151 U.S. 294 - Ft Worth City Co v. Smith Bridge Co

Statement by Mr. Chief Justice FULLER:

The Smith Bridge Company, a private corporation, incorporated under the laws of Ohio, and having its domicile in the city of Toledo, in that state, brought this action against the Ft. Worth City Company, incorporated under the laws of, and having its domicile in the city of Ft. Worth in, the state of Texas, in the circuit court of the United States for the northern district of Texas, and alleged that on May 19, 1888, the parties entered into a certain contract, whereby the bridge company, for the consideration of $8,166.66 to be paid to it by the defendant company, agreed to build for the latter a bridge across the Trinity river, near Ft. Worth, at a point just north of the public square in that city, to be designated by the city engineer, and in accordance with specifications furnihsed by him. It was further averred that the contract price of the bridge was $24,500, and that the city of Ft. Worth and the county of Tarrant had agreed with the bridge company, each to pay one-third of the cost, and had done so; that the bridge company constructed the bridge according to the contract; that the consideration to be paid by the Ft. Worth City Company was contracted to be paid in the first mortgage bonds of that company and the North Side Street-Railway Company, and that the defendant had failed and refused to deliver the bonds, which were of the face value of $8,166.66.

The defendant company answered by way of demurrer and special exception, that the petition did not disclose the purposes for which the two corporations were incorporated, nor any power or authority in the defendant to use its funds and property for the purpose of constructing the bridge; general denial; and, also, that the contract sued on was without authority on the part of the board of directors and officers of the Ft. Worth City Company, which was organized 'for the purchase, subdivision, and sale of land in cities, towns, and villages,' under the provisions of title 20 of the Revised statutes of Texas; that the bridge was to be and was built for the use and benefit of the general public on one of the public streets of the city, and was not under defendant's control, or owned by it; that defendant company was not to have, and did not have, any property in the same, or other right to use the same than such as the public in general had; that therefore the contract was illegal and unauthorized, and that the contract was also void in providing that the defendant should deliver to the plaintiff bonds executed by itself and by the North Side Street-Railway Company, the latter being a separate and independent corporation; and that it could not and did not obligate itself to deliver any bonds executed by any other corporation, and was not authorized to legally acquire the bonds of any other corporation. Defendant further stated 'that the sole and only benefit it ever expected to derive from the construction of said bridge was the enhancement of its property, by making it more convenient of access, and so more readily salable; that the contract made by the plaintiff with the city of Ft. Worth required the completion of the bridge by the 1st day of November, 1888, and with reference to this stipulation the contract here sued on was entered into; that the value of the bridge to the defendant depended on its early completion;' that the bridge was not completed until at least six months after the time stated in the contract with the city, and defendant had been greatly damaged by the failure to complete it. 'for that at the time the said contract was made there was an active demand for real estate in Ft. Worth and its suburbs, which defendant expected would continue to the time, and for a long time after the date when the bridge was to be completed;' and that, had the bridge been completed, a considerable cmount of its property could have been sold at a profit.

Plaintiff thereupon filed its supplemental petition in reply, excepting to the special answers of the defendant, and alleging that at the time of making the contract with the defendant the latter owned a large tract of land lying on the north side of the Trinity river, over which river the bridge was built, which land it had subdivided into lots, and was offering them for sale; that the river separated the land from the city of Ft. Worth; that it was necessary, in order to accomplish a ready sale of the lands, that the company have a ready means of access from the city thereto, and that the company had this object in view when it made the contract sued on with the plaintiff; that the erection of the bridge afforded such means of access from the city to the lands and immediately upon the completion of the bridge the North Side Street-Railway Company constructed across the bridge a railway connecting the city of Ft. Worth with the lands. It was further alleged that the latter company was organized in the interest of the defendant, for the purpose of bringing its lots into the market; that the stockholders of both companies were, for the most part, the same; that by reason of the erection of the bridge, and the operation of the street railway, the value of the lots was greatly enhanced, and the sale thereof was promoted, and that the defendant made this contract for the purpose of promoting its business, and expected to use the same in the transaction thereof after its construction by the plaintiff under the contract; and that the defendant, having contracted with plaintiff to construct the bridge, and having accepted and used it, was estopped from denying the validity of the contract on the ground of want of power in the defendant to make the same.

The case coming on to be tried, the exceptions to plaintiff's petition and to defendant's answer were overruled, and, a jury having been waived by written stipulation, the cause was submitted to the court for trial, whereupon it found the law and facts for the plaintiff, and entered judgment in its favor for the sum of $9,633.02, with interest and costs; and findings of fact and conclusions of law were made and filed, as follows:

'The court makes the following special findings of fact on the issues made in the case:

'(1) The defendant, the Ft. Worth City Company, was, at the time of making the contract with the plaintiff here sued on, and is now, a private corporation created and organized for the purchase, subdivision, and sale of land in cities, towns, and willages under the general laws of the state of Texas relating to private corporations.

'(2) That on the 16th day of May, 1888, the city of Ft. Worth, a municipal corporation of the state of Texas, entered into a contract with the plaintiff herein for the construction of a certain bridge on one of the streets of said city, where it crosses the Trinity river, in said city; it being provided in the said contract that one-third of the contract price of said bridge that is, eight thousand one hundred and sixty-six dollars and sixty-six and two-thirds cents—should be paid by the defendant herein, and a like amount by Tarrant county, which is also a municipal corporation of said state; the bridge to be completed on or before the 1st day of November, 1888; the plaintiff being required to give a bond within twenty days from the 16th day of May, 1888, payable to said city, in the sum of ten thousand dollars, for the completion of said bridge on or before November 1, 1888, in accordance with certain specifications; said bond to be made part of the contract with the said city.

'(3) That on the 19th day of May, 1888, the president and secretary of the defendant corporation, owning together eighty-eight per cent. of its stock, executed a contract in its name, obligating it to pay said sum of $8,166.66 2/3 cents in the joint first-mortgage bonds of the defendant and the North Side Railway Company, another separate and distinct corporation, in which said president and secretary owned likewise said per cent. of stock; said bonds secured on the lares, franchises, and possessions of both corporations; the said bonds to be delivered on the building of said bridge according to the terms of said contract between plaintiff and defendant and the said contract between plaintiff and the city of Ft. Worth, to the acceptance of the street and alley committee and the city engineer of said city, and the turning of the same over to said city completed in accordance with the above-mentioned contracts and the contract between plaintiff and Tarrant county.

'(4) That the bridge was not completed and turned over to the city of Ft. Worth until the 19th day of March, 1889, but the delay was caused neither by the plaintiff nor the defendant herein, but altogether by the city of Ft. Worth, and time was not of the essence of the contract.

'(5) That the said bridge was to be, and is, a part of a public street of the incorporated city of Ft. Worth, and the defendant was not to have, nor has it ever had, any property interest in or control over the same, or use of it, except as a part of the general public.

'(6) The defendant was not damaged by the delay in the completion of the bridge.

'(7) That the bridge, when completed and turned over to the said city, was in substantial compliance with the contracts mentioned herein.

'(8) That a proper demand was made by the plaintiff on the defendant for the delivery of the said bonds, and the defendant refused to deliver the same on said demand.

'(9) That Tarrant county and Ft. Worth paid their proportional part of the sum of ___.

'(10) That the bridge was expected to enhance the value of the property owned by the defendant by furnishing another mode of access thereto from the city of Ft. Worth.

'And on the findings of fact the conclusions of law are as follows:

'(1) That the defendant had the power to make the contract here sued on, and that the same is therefore legal, valid, and binding upon it.

'(2) That the plaintiff is entitled to judgment in this court for the sum of eight thousand one hundred and sixty-six dollars and sixty-six and two-thirds cents, with eight per cent. interest from the 19th day of March, 1889.'

Thereupon, this writ of error was brought.

Thomas P. Martin, for plaintiff in error.

M. L. Crawford, for defendant in error.

Mr. Chief Justice FULLER, after stating the facts in the foregoing language, delivered the opinion of the court.