Interstate Tel. Co. v. Baltimore & O. Tel. Co. of Baltimore County

• Decision Date: 08 June 1892
• Parties: INTERSTATE TEL. CO. v. BALTIMORE & O. TEL. CO. OF BALTIMORE COUNTY et al.
• Court: U.S. Court of Appeals — Fourth Circuit

51 F. 49

INTERSTATE TEL. CO. v. BALTIMORE & O. TEL. CO. OF BALTIMORE COUNTY et al.

United States Circuit Court, D. Maryland.

June 8, 1892

(Syllabus by the Court.)

The B & O.R.R. Co., having power to transact a general telegraph business, and being the owner of an extensive telegraph system, caused the Telegraph Company of Baltimore County to be incorporated with a small capital, and in its name made a contract with the complainant. For breach of that contract the complainant recovered judgment against the Telegraph Company of Baltimore County. The B. & O.R.R. Co. sold out its whole telegraph system to the Western Union Telegraph Company, and the Telegraph Company of Baltimore County was left without assets of any kind, and became insolvent. Held that as the railroad company was the sole stockholder of the Telegraph Company of Baltimore County, and appointed its officers, and held it out as having authority to contract with regard to the whole system owned by the railroad company, the Telegraph Company of Baltimore County was a mere agent of the railroad company, a mere name, in fact, under which the railroad company conducted its telegraph business and that, under the circumstances of this case, a court of equity had jurisdiction to decree that the railroad company as principal, should pay complainant's judgment against the agent, from which it had taken all the property which it had represented that its agent controlled.

Morrison, Munnikhuysen & Bond, for plaintiff.

J. K. Cowen and Charles J. M. Gwinn, for defendants.

MORRIS District Judge.

This is a creditors' bill filed by the Interstate Telegraph Company seeking, in equity, to obtain payment of a judgment against the Baltimore & Ohio Telegraph Company of Baltimore County for $25,133.75, which it recovered on the law side of this court, April 19, 1890, and execution upon which has been returned nulla bona.

The judgment was recovered for damages sustained by the complainant company for the breach of a contract which it had made with the Baltimore & Ohio Telegraph Company of Baltimore County, dated December 15, 1885, and a supplemental agreement, dated November 30, 1886, by which contracts the Interstate Telegraph Company agreed to build, equip, operate, and maintain certain lines of telegraph in Michigan and Ohio, in consideration of an agreement for an exclusive interchange of telegraph business with the general telegraph system connecting the various leading cities of the United States, which the Baltimore & Ohio Telegraph Company to Baltimore County was at the dates of said agreements stated therein to be engaged in operating and extending. It appears from the testimony and from the admissions of the pleadings that about 1877 the Baltimore & Ohio Railroad Company, having a system of telegraph poles and wires located along its railroads and maintained for us in its railroad business, began extending its telegraph system for general commercial telegraphing, and that in 1882, by act of the Maryland legislature, (Act 1882, c. 231,) it obtained authority to do a general telegraph business; that the railroad company, on September 30, 1884, owned 6,886 miles of poles, and 47,417 miles of wire; that the Baltimore & Ohio Telegraph Company of Baltimore County was incorporated with a capital of $100,000, November 2, 1885, by seven corporators, but that all the capital stock was subscribed by the Baltimore & Ohio Railroad Company, and always belonged exclusively to it until November 2, 1887, and the corporators and officers of said telegraph company were employes of the railroad company, and appointed by it. It appears, in fact, that the said telegraph company was but a department or bureau of the Baltimore & Ohio Railroad Company, and an agent in the name of which it made the contracts for extending its system and operating its telegraph lines. It appears that there was an expectation that the Baltimore & Ohio Telegraph Company of Baltimore County would acquire defined rights of property in the system thus built up by the Baltimore & Ohio Railroad Company, and would pay for it by the delivery to the railroad company of bonds to the amount of $6,000,000, secured by mortgage of the property to be acquired by the telegraph company, but this expectation was never carried into effect.

It appears that in October, 1887, the telegraph system thus owned and controlled was of the value of $8,000,000, as stated in the answer of the Baltimore & Ohio Railroad Company; that on October 15, 1887, the Baltimore & Ohio Railroad Company entered into an agreement...