Crichfield v. Julia

• Decision Date: 16 June 1906
• Docket Number: 229.
• Citation: 147 F. 65
• Parties: CRICHFIELD v. JULIA.
• Court: U.S. Court of Appeals — Second Circuit

147 F. 65

CRICHFIELD v. JULIA.

No. 229.

United States Court of Appeals, Second Circuit.

June 16, 1906

L Laflin Kellogg, for plaintiff in error.

W. B Crisp, for defendant in error.

Before TOWNSEND and COXE, Circuit Judges, and PLATT, District Judge.

TOWNSEND Circuit Judge.

This action was brought to recover $100,000, for damages for breach of contract. The material recitals in the said contract are summarized by the court in its charge to the jury as follows:

'The contract was entered into the city of Mexico. It contains a recital that the plaintiff represented that he knew of the location of certain large and valuable asphalt deposits in Venezuela; that he believed them to contain more than 2,000,000 tons of crude asphalt, of a good quality for paving purposes, and that to the best of his knowledge and belief a concession could be obtained from the government of Venezuela, and also from the owners of the lands on which said deposits are located, authorizing the mining and exporting of asphalt therefrom on favorable terms, and further recited that 'the said George W. Crichfield being engaged in the asphalt paving business, is desirous of securing the ownership and control of an asphalt deposit of the magnitude and character described by the party of the second part.''

In these circumstances, the parties agreed to visit said location. The plaintiff agreed to--

'Use his best endeavor to secure concessions in favor of George W. Crichfield, granting the exclusive right to mine and ship said asphalt on reasonable and equitable terms satisfactory to the said Crichfield.'

And the defendant agreed as follows:

'In the event of obtaining the said concessions in favor of the said Crichfield, and the acceptance of the same by him, the said Crichfield agrees that he will pay in cash, United States currency, unto the said John P. Julia the sum of five thousand dollars ($5,000), and will also guaranty to organize a corporation to handle said deposits, and will issue to said Julia preferred stock therein, guarantied to pay six per cent, dividend, gold, annually, to a par value of one hundred thousand said stock to be issued within six months after the date of such concession.'

The exceptions challenge the action of the court in the admission and exclusion of certain testimony, and in its charge to the jury and in certain refusals to charge, and especially in the refusal of the court to direct a verdict for defendant or for nominal damages only.

The first exception argued is that the court should have directed a verdict for the defendant because the plaintiff never secured such concessions as were called for by the contract. On this point the court charged the jury as follows:

'The defendant has contended here that this third clause should be construed as calling for the procuring of a concession directly from the government to him. I do not so read the contract, and I instruct you that it is not susceptible of such an interpretation, or rather, is not to be confined to such an interpretation. What is contemplated should be obtained was what in ordinary parlance we speak of as a mine. That means a certain part of the soil, a certain part of the earth's surface, in which there are mineral deposits, and in which a person obtains, not only a full right of ownership so far as the soil is concerned, but also the right to remove the minerals from the soil and to export them and do what he pleases with them. The ownership comes in one way and the right to remove the mineral comes in another way. The right to remove the mineral is called a concession, and so far as the evidence shows, the government did make a concession in regard to this very Inciarte mine; made the concession to Guzman, who, when he sold the title to the mine the title to the real estate in which the mine was located, at the same time sold and conveyed all his right, title and interest in the concession which he had received from the government, and it is under such concession that the mine has been worked. Therefore, however the concession was obtained, whether directly from the government or by transfer from some one who has already obtained the concession from the government to himself, in his own name, was immaterial. The material point is that after inspection of the deposits Crichfield was to be satisfied that they contained the quantity indicated, and that their location was satisfactory, permitting mining and exportation without extraordinary expense, and that it could be shipped on reasonable terms.'

This exception is not well taken. All that the plaintiff agreed to do appears from the portions of the agreement quoted above. He was 'to use his best endeavor to secure concessions,' etc. The vendor of the mine procured a concession from the government giving him the exclusive right to take said asphalt from the mine in question; its title was examined by defendant's attorney and was transferred to the defendant; the transfer was approved by the government, and defendant expressed himself as satisfied with the title and concession. These facts showed a substantial and complete fulfillment of the terms of the contract, and the jury, under appropriate instructions, found in favor of the plaintiff. The trial court, against the exception of defendant, received evidence as to the formation of the company which was organized with a capital stock of $50,000, which was afterwards increased to $1,000,000, of common stock, at a par value of $100 a share; that $300,000 of this stock was left in the treasury, and that $700,000 thereof was issued for the property and various concessions connected therewith; and that there were no other mines and deposits, and that the only property for which the $700,000 was issued was the mine and the railroad concession. It is argued that this evidence was inadmissible, because it did not appear that this company was the one organized by the defendant pursuant to the terms of the agreement or that he was even an organizer or director of the company, or had any voice in its organization or as to the amount or kind of stock to be issued. The evidence shows that the defendant so far participated in the organization of the company that he turned over the property in question to the company in return for the shares of stock of the company, and thereby furnished, so far as appears, the only property which the company had, and which made it a substantial corporation. In these circumstances, the court was justified in submitting the evidence to the jury, and the jury were justified in their finding thereon, that this was the company organized by the defendant under the agreement.

The other exception to the admission of evidence, that it failed to show that any preferred stock was issued, and that, therefore, the jury were allowed to speculate as to the value of the preferred stock, the issuance of which was provided for by the agreement, may be considered in connection with the exceptions to the refusal of the court to direct the jury that the plaintiff was not entitled to substantial damages, on the ground that the contract was too indefinite and uncertain to warrant a recovery for more than nominal damages and that the proof was insufficient to sustain a finding for substantial damages.

Upon this branch of the case the court charged the jury as follows:

'As a matter of fact, the company was organized and the company did issue stock; and by that same company the Inciarte property was taken on, and the railroad concession was taken, and the property was improved in various ways, in the buildings and fixtures of all kinds, boats and what not. If that company had provided for preferred stock, and had issued it and it had gone upon the market and had been dealt in, of course you would have a very convenient method of ascertaining what that preferred stock was worth. But no preferred stock was provided for in the organization of that company, none was issued, and none ever has been issued; therefore, what you have to do, if you can, is to determine what was, at the time that that preferred stock should have been turned over, its fair and reasonable value if it existed. Even although no preferred stock was issued, if this common stock had been put upon the market, and bought and sold, you might have something very tangible to enable you to reach some sort of an opinion as to what would have been the value of 1,000 shares of preferred stock, superior to the common stock. But there had been no sale, no transaction, no dealings in the stock, so far as we know; and the problem which you have before you is an extremely difficult one, I must concede, and I think you will agree with. One hundred thousand dollars worth of preferred stock does not necessarily mean $100,000. You are business men enough to know that; that there is preferred stock of old and established companies, which have been going on for years and have been making considerable money, that is not worth par. And with regard to new companies, it is within your knowledge that the face value of stock, whether it is common or preferred, does rarely import that that is its real value. All that was promised to the plaintiff was, not $100,000 in money, but 6 per cent, preferred stock of the company, which should be organized to operate this particular property.

'Another way of approaching this subject is to see what property there is. So far as appears, all the property that the company has ever owned consisted of this mine, Inciarte, and the railroad concession, the railroad that it has built, the improvements on the property and the plant that it has made down there, the improvements that it has put in the way of equipment, and so forth. If all that there was to be issued

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