately to their origina 1 position and a rescission would work gross inequity, but the wronged party is usually confined to on action at law. [Ed. Note.—For other cases, see Cancellation of Instruments, Dec. Dig. I'or othOT casos ace same topic & KEY-NUMBER in all 'Key Numbered Digests & indexes 4. Injunction 147—Temporary Injunction—Evidence—Sufficiency. In a suit to restrain a buyer of corporate stock from voting tke same, or disposing of it, on tke ground that the stock was obtained by fraud, and for a return of the stock, evidence held not to show such fraud in the procurement of the transfer as to justify a preliminary injunction. [Ed. Note.—For other cases, see Injunction, Cent. Dig. §§ 320-322; Dec. Dig. 147.] other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes