ROSS
Circuit Judge.
The
court below sustained a demurrer to the amended bill of
complaint, and thereafter dismissed it at the
complainants' cost. The appeal therefore presents only
the question of the sufficiency of the bill. It was brought
against Hammond, one John C. Stanton, and a corporation
called the Astoria Company. It alleges that in the month of
April, 1894, Stanton, who was never served with process
never appeared in the suit, and was subsequently dismissed
therefrom on the motion of the complainants, entered into a
parol agreement with one Campbell and the complainants to the
effect that they should unite their efforts to secure the
right of way, together with certain bonuses and subsidies
for building and equipping a line of railroad from the city
of Astoria along the south shore of the Columbia river, in
the state of Oregon, to a railroad station called
'Goble,' on the Northern Pacific Railroad, in
Columbia county, of that state, secure the necessary money
for and build and equip, or procure other parties to build
and equip, the same; that each of the parties should devote
such of their time and attention to the matter as should be
thought desirable; that each should pay his own expenses, and
that the profit that might be derived from such operations
should be divided, one-third to Stanton, one-third to
Campbell, and one-third to the complainants jointly; that no
contract should be entered into without the concurrence of
all of those parties, and that any contracts made should be
made in the name of such party or parties as might be agreed
upon, and, if not made in the names of all the parties, then
the party or parties receiving the contract should execute a
suitable declaration of trust showing the rights of all of
the parties to the agreement stated.
It is
alleged that each of the four persons named expended
considerable time and money in prosecuting their enterprise
and in discussing various plans, and that on the 30th day of
November, 1894, Stanton, acting under the above-mentioned
contract, and for the
benefit of himself, Campbell, and the complainants, entered
into the following contract:
'Memorandum
of Agreement, made this 30th day of November, A.D. 1894, by
and between Ed I. Bonner and A. B. Hammond of Missoula,
State of Montana, hereinafter called the party of the first
part, and J. C. Stanton, of New York City, and H. I.
Kimball, of Atlanta, State of Georgia, hereinafter called
the party of the second part, witnesseth:
'That
whereas certain parties in Astoria, Oregon, own a railway
now in operation from the west side of Young's Bay
southerly along the Pacific Coast some sixteen miles, and
known as the Seaside Railway Company-- which said company
also own and control the grant from the United States
Government to build a drawbridge across said Young's
Bay, and
'Whereas,
the citizens of Astoria have donated certain lands and
other property, and placed the same in the hands of the
Astoria Savings Bank Trustees, to be used as a subsidy
under the control and direction of a committee of
twenty-one named by them for the building of the Columbia
River and Astoria Railway, from Astoria to a connection
with the Northern Pacific R.R. at Goble; and
'Whereas,
the party of the first part is willing to enter into
contract with the owners of the said Seaside Railway for
its road and franchise, including the grant for the said
drawbridge from the U.S. Government, also to enter into
contract with the committee controlling said subsidy--
for the construction of said Columbia River and Astoria
Railway, which said contracts are to have the approval of
the party of the second part; and
'Whereas,
the said party of the second part has heretofore had
preliminary negotiations with parties who are to
undertake to furnish the money necessary to buy said
Seaside Railway, also to build said Columbia River &
Astoria Railway-- and is confident of their ability to
secure such money:
'Now,
therefore, in consideration of one dollar in hand
paid each to the other-- the receipt of which is
hereby acknowledged, agree as follows, to wit:
'First.
It is mutually agreed that all parties hereto shall
unite their influence in securing for the party of
the first part the most favorable contract with the
said Seaside Railway Company and with the said
Subsidy Committee.
'Second.
The said party of the first part hereby agreed to
enter into contract with the said Seaside Railway
Company for the purchase of its railway and
franchise, also to enter into contract with the said
Subsidy Committee for the building of the said
Columbia River and Astoria Railway, upon the best
terms obtainable.
'Third.
The said party of the second part hereby undertakes
to finance the entire enterprise and secure the funds
required for the purchase of the said Seaside Railway
and its franchises, and for the construction of the
said Columbia River & Astoria Railway-- in accordance
with the proposed contracts with said parties, and
the party of the first part. It being mutually
understood that the plan of raising such money
suggested by the said party of the second part, viz.,
of borrowing the full amount required for an average
term of about two years at 6 per cent. per annum
interest-- and the payment of such commission as may
be agreed upon between the lenders and all the
parties hereto-- and pledging as security for such
loan, all of the subsidies which may be procured--
also all of the securities, stock and bonds which may
be issued upon said properties, is accepted.
'Fourth.
It is hereby mutually agreed that all of the parties
hereto shall work to secure additional subsidies, this
having special reference to the property on the west side
of the Astoria harbor-- and that in every department of
the work herein contemplated by either party there should
be mutual conference and co-operation.
'Fifth.
It is hereby further mutually agreed that in case it
should be found desirable to interest other parties in
this enterprise that it may be done upon the mutual
consent of the parties hereto, and whatever interest in
the enterprise it is found necessary to part with for
such purpose should be deducted from the whole, each of
the parties hereto surrendering its pro rata share.
'Sixth.
It is hereby further mutually agreed that the parties
hereto shall
work in good faith, each aiding the others whenever
possible-- and that in all contracts and in all property or
profits the interest of each party shall be as follows, viz:
'5/9
to the parties of the first part, and 4/9 to the parties of
the second part.
'Seventh.
It is hereby further mutually agreed and understood that in
case the said party of the first part fails to secure the
contracts herein referred to, that they will surrender all
claims and not be entitled to any interest therein-- and in
case the party of the second part fails to secure the money
to carry out said contracts, as contemplated, and that burden
falls upon the party of the first part, the said party of the
first part shall not in such case be bound to divide any of
the profits of the enterprise with the said parties of the
second part.
'In
witness whereof the said parties have hereunto affixed their
hands and seals at Portland, Oregon, the day and year first
above written in quadruplicate.
Edward
I. Bonner, 'By A. B. Hammond. (Seal.) 'A. B. Hammond.
(Seal.) 'J. C. Stanton. (Seal.) 'H. I. Kimball.
(Seal.)
It is
alleged that at the time of the making of the contract of
November 30, 1894, Hammond, Bonner, and Kimball knew that the
complainants and Campbell were interested with Stanton
therein, and that Stanton...
