Tscheider v. Biddle. fifty per cent more than the value of the property; that the lessors' assessors made excessive valuations accordingly, whereas the lessees' assessors made fair valuation; that the lessors have purposely and fraudulently prevented any valuation of the rental, as provided by the lease, with a view to extort an unconscionable rental from the lessees, who aver their willingness to appoint an assessor to meet one appointed by the lessors, who refuse to make such an appointment; that defendant, Catherine Biddle, is now seeking to recover, in an action at law in this court, for use and occupation of said premises, against your orators, Peter Tscheider and Joseph Weber, an exorbitant and excessive rent. They therefore pray that the further prosecution of said case of Catherine Biddle against Peter Tscheider and Joseph Weber be enjoined. The prayer of the bill of Peter Tscheider et al., as amended, is as follows: They therefore pray that plaintiff and defendants be required to appoint assessors, as required and contemplated by said lease, and in accordance with the terms and provisions thereof, and proceed to an ascertainment of the rental value of the premises, as in and by said lease contemplated and provided, and that defendants be ordered and directed to execute to said lessees a renewal term of said lease, as therein provided; and unless they do So, and in the meantime, the further prosecution of the said case of Catherine Biddle against Peter Tscheider and Joseph Weber be enjoined, and for such other and further relief as the equity of the case may require, and to your honors may seem meet. The cause is now before the court on the demurrer of Catherine Biddle to the bill of complainants. E. T. Farish, for complainants (Tscheider et al.) Grover & Ellis, for defendant (Biddle). DILLON, Circuit Judge.-On the demurrer the averments of the bill in equity are admitted on the record. The lessees obtained a lease for ten years, with the right to periodical renew Tscheider . Biddle. als for five hundred years, the rental to be ascertained by assessors in the manner provided in the lease. The lessees have entered into possession, and on the faith of the efficiency of the covenant to renew, have made improvements on the demised premises costing over $100,000. At the end of ten years, the lessors, instead of complying in good faith with the covenant as to renewal, act, as it is alleged, in bad faith and fraudulently, to prevent a valuation and a renewal. Hence no renewal has been had. The lessees are still in possession. The lessors bring an action at law in this court, for the use and occupation of the premises — of the whole premises, and not simply of the premises aside from the improvements made by the lessees. On a demurrer to the answer at law, we held that the unexecuted provisions of the lease as to renewal, although attributable to the fault of the lessors, was no answer to the action; and this holding was in accordance with the decisions of the supreme court of Missouri, in a case which arose under a similar lease. (Finney v. Cist, 34 Mo. 302, and its sequel, Garnhart v. Finney, 40 Mo. 449; and see, also, Biddle v. Ramsey, 52 Mo. 153.) And if, under such circumstances, the lessor can recover at law for use and occupation, he could recover the possession in ejectment, if he had seen fit to adopt that remedy. The lessees being without fault, and willing to comply with the lease, what are their rights and remedies? They may, it is said, sue the lessor at law for a breach of the covenant in respect to renewals, and recover damages. This was so held in Garnhart v. Finney, supra, and has been adjudged in other cases (Greason v. Keteltas, 17 N. Y. 491; Hopkins v. man, 22 Wis. 476). v. Gil It will be observed that it is so held, although the obligation to renew does not become consummate until the valuation is fixed, and such valuation is to be ascertained by arbitrators, who had never been appointed or acted. But assuming that on the facts stated in the present bill, the lessees might sue the lessors for damages, is this their only remedy? If so, it is obvious that the law is so defective as to shock the sense of justice, and that it rewards the party who fraudulently seeks to evade his obliga Tscheider v. Biddle. tion at the expense of the party who has trusted the covenants of the lessor and expended large sums of money on the faith that he would observe those covenants. If this lease contained a simple covenant to renew at a fair valuation, such a covenant, it is admitted, could be specifically enforced, and the court would settle the valuation or rental to be paid. The lessee in such a case is not confined to an action at law for damages, but may go into equity for a specific execution of the covenant to renew. This is settled law. Is the right, the equity, to a renewal in these lessees any the less cogent and persuasive because they have provided the means for ascertaining the rental on the renewal, and the lessor purposely and fraudulently thwarts the execution of those means? As an original proposition, after much reflection, I should say that it was in accordance with sound principle to hold that if the lessor were guilty of the fraudulent conduct charged in the bill, he subjected his conscience to be laid hold of by the chancellor, who would say to him, "You have agreed to renew the lessee has expended large sums of money on the faith of that agreement-you refuse to execute the provisions for the fixing of the valuation by arbitrators-you cannot, therefore, object if the court, with the concurrence of the lessee, proceeds to fix the valuation under the provisions of the lease." Some adjudications, however, have been made, with which it might not be easy to reconcile the view just stated. (Milnes v. Gery, 14 Vesey, 400; Greason v. Keteltas, 17 N. Y. 491; Hopkins v. Gilman, 22 Wis. 476.) These cases proceed upon the notion that such provisions as those in this lease are in effect an agreement to arbitrate, and that agreements to arbitrate will not be specifically enforced in equity. I agree to the reasonableness of the doctrine that a court of equity will not enforce a specific performance of an agreement to arbitrate. The grounds of this doctrine and the cases in its support are given by Mr. Justice STORY, in Tobey v. County of Bristol (3 Story, C. C. 800). To refuse judicially to enforce an agreement to arbitrate occasions no injustice, for the courts remain open to the parties, with better provisions for securing justice than are possessed by arbitrators. Tscheider v. Biddle. So, when the refusal of a court to appoint or compel the appointment of arbitrators, or substitute its judgment for the judgment of arbitrators, will occasion no injury which cannot be fully and adequately redressed by an action at law, as in the ordinary case of an agreement to sell, it is entirely consistent with sound principle for a court of equity to decline to interfere. In this view I can agree to the actual decision on the facts of the cause, of Sir WILLIAM GRANT, the master of the rolls, in the leading case in Milnes v. Gery (14 Vesey, 400), without assenting to the reasoning of that great judge that equity is absolutely disabled from interfering to compel a specific execution unless the price of the property has been ascertained in the prescribed mode. That was the case of an agreement to sell. The parties could be placed in statu quo. No mala fides was imputed, and the failure of arbitrators to agree was not owing to bad faith; under such circumstances the refusal of the court to appoint its own master to fix upon the price can be well justified. But such a case as that made by the present bill is entirely different; here the parties cannot be put in statu quo-here mala fides is imputed—here a remedy at law for damages does not satisfy the covenant or the demands of enlightened justice. It is a well settled principle that courts will not compel the specific execution of a mere agreement to arbitrate; but I am strongly convinced that it is erroneous to apply that principle to cases like the present, where it would result in manifest and gross injustice. The cases somewhat like the one before us (Greason v. Keteltas, 17 N. Y. 491; Hopkins v. Gilman, 22 Wis. 476), while asserting that the lessees have a remedy at law, but none in equity, for specific performance, deserve, I think, further consideration before assenting to their entire correctness. In Greason v. Keteltas, the refusal of the lessor to appoint arbitrators or take steps for an appraisal was held to subject him to liability at law for the value of the building on a valuation fixed by the court, although the covenant was that this valuation was to be fixed by arbitrators. If such refusal on the part of the lessor is a breach of the covenant so as to render him liable Tscheider v. Biddle. for damages or to pay for the improvement on a judicial valuation, why is it not such a breach of duty as to justify a court of equity, when substantial justice requires it, to compel the lessor either to make the appointment or to make one for him, or otherwise judicially ascertain the valuation? Where is the equity of the party who purposely and fraudulently seeks to evade the contract on his part to insist that a valuation by arbitrators is a sine qua non to equitable relief? Is he not in such a case estopped to set up his own wrong and fraud in defence to the relief to which his adversary is otherwise clearly entitled? I suggest these views that attention may be directed to this subject, and not because they are absolutely essential in this stage of the cause to support the present bill. I admit that in specific performance the court must enforce the contract made by the parties, and that it cannot ordinarily modify this contract or make another and enforce that; but this sound and necessary principle does not preclude the operation of the principle of estoppel where this principle is necessary in order to do justice. Where the covenant to renew on an appraisal by third persons has, as in this case, been acted on by the lessee, and where the failure to secure a renewal will work an injustice for which an action for damages is not a complete remedy, and where the lessor fraudulently thwarts the appraisal, why is he not estopped to set up the want of an appraisal caused by himself as a bar to appropriate equitable relief? The leading English decisions, from Mitchell v. Harris, 2 Vesey, 129, to Scott v. Avery, 5 House of Lords Cases, 811, and Dawson v. Lord Otto Fitzgerald, 9 Law Rep. Exch. 7, S. C. 3 Cent. Law Jour. 477, have been critically examined, and, when thoroughly understood, I do not think that in their essential facts they are in conflict with the above views. And the right to some equitable relief in cases like the present is directly decided by the supreme court of Missouri under a lease exactly similar to the one before us, in Biddle v. Ramsey, 52 Mo. 159, and is also recognized by the supreme court of Wisconsin in the case of Hopkins v. Gilman, before cited. |