Trenton Street Railway Co. v. Lawlor , 74 N.J. Eq. 828 ( 1908 )

The opinion of the court was delivered by

Trenchard, J.

This is a bill for an injunction filed by the Trenton Street Eailway Company to restrain William T. Lawlor from prosecuting a suit at law against the company for personal injuries and to compel him to perform and carry out an agreement of compromise of the suit alleged to have been entered into by him for a valuable consideration.

The learned vice-chancellor, before whom the case was heard, advised a decree, which was made, granting the relief sought, having found from the evidence that an agreement of compromise had been made whereby the railroad company was to pay and Lawlor was to receive $1,850 in full settlement. From that decree Lawlor appeals to this court.

It appears from the testimony taken before the vice-chancellor that Lawlor brought an action' against the railway company in the supreme court to recover damages for injuries, received while in the act of alighting from one of its cars. That on October 26th, 1906, the suit came up for trial at the Burlington circuit, and on that day the counsel of the railway company, with Mr. Hurley, its general manager, and their witnesses, went to Mount Holly to try the cause. Upon reaching Mount Holly, negotiations looking to settlement were hacl. Mr. Budd, one of the attorneys of Lawlor, said: “They would like to have $1,850, but they would settle for $1,800.” Thereupon Mr. Hurley, speaking to the attorneys of the company, “ordered a settlement,” and they (the attorneys of the company) oilered Mr. Budd $1,800 in settlement of the suit. When this offer was communicated by Mr. Budd to Lawlor, the latter asked Mr. Budd ' to try to get $60 additional to reimburse him for witness’ fees. Mr. Budd returned to counsel for the company, who thereupon agreed to pay, or have the company pay, $50 for witness’ fees in addition to the $1,800 to be paid in settlement. This was communicated by Mr. Budd to Lawlor; who thereupon authorized his attorney to settle for that amount. Whereupon, Mr. Budd, in company with Mr. Hurley and the counsel for the company, went into court and announced that the cause was settled. The parties and their witnesses then departed from the court house.

It was understood between counsel for the company and the attorney of Lawlor that a release was to be prepared by the former, to be executed by Lawlor and the money then paid. The release was immediately prepared and sent to Mr. Budd, but Lawlor repudiated the settlement, refused to sign the release, and engaged other counsel who was later substituted as attorney of record. The new counsel, having caused the plaintiff’s declaration to be amended in a particular of no importance so far as the present inquiry is concerned, the railroad company at first pleaded accord and satisfaction, but later, upon the plaintiff’s again noticing his case for trial, the railroad company filed this bill.

The defendant, Lawlor, on his appeal asserts that the proofs fail to show any agreement of compromise. We think they show an agreement to compromise for $1,850. But the defendant further contends that it does not appear that the agreement actually made by the railroad company’s attorney was made by its authority. We incline to' think it does. It was proved to have been made by the authority of Mr. Huxley, who testified that he was the general manager of the company. The defendant argues that this may have been true at the time the witness testified, but that there was no proof that he held such office at the time the compromise was made. It is sufficient to say by way of answer that Mr. Macpherson, the railroad company’s attorney, testified that Mr. Hurley was general manager at the time of the compromise. It is further contended that even if this is so, it is not within the power of a general manager of a street railway company to authorize the compromise of a suit unless he has special authority for that purpose from the board of directors. We know of no such rule. The implied powers of one who has been appointed general manager of a corporation are generally understood to be co-extensive with the general scope of its business (Thomp. Corp. § 8556), and probably include power to authorize settlement of a claim. But however these things may be, it certainly is true that where, as in this case, the general manager of a corporation, in charge of its affairs, knows of the negotiations pending between its attorney and the opposite party for the compromise of a litigation, and orders settlement,- making no objection to the terms, and the company accepts the benefit of the settlement by seeking to enforce it, this will be tantamount to a ratification of the compromise by the company. Thomp. Corp. § 4943.

It is further contended by the defendant that the defendant did not agree.to the settlement. We think he did.

It is, of course, the general rule that an attorney without special authority is not authorized to compromise his client’s claim. There is, however, no objection to giving an attorney special authority to compromise, in which case the attorney in agreeing to the compromise would bind the client. Phillips v. Pullen, 50 N. J. Law (21 Vr.) 439.

In this case the evidence clearly shows that Lawlor gave Mr. Budd, his attorney, authority to settle for $1,850.-

The contention of Lawlor that he was coerced or otherwise unfairly treated by his attorneys is not supported by the evidence.

But it is contended that the testimony of the authority of Mr. Budd, coming as it does from Mr. Budd and Mr. Atkinson, the attorneys of Lawlor, is not competent proof, -because it was a privileged communication between attorney and client. We think it was competent. The authority given by Lawlor to his attorney to compromise the suit was intended to be communicated to the railroad company. It was necessary that the company should be informed of that fact before dealing with Lawlor’s attorney. 23 Am. & Eng. Encycl. L. (2d ed.) 75, and the cases there cited.

Again it is argued that there was no sufficient consideration for the compromise. We think there is no merit in the argument. The only elements necessary to a valid agreement of compromise ai’e the reality of the claim made and the bona fides of the compromise. The court will not inquire into the adequacy or inadequacy of the consideration of a compromise fairly and deliberately made. Grandin v. Grandin, 49 N. J. Law (20 Vr.) 508. The agreement in question was undoubtedly so' made.

It was further suggested at the argument that this was not a case for equitable relief, it being contended that the agreement of compromise could be set up as a defence under a proper plea in the action at law. We think this is not so. The agreement for compromise remains unexecuted, the defendant having refused to accept the money and repudiated his contract. It is, therefore, an accord unexecuted. An accord that is unexecuted is not an available defence at law against the original cause of action, but it may, in a proper case, become available as an equitable defence thereto. Headley v. Leavitt, 65 N. J. Eq. (20 Dick.) 748. In that ease Mr. Justice Pitnej^, at the trial at circuit, refused to permit such a defence to be interposed, on the ground that the accord was unexecuted and that fact was held by this court to justify the filing of a bill in chancery to restrain the plaintiff from further prosecuting her suit at law until she agreed to permit the defendant to take advantage of the contract which he had subsequently executed, this court thereby recognizing that the unexecuted contract, although it constituted an equitable, did not constitute a legal defence. Headley v. Leavitt, 68 N. J. Eq. (2 Robb.) 591.

We think the present a proper case for equitable relief. The agreement of compromise was lawful in character in its inception, and, as we have pointed out, may be a good defence in equity. It is apparent that, by making the agreement of compromise with the complainant, Lawlor induced the complainant to surrender its right to go to trial when it had its witnesses present and was otherwise prepared. The complainant having, in reliance upon the settlement, changed its position by surrendering such right and discharging its witnesses, it would be inequitable to permit Lawlor to withdraw from his contract and bring on the trial with complainant having a defence which was not available to it in a court of law‘only because Lawlor had refused to accept the money according to the terms of his contract.

Again it is contended that complainant is not entitled to relief because there was no tender of the money. But a tender to one who announces in advance that he will not accept it is unnecessary. Thorne v. Mosher, 20 N. J. Eq. (5 C. E. Gr.) 257.

Nor is there any merit in the suggestion of the defendant that the complainant is in laches by filing a plea of accord and satisfaction to the amended declaration and waiting until notice of trial before filing its bill. The testimony shows that the position of the complainant, with respect to the agreement of compromise and its effect, was consistent throughout, and that it acted with reasonable promptness in filing its bill.

The decree appealed from awards a perpetual injunction restraining Lawlor, the defendant, from prosecuting his suit at law against the complainant, and orders that he perform the agreement of compromise, and accept the sum of $1,850 from the complainant in full settlement of the suit. Such is not the precise form in which the decree should be drafted. It should provide that, upon the complainant paying into court, for the benefit of the defendant, the sum of $1,850, the defendant be perpetually enjoined from prosecuting or proceeding in his suit now pending in the supreme court against the complainant, or any other suit in that or any other court for the same cause of action.

Eor the purpose of such modification the decree must be reversed and the record remitted to the court of chancery.