exact justice between the parties is to direct the carrying out of the precise agreement. Justice Story says that “it is against conscience that a party should have a right of election whether he would perform his covenant or only pay damages for the breach of it. But, on the other hand, there is no reasonable objection to allowing the other party who is injured by the breach to have an election either to take damages at law or to have a specific performance in equity." 18

It should furthermore be said that specific performance of an agreement to transfer shares may sometimes be decreed if the aggrieved party proves that the shares have to him some special or peculiar value which cannot be measured in money damages.14

A court of equity does not direct performance of the impossible and, therefore, refuses to decree specific performance of an agreement to transfer shares if it appears that the defendant is neither the legal nor equitable owner of the shares in suit.15 If the plaintiff would, but for the inability of the defendant to perform, have been entitled to a decree of specific performance, a court of equity will, while refusing to make such decree, retain jurisdiction and render judgment for money damages.16 If, however, it appears that the plaintiff, before he commenced his action, knew that specific performance of his agreement was, or had become, impossible, his action in equity will be dismissed.17 An agreement for the organization of a corporation and the

13. Story's Equity Jurisprudence (13th Ed.), § 717a. Quoted, but not altogether approved of, in Johnson v. Brooks, 93 N. Y. 337, 343.

14. Moulton v. Warren Mfg. Co., 81 Minn. 259, 83 N. W. 1082; Butler v. Wright, 186 N. Y. 259, 78 N. E. 1002, 37 N. Y. Civ. Proc. 253; Sherman v. Herr, 220 Pa. 420, 69 Atl. 899.

See note to Turley v. Thomas, 135 Am. St. Rep. 689.

15. Ryan v. Martin, 165 Fed. Rep. 765; Jones v. Tunis, 99 Va. 220, 37 S. E. 841; Columbine v. Chichester, 2 Phillips 27.

16. Altoona, etc., Co. v. Kittanning, etc., Railway Co., 126 Fed, Rep. 559; Jones v. Tunis, 99 Va. 220, 37 S. E. 841.

17. Jones v. Tunis, 99 Va. 220, 37 S. E. 841.

Cf. Hogg v. McGuffin, 67 W. Va. 456, 68 S. E. 41, 31 L. R. A. N. S.

division or transfer of its shares cannot be specifically enforced by a court of equity, unless the agreement is so drawn that the rights of the parties can be definitely ascertained. It is not, however, necessary that every detail of the scheme of incorporation should be set out in the agreement. If the properties to be conveyed, or the services to be performed by the parties, and the shares to be received in payment therefor, are clearly stated, the agreement is sufficiently definite, and if a company is organized in substantial compliance with the scheme outlined in the agreement, specific performance of the provisions relating to the transfer of the shares may be enforced.18

It is, however, necessary to keep in mind that the granting of a decree of specific performance of a contract relating to personal property, rests always in the sound discretion of the court, and that such decree will be denied if the court deems that the granting thereof would work a hardship, and that justice would not result therefrom.19

§ 40. Actions of accounting.

Relief similar in effect to that obtained by an action for specific performance, is sometimes had by an action to enforce a trust or to compel an accounting for the shares issued to the promoters.20 The plaintiff must, in order to succeed in an action

491, where the court gave the plaintiff a lien upon the purchase money for the shares not yet paid by the innocent purchaser thereof.

18. Butler v. Murphy, 106 Mo. App. 287, 80 S. W. 337. Cf. Burke v. Mead, 159 Ind. 252, 64 N. E. 880. See post, § 42.

19. Newton v. Wooley, 105 Fed. Rep. 541; Williams v. Montgomery, 148 N. Y. 519, 527, 43 N. E. 57; Butler v. Wright, 186 N. Y. 259, 78 N. E. 1002, 37 Civ. Proc. 253; Bateman v. Straus, 86 N. Y. App. Div.

540, 83 Supp. 785; Gilbert v. Bunnell, 92 N. Y. App. Div. 284, 86 Supp. 1123; Brown v. Britton, 41 N. Y. App. Div. 57, 58 Supp. 353.

20. Federal.-Krohn v. Williamson, 62 Fed. Rep. 869, 877, affirmed, sub nom. Williamson v. Krohn, 66 Fed. Rep. 655, 13 C. C. A. 668, 31 U. S. App. 325; Harvey v. Sellers, 115 Fed. Rep. 757; Warner v. Wood, 200 Fed. Rep. 542, 118 C. C. A. 636. Alabama-Howison v. Baird, 145 Ala. 683, 40 So. 94. Arizona-Philes

V. Hickies, 2

of this character, show something more than a mere contract to organize a company and transfer to him a portion of the share capital. If the plaintiff has transferred property to the defendant under an agreement that such property is to be transferred to a corporation and its shares issued to the plaintiff in payment, and the defendant transfers the property to the corporation and receives the shares therefor, he holds such shares as agent or trustee for the plaintiff and may be compelled to account therefor. Some fact upon which a finding of a partnership or trust relation can be predicated must, however, be shown in order that an action of this character may be maintained.21

§ 41. Action to compel corporation to issue shares.

If the plaintiff has transferred his property directly to the corporation, under an agreement that he is to receive shares of the corporation in payment, the courts may treat the plaintiff as the owner of the shares and direct the corporation to issue stock certificates to him.22 An action of this character can

Ariz. 407, 18 Pac. 595, affirmed for want of prosecution, 154 U. S. 505, 14 Sup. Ct. 1147.

California.-Hunt v. Davis, 135 Cal. 31, 66 Pac. 957.

Colorado.-Farris V. Wirt, 16 Colo. App. 1, 63 Pac. 946.

New York.-King v. Barnes, 109 N. Y. 267, 16 N. E. 332; Spier v. Hyde, 92 N. Y. App. Div. 467, 87 Supp. 285.

Wisconsin.-Bannen v. Kindling, 142 Wis. 613, 126 N. W. 5.

United Kingdom and Colonies.McNeil v. Fultz, 38 Can. Sup. Ct. 198.

The right to the shares is not enforceable as against a bona fide purchaser thereof. Thurber v. Crump, 86 Ky. 408, 6 S. W. 145.

In Badgerow v. Manhattan Trust Co., 64 Fed. Rep. 931, the court sustained an action to impress a lien upon the securities.

21. Everett v. Defontaine, 78 N. Y. App. Div. 219, 79 Supp. 692; Avery v. Ryan, 74 Wis. 591, 43 N. W. 317; Cf. Dickerson v. Appleton, 195 N. Y. 507, 88 N. E. 1117, affirming, 123 N. Y. App. Div. 903, 108 Supp. 293.

22. Anthony v. American Glucose Co., 146 N. Y. 407, 41 N. E. 23.

In Wait v. Kern River Min. Mill. & Dev. Co., 157 Cal. 16, 106 Pac. 98, the plaintiff showed that he was entitled to receive 245,000 shares from the individual defendant who had absconded and could not be personally served.

It appearing that

be maintained in any case where the facts are such that the plaintiff may be treated as the owner of the shares, and the court is called upon only to decree the issue of proper certificates.23

§ 42. Actions for damages.-Definiteness of agreement.

A remedy which is always open to every party complaining of the breach of an enforceable agreement, is an action at law for the recovery of the money damages suffered by reason of the breach.24

The party bringing an action for damages for the breach of an agreement to form a corporation must, in order to recover, show the making of a contract in terms sufficiently definite to form a basis for the computation of damages. The property that is to go into the corporation and the proportionate part of the capital stock to be issued to the plaintiff must be substantially fixed, otherwise it cannot be determined what the plaintiff was entitled to receive, or what damages he has suffered by reason of the breach.25 If the agreement fixes, with reasonable certainty,

such absconding defendant was entitled to receive from the defendant corporation more than 245,000 shares, such corporation was by the court directed to issue 245,000 of the individual defendant's shares, directly to the plaintiff.

23. Chater V. San Francisco Sugar Refining Co., 19 Cal. 219, seems to have been an action of this character. See also Chambers v. Mittnacht, 23 S. D. 449, 122 N. W. 434.

Cf. Dickinson v. Matheson Motor Car Co., 161 Fed. Rep. 874, affirmed, 171 Fed. Rep. 646, 97 C. C. A. 29.

24. Crichfield v. Julia, 147 Fed. Rep. 65, 77 C. C. A. 297; Perrin v. Smith, 135 N. Y. App. Div. 127, 119 Supp. 990; Kirschmann v. Lediard, 61 Barb. (N. Y.) 573; Grant v.

Walsh, 36 Wash. 190, 78 Pac. 786.

25. See Haskins v. Ryan, 71 N. J. Eq. 575, 581, 64 Atl. 436; Watson v. Bayliss, 71 Wash. 499, 128 Pac. 1061.

The court in Flaherty v. Cary, 62 N. Y. App. Div. 116, 70 Supp. 951, affirmed, 174 N. Y. 550, 67 N. E. 1082, defeated the plaintiff on the ground that the agreement under consideration was a mere agreement to assist the plaintiff in forming a corporation and not an absolute agreement to form the corporation. See also Porter v. Blair, 83 Fed. Rep. 104; Brehm v. Sperry, 92 Md. 378, 403, 48 Atl. 368, 372.

A mere agreement to make a definite agreement is not enforceable. See Haskins v. Ryan, 71 N. J. Eq. 575, 64 Atl. 436.

the assets to be transferred to the corporation, the total share capital, and the portion thereof which the plaintiff is to receive, or contains definite provisions from which the relation between these factors may be computed, the courts will not, or at least should not, be too astute in discovering uncertainties by reason of which the plaintiff's right of recovery may be defeated.2

26

In Crichfield v. Julia,27 the defendant agreed to pay the plaintiff for his asphalt mine $5,000 in cash and $100,000 in guaranteed 6 per cent preferred shares of a corporation to be organized to operate the mine. The agreement did not fix the capitalization of the proposed company, its bonded indebtedness, or even the total amount of the preferred stock of which the plaintiff was to receive $100,000 par value. It was claimed that the contract was too indefinite for enforcement. The court said that the amount of common stock that might be issued was immaterial as such common stock would be subject to the preferred stock and would not affect its value; that in the absence of any words or definition of limitation," the use of the term 'preferred stock,' in connection with defendant's guaranty of interest, may fairly be taken to indicate stock whose par value is to be based upon the actual value of the property it represents, and not upon any fictitious or speculative value. If the stock were so affected by a bonded indebtedness as not to have a substantial value representing a par value it would be a preferred stock merely in name, and would not represent the understanding of the parties as evidenced by the agreement and the defendant's guaranty." The contract was held sufficiently definite to enable a jury to estimate the value of the preferred stock which the plaintiff was under his contract entitled to receive.

In Waring & Gillow, Ltd., v. Thompson,28 it was held that because of the indefiniteness of the contract to form the corporation,

26. Crichfield v. Julia, 147 Fed. Rep. 65, 77 C. C. A. 297. But see cases cited under notes 28 and 29.

27. 147 Fed. Rep. 65, 77 C. C. A. 297.

28. London Times, Feb. 9, 1912.