Rogers v. Virginia-Carolina Chemical Co.

• Court: U.S. Court of Appeals — Third Circuit
• Citation: Rogers v. Virginia-Carolina Chemical Co., 149 F. 1 (3rd Cir. 1906)
• Decision Date: 30 November 1906
• Docket Number: 32.
• Parties: ROGERS et al. v. VIRGINIA-CAROLINA CHEMICAL CO.

149 F. 1

ROGERS et al. v. VIRGINIA-CAROLINA CHEMICAL CO.

No. 32.

United States Court of Appeals, Third Circuit.

November 30, 1906

Horace L. Cheyney, for plaintiffs in error.

Frederic J. Faulks, for defendant in error.

Before DALLAS and GRAY, Circuit Judges, and BRADFORD, District Judge.

BRADFORD District Judge.

This writ of error was taken by George H. Rogers and John G. Gray to reverse a judgment of the circuit court of the United States for the district of New Jersey on a demurrer to an amended declaration in an action brought by them against the Virginia-Carolina Chemical Company. The declaration is in case for an alleged tort. It alleges in substance, among other things, that the plaintiffs in 1901 'by the outlay of large sums of money and after great labor procured options for the purchase of certain lands, containing deposits of phosphate rock, and for the purchase of phosphate rock deposited upon certain other lands situate in the State of Tennessee'; that the options were all obtained in June 1901, and 'by the terms thereof remained in force for periods of from 60 to 100 days, with provision for extension thereof for such further time as might be necessary to complete the examination of the properties and consummate the transaction, provided the periods of time mentioned in said options should be insufficient to complete the investigation of said properties in Tennessee upon which the plaintiffs held similar options'; that 'the property covered by said options contained some of the richest deposits of phosphate rock in the Tennessee phosphate fields'; that the options were worth $150,000; that 'after said options were obtained, the plaintiffs entered into negotiations for the sale of the same and of the rights conveyed thereunder with the officers of several railroads whose lines ran through said phosphate fields or could be extended thereto and with other persons likely to purchase the same'; that among the other persons to whom the options were offered for sale was one of the directors of the defendant; that after several interviews with that director the latter referred the plaintiffs to Charles S. Bryan, a broker of New York 'for the purpose of enabling the said Bryan to thereafter carry on and complete the negotiations for the purchase of said properties and rights covered by the said options on behalf of the party represented by the said director' that Bryan during all of the negotiations and transactions thereafter mentioned in the declaration was the agent of the defendant, authorized and empowered by it to negotiate 'for the purchase of the rights of the plaintiffs under said options and to enter into all agreements and to do all things that might be necessary for that purpose, and all of the negotiations, contracts, transactions and acts' of Bryan thereafter referred to in the declaration were 'carried on, executed, performed and done by him in pursuance of said authority and as agent for and on behalf of' the defendant, and 'with its knowledge and consent'; that thereafter further negotiations were carried on between the plaintiffs and Bryan and a contract was entered into July 30, 1901, between the plaintiffs and Bryan, a copy of which was attached to the declaration, marked Exhibit A and made part thereof, whereby it was agreed, among other things, that Bryan 'should examine the lands mentioned in said options with engineers and experts, to estimate to his satisfaction the quantity and quality of the phosphate rock thereon with a view to purchasing said lands, properties and mining rights, and that in no event should the said plaintiffs exercise any of the options for the purchase of properties mentioned in any of the schedules attached to said contract within ninety days from the date thereof, except with the consent of said Bryan'; that the contract also provided that, 'if the said plaintiffs should at any time prior to January 1st, 1902, acquire any options of any other property they would execute with Bryan a similar agreement with respect to such properties'; that the contract also provided that upon the completion of the purchase of any of the lands covered by the options by Bryan, either directly from the owners of the property or by an assignment of the options from the plaintiffs, the latter should receive as commissions from Bryan certain rates or amounts per ton, as therein provided, on all phosphate rock on the property purchased as the same should be estimated by the engineers of Bryan; that prior to the execution of the contract of July 30, 1901, Bryan, acting as agent for and on behalf of the defendant, in order to secure the execution of that contract by the plaintiffs, and for the purpose of securing control over the options for the defendant until the expiration of the same and for the purpose of preventing the plaintiffs from offering the said options to persons other than the defendant, falsely and fraudulently and with intent to deceive the plaintiffs represented to them that, if they would execute the contract, then Bryan 'as agent of the defendant would purchase the said lands and mining rights covered by said options, if the examination of said properties by his engineers should show that the said lands contained valuable deposits of phosphate rock, and would pay to the plaintiffs the commissions upon the purchase price thereof as set forth in said contract, if any of said properties should be purchased by said defendant company either directly or indirectly, and the plaintiffs relying upon the said representations of the said Bryan executed the said contract'; that 'thereafter in accordance with the said agreement an examination was made of the properties covered by said options by the engineer of the said defendant company, and by its instructions, and said engineer by his report estimated the amount of phosphate rock deposited upon' certain lands mentioned in the declaration at 1,161,055 tons; that the estimate of the engineer as reported by him as to these lands was 'not a true report of the amount of phosphate rock thereon and was made by said engineer in bad faith, and that according to the actual surveys and examination of said engineer and a proper estimate based thereon' the amount of phosphate rock thereon was 1,310,497 tons; that 'the said surveys and examination showed that the said lands contained valuable deposits of phosphate rock and said lands actually contained deposits of phosphate rock of great value'; that thereafter, October 25, 1901, Bryan acting for and on behalf of the defendant notified the plaintiffs that he did not care to purchase any of the properties mentioned in the contract of July 30, 1901; that 'it was then impossible for the plaintiffs to renew said options'; that the defendant in advising the plaintiffs through Bryan that it did not care to purchase any of the properties covered by the options under the contract of July 30, 1901, did not act in good faith, but 'knowing that the said options held by the plaintiffs would expire at once upon the refusal of the defendant to complete the purchase of said properties and that it would be impossible for the plaintiffs to renew such options', in bad faith declined to make said purchases, 'and with the intention to deprive and defraud the plaintiffs of their commissions upon the purchase price of said properties under said contract and of their rights under said options, and with the purpose and intention of negotiating directly with the owners of said properties for the purchase thereof after the expiration of the options held by the plaintiffs'; that thereafter the defendant by its officers and agents entered into negotiations for the purchase of the properties theretofore mentioned in the declaration, excepting the Lockridge property which had already been purchased by it, upon the basis of the investigation and examination made by its engineer under the contract of July 30, 1901, and thereafter purchased a number of them, specified in the declaration; that 'if the defendant had acted in good faith with the plaintiffs under said contract, in purchasing said properties and mining rights, the plaintiffs would have received as compensation or commission the sum of $91,734.99 upon the purchase of the properties of the International Phosphate Company, the Howard Phosphate Company and the Ridley Phosphate Company, being seven cents per ton upon 1,310,497 tons of phosphate rock contained in said properties, and the said plaintiffs would also have received the sum of $2,700 commission upon the sale of the said Lockridge property, being seven and one-half per cent. upon the purchase price of $36,000, and the plaintiffs would also have received the sum of $3,525, being commission at the rate of seven and one-half per cent. upon $47,000, the purchase price of the said Harlan property, a total of $97,959.99"; that 'the fraudulent acts and misrepresentations of the defendant company and of the said Bryan, its agent, heretofore fully set forth, deprived the plaintiffs of their rights under said options of a value of $150,000, and prevented the plaintiffs from selling to persons other than the defendant the properties and mining rights hereinbefore particularly mentioned and the other properties set forth in the schedules A, B and C attached to said contract marked Exhibit 'A,' and that if the same had been sold by the plaintiffs to persons other than the defendant, they would have received a profit of $150,000 and upwards'; that 'the defendant in all of the acts, negotiations, transactions and representations heretofore mentioned, done, conducted, carried on, executed and made by it and by its agent, the said Bryan, on its behalf, with the plaintiffs, did not act in good faith with the plaintiffs, but...