Barker v. Pullman's Palace Car Co.

CourtUnited States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
Citation124 F. 555
PartiesBARKER v. PULLMAN'S PALACE CAR CO.
Decision Date31 July 1903

Cardozo & Nathan, for complainant.

Alexander & Green, for defendant.

RAY District Judge (after stating the facts as above).

The Pullman Company, or Pullman's Palace Car Company, is a corporation created and existing under and by virtue of the laws of the state of Illinois, and is a citizen of said state. The Agricultural Insurance Company is a corporation created and existing under and by virtue of the laws of the state of New York, and as such duly authorized and empowered to do and transact a fire insurance business in said state. At the times mentioned the Wagner Palace Car Company was a joint-stock association, consisting of more than seven members, organized and existing under the laws of the state of New York, and having its principal place of business in the county of New York. Both the Pullman Company and the Wagner Company for many years were respectively engaged in the business of carrying passengers for hire in their cars over the lines of public railroads in the state of New York and elsewhere, and, for the purposes of their said business owned, respectively, many cars, stations, buildings, and other property, which were subject to loss or damage by fire and said Pullman Company was accustomed to, and did, obtain insurance. In and about the month of March, 1898, the established rate of premium for fire insurance on such risks was the sum of $35 for every $1,000 of insurance. On the 10th day of March, 1898, a memorandum of agreement was made and entered into between the said the Wagner Palace Car Company by W. S. Webb, its president, duly authorized, and the said the Agricultural Insurance Company, in the words and figures following, viz.:

'Memorandum of Agreement, made this tenth day of March, 1898, between the Wagner Palace Car Company and the Agricultural Insurance Company: Witnesseth: 'That in consideration of one dollar and other valuable consideration, the Agricultural Insurance Company agrees, on the expiration of the present Insurance policy of the Wagner Palace Car Company, to renew the same for three years for the rate of 29 17/100 annual premium, payable in nine equal installments, one each in September, October and November, respectively of each year.
'The Agricultural Insurance Company agrees to give substantially the same Companies comprising the syndicate now on the risk.
'In witness whereof the parties hereto have hereunto appended their signatures and seals the day and year first above written.
'The Wagner Palace Car Company, 'By W. S. Webb, President. 'The Agricultural Insurance Co., 'By . . . . '
'Witness, F. G. Smith.'

It will be noted that this agreement, as executed, contains no covenant or agreement on the part of the Wagner Company to accept a renewal of insurance or to pay the premiums, and the complaint seeks to reform same by inserting the words 'and the said Wagner Palace Car Company agrees to accept such insurance for the term of three years as aforesaid,' before the attestation clause of said agreement, it being alleged that such words were left out by the mutual mistake of the parties to such agreement. The fair construction of the contract or agreement of March 10, 1898, is that in consideration of one dollar and other valuable considerations the insurance company agrees to renew certain insurance of the Wagner Company at the rate and on the terms mentioned. The Wagner Company does not agree (unless such an agreement on its part will be implied) to accept the insurance or pay the premiums mentioned. If no such agreement is implied, and the evidence does not justify the reformation asked, that is an end of the case, for no one will contend that damages may be recovered for refusing to accept insurance (which is the ground for damages alleged in the bill of complaint) unless there was an agreement to accept such insurance.

After the execution of the agreement of March 10, 1898, and on the 8th day of November, 1899, the Wagner Palace Car Company, by W. Seward Webb, its president, and Pullman's Palace Car Company, by Robert T. Lincoln, its president, entered into a written agreement as follows:

'Whereas, the Wagner Palace Car Company, a joint-stock association formed under the laws of the State of New York, hereinafter called the 'Wagner Company,' party of the first part, and Pullman's Palace Car Company, a corporation organized under the laws of the State of Illinois, hereinafter called the 'Pullman Company,' party of the second part, have entered into an agreement subject to ratification by the stockholders of both companies, for the sale of the property and assets of said Wagner Company to said Pullman Company, and said agreement contemplated the preparation and execution of a more formal contract between said companies; and
'Whereas, the Directors of said Wagner Company have taken appropriate action to secure the dissolution thereof on the thirtieth day of December next,
'Now therefore, in consideration of the premises and of one dollar paid by each of the said parties hereto to the other, receipt whereof is hereby acknowledged, and of the covenants and agreements hereinafter contained, to be kept and performed by the respective parties hereto, it is covenanted and agreed by and between said parties as follows:
'First. Said Wagner Company shall sell, assign, convey and transfer unto said Pullman Company all of its cars, equipment, real estate, plant, good will

and other assets and property, including its contracts with railroad companies for the running of sleeping and other cars on their respective railroads, and shall procure the assent of said companies to such assignment.

'Second. In consideration of such sale, conveyance and assignment, said Pullman Company shall cause its capital stock to be increased from the amount of five hundred and forty thousand shares of the par value of one hundred dollars each, now authorized, to seven hundred and forty thousand shares of the same par value, and shall cause the two hundred thousand (200,000) shares, thus added to its capital stock, to be issued and delivered to said Wagner Company, or to its directors as liquidating trustees, in full payment for said property, assets and good will, and to be distributed by said Wagner Company, or said liquidating trustees, to the shareholders in said Wagner Company in proportion to their respective shares in such assets and property.

'Third. Said property and assets shall be conveyed, transferred and assigned by said Wagner Company, or said liquidating trustees, or both, and the certificates for said two hundred thousand shares of capital stock of said Pullman Company shall be issued and delivered in payment therefor on the thirtieth day of December, 1899.

'Fourth. Until such conveyance and assignment shall be executed, the officers of said Wagner Palace Car Company shall carry on the current business thereof, and shall not make any new contracts with railway companies or cause extraordinary or unusual liability or expenditure to be incurred; and shall not make any change in the organization of the company by the employment of new officers or increasing the compensation of officers and employees or otherwise; and the property and assets to be conveyed and transferred, as aforesaid, shall be the property and assets the said Wagner Company shall have, or be entitled to, on said thirtieth day of December, 1899. The intent of this provision is that the present condition of the assets, liabilities, obligations, contracts and business arrangements of the Company shall be preserved as it now is until such conveyance, so far as the same shall be consistent with the ordinary routine conduct of its business. As the Pullman Company is now paying dividends at the rate of eight per cent. per annum, therefore in order to equalize the rates of dividends upon the two stocks, pending the carrying out of this agreement, it is further agreed that the Wagner Company shall hereafter declare a dividend of no more than one-third of one per cent. upon its capital stock, the payment whereof, with the dividend already declared and payable on the fourth day of November, A.D. 1899, making a total of one per cent. upon the capital stock.

'Fifth. In order to enable said Wagner Company to make an immediate settlement of its affairs and distribution of its assets without the delay incident to the payment of its indebtedness and liabilities, said Pullman Company agrees that it will, as a part of the transaction, satisfy and discharge the indebtedness and liabilities of said Wagner Company of any and every kind which may be unsatisfied at the time of the transfer of said assets, and the Pullman Company further agrees to indemnify and save harmless the said Wagner Company and said liquidating trustees and the shareholders in said Wagner Company from all costs, damages and expenses by reason of the failure or neglect of either of said companies to pay, satisfy and discharge the same.

'This agreement is made subject to such ratification by the stockholders of both companies as may be required by law, or the charter or articles of association of said companies, or either of them.

'In witness whereof, the parties hereto have caused the signatures of their respective Presidents and their respective corporate seals to be affixed hereto, this eighth day of November, 1899.

'Wagner Palace Car Company, '(Seal.) By W. Seward Webb, President. 'Pullman's Palace Car Company, '(Seal.) By Robert T. Lincoln, President.'

This agreement was consummated, and the Wagner Palace Car Company ceased to do business.

The insurance company tendered the renewal of the insurance in accordance with the...

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