received by November 10, (Mr. Fogel) will proceed to declare a formal forfeiture of the lease and take such steps as may be required to protect his interest and the interest of Rhawn Realty Co.' (Plaintiff's Exhibit E.)
4. Exhibits A, B, and C to the complaint are true and correct copies of the documents, of which they purport to be copies, as signed by the parties to such documents.
5. All the rents due under the lease as of January 27, 1959, when the temporary restraining order was first issued, had been paid by plaintiff prior to that date.
In December 1955, plaintiff agreed in writing to buy all the stock of Jordon Refrigerator Company, Inc. (hereinafter called 'Jordon'), as well as the stock of certain of Jordon's subsidiaries. As part of the settlement, made in January 1956, an indemnity contract (Exhibit C) was executed to indemnify plaintiff from loss on commitments of Jordon in connection with commercial paper of purchasers of Jordon's products held by a factor.
This count alleges that ever since July 1958 defendants have owed it $ 95,377.14 on the indemnity contract marked Exhibit C, but that they have consistently refused to pay this sum. Also, it alleges defendants' threat to confess judgment if the rent is set off against this alleged obligation and that plaintiff has no adequate remedy at law to prevent such confession which would cause it irreparable damage. The answer alleges that the indemnity contract was entered into 'through fraud, accident or mistake,' but does not state '* * * with particularity * * * the circumstances constituting fraud or mistake * * *' as required by F.R.Civ.P. 9(b), 28 U.S.C.
Defendants offered at the hearing no evidence whatever of fraud, accident or mistake.
Rhawn has at all times made clear that it intends to confess judgment under this lease if necessary in its opinion (see Finding of Fact 3 and N.T. 72-3). The terms of the lease give Rhawn broad powers for the breach of any of the many covenants imposed on plaintiff, as lessee under the lease, including (a) the acceleration of the rent and of all other expenses assumed by plaintiff for the entire unexpired balance of the term of the lease (Section 14-b-1), (b) the right to enter, by breaking if necessary, the premises to levy upon, take possession of, and sell any and all goods at auction upon three days' notice served on plaintiff (Section 15-a), (c) the right to enter action and judgment in ejectment against plaintiff (Section 17), and (d) the confession of judgment for nonpayment of rent (Section 16).
Plaintiff has established that any acceleration of the rent and confession of judgment therefor would substantially injure its credit and impede its ability to get bank loans (see plaintiff's Request 16, adopted by Finding 1). Under such circumstances, plaintiff is entitled to an injunction to prevent the distinct possibility (in view of defendants' past threats and their broad powers under the lease) that Rhawn would proceed in the state courts against it for confession of judgment. See Cold Metal Process Co. v. United Engineering & Foundry Co., 3 Cir., 1951, 190 F.2d 217, 222; Conrad v. West, 1950, 98 Cal.App.2d 116, 219 P.2d 477; cf. Income Properties Investment Corporation v. Trefethen, 1930, 155 Wash. 493, 284 P. 782, 786.
The defendants contend that they are entitled to immediate payment of the rent when due, since the lien on the leased property created by the recording of the indemnity contract (Exhibit C) is sufficient to protect the plaintiff for any claim it may have for the amounts claimed under this count ($ 95,377.14, with interest from July 1958). There are authorities sustaining plaintiff's position that the dilution of the solvency of the obligors,
and hence its security for recovery of any amounts to which it is entitled under the indemnity agreement, is a ground for equitable relief. Cf. Fourth Ave. Amusement Co. v. Glenn, 6 Cir., 1953, 201 F.2d 600, 604; Waterman v. Mackenzie, 1891, 138 U.S. 252, 259, 11 S. Ct. 334, 34 L. Ed. 923.
Also, it has been held that a preliminary injunction will issue to enforce compliance with a contract's terms where defendant's violation of such terms is sought to be justified, as is true in this case, on the ground of fraud or mistake. See Perry v. Perry, 1951, 88 U.S.App.D.C. 337, 190 F.2d 601; cf. Cold Metal Process Co. case, supra.
After considering (a) the relative importance of the plaintiff's right to payment of the amount due under the indemnity agreement, (b) the failure of defendants to submit any evidence of fraud, accident or mistake at the hearing or to specify anywhere what are the circumstances supporting this claim, (c) the security granted to both parties through payment of the rents into the registry of the court, (d) the protection which can be made available to defendants by requiring plaintiff to pay Rhawn 6% interest per annum
on the rents which shall be paid into the registry of the court until a trial on the merits, (e) the irreparable nature of the injury flowing from denial of preliminary relief, and (f) the balancing of damage and convenience generally, the hearing judge has determined that plaintiff is entitled to a preliminary injunction, provided that all rents be paid into the registry of the court until final hearing and the plaintiff pay Rhawn monthly, beginning May 1, interest at the rate of 6% per year on the amount in the registry of the court during the previous month.
Also, the hearing judge will give the defendants another opportunity to present evidence in this matter after the current jury trial schedule ends in June, and prior to September 1, 1959, provided that prompt application for such a hearing is made.
The foregoing authorities make clear that plaintiff's claim in Count I and the relief requested in the complaint which is referrable to that count present issues which are basically equitable in character and, hence, defendants are not entitled to a jury trial on this count. See Ettelson v. Metropolitan Life Ins. Co., 3 Cir., 1943, 137 F.2d 62, 65,
certiorari denied 1943, 320 U.S. 777, 64 S. Ct. 92, 88 L. Ed. 467; Canister Co. v. Leahy, 3 Cir., 1950, 182 F.2d 510, 513. Equitable relief is clearly required in this case to prevent a multiplicity of suits. Also, in addition to the Canister Co. case, supra, the federal courts have consistently recognized that an equity court may award damages as well as give equitable relief where equitable relief is required. See Gulbenkian v. Gulbenkian, 2 Cir., 1945, 147 F.2d 173, 176, 158 A.L.R. 990; cf. Huntress v. Huntress' Estate, 7 Cir., 1956, 235 F.2d 205, 207, 61 A.L.R.2d 682; Altoona Electrical Engineering & Supply Co. v. Kittanning & F.C. St. R. Co., C.C.W.D.Pa., 1903, 126 F. 559, 560-561; 'Equitable Clean-Up and The Jury,' by A. Leo Levin, Esq., 100 Pa.L.Rev. 320 (1951).
Furthermore, if plaintiff is forced to try its case to a jury, it will have to wait over two year, whereas if it is tried to the court, it will be reached for trial on the non-jury list in approximately half that time. The Supreme Court of the United States has stated that a chancellor must consider, among other things, the condition of the court calendar where an objection is made to equity jurisdiction, using this language in American Life Ins. Co. v. Stewart, 1937, 300 U.S. 203, 216, 57 S. Ct. 377, 380, 81 L. Ed. 605:
'There would be many circumstances to be weighed, as, for instance, the condition of the court calendar, whether the insurer had been precipitate or its adversaries dilatory, as well as other factors. In the end, benefit and hardship would have to be set off, the one against the other, and a balance ascertained.'
For the foregoing reasons, paragraphs 1 and 2 of the above-mentioned motion (Document No. 10) will be denied.
This court seeks relief against Harry Fogel, Beatrice Fogel, Frank Fogel and Shirley Fogel, defendants, for knowingly and wilfully breaching and violating warranties, guarantees and covenants in a written agreement of December 17, 1955, by plaintiff to purchase the outstanding stock of Jordon and the stock of certain of Jordon's subsidiaries from these defendants. These warranties, guarantees and covenants concerned the financial condition of Jordon and plaintiff claims that the balance sheet as of October 31, 1955, presented to it was inaccurate in many respects. Plaintiff claims, in this connection, money damages in the amount of $ 364,184.93 for items summarized as follows:
and accounts payable
of Jordon (paragraph 25 of
Fictitious assets of
Jordon or assets overstated
in excess of their actual and fair
value (paragraph 26 of complaint) 26,112.00
Worthless and uncollectible
of Jordon or accounts receivable
of Jordon against which there
were off sets or
27 of complaint) 281,981.84
Personal obligations of defendants
charged to Jordon (paragraph 29 of
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