Hale v. Kumler

• Decision Date: 08 February 1898
• Docket Number: 513.
• Citation: 85 F. 161
• Parties: HALE v. KUMLER.
• Court: U.S. Court of Appeals — Sixth Circuit

85 F. 161

HALE v. KUMLER.

No. 513.

United States Court of Appeals, Sixth Circuit.

February 8, 1898

This was an action to recover an agreed compensation under a contract for services rendered as a broker in bringing about a consolidation of two rival street-railway companies. It was not claimed that any actual consolidation of the two companies had ever been brought about, but after an agreement had been reached between plaintiff in error as the owner or representative of the stock of the Toledo Consolidated Street-Railway Company, and David and James J. Robison, as the owners or representatives of the stock of the Toledo Electric Street-Railway Company, as to the vital terms of a consolidation, a consummation of the arrangement was defeated by the wrongful refusal of the plaintiff in error to further negotiate or to carry out the consolidation by doing the formal acts which were necessary to the conclusion of the matter. There was a verdict and judgment against the plaintiff in error for $18,200, being the full amount, with interest, which would have been earned if an actual consolidation had taken place through the intervention and services of the defendant in error.

The facts necessary to an understanding of the questions upon which the case must turn are these:

The defendant in error, John F. Kumler, was a lawyer, practicing and residing in Toledo, Ohio. He was, when he undertook to bring about a consolidation of the Toledo Consolidated Street-Railway Company with the Toledo Electric Street-Railway Company, the general attorney of the latter company as well as the confidential counsel for the Robisons who owned or controlled all of its stock. William E. Hale the plaintiff in error, was a retired capitalist living in Chicago, and owned two-fifths of the entire stock of the Toledo Consolidated Street-Railway Company. For some time there had been suggestions from both sides for a consolidation of the two companies, but they had come to nothing. In this situation Kumler addressed the following letter to Hale:

'Dear Sir: Would you sell your entire street-railway system here for $2,800,000, and turn the property over free from all liens except first mortgage? In thirty days, I am sure I can bring a purchaser to you. If you will not sell, would you consolidate yours with the Robison system on a fair equitable basis? The suggestions which I have made above are independent of my clients. I have now a flat offer for the Robinson system, in cash, over and above their first mortgage indebtedness. If you have either in mind please write me. If not, let the subject pass, and no harm will be done. The times are hard, and if I can take any matter up that will enable me to turn an honest penny I am ready to do it. If sale is made of your property or consolidation is effected, for the former I shall expect $25,000, and for the latter the same sum, but to be divided on the basis of the value of the properties so consolidated.'

To this Hale replied as follows:

'Dear Sir: I have your letter of the 4th. I doubt any one's ability to sell our Toledo property at any price we would consider at the present time. Certainly could not consider the price you name. It is better for us to keep it than to think of selling this year or next. As to consolidation, I believe a large saving could be made by operating the roads together, and, if a feasible plan could be presented, might be inclined to consider it. The terms of such a plan could only be determined by an interview. If you have anything in mind come over here. It is not wise to talk in Toledo. Mr. Ream will be in the East for some weeks, probably until September 1st, but that need not stand in the way, as, if we can agree on any plan, I can submit it to him.

'Yours, truly,

W. E. Hale.

'If you have a party who can buy Robisons' road, why not bring him along? We might be able to agree with him easily.'

A conference followed, which resulted in the agreement found in Hale's letter to Kumler of August 14, 1894, as follows:

'Dear Sir: My understanding of our talk to-day in reference to commission is as follows: If within sixty days from this date you shall bring about, and actually carry into effect (by the transfer of the stock of each company, as may be agreed upon), a consolidation of the properties of the Toledo Consolidated and the Toledo Electric Street-Railway Companies, I am to pay you such proportion of twenty-five thousand dollars ($25,000) as the percentage allowed the Toledo Consolidated Street-Railway system, in the consolidation, bears to 100 per cent. Or, in case you shall succeed in selling the Toledo Consolidated system of street railways at a price not yet named, which is satisfactory to me, and the sale is consummated and payment made within sixty days from this date, I am to pay you twenty-five thousand dollars ($25,000) when the final payment is made. In the event that the consolidation is not fully accomplished, or the sale effected, and the money paid within sixty days, I am to be under no obligations whatever to pay anything, and perfectly free to make any other disposition of the property, or none at all, as I deem best.'

Kumler endeavored to get some modification of this agreement, as shown by his letter of August 22, 1894, which was as follows:

'Dear Sir: I am in receipt of your letter of August 14th, and also of the 17th inst., and in answer to the former would say that I think your proposition Could you not prepare another proposition, and in it provide that if the said Kumler finds a purchaser for your street-railway property at which you will sell, and the negotiation is reduced to writing, fixing the terms of sale, that under those circumstances the commission ought to fairly be earned. Next, as to the consolidation of the two properties. I think the contract ought to provide, as between yourselves and myself, that if a contract for the consolidation of the two properties is entered into by which a consolidation of the street-railway properties is effected, that then and under those circumstances the commission ought to be fairly earned, you folks to pay a proportionate share of the $25,000 as the value of your proportionate share of the whole consolidation. You doubtless will understand what I mean in what I have suggested above, and which I think to be entirely fair between all parties. Mr. Robison expects to leave Toledo for Mackinac Island next Tuesday. His wife will precede him to-morrow, and, as he is one of the busiest men in the world, he doubtless will not tarry very long at the island, say not longer than three or four days; at which point, should it suit you to be, he will be glad to talk your business affairs over fully. Will the time fixed be agreeable to you? Matters are quite uncertain with Mr. Robison, as he has a sister-in-law very sick at his house, and the condition of Mrs. Robison is such that she is obliged to go somewhere to obtain relief from hay fever. Be kind enough to let me hear from you by return mail, and oblige.'

To this Hale replied:

'Chicago, August 23, 1894.

'Mr. John F. Kumler, Toledo, Ohio-- Dear Sir: I have your letter of the 22nd. I prepared my proposition in regard to a commission with a view of getting through the matter at some definite time, and should not care to vary it so as to make it at all indefinite. You asked for thirty days and I gave you sixty. In all cases of this kind I am careful in making an agreement to have a definite and fixed time for its termination, so that by no possibility can any misunderstanding arise. I should not be willing to make any preliminary contract either for the sale or consolidation of our Toledo property. When it is done it must be done, and that must be the end of it. You will therefore see that I could not change the terms of my proposition on the basis of reducing to writing a preliminary agreement. I am not willing to put anything in writing in regard to the matter until you have a party who is ready to close. I want to make the arrangement perfectly fair between us, and want to fix it so that you can earn the commission, but I also want to be sure that there is no misunderstanding at the end.'

The contract set out in Hale's letter of August 14, 1894, was declared upon as the contract under which Kumler had earned the compensation therein stipulated for.

There was evidence tending to show:

(1) That Kumler's relation to the Toledo Electric Street-Railway Company and to the Robisons was perfectly well known to Hale, and also that the Robisons knew of the relation he assumed to Hale under the contract here involved.

(2) That Hale and the Robisons, through the intervention of Kumler, were brought together on the island of Mackinac for the purpose of conferring upon the terms of a consolidation of the two properties, and that the conferences and negotiations there had resulted in an oral agreement that a consolidation should be brought about upon the basis of the gross earnings of each company in 1893, including the earnings of the electric lighting department of the Toledo Electric Street-Railway Company for the year beginning July 1, 1893, and ending July 1, 1894.

(3) It was further there agreed that the books of each company for the periods mentioned should be examined by an expert bookkeeper, appointed by the opposite party, for the purpose of fixing the precise percentage of the stock of the new or consolidated company to be alloted to each of the old companies.

(4)The matter of the disposition of the large indebtedness of each company was not referred to in the Mackinac conference, nor was any other detail of such consolidation arranged; such as the amount of the capital stock of the new company, its name or officers. All these matters seem...