Opinion
No. 4680.
Argued October 7, 1958.
Decided November 28, 1958.
1. The finding by the Trial Court that the parties provided for a loan of money and for its repayment by written agreements in plain and unequivocal language and that there was no evidence of a joint adventure was warranted on the record.
2. Proffered evidence by the plaintiffs, in support of allegations of a joint adventure, as to conversations and transactions between the plaintiffs and a third party which occurred several years prior to the execution of a financial agreement between plaintiffs and defendants was properly excluded.
3. So also, evidence of preliminary negotiations between the plaintiffs and defendants tending to vary or contradict a written agreement between them which finally integrated their negotiations in plain and unmistakable terms was properly excluded.
4. Damages including counsel fees and disbursements occasioned by the improper issuance of an injunction are not limited to those incurred after the filing of a bond pursuant to Superior Court Rule 136 but may include damages which accrued prior thereto.
BILL IN EQUITY, brought by the plaintiffs Adelard M. and Yvonne A. Lefebvre and Bedford Gardens, Inc., against the defendants Edward Waldstein and Morris Silver. The bill prayed that the defendants be temporarily, and, after hearing on the merits, permanently restrained from foreclosing either a mortgage of certain land and buildings in Bedford, given by the plaintiff, Bedford Gardens, Inc., to the defendants, or a mortgage of certain chattels made by this plaintiff to the defendants; that the Court establish and decree that Bedford Gardens, Inc. was not indebted to the defendants; that the Court decree that a "joint enterprise" existed between the defendants and the plaintiff Adelard Lefebvre and declare "the terms thereof and the equities of each respecting the premises described in . . . the mortgages." The defendants answered, denying the essential allegations of the plaintiffs. On January 18, 1956, following a hearing and by agreement of counsel, the Court restrained the defendants from proceeding with the foreclosure until after February 1, 1956. On that date, after another hearing, the Court continued the injunction until February 27, at which time it would expire unless the plaintiffs furnished an injunction bond of $5,000 on or before February 24, 1956. On the first of February the case was referred to a master (Clinton S. Osgood) on the merits and hearings were held between February 10 and the 19th. During the course of these hearings, the plaintiffs excepted to the admission and exclusion of evidence and to the granting of the defendants' motions to dismiss, which were made at the close of the plaintiffs' case.
After the hearing before the master, but before February 27, the plaintiffs moved that the restraining order be continued to March 8, 1956, without a bond. After hearing on this motion and conferring with the master, the Court made an order to which no exception was taken, denying the motion but extending the injunction until April 23, "provided the plaintiffs filed an injunction bond in the amount of four thousand dollars on or before February 29, 1956, at noon." The bond, in the form of a cash deposit, was filed on February 28. The injunction expired by its terms on April 23, and on June 7, 1956, the mortgages were foreclosed by sale at public auction. On November 20, 1956, after hearings on the master's report, the Court made an order accepting and approving it and dismissed the plaintiffs' bill, to which order they excepted as not being warranted on the law or the evidence. The Court also, after hearing, ruled subject to the defendants' exceptions that no damages accruing prior to February 27, 1956, were recoverable on the cash bond.
The master made certain essential findings of fact, which were approved by the Court, as follows:
"The petition in this case was brought to restrain Edward Waldstein and Morris Silver from foreclosing a mortgage executed by Bedford Gardens, Inc. on certain real estate in the town of Bedford . . . . This mortgage was executed June 8, 1953 and was to secure payment of two notes therein set forth; one for $60,000 . . . and the other for $90,000. The payments on the latter note to begin on or after June 15, 1958; the payments on the former to begin June 15, 1953 without interest and continue at the rate of $1,000 a month without interest.
"There was a side agreement executed on June 8, 1953, providing in effect that if the mortgagors obtained no income during the first two years, no payments were required. In fact no payments whatever were made on this mortgage and a sale under the power contained in the mortgage was advertised in regular form to take place on the premises January 19, 1956 at 10 o'clock in the forenoon. There was a chattel mortgage conveying the personal property on the premises of Bedford Gardens, Inc., also given to secure the same notes and in the same advertisement notice was, given that a sale of the chattels conveyed by this mortgage would be held on the premises on said January 19, 1956 at 11 A. M . . . . .
"Prior to the execution of these mortgages, Bedford Gardens, Inc. was incorporated, all the stock being owned by Adelard Lefebvre and to this corporation Adelard and Yvonne Lefebvre conveyed the property in question.
"About the same time another corporation, the Hotel Beau Reve Corporation was formed. The stock in this was divided equally between Adelard Lefebvre, Edward Waldstein and Morris Silver. Bedford Gardens, Inc. leased the premises to Hotel Beau Reve Corporation at a rental of $15,000 a year with the provision that for two years the total net proceeds of the lessee to be paid on the 15th of each month would be accepted in place of the stipulated rental. No payments whatever were made. Certain other provisions in the lease are unimportant.
"For some years prior to the events heretofore set forth Lefebvre and his wife had been conducting on the premises some sort of a boarding house business and with the financial assistance of Henry Silver [brother of the defendant Morris Silver] they carried out a considerable expansion of their facilities. However, the enterprise did not succeed and some time before the formation of these corporations Lefebvre was involved in bankruptcy proceedings and the business of his establishment was conducted by a trustee. The evidence indicates that this period was not a prosperous one. Very extensive negotiations took place between the Silvers, Waldstein and Lefebvre for the purpose of devising some scheme of operations which might be successful and beneficial to all concerned. Sufficient funds were obtained to effect a composition in the bankruptcy proceedings and in this way the Lefebvres became free to deed the property to Bedford Gardens, Inc., as above set forth. Prior to this mortgage Mrs. Yvonne Lefebvre conveyed the half interest to Adelard Lefebvre which he had previously deeded to her. Hotel Beau Reve Corporation began operations with Waldstein as Managing Director and Lefebvre working as some sort of an assistant manager, as he appears to have had control during the absence of Waldstein. One Friedman was treasurer of the Hotel Beau Reve Corporation. Waldstein, Morris Silver and Lefebvre were the directors. From the new start the business ran at a loss. The principal claim of the petitioner in regard to this is that Waldstein as Managing Director insidiously adopted disastrous plans especially in permitting a flat rate of $10.00 per day for board and room. There was evidence that many rooms were vacant a large part of the time and that it was Mr. Waldstein's purpose to attract new trade to fill these rooms in the expectation that a temporary loss might be later turned into a permanent gain. There was no evidence of willful, fraudulent or negligent misconduct. Waldstein was an accountant and the master finds nothing in the evidence to indicate that he acted in any way in bad faith or that he did not use to the best of his ability whatever talents he had, for conducting such an enterprise. Moreover there was an entire absence of evidence that any other plan of operation would have been more successful and there was no evidence as to the value of the equity, if any, in the property in question . . . .
"The master now finds on all the evidence that the indebtedness in question was for a good and sufficient consideration, that there was no willful, fraudulent or negligent misconduct by either defendant and therefore suggests that there is no legal reason to restrain or interfere with its collection and recommends that the Bill in Equity be dismissed."
Further facts appear in the opinion. Reserved and transferred by Grimes, J.
Martin E. Loughlin and Edward J. Davis (of Massachusetts) (Mr. Davis orally), for the plaintiffs.
Orr Reno, John W. Barto and Charles H. Toll (Mr. Toll orally), for the defendant Waldstein.
McLane, Carleton, Graf, Greene Brown (Mr. Brown orally), for the defendant Morris Silver.
The plaintiffs' main contention is that the promissory notes of $60,000 and $90,000 respectively, dated June 8, 1953, given by the plaintiff Bedford Gardens, Inc. to the defendants Morris Silver and Edward Waldstein, secured by real estate and chattel mortgages of certain property, and the so-called "side agreement" also of June 8, between this plaintiff and the defendants, when considered with certain extrinsic evidence, must be so construed that the defendants should be restrained from foreclosing the mortgages or collecting on the promissory notes. This argument is buttressed upon the proposition that the transaction evinced by these instruments was a joint adventure and that the defendants as participants cannot stand as creditors, but must share in the loss. All parties agree that such is the law of joint adventure or joint enterprise. 30 Am. Jur., Joint Adventures, s. 11. They are also in accord that generally speaking "The exact nature of this relationship has never been previously defined . . . it resembles a partnership and has many of its attributes." Mendelsohn v. Leather Manuf. Corp., 326 Mass. 226, 233.
As was said in our case of Glaser v. Company, 93 N.H. 95, the concept of a joint enterprise is of modern origin and closely allied to a partnership. It binds the parties to share, among other things, control, profits and losses. Id., 99, 100. Whether there is an agreement between the parties to share losses is an important, though not a completely decisive test (48 C. J. S., Joint Adventures, s. 2, p. 811) and whether such a relationship has been created depends upon the intent of the parties, to be determined by the usual rules of construction. Id., s. 2b, p. 813. However, it seems unnecessary to delineate all the characteristics of a joint enterprise as described in numerous authorities. 30 Am. Jur., Joint Adventures, ss. 1-11; anno. 138 A.L.R. 968, 976.
The implied finding of fact by the master, approved by the Superior Court that there was no evidence of a joint adventure is sustainable on the record. Eastern Electric c. Co. v. Ekdahl, 84 N.H. 339. It would serve no useful purpose to attempt to summarize the evidence contained in the voluminous record and exhibits. It is sufficient to say that it amply supports the master's findings. In these circumstances, it is too elementary to require citation that our court is bound by the findings.
However, the plaintiff claims that evidence of conversations and transactions between the plaintiff Adelard and Henry Silver, a brother of the defendant Morris, and also between Adelard and Morris, occurring prior to the signing of the agreements of June 8, 1953, was improperly excluded. In respect to the transactions between Adelard and Henry Silver, which took place several years prior to June 8, 1953, it is difficult to perceive what bearing they could have on the present dispute and they were rightly excluded.
In the case of Morris Silver, the plaintiff sought to show that this defendant told him that he would see to it. that his brother Henry did not put in any more money. This the plaintiff was permitted to do, but a further question as to whether, up to the time of the plaintiff's conversation with Morris, there had been any demand by Henry or anyone for the $70,000 advanced by Henry to the plaintiff prior to the execution of the agreements of June 8, 1953, was excluded. In accordance with the modern tendency (IX Wig. Ev. (3d ed.) s. 2465) it has long been the rule here that the facts surrounding an undertaking, including conversations in preliminary negotiations, are admissible to aid in interpreting an agreement. Kendall v. Green, 67 N.H. 557, 562, and authorities (decided 1893); Weston v. Ball, 80 N.H. 275, 276, 277; Kann v. Company, 85 N.H. 41, 46, 47; Perry v. Company, 99 N.H. 451, 454. However, this does not mean that when the parties finally integrate their negotiations into. a written agreement in plain, unmistakable terms, parol or other evidence of preliminary negotiations can be introduced to vary or contradict its terms. Kendall v. Green, supra, 562; Lancaster c. Electric Light Co. v. Jones, 75 N.H. 172, 174, 175; Glaser v. Company, 93 N.H. 95, 98, 99. In the absence of rebutting evidence — and here none was admitted or offered — the parties must be presumed to have used words in their ordinary sense. Glaser v. Company, supra, 99, 100; Kendall v. Green, supra, 562. The agreements of June 8, 1953, between the plaintiffs and the defendants, provided in plain and unequivocal language for a loan and its repayment. It follows the exceptions of the plaintiffs to the exclusion of evidence and to the granting of the defendants' motions to dismiss the plaintiffs' bill are overruled.
A further and final question is presented by the defendants' exceptions to the ruling of the Trial Court which limited the damages recoverable on the injunction bond to those suffered on or after February 27, 1956. The bulk of the losses for which the defendants claim they should be reimbursed from the cash deposit were sustained prior to this date. It is true, as they argue, that when an injunction is issued in the circumstances here, "the party at whose request it is issued, ordinarily shall, and in any case may, be required to give bond with sufficient sureties, conditioned to pay and satisfy all such damages as may be occasioned to the adverse party by reason of the injunction, in case it shall appear that the injunction was improper." Superior Court Rule 136, 99 N.H. 629; Fowler v. Taylor, 99 N.H. 64, 65, and authorities cited. In such cases, counsel fees occasioned by the improper issuance of the injunction are recoverable. Id., 65; see also, Gowen v. Swain, 92 N.H. 157.
In Towle v. Towle, 46 N.H. 431, the court said that expenses incurred both before and after the issuance of an injunction bond, as in the case here, were recoverable. Id., 434. In the case before us, the Trial Court denied recovery for all losses suffered before February 27, 1956, speaking as follows: "The question now before the Court is the determination of damages to which the defendants are entitled under the terms of the bond in accordance with Superior Court Rule 136. One of the major issues is whether damages, including counsel fees, which accrued before February 27th are recoverable or whether the defendants are confined to damages accruing on or after February 27th.
"The Court rules that only such damages as accrued on or after February 27, 1956, are recoverable." It thus appears that a ruling was made as a matter of law that where a bond is given pursuant to Rule 136, there can be no recovery for damages suffered before the bond is filed. We think this interpretation of the scope of the rule, in the light of its purpose, and our previous cases, was erroneous. Towle v. Towle, 46 N.H. 431, 434; Fowler v. Taylor, 99 N.H. 64, 65, and authorities cited. Since there was no determination of the amount of the damages including counsel fees and disbursements occasioned by the improper issuance of the injunction, both before and after February 27, 1956, this issue must be remanded to. the Superior Court. The order is
Plaintiffs' exceptions overruled; defendants' exceptions sustained; remanded.
All concurred.