Oregon Pacific R. Co. v. Forrest

• Decision Date: 16 June 1891
• Citation: 128 N.Y. 83,28 N.E. 137
• Parties: OREGON PAC. R. CO. v. FORREST et al.
• Court: New York Court of Appeals Court of Appeals

128 N.Y. 83

28 N.E. 137

OREGON PAC. R. CO.

v.FORREST et al.

Court of Appeals of New York.

June 16, 1891.

Appeal from supreme court, general term, first department.

Action to recover bonds by the Oregon Pacific Railroad Company against George J. Forrest and other, as executors of Cornelius K. Garrison. From a judgment for defendants plaintiff appeals.

Joseph H. Choate, for appellant.

Horace Russell, for respondents.

EARL, J.

This action was brought against the executors of Cornelius K. Garrison to recover the possession of 100 first mortgage bonds issued by the plaintiff, of which it claims to be the owner and entitled to the immediate possession. It is alleged in the complaint that the plaintiff, on or about the 1st day of October, 1887, duly demanded of the defendants the delivery to it of the bonds, and that the defendants had failed and refused to deliver the same, or any of them, to it; and relief is prayed that the defendants may be adjudged to deliver to the plaintiff the bonds, or that it may have judgment for $102,500, in case a delivery cannot be had, together with its damages and costs. The answer put in issue the plaintiff's right and title to the bonds, and claimed that the defendants were entitled to hold and possess the same under an agreement between the plaintiff and their testator, made on or about the 13th day of August, 1881. The material facts are as follows: On the 13th day of June, 1881, the plaintiff and Cornelius K. Garrison entered into a contract under seal, by which Garrison agreed to purchase 5,000 tons of English steel rails, deliverable in San Francisco at as early a day as reasonably practicable, and agreed to sell and deliver to the defendant the rails so bought upon arrival there of each shipment, upon receiving in cash the actual cost to him of the rails, and the further sum of $100,000 in the first mortgage bonds of the plaintiff; and he agreed to purchase the necessary fish-plates, bolts, nuts, spikes, and fittings for the rails, deliverable in San Francisco at the same time with the rails, and sell and deliver the same to the plaintiff upon the arrival of each shipment at that place at the net cost to him; and the plaintiff agreed to purchase from him the rails, fish-plates, bolts, nuts, spikes, and fittings upon arrival of each shipment at San Francisco, and pay for the same in cash and bonds, as provided. The plaintiff also agreed to deposit with Garrison, as a guaranty for the performance of the agreement on its part, 3,000 of its first mortgage bonds, for $1,000 each, 100 of which bonds he was to retain, and he was to hold the remaining 2,900 bonds until the plaintiff had taken and paid for the rails, fish-plates, etc., in full, including interest and all proper charges, provided that the plaintiff might withdraw any part of the bonds upon paying to Garrison 60 per cent. of their par value. The plaintiff further agreed to give to Garrison the same bonus in the full-paid stock of the company upon the 100 bonds that he was to retain that he would be entitled to pro rata with the most favored purchaser of any of the plaintiff's bonds. Garrison was also to loan to the plaintiff an amount equal to the difference between the cost to him of the rails, fish-plates, etc., and $200,000, the bonds deposited with him being held as security for such loan; and the plaintiff agreed to purchase from Garrison the 100 bonds mentioned, together with their pro rata of stock, and pay him therefore $100,000 at any time he might elect to sell the same to it. In pursuance of that contract the 3,000 bonds were delivered to Garrison, and he thus became obligated to furnish the steel rails, fish-plates, etc., as provided. It appeared in evidence that these rails were expected to be purchased, and that they could only at that time be purchased, in England, and that they were to be shipped from that country by vessels to San Francisco. The negotiations in reference to the agreement and its performance were conducted mainly between Mr. Hogg, the president of the plaintiff, and Cornelius K. Garrison and W. R. Garrison, his son and general agent. English steel rails were easily purchasable in England in the summer of 1881, but it was difficult to get steamers to transport them to San Francisco. Cornelius K. Garrison died on the 1st day of May, 1885, and W. R. Garrison died on the 1st day of July, 1882; and this action was commenced on the 1st day of October, 1887; and the only person then living who had personal acquaintance with the main facts out of which plaintiff's alleged case of action arose was Hogg, who was the plaintiff's main witness upon the trial.

It appears that on the 21st day of July, 1881, the plaintiff received back from Garrison 400 of the bonds referred to in the agreement, but for what cause or upon what consideration they were surrendered by Garrison to the plaintiff does not appear. The evidence tends strongly to show that during the two months after the execution of the contract Garrison did very little, if anything, towards its performance. It does not appear that he had purchased any rails, or that he had made an effort to purchase any, or to procure vessels to transport the rails when purchased. It does appear that Hogg, on behalf of the plaintiff, from time to time, urged performance of the contract, and finally, about the 1st day of August, Hogg, on behalf of the plaintiff and upon credit furnished by him, purchased the rails. On the 13th day of August he notified Garrison that he had purchased them, and he then claimed that Garrison had broken the contract with the plaintiff, and that he should hold him responsible, and he then demanded the surrender of the balance of the bonds remainingin the hands of Garrison. He refused to surrender any of the bonds unless the plaintiff consented that he should have the 100 bonds which he was entitled to under the contract, and threatened to retain all the bonds unless the plaintiff would consent to surrender the 100. Thereupon there was a proposition from one of the parties to the other that the contract of June 13th should be canceled and surrendered, and that Garrison should have and retain 100 of the bonds upon surrendering the remainder thereof. The by-laws of the plaintiff provided for an executive committee, who should possess and exercise, by a majority of its members, all the powers and duties of the board of directors when the board was not in session; and at a meeting of the executive committee held on the 13th day of August the president was authorized to negotiate with Garrison for the cancellation and abrogation of the contract existing between him and the plaintiff, and to close the transaction on the terms proposed, in his discretion. It will be observed that in the negotiations between Hogg and Garrison both parties acted upon the...