Opinion
03-17-1891
WOOD v. BONEY et al.
William E. Potter, for complainant. B. Williamson, William Gorman, and Silas W. Pettit, for defendants.
William E. Potter, for complainant.
B. Williamson, William Gorman, and Silas W. Pettit, for defendants.
BIRD, V. C. The complainant filed his bill of complaint, and asked that one of the defendants, the Philadelphia & Sea-Shore Railway Company, may be decreed specifically to perform the contract entered into between him and it for the construction of a railroad which has been partially, but not entirely, completed by him; and that a certain meeting of the directors of the said railroad company, held in the city of Philadelphia on or about the 14th day of October, 1889, may be declared to be illegal and void, because it was held outside of this state; and that the proceedings and resolutions of the said corporation at the said meeting so held as aforesaid may be declared to be illegal, null, and void; and that a certain contract, purporting to have been entered into between the said corporation and one Jemison, respecting the completion of the said railroad, be declared to be null and void; and that the said corporation be prevented from issuing any of its stock or bonds to the said Jemison under the said contract; and that the Guarantee Trust & Safe-Deposit Company of Philadelphia be restrained from delivering any of the bonds which it holds to any person; and also the prayer for general relief. The bill shows that the defendant the Philadelphia & Sea-Shore Railway Company is a corporation incorporated under the laws of this state, and is now engaged in the construction of a railroad from a place called Winslow to Sea Isle City, a sea-shore resort on the Atlantic ocean. That the capital stock of the corporation aforesaid is $900,000, represented by 18,000 shares, of the par value of $50 each. That on the 1st day of November, 1889, the said company executed a mortgage to the Guarantee Trust & Safe-Deposit Company as trustees, for the sum of $900,000, to secure the bonds of said railroad of that amount. That of these bonds the said complainant now holds 435, which are held subject to the order of the treasurer of said railroad. That the said Wood is a stockholder to the extent of a majority of all the stock. That prior to the organization of such railway company the said Wood was the owner of a contract entered into between himself and the Philadelphia & Atlantic City Railroad Company, under and by which the said last-named company agreed to carry passengers and freight of the said proposed Philadelphia & Sea-Shore Railway Company at such advantageous rates as to make the said contract of great value. Having such contract, and having some acquaintance with the construction of railroads, on or about the 27th day of November, 1889, the said Wood entered into a contract with the Philadelphia & Sea-Shore Railway Company to construct the said proposed railroad, a copy of which contract is as follows:
"Agreement. Now, therefore, this agreement witnesseth: First. That said party of the second part agrees to construct for party of the first part a railroad from Winslow Junction, on the system of the Philadelphia and Reading Railroad, to a point on the sea-shore at Ludlam's beach, as near as may be to Carson's inlet, and extending thence through the city of Sea Isle to the south-western portion of the island: provided, always, that the said party of the first part, or the land-owners along the line of the said proposed railroad, and the city authorities of Sea Isle, shall grant a suitable and convenient right of way for this purpose: and provided, further, that the party of the first part will in due course and shortly hereafter organize, or render every proper assistance to the process of organizing, a railroad company to build a railroad which shall serve as an extension or branch from near Tuckahoe to the city of Cape May; and also that said party of the first hereby agrees that any contract it may make, influence, or control for building the same shall be given to said party of second part upon the same general terms and conditions, so far as they may be thereto applicable, as those which govern this contract for building the line to Sea Isle. Second. It is agreed said railroad shall be built with seventy-pound steel rails of best quality; that bolts and fastenings shall be equal to Pennsylvania standard, and ties of standard size and weight; and that the grades of the road to be built shall be equally favorable to the traffic as those of the Philadelphia and Atlantic City Railroad. Third. It is also agreed that party of the second part shall erect attractive and commodious station-houses, sufficient, in his opinion, to accommodate the business of each place; and to equip the road with such rolling stock as he shall consider requisite for its business: provided, that on the completion of said railroad and of its contemplated extension to Cape May the total rolling stock equipment shall not be less than six locomotives, thirty passenger coaches, and thirty freight, gondola, and construction cars. Fourth. That the price to be paid to said Wood for construction and equipment of the railroad to Sea Isle City shall be $550,000 in the stock of this company and a like amount of its first mortgage bonds thereof; and the said Wood also agrees to construct the line from Tuckahoe to Cape May for $350,000 in the stock of this company and a like amount of its first mortgage bonds as aforesaid: provided, that the total amount to be issued to the said Wood for all the railway construction and equipment which he herein undertakes shall not exceed $900,000 of the stock and $900,000 of the bonds of this company: provided, further, that no part of said mortgage bonds shall be issued until an amount at least equal thereto shall have been issued of the capital stock in bona tide return for cash labor or material expended upon said railroad: provided, further, that the said securities shall not be issued more rapidly than at the rate of $10,000each of the stock and bonds per mile in payment of the construction of the said railroad, and the additional amounts due to said party of the second part shall be held in reserve, and shall be paid to him in due proportion as he shall supply the equipment of locomotives, passenger coaches, and freight-ears: and provided, that the sum of $50,000 each of stock and bonds out of the said $10,000 per mile shall be held as a reserve by the party of the first part until the completion of the roadbed and the line of rails to the termini determined upon; and it is understood that $25,000 shall be that part of the above reserve of the $50,000 aforesaid which shall be applicable to the construction of the line to Sea Isle and shall be payable when said line is completed, and the additional $25,000 shall be applicable to the construction of the branch to Cape May, and payable on the completion of that road to Cape May city: provided, further, that the securities which maybe issued to said party of second part under the contract shall not be additional to those due to this company for any subscriptions, whether made to its stock or to its bonds; and the said party of the second part shall at all times protect the said party of the first part in this respect, and shall stand ready to receive cash at par. instead of stock or bonds, as the case may be, and by so doing shall permit the treasurer of the company to reserve out of the payments due unto him as much of the stock or as many of the bonds as may be needed to make deliveries to the subscribers to either of these sureties. Fifth. It is understood that until $500,000 shall have been realized by subscription or from sale of the securities of this company, the said party of the second part shall have authority to make necessary purchases and contracts upon the credit of this company, and shall not be obliged to use his own Credit. Sixth. That this contract shall not be transferable by party of the second part, except by the consent of the board of directors of party of the first part. Seventh. That, unless prevented by adverse litigation, the party of the second part agrees to finish the said railroad on or before the first day of October, 1890. Eighth. The cost of the securing rights of way shall be borne by the party of the second part."
Immediately after the execution of the said contract the said Wood commenced the construction of the said railroad, and nearly completed the construction of the same under and according to the terms of the said contract, so that since some time in July last passenger trains have been running twice a day each way over the said railroad between Winslow Junction and Tuckahoe, a distance of 28 miles; and that the rest of the said line from Tuckahoe to the sea, a distance of about 9 miles, is substantially completed, although, as yet, not so far finished as to permit trains to pass over regularly. That that portion of the line which the said Wood agreed by the contract last aforesaid with the Philadelphia & Sea-Shore Railway Company to construct from Tuckahoe to Cape May city is completely graded, with the exception of about three miles. The ties for the entire distance are furnished and placed on the line of the road, and the rails necessary for the entire line are delivered at Tuckahoe; the last-named road being about 27 miles inlength. That the said railway company owes to said Wood for work already done and bonds to the amount of $70,000. That the office of said railway company, where its regular and daily business has been carried on, and where the books of the said company have been kept, is 400 Chestnut street, in the city of Philadelphia. On the 14th day of October last Morris Boney, one of the defendants, called a meeting of the board of directors at the office of William Gorman, one of the defendants, in the city of Philadelphia. That there was present at this meeting Morris Boney, Emlen Physic, William Gorman, George H. Becker, John J. O'Neil, Michael J. Kelly, Thomas E. Ludlam, George W. Urquhart, James Mecray, and James M, E. Hildreth, directors of the said corporation; James E. Taylor, secretary; and C. L. Williams, treasurer. That the said meeting was illegal, and had no power to transact the business complained of, because it had no power or authority to convene for the purpose of transacting any business beyond the limits of the state of New Jersey. That at the said meeting the said board of directors passed a resolution, without any notice to the said Wood, purporting to annul, abrogate, and set aside the said contract between the said Wood and the said Philadelphia & Sea-Shore Railway Company. At the lastmentioned meeting the said board of directors authorized its finance committee, consisting of Morris Boney, Emlen Physic, and George H. Becker, to enter into a contract with one John Jemison to take possession of said railroad, and to complete the construction of the same, for which the said Jemison was to he paid all of the unissued bonds of the company, secured by mortgage, as above mentioned, and now in the possession of the said Guurantee Trust & Safe-Deposit Company, being 435 bonds, and also all the unissued stock of the company, amounting to 7,818 shares, representing $290,850; and also providing that there was to be issued to the said Jemison any other securities or assets to which the railway had any right or title; and that two of the said directors voted against the passage of such resolution. That the said railroad corporation has directed the Guarantee Trust & Safe-Deposit Company to deliver the said bonds in its possession to some person or persons unknown to the said Wood, in violation of the right of said Wood to have delivered to him at least $70,000 worth of bonds and stock, and of his right to demand bonds after a certain stage of the work under his contract; and that the said company has directed the said Jemison to take possession of the said railroad, and to complete the same, and thereby to prevent the said Wood from completing the construction of said road under his contract; and that the said Jemison threatens to proceed under his contract. That the said Wood has performed his said contract, and has become the holder of bonds of the saidcompany in consideration of the outlay of money and labor on his part, and is possessor of said bonds to the amount so above set forth, and is a creditor of said company, and is entitled to a further delivery of said bonds heretofore deposited, and to the delivery of a parcel of the bonds now on deposit, and has an equitable claim upon a parcel of the said lastmentioned bonds, to be his, and to become deliverable to him in the future as he further proceeds in the execution of his work of construction with the said railroad corporation.
The answer admits most of the allegations of the bill, but denies that Wood has performed his contract according to the agreement, and charges that he has been guilty of fraud and deception in the accounts which he rendered to the company, in that he claimed bonds and stock greatly in excess of the work that he had actually performed, and that, consequently, instead of anything being due to him, he had already been largely overpaid. It is admitted that, while the contract required Wood to complete each mile of the road consecutively before he should be entitled to any compensation, in order to hasten the work it was afterwards agreed between them that he might carry on the work along different portions of the line, and this he did. It was agreed that he should have compensation according to the work done in this manner. As the work progressed, from time to time, he presented his claim, and bonds and stock were issued to him upon the basis of the claims presented. It is also agreed between the parties that the same individuals organized a corporation in the name of the "Tuckahoe & Cape May City Railroad Company," whoso object was to build a railroad from Tuckahoe to Cape May city; but no further steps were taken towards the building of such road by the last-named company, but the Philadelphia & Sea Shore Railroad Company undertook to embrace the construction of this road within its contract with Wood. This reference is made to show that the doctrine of ultra vires might very naturally have a very prominent place in the discussion.
Jurisdiction in this case has been entertained, not for the purpose of compelling the specific performance of a contract to construct a railroad, and to that end superintend the progress and completion of the work, but to compel the performance upon the part of the defendant company of so much of the contract upon its part as it was bound to perform, for work and materials done and furnished by the complainant according to the allegations of his bill, and to restrain the defendant company from disposing of so much of its assets as were necessary to comply with such condition, and the rest of the assets of the company for a like purpose incase Wood should faithfully perform the balance of the contract upon his part. This view, to the extent of securing compensation to Wood for what he had already earned, if anything, seemed to be in accord with the spirit of the following cases: Camden & A. R. Co. v. May's Landing, etc., R. Co., 48 N. J. Law, 530, 7 Atl. Rep. 523; Jemison v. Bank, (N. Y.) 25 N. E. Rep. 264; Manufacturing Co. v. City of East Portland, (Or.) 22 Pac. Rep. 536; Arms Co. v. Barlow, 63 N. Y. 62; 2 High, Inj. §§ 1120, 1121, et seq.; Holmes v. Willard, (N. Y.) 25 N. E. Rep. 1083; Railway Co. v. McCarthy, 96 U. S. 258; Woollen Co. v. Lamb, (Mass.) 9 N. E. Rep. 823; Ten Broek v. Compound Co., (Mo.) 2 West. Rep. 442; Railroad Co. v. Derkes, (Ind.) 3 N. E. Rep. 239. And to the extent that it restrained the company from disposing of the balance of the assets to another contractor, and thereby preserving them, that they might be applied to Wood in case he performed the contract upon his part, it was in accord with the spirit of the authorities found in High, Inj. § 1164; Lumley v. Wagner, 1 De Gex, M. & G. 604.
The allegations in the pleadings and the testimony show that the difficulty in coming to a proper solution of the questions involved in this case arises not so much from the fact that the contract was not completed at the time stipulated, but from the uncertainty as to the amount of the work done and material furnished by the complainant prior to the time of filing his bill. It is perhaps quite clear that in such case the court would deal liberally with a contractor. This is especially so when a large amount of work is contracted to be performed in a short period of time, during the running of which there is a severe stringency in the money market, and most of the securities offered are at a discount, and both of the contracting parties not only confided in each other, but dealt with each other with the utmost liberality, and the defendant has allowed the written contract to be materially departed from, so that there is a difficulty in ascertaining the comparative value of the work done from the payments actually made, and when it appears that the performance of the contract within the time contemplated by the parties results in no material damage to the party objecting. To these important elements is to be added the significant consideration that the contract itself shows that the stock and bonds which were to be given to Wood as compensation for the construction of the road were at the very instant of the execution of the contract without any certain measure of value; for it cannot be supposed for one instant that careful, prudent, and sagacious business men in the slightest sense capable of conceiving and promoting such an enterprise would deliberately give $1,800,000 for doing less than $900,000 worth of work; or, in other words, a profit to the workman of over $900,000. Indeed, not only the contract, hut every page of the testimony, as well as all of the minutes and proceedings of the company since the execution of the contract, unequivocally show that the price agreed to be paid to Wood for the construction of the road was more in imagination than in substance. So far as the main object of the bill goes, had the parties stood by the original contract, as above presented, the court could have readily come to a conclusion respecting the equitable rights of the parties. The contract most wiselyprovided that no payments in stock or bonds should be made to Wood until he had completed a mile of the proposed roads. This was found to be interfering with the rapid progress of the work, and the defendant company consented that the work might be carried on at different places at the same time. Generally speaking, the result has been that, according to the allegations of the defendant, over 30 miles of the main line are not completed, although trains have been running for several months over 27 miles of the main line; and no part of the branch line from Tuckahoe to Cape May city has been completed, although 24 miles thereof have been graded, and the bridges and culverts all constructed and completed. To show the extent of this embarrassment, taking the thought from the testimony of the defendant company, only about seven miles on the main line have been completed according to the contract, while the balance, though not completed, has been constructed at the cost of $332,828, and to complete which will cost $131,487, while the branch line has had expended upon it work to the value of about $20,260, while to complete it would cost $245,790, showing that, according to the original contract, Wood has really been entitled to be paid for only seven miles of road completed, or bonds and stock to the value of about $140,000, while he has actually been paid, according to his own showing, bonds to the extent of $465,000, and stock to the amount of $435,000, or a payment in full for at least 45 miles of completed road. This very embarrassment the defendant casts in the teeth of Wood, and charges him, not with being only responsible for the departure from the contract in working at different points along the line at the same time, but in not completing the work at the different points when so undertaken; while, on the other hand, Wood insists that the work upon the one hand has not only been carried on under the eye of the defendant, but that the principal part of it is actually completed within the spirit and meaning of the contract, or so nearly so that he ought not to be deprived, through the means contemplated by the defendants, of the advantages which would accrue to him from his contract. Wood insists that the main line from Winslow to Sea Isle can be fully completed within 10 days, and the branch from Tuckahoe to Cape May city in 60 days. It does not admit of dispute but that the company is interested in having these roads completed according to the terms of the contract. From the statements above made it is also beyond dispute that Wood is largely interested in the completion of these contracts, and that he may suffer irreparable loss unless he be permitted to complete them, provided he has not, as the defendant claims, already been paid largely in excess of the value of the work which he has performed. It will be admitted that, if Wood is at fault, even in such a case as this it will be difficult for a court administering the rules of equity to grant him relief, unless that fault, has been induced by the conduct of the defendants, or has been so connived at as to have made the consequences thereof more serious to Wood than it otherwise would have been. In other words, he who comes into a court of equity must come with that propriety of conduct which will commend itself to the court; and, if there be any fraud upon his part, the court will not hear him in asking for relief, unless the other side is equally responsible for that condition of things which it denominates fraud. I think the embarrassments which present themselves in this case, and which have been above alluded to, are of such a character as to forbid the interference of a court of equity in behalf of Wood, unless the court is fully satisfied that Wood alone is not responsible for them. Therefore it will not be amiss to consider more in detail how those embarrassments have been brought about.
An examination of the contract will show it is one of very striking peculiarities. It is embraced in the merest generalities, and in some respects strikingly vague or indefinite, and wholly destitute of those important details which are an assurance of certainty and good faith. Yet in one important particular the generality referred to was as clear as could be desired, namely, the payment of $10,000 in bonds and $10,000 in stock upon the completion of each mile of track. The departure from this plain provision seems to have been the source of all the woes or difficulties in which these parties are now involved; for what before was definite by the change is left simply to estimate, which is as variable as the testimony of human witnesses, as the evidence in this case shows; yet the parties are mutually responsible for the departure. When the defendant company permitted Wood to work at as many different points along the line as he chose, but did not require of him and see to it that each mile of track or its equivalent was completed before the payments were made, by their long continuance in making payments they sanctioned the mischief which they now seek to make use of as a defense. According to the theory of the defendants, scarcely a mile of track was completed before payments were made; and, although a large amount of work had been done, yet perhaps not a single mile had been completed according to the contract before bonds and stock were turned over to Wood sufficient in amount to pay him for a fourth or a third of the road actually completed. And, as above intimated, the defendants claim that Wood has been paid largely in excess of the amount due him for work actually done, while in fact he has completed hut seven miles of the road. For this Wood cannot be held alone responsible. I cannot make up my mind that it would be just or equitable to say that he alone should suffer for this wide departure from the performance of his contract. Every step in the progress of this case makes it conclusive that the company understood precisely what it was doing in this regard. They paid Wood according to his own estimates of the comparative value of work done, and this, too, with such opportunities of information as to forbid their offering any excuse for any imperfection in Wood's estimates. In May, 1890. as work was commenced inthe previous December, the finance committee, whose duty it was to examine into and to report respecting the condition and progress of the work, went over the track as far as it was then open sufficiently for that purpose, with the view of determining what had been accomplished by Wood, and reported to the company the following: "Col. Potter: Now I will read, by the permission of the court, another extract from the minutes of the board of directors under date of May, 6, 1890: 'The finance committee presented the following report: To the President and Board of Directors of the Phila. and Sea-Shore Railroad Co.—Gentlemen: Your finance committee beg leave to report that they went on a tour of inspection of the road on Friday, May 2d, and are pleased to say that the work done far exceeded their expectations. We found that there is about 9 1/2 miles of the road completed, and the excavation and grading is done as far as Tuckahoe, with the exception of about 2 1/2 miles, which has a gang on each end at work. The Tuckahoe and Cedar Swamp bridges are completed, and the bridge at Corson's inlet will be completed in a few days; all of which is of first-class material and workmanship. There is considerable grading done between Tuckahoe and Sea Isle City. We have not been over the Cape May branch, but we undertand from good sources that the grading is all done, with the exception of about 8 miles. In our judgment of the work already performed, we see no reason, unless through lack of funds, why trains should not run into Sea Isle City and Cape May by the middle of July, 1890.' On motion this report was approved and ordered to be filed." At the time of the investigation and report, the condition of things which now embarrasses the court, and which the defendants now set up as a bar to the relief prayed for by the complainant, existed. At that time, and long before, the company had been advancing bonds and stock to Wood very much in excess of what he was entitled to under the terms of the original contract; that is, they had been paying him in stock and bonds for work done promiscuously along the line, and not for any portion of the road actually completed. This fixes beyond peradventure not only the knowledge upon the part of the company of the manner in which Wood was carrying on the work, and the basis upon which he demanded payments, but acquiescence upon their part, and that, too, to such an extent as to forbid them to avail themselves of such departure, and according to Wood's understanding of the extent of the departure agreed upon. In addition to this, the defendant company seemed to be so well satisfied with the manner in which Wood discharged his obligations under the contract that, besides making the payments aforesaid, they actually took possession of about 27 miles of this road, with the rolling stock and equipment which Wood provided under the contract, and had been running two trains each way over the same daily since July last,—Wood having until the 1st of October to complete his contract. And the company continues to occupy and use all of that portion of the said road. Is the company excused from the performance of all reasonable obligations to Wood because the company alleged unlimited confidence in him? It is said that the company trusted him to the fullest extent, and accepted his reports as to the progress of the work without abatement or inquiry, and made payments accordingly. The ground now taken by the defendant is that in his reports of work completed Wood deceived the company. The facts adverted to do not justify the company in assuming this position. It is unreasonable to suppose that the finance committee would have reported what they did in May, or that the company would have assumed control of the road and the rolling stock in July, as it did, if Wood had been acting falsely, and to any material degree misled them. What the company did it did with the fullest opportunity of knowing all the facts and the exact condition of affairs before it, as every page in the history of the work, as shown by the oral testimony and the minutes of the company itself, demonstrates. There is no dispute as to the allegation that the company implicitly relied upon Wood; but the admission of this fact neither disapproves nor qualifies nor limits the fact that the company had the knowledge contended for, and acquiesced in or ratified what was done as above intimated. Nevertheless I do not wish to be understood as meaning that because the company had knowledge of the manner in which Wood was conducting the work, and acquiesced therein, and took charge of the road, and is therefore prohibited from interposing any departure from the contract in that respect against Wood, Wood is not ultimately liable for a full and fair compliance with the requirements of the contract. The confidence which has been adverted to may have been mutual, and may have led to that indulgence upon either hand which gives the present trouble. Before the company took charge of the road and began to run trains over it daily, Wood had fixed a standard which had served as a just interpretation of the contract with respect to what it required for a completed road. The first seven miles from Winslow gives us that standard. The experts called by the defendant admit these seven miles to be completed according to the contract.
However, notwithstanding these things, the defendant company insists that Wood was so far in default under his contract that he was not only unable to complete the road, and declared himself so to be, but that for the work already done by him he had been largely overpaid; and because of these facts it determined to rescind its contract with him, and to enter into a contract with one Jemison to complete the road, and accordingly passed a resolution, and placed it upon its minutes, to that end. This was done after repeatedly notifying Wood that they would do so unless he promptly proceeded to complete the work. As will be seen, his contract required him to complete the work by October 1, 1890. The resolution referred to was passed October 14th of thesame year. Taking into consideration the embarrassments which have been above adverted to, is Wood in a position—the road being completed—to ask the aid of this court? He admits the important fact that the road was not completed at the time stipulated in the agreement. The testimony clearly establishes that he was repeatedly informed by the company to complete the road, and warned that if he aid not do so the company would rescind his contract. Most of the witnesses, if not all, who spoke upon this point say that he declared himself unable to complete the road, and could not do it without help,—without more means to do it with. Wood insists that the inability referred to came from the refusal of the defendant company to pay him any bonds and stock for the work which he had done. His claim is that the company was indebted to him $70,000, and that, had the company met its obligation to him promptly, the work would have been carried on satisfactorily to a completion. It is true that Wood also alleges that he was embarrassed by the failure of individuals, who were members of the board of directors of the company, to comply with their promises and undertakings with him. A large amount of testimony was admitted to establish the assertions of Wood as to this point. At the time it seemed very questionable whether it was relevant or not. It, however, seemed safer to admit it, since it showed the good faith of Wood, and might have very much to do with determining the rights of the parties in the case. This seemed especially so since the individuals named were prominent and leading actors in the creation and management of the corporation. But it is difficult for me to conclude, whatever the legal principle might be, that the failure of these gentlemen to comply with their promises to Wood was of such a grave nature as to merit the serious consideration of the court. For example, on one occasion, when Wood's indebtedness for labor and material was $40,000, he claims that $3,000 were due to him from subscribers to stock which had passed to them through his own hands. Still the question remains to be determined whether, under the circumstances of the case, Wood himself wasindefault, andcon-sequently not entitled to be heard in this court. It will be seen that there is great difficulty in determining with exactitude the precise situation or true state of the accounts between these parties, because of the manner in which the work was allowed to be proceeded with. But it must not be forgotten that, in addition to the difficulties above adverted to, Wood himself is at fault in not keeping and preserving a detailed account of all his transactions with the company, including the cost of work performed by him, and the value of materials purchased, but especially the value of work or cost thereof. The fact also cannot be overlooked that in one aspect of the case Wood was not obliged to keep any account in detail with the company of the cost of the work; and the advantages of such an account would not have presented themselves, had not the present conflict as to the value of work arisen between the parties. Wood's contract with the company was to build the railroad for a given consideration. It made no more difference to the company what it cost Wood to build the road than it would the steam-ship company who should employ a ship-builder at a given sum to build for it an ocean steamer. In other words, had Wood built and completed the road by the mile, and taken his pay under the original contract when each mile was completed, the accounts between the parties would properly have been closed, with the exception as to there serve named on the contract; but, as has been shown, such was not the case. According to Wood's own statement over 30 miles of road are only partially completed, yet some work has been done upon the line over that entire distance. Therefore, in such condition of affairs, it would be of great service to the cause of justice had Wood kept such an account as would enable him to show the cost of labor and materials to the extent supplied. But, taking the case as it stands, has he established the allegation that his failure to complete the road is because of the failure of the company to pay him stock and bonds according to the contract as modified, with reasonable certainty? Unquestionably bonds and stock were transferred to Wood as he rendered his accounts or demanded them, without hesitation, and certainly without any special inquiry or investigation, until September, 1890. It was during that month that certain members of the board of directors first began to inquire into the condition of affairs of the company and the advances made towards the completion of the road by Wood. Wood was then urged to hasten the work, and was distinctly told that if he did not the contract would be rescinded. While it is very clear that he declared his inability to proceed for want of money, and while it is also clear that he claimed that they owed him stock and bonds, it nowhere appears that he insisted or relied solely upon such claim as against the company, but insisted that individual members had failed in their promises to him.
It will be proper to state the substance of the testimony upon this point. As early as in June, 1890, Wood called the attention of Mr. Gorman, one of the board of directors of the company, to its financial condition, and stated to him that the work could not go on until he was furnished with more money to pay the laborers with; saying at the same time that certain gentlemen interested in the city of Sea Isle, and upon whom he had largely depended for aid, had not succeeded in raising $100,000, which they had promised, and upon which he had relied. This reliance seems to have been well based, according to the report of the finance committee which was approved by the board of directors March 18, 1890, and which is in these words: "We find from information furnished by Mr. Wood that the subscriptions promised have not been regularly paid up to this time, and we feel that additional effort should be made to fill up the amount wanting; and we believewith a very little effort this can be done, and the contractor's complaint in this respect remedied." Dr. Physick, who was also a director, and one of the prominent actors in promoting the original scheme, testifies with respect to Wood's claim, as follows: "He constantly was importuning the finance committee to raise him money. He said repeatedly that if more money didn't come in he would have to stop operations. Ho said this to me repeatedly; not only to me, but to several of the board of directors, I think." He thinks this demand for more money was made at least one-half dozen times, and that he said this upon the very day the resolution was passed rescinding his contract. One important event which brought the corporation and its directors and Wood to sharply come face to face was the fact that in the month of September, 1890, the work to a large extent ceased because Wood was largely in arrears with the payment of laborers. Mr. Steelman, a gentleman of confidence and business habits, and greatly interested in the success of the enterprise, says that he was two months behind in the payment of wages; and his testimony is equally important with that which has been adverted to upon the subject of Wood's claim as to the cause of the difficulties in which he and the company were then involved. According to his evidence, Wood's embarrassment was not the delinquency upon the part of the company in advancing to him bonds and stock, but his inability to raise money upon stock and bonds of the company which had already come to his possession, or which had been subscribed for by others through his instrumentality. This appears in the testimony: "Question. Was there any discussion between Mr. Wood and the board about that,—about where the money was to come from, and who had to raise it? Answer. Mr. Wood wanted the board to raise it. We said to him, 'You must go on, and spend what you have got first.' Q. What did he say to that? A. He said he had no means,—nothing to do it with. Q. You told him that he already had more stock and bonds than he was entitled to? A. Yes, sir." He also says that Wood always claimed that the company owed him. "Q. What I want to get at is this: You say he wanted pay. Did he ask for money, did he ask for bonds and stock, or did he ask for both? A. I think he meant both, or said both. I am not positive about that. He wanted funds, however. He said he could not go on unless the company gave it to him." The testimony of Mr. Boney is to the same effect. When Wood made known his distress to Boney he urged him to appeal to his relatives for pecuniary aid, but to do this Wood expressed a disinclination. His testimony shows that in all probability Wood himself saw the difficulties in the way of his completing the work under his contract were increasing, and becoming more and more weighty, even before the officers of the company were seriously impressed with them; for, on August 28, 1890, he wrote a letter to Mr. Boney, in which be used this language: "Is there any chance that you or your friends will be in position to make up the money needed by the company within a short time? I am just on the point of making engagements with other parties, which will dispose of the securities of the Co., and I would much rather act with you than with any other set of men, if necessary arrangements can be made within the time at our disposal. You know I can only make a vague guess at the means which you can control or influence, and 1 cannot base any calculation upon what you could or would do unless you make these points clear to me." Which of the securities of the company—whether those which had already been assigned to him or those which were still retained by the company —he was about negotiating does not appear, except by reference to the testimony of Mr. Garwood, who says that Wood offered to assign to him and others all his interest in the construction contract. But whatever was intended, the contents of this letter very clearly point to the fact that Wood was preparing the way to dispose of his interest in all of the stock and bonds; and he had gone so far as to request Mr. Boney to have a resolution passed to aid him in accomplishing this purpose. Mr. Gorman conferred with these gentlemen, and they agreed to raise $50,000, all of which, except $3,000, was raised by them, and paid to Wood. Upon their promise to raise this $50,000 Wood promised that the road should be completed by the 15th of July. Mr. Gorman says that the reason the $3,000 were not paid was because Wood did not complete the road according to his promise. He also says that he directed the treasurer not to pay Wood any more money. The company had ordered an investigation of the accounts by an expert accountant, who had been at work upon the books of the company prior to September 15th. On September 15th there was a meeting of the board of directors, at which Wood was present, and he then stated "that there would have to be money raised for wages for workmen, and he wanted ten or twelve bonds more in addition to what he had, and some stock to go on with the bonds." The statement of the accountant shows that Wood was largely overpaid, and this was made known to him, and he was requested to return to the company a portion of the stock and bonds which he had already had. Mr. Gorman said to Wood as follows: "I said to Mr. Wood: 'You will have to return some of the stock and bonds, instead of getting others. You will have to go on with your work, and you will have to pay the wages.' He says: 'I cannot do it, and the work will stop.' 'Well,' I said, 'Mr. Wood, this company cannot give you any more stock and bonds, and you will have to go on, or we will rescind your contract.' 'Well,' he says,' I cannot go on with the work without more stock and bonds. Mr. Warrington is wrong. There is more due me.'" Mr. Wood then proposed that if the members of the board would raise him $10,000 he could pay the laborers and finish the road into Sea Isle City; and to secure them for that he offeredto convey them by way of mortgage certain real estate of his own. This negotiation was not consummated; but it is very significant to note that Wood made this offer, and did not insist upon his previous claim that he was entitled to more bonds and stock. It must make a serious impression that he was willing to pledge bis own individual property to raise money if he were serious in his claim that a large amount of bonds and stock was due to him.
At this same time and in the same connection Wood claimed that the clause in the contract which permits him to use the credit of the company and to expend $500,000 obliged the company to furnish him cash to that extent; and he also claimed that, if the bonds and stock were sold for a discount, the company was chargeable with such discount No unbiased person will read the contract and contend for an instant that the latter insistment has the slightest foundation therein. There can be no doubt that Wood was under obligations to build the road for bonds and stock. Whatever they might be worth, he was entitled to no other compensation. The profit or loss was his, and his alone; and, as to the former insistment, it seems to me that it might strike the unbiased mind as very absurd to contend that Wood was entitled to all of this stock and these bonds and also to $500,000 in cash; and, whatever might have been his contention in the presence of the board of directors, or with any of them, upon the witness stand he distinctly admitted that he was to build the road for the stock and bonds, and that they were to be security for the payment of $500,000, or any fractional part thereof, in case he used the credit of the company according to that clause of the contract. These things are adverted to, not so much to discuss the rights of Wood with respect to them, but to call attention to the fact that he made these insistments, rather than to continue and press his claim that the company was indebted to him in stock and bonds for work already performed. While this discussion was going on between Wood and the directors, Mr. Gorman says that Wood said "that the people who had subscribed had not come forward, and that work must stop unless these subscriptions came in, (meaning the Sea Isle people.) He said the Sea Isle City people. "
But, again, Wood insisted that very grave responsibilities rest upon the company because it did not faithfully comply upon its part with the clearly implied condition of clause 5 of the contract, which permits him to pledge the credit of the company to the extent of $500,000. He insists that he had the right so to pledge the credit of the company, and that, having done so, it was the duty of the company to promptly meet all the obligations thus imposed upon it by him. From time to time he pledged the credit of the company for rails and other supplies to the extent of $320,000, and urges that because the company did not promptly discharge every one of its promises to pay thus executed and delivered by him its credit became so impaired as to render it quite impossible for him to dispose of any of the stock or bonds of the company at such prices as would afford him the necessary means to carry forward the work of construction. A great deal of attention was given to this branch of the case by the counsel for Wood; but, while I have no doubt that Wood was permitted to pledge the credit of the company, and no doubt that as between the vendor of the supplies purchased by Wood and the company, the company was liable, yet there is not the slightest room for disputing the assertion that, as between Wood and the company, Wood was primarily liable, and in accounting he would be held clearly chargeable with the entire amount of debts thus created by him, and the company justified in retaining stock and bonds enough to discharge every such liability. This inevitably springs from the fact admitted by Wood and his counsel, that Wood undertook to complete the work of construction and furnishing the rolling stock for the bonds and stock issued by the company; and this, it will be seen, induces another element of uncertainty as to the rights of these parties, which no method of reasoning or calculation can at this time reconcile. While the amount of liabilities thus created by Wood as against the company are certain, the bonds and stocks have no market value whatever; and whether or not a settlement at this juncture, considering the situation in which the affairs of both parties have been precipitated, the stock and bonds remaining in the hands of the company, would by any possibility liquidate all these liabilities, it is impossible to determine. Indeed, Wood himself was so impressed with the significance of this view that he endeavored to provide against it by calling a meeting of the stockholders of the Tuckahoe & Cape May Railroad Company on the 10th of August, 1890, at Camden, N. J., which meeting was called to order by Wood. He then presented a resolution; of which the following is a copy: "Resolved, that in pursuance of the authority contained in an act to amend an act entitled 'An act to authorize the formation of railroad corporations and regulating the same,' approved April 2, 1873, the said amendment having been approved February 19, 1878, the board of directors of this company be, and they are hereby, authorized and empowered to make and execute the bonds of this company to the aggregate amount of $400,000, to bear interest at the rate of 6 per cent. per annum, payable in——years from the——, and to execute and deliver a mortgage at the same time to the——, a corporation of the state of——, as trustees, on all the lands, privileges, franchises, and appurtenances and belongings of this company. This said mortgage shall constitute a first lien on all the railroad of this company now under construction between Tuckahoe and the city of Cape May, and its cars, real estate, railroad, and franchises acquired or to be acquired, to secure the payment of said bonds in such form as the board of directors shalldeem proper: provided, such bonds shall not be issued to an amount exceeding the paid-up capital stock of this company; and the proceeds of the sale of such bonds shall be used for the purpose of aiding the construction of said road." This resolution alone, without any comments as to its legality or as to the breach of good faith with the stock and bond holders of the Philadelphia & Sea-Shore Railway Company, whose bonds are secured or proposed to be secured by a mortgage on both roads, makes it indisputably manifest that Wood was convinced that the project upon the part of the Philadelphia & Sea-Shore Railway Company to build both roads as it had attempted to under its contract with him could not be accomplished without additional securities. He expressly provides that "the proceeds of the sale of such bonds shall be used for the purpose of aiding the construction of said road." These two last considerations, viz., the pledge of the credit of the company to the extent of $320,000, together with the uncertainty of the value of stock and bonds remaining in the hands of the defendant company, and the uncertainty which pressed Wood to secure the issue of $400,000 worth of bonds upon the Tuckahoe & Cape May City Railway, being so, the very greatest prominence is given to the question: Can a court of equity undertake to compel the specific performance of a contract which has given birth to such a motley brood of difficulties, or can it undertake to compel the defendant company to transfer to Wood any given number of shares of stock, should it be made reasonably clear upon a fair estimate that he has done more work and furnished more materials than he has actually been paid for, while such heavy obligations created by him are outstanding against the company, and the stock and bonds have confessedly no market value? I am not aware of any principle, nor have I been able to find any adjudication, which would sustain this court in an endeavor to aid the complainant in such case. To do so would be shifting a burden which justly belongs to Wood upon the company, in case it should never be able to cast off its present embarrassment. In other words, a court of equity will hesitate a long time before it requires the surety of a debtor to give up the instruments which it holds for its protection to the debtor himself.
However, so much is involved and so extremely important is the proper settlement of the matters in dispute between these parties, and so serious may be the consequences to the creditors, and so mortifying the unnecessary delay to the public, who are interested in the speedy completion of every scheme that will afford them rapid transit, and so much attention was given to it upon the discussion by counsel, that, independent of former considerations, I cannot feel myself entirely justified without further inquiring whether or not the testimony shows that Wood is entitled to more stock and bonds from the company. While so much time and attention was paid to this branch of the inquiry both in the examination of witnesses and in the argument by counsel, I am aided in coming to a conclusion as to my present duty without much additional labor by the course pursued in the argument of Wood's counsel. He took the position that in any event Wood was entitled to an account; that he had acted in good faith from the commencement, having made every reasonable endeavor to complete the road within the time specified; that the road was not completed within the time specified because several members of the board of directors, who had promised him material aid before the organization of the company, and thereby induced him to enter into the project, had failed to meet their promises; that the company itself was cognizant of these things, and was aware of the embarrassment which was thereby entailed, and which, without its further indulgence, could not be overcome; that they accepted with him the situation, and paid him stock and bonds according to the estimates which he had from time to time furnished, until his embarrassment reached a climax, when they refused to advance him more according to his estimates; that he relied upon such stock and bonds for the discharge of the debts which were due to laborers upon the estimates which he had furnished, and which stock and bonds he insisted they ought to have transferred to him upon the said estimates, as the company had transferred stock and bonds before upon his estimates; that the testimony shows that Wood has expended a very large amount of money and over $50,000 in cash of his own, and has accomplished a great deal in the interests of the company under this contract, and that his interests because thereof are so great that, since the company has refused to aid him any further, he is equitably entitled to an account, in order that he may ascertain whether or not the company is indebted to him as he claims, and that to that end the injunction which restrains the further prosecution of the work until such an accounting be completed should be continued. This claim for an account admits a. condition of things which is absolutely fatal to the prayer upon which Wood relies. It admits that uncertainty in the terms of the contract or in the manner in which it has been carried on, if not completed, which prevents a court of equity from interfering. Not that a court of equity has not jurisdiction of matters of account, and especially when the account sought for is a final account between contending parties; but when the question involved is at an intermediate stage between the commencement of the work under the contract and the completion of such work, and when it is uncertain as to how much work has been done under the contract, and that is only to be ascertained by estimates, a very different situation is presented for the court to deal with. The case in hand involves all the uncertainties supposed. Wood was permitted to carry on his work along the entire line of these roads, for which, from time to time, he was permitted to render estimates of the value of such work, and upon these estimates bonds and stock were issued to him. Were these estimates fair and reasonable? Atno time did the parties agree upon any standard which should control Wood in making these estimates. They were all presented according to his own will or judgment, and from his own statements no certain standard controlled him. It is true, as I have said, the company accepted them, and made payments accordingly. But it is also true that the estimates were exceedingly liberal towards Wood himself. It is plain, therefore, that the court in dealing with this contract and the rights of the parties under it must deal with the very question here presented, namely, the question of proportion, or a fair and just estimate. But can the court do this? Is it the province of a court of equity to do what the parties have failed to do, and thereby add a new term or condition to the contract? This evidently would be the result in case I should endeavor to determine what is reasonable or fair as between these parties. These past statements show what has already clearly appeared, that there is an uncertain element or term in this contract which the court is asked to deal with, but which a court of equity never undertakes to dispose of. When this contract was modified, so that instead of paying him $20,000 per mile for each mile of complete road it proposed to pay him at that rate for work done along the entire line, without fixing any given standard by which they should ascertain the value of the work done, they introduced an uncertain element, which absolutely forbade the interference of a court of equity at this stage of the transaction. The testimony shows that for certain branches of work he adopted one standard, when he would ask for bonds and stock, and for certain other branches of work a different standard.
If an order of reference should be made directing an account, what standard could the court give the master for his guidance? In determining the relative value of the work done, would it be possible for the court to do otherwise than to fix an arbitrary standard, wholly independent of and unprovided for by the contract? It is true, the court might direct a master to ascertain the cost of the work performed and materials furnished by Wood; but, nevertheless, all that would be merely estimate when applied to any given portion of the road, for the reason that at this juncture it is impossible to tell with certainty what any given portion of the road actually costs. Wood claims in his bill that the company is indebted to him in stock and bonds to the amount of about $70,000, while, according to the statement which he produced during the progress of the hearing, he shows that there are about $112,000 due him in stock and bonds. This statement was made for the purpose of showing that by a very slight change in the estimate or proportion in a transaction involving nearly $2,000,000 this amount could be reached; and this is most easily demonstrated by the testimony in this case offered by Wood himself. If I understand his testimony aright, in some instances his claim for stock and bonds was only about double the amount of cost actually incurred by him, while in other instances it was considerably more; and, if the testimony of the experts offered by the defendants be regarded as of any value, it would appear that Wood has been paid largely in excess of what he is entitled to. Taking, for example, the testimony of Mr. Hunter, he estimates the total cost of both roads at $740,355, to which should be added the cost of the rolling stock, which in this case is $00,000. He estimates the cost of work to be done at $377,277, showing the cost of work done $303,078. He makes the cost of work to be done $377,277, but from this should be deducted the cost of rails furnished at Tuckahoe, $29,000; cost of ties, $42,000; and cost of rolling stock, $60,000; amounting to$131,000; and these items should be added to the $363078, making the whole value of work done $494,076. These three items not having been taken into the account by Hunter, it is proper that they should be added here. The whole number of miles of road to be constructed under the contract is about 66 1/2. The whole cost of the road being $800,355, (this including rolling stock,) it will be seen that the cost per mile is $12,045.41. Then, if the whole cost of the work actually done be $494,076, and the cost per mile of the whole road be $12,045.41, if the whole amount of work bad been done in consecutive miles the number of miles completed would be 41.05. For this he is entitled to $20,000 per mile in stock and bonds, making in all $821,000. He has had in stock $435,000 worth and in bonds $465,000 worth, which made in all $900,000 worth, making $79,000 worth more than he is entitled to. But then it must be admitted that, like the calculations presented by Wood, these results are ascertained upon estimates.
It is important to observe that the bill of complaint is not so framed as to permit the complainant to ask for an accounting with the defendant company. It is plain in this case that Wood has been the principal actor. He has done the work and made all the purchases. It was his duty to keep accounts, and to be prepared at all times to present true, full, and detailed statements of his transactions under the contract as it was modified, so that he might show with certainty whatever labor was performed and whatever supplies were purchased. He has no right to come into a court of equity, and ask for the payment of a balance claimed to be due him, without showing in his bill of complaint precisely how that balance is due. Every principle of good pleading requires that he who makes a claim that the balance is due him upon an accounting, and whose duty it is to keep an account, must show affirmatively by his pleading how that balance is produced. He has no right to call the other party to an account until he himself so accounts. Wood not only does not set forth in his bill any account, but he makes no prayer for an account. Besides this, during the progress of the cause at the hearing he was directed and given time to prepare and present an account of his transactions with the company, but it may be said that he failed almost absolutely to do so. It is true that he presented a number of items, but whichdifferent items were aggregations, being very large amounts, but nothing whatever in detail; the whole covering not more than two ordinary pages of paper.
I do not think that Wood is entitled to be heard because the meeting of the board of directors which passed the resolution rescinding his contract was held in Philadelphia. Nearly all the meetings of the board were held there, and in a room adjoining Wood's office, with a door opening from one into the other. Wood was present at almost every meeting so held. He drew a very great many of the resolutions which were offered and spread upon the minutes. There is nothing to show that he ever offered the slightest objection to the company transacting its business in Philadelphia. It is too late for him to take any profit to himself because the board held its meetings outside of the state of New Jersey. I think the injunction should be dissolved, and the bill dismissed, with costs.