Blagen v. Thompson

• Decision Date: 12 December 1892
• Citation: 31 P. 647,23 Or. 239
• Parties: BLAGEN v. THOMPSON et al.
• Court: Oregon Supreme Court

31 P. 647

23 Or. 239

BLAGEN v. THOMPSON et al.

Supreme Court of Oregon

December 12, 1892

Appeal from circuit court, Multnomah county; E.D. SHATTUCK, Judge.

Action by N.J. Blagen against D.P. Thompson and others. Plaintiff had judgment, and defendants appeal. Reversed.

The other facts fully appear in the following statement by BEAN J.:

This is an action to recover damages for breach of contract. The facts are that on March 26, 1890, a written contract was entered into between plaintiff and J.H. Lambert and wife, by the terms of which he purchased of them about 255 acres of land near the town of Milwaukee, and some three or four miles south of Portland, for the sum of $150,000; he paying to them the sum of $10,000 in cash, and agreeing to pay the further sum of $15,000 on or before October 7, 1890, and the remainder of the purchase price on or before five years from the date last named. This property was purchased by plaintiff for the purpose and with the design of subdividing it into lots and blocks, and selling it for suburban residences. About the same time plaintiff, desiring to build a motor line from East Portland to the property, for the purpose of making it accessible and otherwise developing the same, purchased for $5,000, all the subscribed stock of the Portland Sellwood & Milwaukee Railway Company, a corporation organized to build such road, and the owner of certain franchises and rights of way on certain streets in East Portland and Sellwood, and along the county road between said towns, and commenced to have the route of such road surveyed and located for the purpose of constructing a motor railway to and across the land so purchased by him of Lambert. On the same day this survey was commenced, certain other surveyors, acting for defendants, who claimed a right to build a road along the same route, appeared upon the ground, and commenced to survey another line along the county road, covering the line staked out by the Portland, Sellwood & Milwaukee Railroad Company. Plaintiff then sought an interview with defendants, and negotiations were begun between them which finally resulted in a written proposition, of date April 4, 1890, from defendants to the Portland, Sellwood & Milwaukee Railroad Company, that if it would transfer to them its rights and franchises to construct and operate a motor line on certain streets in East Portland, and the right of way as surveyed by it from East Portland to the Lambert farm, except over two or three pieces of land, without any restrictions as to charges over said motor line, (except as to residents and property owners on lands of Lambert near Milwaukee, which is limited to 20 tickets for $1, and to be completed by October 31 1890,) they would pay to it, when the franchises and rights of way should be transferred free from all incumbrances, the sum of $6,000, (that being the amount plaintiff had paid for the stock and the company had expended for work on the proposed road,) and the costs of all labor in grading and clearing the right of way since April 1, 1890. This proposition was accepted by the company, and on April 5 1890, a written contract was entered into between it and the defendants, by which the company was to sell and the defendants to purchase, on or before May 19, 1890, all its franchises and rights of way for said motor line, for the sum of $6,000 and the cost of all labor performed by it upon the road, in grading and clearing the right of way, until the defendants should take charge of the construction of the road. The defendants also agreed in said contract to complete and have in operation the said railway, along the line of survey as made by the said company, from its terminus in East Portland to the south line of the Lambert place, by October 31, 1890, and to furnish transportation to residents and property holders on said place, to and from Portland, to the south line of the Lambert place, at the rate of 20 tickets for $1, and to stop at three places on said land, to be designated by Lambert or his assigns; and the corporation agreed, on its part, to secure and convey to defendants, on or before the time fixed in the contract, said rights of way and franchises, without restriction, except as aforesaid, from the south boundary line of East Portland to the south line of the Lambert place, excepting the rights of way through two or three pieces of land, which the defendants were to secure for themselves. This executory contract between defendants and the corporation seems never to have been carried out, but for some reason it was thought best, in place of transferring to defendants the franchises of the company, as agreed upon, to sell and transfer to them all the stock in the company; and consequently, on May 12, 1890, the contract, for the breach of which this action was brought, was entered into between defendants and plaintiff, Lambert, Brown, and Cake, who held certain stock in the corporation in trust for plaintiff, by which the latter sold to the former all the stock of the company, and agreed upon demand to transfer the same on the books, which contract, omitting the signatures of the parties, is as follows: "Memorandum of agreement made between D.P. Thompson, J.H. Smith, and W.E. Post, the parties of the first part, and N.J. Blagen, J.H. Lambert, C.W. Brown, H.M. Cake, and B.F. Smith, the parties of the second part, witnesseth, that in consideration of $6,539.30, to them in hand paid, the receipt whereof is hereby acknowledged, and in consideration of the covenants of the said D.P. Thompson, J.H. Smith, and W.E. Post, herein contained, the parties of the second part hereby sell, assign, and transfer their stock in the Portland, Sellwood & Milwaukee Railway Company, and agree to, upon demand, assign their stock upon the books of said company, to the said D.P. Thompson, J.H. Smith, and W.B. Post, hereby declaring that they own the number of shares as follows: N.J. Blagen, 1,403 shares; J.H. Lambert, 200 shares; C.W. Brown, one share; H.M. Cake, one share; B.F. Smith, _____ shares. And the said D.P. Thompson, J.H. Smith, and W.E. Post hereby agree, in consideration of the above, that they will construct, in a first-class manner, complete, and have in operation, a steam railway motor line alone the route surveyed by the said railway company, from its terminus in the city of East Portland to the south line of J.H. Lambert's place, by the 31st day of October, 1890, (delays caused by unavoidable injunction proceedings excepted.) Second. That they will furnish transportation to residents and property holders in the said tract of land known as the 'Lambert Place,' by a railway motor line along the route surveyed by the said railway company to the city of Portland, from any stopping places or stations established on the said Lambert place on the line of the said motor road, and from the city of Portland to any of the stopping places or stations on the said Lambert place, at the rate of twenty tickets for one dollar, and that all trains shall stop at three places or stations on the said Lambert place, to be designated by the said J.H. Lambert or his assigns. Third. That they will carry out and fulfill all the obligations imposed upon the said Portland, Sellwood & Milwaukee Railway Company by the written and express terms of franchises granted to said company. In witness whereof, the parties to these presents have hereunto set their hands and seals this 12th day of May, 1890."

The plaintiff and his associates fully complied with the terms of this agreement on their part to be performed, and did on July 7, 1890, duly transfer on the books of the corporation all their stock to defendants, and the same has been ever since retained by them. The defendants wholly failed and neglected to build said motor line, or any part thereof, and on September 1, 1890, the city of East Portland, by ordinance revoked the franchises theretofore granted by it to the Portland, Sellwood & Milwaukee Railway Company to construct its road upon the streets of the city. Meanwhile, however, plaintiff, relying upon the contract of defendants to build the road, had caused a large portion of the Lambert place to be cleared off and surveyed into lots and blocks, and had sold about 100 lots for the aggregate sum of $18,693.35; the purchasers paying therefor in cash a small part of the purchase price, and agreeing to pay the remainder thereof, to wit, $14,797.25, in deferred installments. Under these circumstances, the second payment from plaintiff to Lambert was about to fall due; and perceiving that defendants did not intend to build the road within the time agreed upon, and could not do so, because the franchises granted by the city of East Portland had been revoked, and that consequently he could sell no more lots, and would probably be bankrupt, unless he could induce Lambert to release him from his contract of purchase, he applied to Lambert for a release and cancellation of his contract, and did on September 30, 1890, obtain such release, upon the best terms possible, which was the forfeiture of the cash payment of $10,000 and the surrender to Lambert of all notes received by him for deferred payments on lots sold. After the time in which defendants agreed to construct and have in operation the motor line had expired, plaintiff procured from Lambert, Brown, and Cake an assignment to him of all their rights under the contract of May 12, 1890, and of their right of action against defendants for the breach of said contract, and thereafter commenced this action to recover $146,001.96 damages. In his complaint he avers that at the time of entering into the contract of May 12th, and as a consideration and inducement for the execution thereof, the defendants were informed and well knew that he had...