Hyer v. Richmond Traction Company

On October 30, 1895, appellant, as plaintiff, filed his bill against the defendants in the circuit court of the United States for the Eastern district of Virginia. After some changes, he, on April 18, 1896, filed an amended and supplemental bill. The sufficiency of this was challenged by demurrer. The demurrer was sustained, and on August 22d a decree was entered dismissing the bill. From that decree the plaintiff appealed to the court of appeals, which court, on May 14, 1897, ordered that the decree of the circuit court be affirmed, without prejudice (26 C. C. A. 175, 80 Fed. 839), whereupon the case was removed to this court by certiorari.

It appears from the allegations in the amended and supplemental bill that the plaintiff, whose attention had been for some time devoted to the matter of street railways in the city of Richmond, Va., succeeded in obtaining from the city council a franchise for the construction and operation of a street railway on Broad street, in that city. An ordinance passed on June 17th granted the franchise to the plaintiff and his associates, under the name and style of the Richmond Conduit Company. The terms of this ordinance differed in some respects from those of the one prepared by the plaintiff, who declined to accept it or to proceed under it in the form in which it had passed the council. But, upon an open conference with the committee on streets of the city council, plaintiff was assured that changes would be made rendering the franchise acceptable to him, provided he would deposit in one of the banks of the city of Richmond the sum of $10,000, upon certain conditions embodied in a paper, prepared by the city attorney. On July 17th he caused the deposit to be made, and gave satisfactory guaranties of the good falth of himself and associates, and of their purpose to construct the railway, which guaranties, as he was assured, would secure the modification of the grant in accordance with his suggestions. While in Richmond, and conferring with the various committees of the city council with regard to this franchise, he became aware that certain other parties were seeking to secure a grant of a like franchise to them, under the name and style of the Richmond Traction Company, and that the defendant P. B. Shield was apparently the head of this movement, but he had not been successful in obtaining the passage of any ordinance by the city council. In the early part of August, 1895, the plaintiff went to the city of New York, to make arrangements for constructing the railway as soon as the amendments had been made to the ordinance. While there, he was in the banking house of Stewart & Co., who had been advising with him with a view of aiding him financially in the prosecution of his enterprise, and there ascertained that the defendant Shield was also in conference with the said firm of Stewart & Co., seeking aid in the prosecution of his Richmond Traction Company scheme. Stewart & Co. advised the consolidation of the two interests, to wit, the interest of plaintiff and his associates in the conduit company with that of Shield and his associates in the traction company. After some conferences, a contract was entered into between plaintiff and Shield, which took the form of a joint letter to the banker, of which the following is a copy:

'New York, August 9th, 1895.

'S. H. G. Stewart, Esq., 40 Wall Street, City-Dear Sir: We, the undersigned, L. H. Hyer, of Washington, D. C., and Phil. B. Shield, of Richmond, Va., have this day entered into the following agreement: That both of us being interested in the procuring of a franchise for and the construction of a street railway on Broad street, in the city of Richmond, Virginia, with collateral lines, have made the following agreement: That we hereby bind ourselves, in our own behalf and for our associates, mutually to co-operate one with the other in securing a franchise for said railway, and to divide equally between us and our associates whatever may be realized from the enterprise, first deducting from said amount whatever actual expenses may have been incurred by either side, such expenses to be paid out of the first money realized from said enterprise.

'It is further agreed between us that the deposit already made with the State Bank of Richmond, at Richmond, Virginia, by Mr. L. H. Hyer or his associates, is to stand and remain intact as it now is, for the purpose of securing the franchise aforesaid, subject to any conditions for the withdrawal thereof made by Mr. Hyer with the depositor after the seventeenth day of August, 1895; and, further, it is agreed that the application and franchise to be presented to the common council of the city of Richmond shall be that of the Richmond Traction Company, for the building of an overhead trolley railway or cable system.

'Among ourselves we will decide what names are proper to be used in the franchise, and the policy we will use in procuring the same.

'Yours, very respectfully,

'[Signed] L. H. Hyer.

'[Signed] Phil. B. Shield.'

Plaintiff was authorized to act for himself and associates, and the defendant Shield represented that he had a power of attorney from all parties interested in the traction company scheme, and he did actually represent them.

It was agreed between the parties to this contract that a full statement and explanation of the action of the two companies should be made to the city authorities of Richmond, and in fact it was so made. Plaintiff fully performed all the promises and covenants entered into in said contract in behalf of himself and his associates, but, being detained by a serious illness, was unable to proceed immediately to Richmond, and trusted to the defendant Shield and his associates to carry out other terms of the contract, and secure the franchise for the mutual benefit of both interests. Disregarding this contract, Shield and his associates secured the passage of an ordinance granting the franchise to them, and wholly ignoring plaintiff and his associates. The first section of this ordinance provides: 'That the Richmond Traction Company, composed of John W. Middendorf. John L. Williams, Everett Waddey, Reuben Sherreffs, Philip B. Shield, Charles T. Child and W. F. Jenkins, be, and the same is hereby, permitted to construct and operate a street railway within the limits of the city, along the following routes, under and subject to the conditions and provisions hereinafter set forth: A double track in Broad street,' etc. Subsequent sections cast various obligations upon the company in respect to the construction and operation of the railway, the use by other companies of the tracks, and the payment of a certain per cent. of the gross receipts into the treasury of the city. The last section is as follows:

'Fourteenth. Said Richmond Traction Company, and all such persons as now compose said company, or who may hereafter unite with them, are, in virtue of the authority vested in the common council of Richmond, pursuant to the act of the general assembly of Virginia, passed March 20, 1860, entitled 'An act to authorize the common council of Richmond to authorize persons to construct railroads in the streets of said city,' declared to be a corporation, and are vested with all the rights and privileges conferred, or intended to be conferred, by said act on persons or companies authorized by said council of the city of Richmond to construct railroads in the streets of said city, and are likewise bound by all the restrictions of said act.'

All the parties named in the first section of this ordinance were duly notified of the claims of plaintiff and his associates, under the contract of August 9th, notwithstanding which they ignored plaintiff and his associates, and proceeded to organize a corporation, taking all the stock to themselves, paying nothing therefor, but receiving certificates purporting to be of fully paid stock. Plaintiff, after alleging that he is the holder of all the interests represented by himself and his associates, prayed that he be decreed the owner of one half interest in the traction company's franchise, property, and stock, and specifically for certain orders to secure to him the possession and enjoyment of such interest.

Robert Stiles and A. L. Holladay, for plaintiff.

W. W. Henry and E. R. Williams, for defendants.

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