
    H. Clay Pickett, Respondent, v. Jacob Michaels, Appellant.
    First Department,
    June 28, 1907.
    Specific performance — when granted on oral contract — review by Appellate Division of findings of fact.
    The specific performance of an oral contract rests largely in the sound discretion of the court; and will only be granted in cases where the contract is fully established, and that question is open to review in the Appellate Division, which must be satisfied that the facts are such as to warrant equitable relief.
    In an action to enforce the specific performance of an alleged oral contract to sell the stock of a business corporation to be formed, the only evidence establishing the contract was that of a stenographer who had been hired by the plaintiff to make a surreptitious recqrd of his conversations with the defendant, without the knowledge of the latter. Evidence examined, and held, to be insufficient to establish the contract with that certainty which would warrant a court of equity in decreeing specific performance.
    Pattehson, P. J., and Houghton, J., dissented.
    Appeal by the defendant, Jacob Michaels, from a judgment of the Supreme Court in. favor of the plaintiff, entered in the office of the cleric of the county of New York on the 14th day of August, 1906, upon the decision of the court, rendered after a trial at the New York.Special Term, directing the specific performance of an oral contract, and also from an order entered in said clerk’s office on the 17th day of July, 1906, denying the defendant’s motion for a new trial made upon the minutes.
    
      I. Henry Harris, for the appellant.
    
      John S. Wise, Jr., for the respondent.
   Lambert, J.:

The remedy of specific performance of oral contracts resting as it does largely in the sound discretion" of the court (McPherson v. Schade, 149 N. Y. 16; Matter of Argus Co., 138 id. 572, 573; Dunckel v. Dunckel, 141 id. 434), is one which should not be permitted except in those cases in which the contract is fully established, and while the matter rests primarily with the trial court it is yet within the cognizance of the Supreme Court, and hence we must be satisfied that the plaintiff has established his right to equitable relief before the judgment1 is made conclusive. (Matter of Adler, 60 Hun, 481, 483.) “ The rule which courts of equity-have adopted in suits for the specific performance of contracts,” • say the court -in Lobdell v. Lobdell (36 N. Y. 327, 330), “ requires that the contract be established by competent and satisfactory proof, to be clear, definite and certain, for the reason, as Judge Story expresses it, that a court - of equity 6 ought not' to act upon conjectures,’ and if the proof should end in leaving the contract uncertain so that the court cannot say what its precise import and limitations are, a decree for a specific performance will be withheld.” This rule in its. application depends upon-.the evidence. If there is. evidence in this case tending to establish a definite contract then it.is within the .power of the court to-awayd specificperformance. But the evidence and its sufficiency are 'open to review in this court, and upon appeal, we must be satisfied that the facts are such as to-warrant the relief granted. - - ' '- . -

The. complaint alleges that during the month of August, 1901,' plaintiff was in the employ of the defendant, engaged in the business of trading in sea food; that previous to said date .plaintiff had entered -into a. contract and- agreement of -employment with defendant, part of which, was that from and ..after the 1st of September, 1901, plaintiff was'to receive as compensation for his services one-third of the net profits thereofthat át a price to be- paid by plain-' tiff. to defendant, to be determined as soon as plaintiff and defendant could ascertain the value of the stock, fixtures, and' accounts' collectible of the defendant’s said business, plaintiff was to purchase of said defendant one-third interest in defendant’s business, and become a partner in said business ; that at that time H. T. Darling and"George E. Conley were in the same line of-business; that they contemplated dissolving partnership, and that Conley intended -to continue in business as a rival of the defendant; that plaintiff was contemplating, severing his business relations with defendant and making- other arrangements; that in the. month of August the plaintiff and defendant entered into a new contract, whereby plaintiff was to endeavor to-induce the'said Géorge E. Conley to combine with defendant and'form a corporation for. the conduct, of a joint business; that Conley was an enemy of defendant; that it was a part of the agi’eement that the plaintiff should release liis claim to an interest in the profits of the business of defendant and his right to become a partner therein, to' continue his -business connection with the defendant, and to use his utmost endeavors to induce Conley to join in the formation of a corporation, and that in consideration of these things the defendant agreed that the plaintiff should have twenty per Cent of the capital stock of the proposed corporation; that the plaintiff did surrender such interest in the profits of the business, etc., and exerted himself to bring about the creation of the corporation, and that he did bring Conley and the defendant together, resulting in the formation, of such corporation in the month of August, 1901,; that forty-five per cent of the stock of such corporation was issued to the defendant, and that $2,000 additional of the stock was issued to'defendant’s wife, in payment, of the defendant’s contribution of capital to the corporation; that the business has been carried on, and that the defendant thus became obligated to deliver to the plaintiff twenty jier cent of such stock; There a>’e other allegations going to the question of equitable jurisdiction, the right of the 'plaintiff to share in the.dividends, etc., but none of these are essential to the determination of the question of whether the plaintiff has established his contract with sufficient certainty and definiteness to entitle him to a decree for specific performance of the same.

The learned justice before whom this action was tried has written a brief opinion which clearly indicates that, except for the testimony of a single witness, the case would have. been differently disposed of, and it is important, therefore, to consider the question from this. standpoint. If the evidence of this one witness is inherently improbable, or if it is not in harmony with the plaintiff’s own version of the facts, or if it is open to such suspicion that in good conscience we cannot say that the defendant is fairly charged with the obligations imposed by the judgment, the propriety of a new trial will become apparent. The opinion of the court at Special Term reads as follows:

“The claim of the plaintiff rests upon.an alleged oral agreement neither so over probable in itself nor'so. supported by likelihood in the circumstances narrated as its inducement as to disturb the bal-anee of fiat contradiction; The admissions made .by the defendant, however, at a meeting with the plaintiff, according to the stenographic account Of the.interview, by one witness without the bias ■ of interest, seem sufficient to sustain the judgment which is awarded to the plaintiff;”

That is, the defendant denies the making of the contract alleged, and there is nothing in the evidence as given by the plaintiff to overcome this denial, except as it may be found in the evidence of a young woman who claims to have taken a stenographic report of a conversation between the plaintiff and the defendant at the Imperial' Hotel. This young woman testified that the plaintiff , came to her in the Imperial Hotel and asked if she was a stenographer and engaged her to go to the parlor and take notes of a conversation ; to appear as a guest of the hotel and avoid letting the defendant know that she .was taking, the notes; The plaintiff and defendant came into the parlor where she' was seated and located, within three or four feet of her, and that she took all of the conversation ; that she transcribed her minutes immediately after-wards, and although this had not been requested by the plaintiff, she appended a statement to the effect that she swore to the correctness of the transcript, although the notary treats it as. a mere acknowledgment. She testified that the paper was not'.changed after the plaintiff brought in the notary public.; that the paper was signed and. sworn to on the same day, immediately following the interview on the eighth day of October, hut the acknowledgment before the notary is dated on the eleventh dayof October. The witness was permitted to read-from the alleged transcript .of her minutes, and it is interesting to note that while she swears that she took all the conversation, there are absolutely none of. the preliminaries' which might he expected to appear. It is to. be remembered that the plaintiff and defendant had had a disagreement; that the plaintiff had demanded his stock and had left the defendant in a. huff,, and that the latter, a successful business man, had a right to expect litigation, yet we are asked to believe that he went to the parlor of the Imperial Hotel with the plaintiff and- answered a series of' abstract questions, .calculated to embarrass himself in litigation he might have with the plaintiff, and that this was done in the presence of this young woman with a note hook, and that this all occurred without any preliminary explanation, such ay is common among men under such circumstances. Here is the alleged stenographic report of the interview,, as given by the witness: “ Mr. Michael», after my interview with Mr. George-E. Conley in regard to employing me, did you not say that you fully intended to give me one-fourth of the profits of your business from September 1st, 1901, that I would be. entitled to a drawing of $50 weekly ? A. Yes, sir. Q. Did you not further agree to have stipulated in a nevv contract that I would have the option of buying one-third of your business on September, 1st, 1902, value of same to be determined as soon as you could také stock book accounts, etc., pertaining to your business at the earliest moment after September 1st, 1901 ? A. I certainly did! Q. Did you not, after your first interview with Mr. George E. Conley, come back to me and say, ‘ Clay, I told Mr. Conley that under no circumstances would I be willing to form a corporation unless Mr. Pickett should have twenty per cent of the stock, as I have promised Mr. Pickett one-fourth of the profits in my business, and in lieu of his services and valuable information which he had given me since November of last year up to the present time?’ A. Yes, yes; I certainly did. Q. When I consented to surrender my one-fourth promised profits in your business did you not ask me to call on Mr. Conley and make him a proposition, as follows : That if a stock company could be formed, capitalized at $20,000, with George E. Conley, president; Jacob Michaels, vice-—president, and H. Clay Pickett, secretary and treasurer, you would take forty per cent of the stock, Conley forty per cent of the stock and H. Clay Pickett twenty per cent of the stock, I, Mr. Jacob' Michaels agreeing to advance either the $4,000 to Mr. Pickett to pay for his1 stock, or to indorse Mr. Pickett’s individual note, which, if agreeable to Mr. Co.nley, would be turned over to the corporation in payment of Mr. Pickett’s stock? A. Yes. Q. Did you not consider that I was the instrument in forming the corporation now known as the. George E. Conley Company ? A. Yes, yes; it certainly would not have been if you had not said to Mr. Conley what you did, as I was certainly going to give you that twenty per cent for bringing it about, you can bet on it, and there is no man I would do more for than yourself. Q. Was I not entitled to some consideration before you took the step you did ? A. I had no idea ■ of doing it as I did until I got to the lawyer’s office.”

It is interesting to note that the plaintiff, in speaking of this same conversation in the Imperial Hotel, gives an ■ entirely different, version,, in so far as' he states what occurred. He tells of having the conversation in the'hotel in October, 1901, and sáys that this-was the only conversation since that time. He then says that he had stenographic notes- taken of the conversation, and that during this - conversation I said to Mr.-Michaels, ‘Mr. Michaels, don’t you think that you have treated me very badly in making me lose It years of my life?’ He said, ‘ How is that, Pickett?’ • 1 said, ‘ After seventeen years I c.ame to work with yon expecting to become your partner, promised as such, and’now I am .thrown out and no stock awarded to me at all.’ * . * *. I said, ‘ Mr.' Michaels, don’t you think that I have been very badly treated ? ’ He- wanted to know why. • I told him that after all these ; * * * .years that I -have been working up, after all I had done for him, after all the business I had secured, didn’t he think "he had treated me badly in- not giving me that stock as promised/ He said ‘ Pickett,.I am sorry, but I could not help it; my lawyers objected to it,-and- there was nothing else-.to do.’ ” ' Pressed to state as nearly as he could his conversation with the defendant at this interview, the plaintiff says •/ “ The first question put to him was, ‘ Michaels, don’t you think I was treated badly, in not receiving that stock-?.’ He-said, ‘Yes,.-but my; counsel did not -think it wise that you should have this .stock.’ ” The stenographer testifies, as we have already noted, that the first , question was entirely different from that stated by the plaintiff, and it is to be noted that the conversation as given by the plaintiff shows the defendant tó have made explanatory replies, as men might do in such a conversation, instead of. the abrupt answers of Yes and no ” as given in the alleged stenographic notes. There is nothing in the conversation, as "given by the plaintiff,- which constitutes a damaging admission on the part of the defendant; it is only when we come to the stenographic minutes,- where the questionq are formed "with, great detail and- accuracy, strongly suggestive of the handiwork of a shrewd lawyer, that there.is anything in the nature, of an admission of the plaintiff’s alleged contract, and these . alleged minutes do not correspond with the plaintiff’s version of the conversation, and the forms of the questions and the answers are not ' stieh. as would be expected under the" circumstances described, nor do they show- any of the' characteristics which are manifest in the conversation as the plaintiff details it. When we add to this the fact that the young woman who is alleged to have taken these' notes, and to have transcribed them and sworn to them ■on the same day, added a verification to the notes as transcribed, without, as she intimates, any request for such a verification, and that the acknowledgment appears in fact to have been taken three days, later, and that the meeting in the hotel, as detailed in the evidence, was brought about for the purpose of producing evidence in support of this highly improbable contract, it seems to us. that it is questionable whether the plaintiff’s case'is materially strengthened by this testimony. Obviously the defendant was tricked into going to the hotel; he was induced to go there for the purpose of making admissions in support of the plaintiff’s alleged cause of action, and the opportunities for taking advantage of him,"and of producing alleged stenographic reports of his admissions, were so great, and the alleged admissions are so different in many respects from the contract alleged in the complaint and from the testimony of the plaintiff, that a-court of equity is hardly justified in accepting this evidence as conclusive,, at least without further opportunity for testing the reliability of the witness and all the surrounding circumstances. There is a degree of doubt always attaching to evi-' deuce developed through methods such as the plaintiff has adopted in the present instance. The cause of action which he asserts is not calculated to appeal strongly to the conscience of the court; the evidence which the plaintiff himself gives of the alleged contract is by no means certain, and when we realize the possibilities of fraud in connection with the methods adopted to gain the alleged admissions,'we are Of the opinion that the case is lacking in that degree of certainty which should be found in all matters where the-court is called upon to decree specific performance. The contract is not, as it might be spelled out from the alleged admissions, the -same contract which the plaintiff alleges in his complaint; and although these might be overlooked as being mere variations in detail, if the case was otherwise free from doubt, we are of opinion that under ail of the circumstances the plaintiff can have no cause for complaint if he is called' upon in a subsequent trial, to establish with greater clearness just what his contract with the defendant is. He is appealing, not to the law side of the; court, but to the equitable jurisdiction; he has undertaken to satisfy the conscience of the court that he is entitled to the relief demanded, and this requires-that the facts shall be brought, out by evidence which is not open to the suspicion of having beén manufactured for the purpose: Either the stenographic minutes as read in this case are not true, or the conversation detailed by the plaintiff is ■ not correctly given, and we are of opinion that the version given by thé plaintiff has within it greater inherent evidence of truthfulness than that which purports to give the actual conversation, for reasons which have airead y béen pointed out. If the plaintiff’s version is true, it gives no support to the cause of action ; if it is not true, it opens the door to suspicion as to all of his acts in the matter, and we are constrained, therefore, to reverse the judgment and to award a new trial. "■

The judgment appealed from should he reversed and a new trial granted, with costs to the" appellant to abide the event.

McLaughlin and Laüghlin, JJ.,. concurred; Patterson, P. J., and Houghton, J., dissented. • •

Judgment reversed "and new trial granted', with costs to appellant to.abide event.. 
      
      See Story Eq. Juris. (13th ed.) § 764.— [Rep.
     