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U.S. Supreme Court

Fort Worth City Co. v. Smith Bridge Co., 151 U.S. 294 (1894)

Fort Worth City Company v. Smith Bridge Company

No. 565

Submitted January 3, 1894

Decided January 15, 1894

151 U.S. 294


This Court cannot take notice of a stipulation of counsel as to evidence bearing on a finding of the court below in an action brought here by writ of error.

Time was not of the essence of the contract upon which this action is founded.

A corporation created for the purpose of dealing in lands, and to which the powers to purchase, to subdivide, to sell, and to make any contract essential to the transaction of its business are expressly granted, possesses, as fairly incidental, the power to incur liability in respect of securing better facilities for transit to and from the lots or lands which it is its business to acquire and dispose of. chanroblesvirtualawlibrary

Page 151 U. S. 295

It being within the power of such a corporation to enter into such a contract, the provisions of the Constitution of Texas touching the issue of bonds by corporations formed under its laws will not prevent its becoming liable to perform its agreements therein after receiving benefits under it at the expense of the other contracting party.

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 Fort Worth City Company, incorporated under the laws of, and having its domicile in the City of Fort 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 Fort 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 furnished by him. It was further averred that the contract price of the bridge was $24,500, and that the City of Fort 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 Fort 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 Fort Worth City Company, which was organized "for the purchase, subdivision, and sale of land in cities, towns, and villages," under the provisions of title twenty of the Revised chanroblesvirtualawlibrary

Page 151 U. S. 296

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 Fort Worth required the completion of the bridge by the first 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 Fort 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 amount 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 chanroblesvirtualawlibrary

Page 151 U. S. 297

for sale; that the river separated the land from the City of Fort 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 Fort 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 p