Safety Insulated Wire & Cable Co. v. City of Baltimore

• Decision Date: 05 May 1896
• Docket Number: 162.
• Citation: 74 F. 363
• Parties: SAFETY INSULATED WIRE & CABLE CO. v. MAYOR, ETC., OF BALTIMORE.
• Court: U.S. Court of Appeals — Fourth Circuit

74 F. 363

SAFETY INSULATED WIRE & CABLE CO. v. MAYOR, ETC., OF BALTIMORE.

No. 162.

United States Court of Appeals, Fourth Circuit.

May 5, 1896

This case comes up by writ of error to the circuit court of the United States for the district of Maryland. The city of Baltimore, being desirous of placing the wires of the police fire alarm, telegraph, and police patrol systems of that city underground, obtained the authority of the general assembly of Maryland to do this, and to provide for the expense thereof. Acting under this authority, an ordinance was passed by the mayor and city council of Baltimore, instructing certain officials of that city, as a commission, to advertise for proposals to furnish cables, conduits, and trenching separately or as a whole, when it may be necessary, within such boundaries as the commission may determine. This commission accordingly did advertise for proposals for this work, with plans and specifications, and received bids. The Safety Insulated Wire & Cable Company, a corporation created under the laws of New York, among others, put in its bid to perform all the said work according to the plans and specifications for the sum of $97,985. On the 28th June 1893, this bid was duly accepted. On 30th June of the same year the Safety Insulated Wire & Cable Company informed the president of the commission that it was then and there prepared to execute the contract for furnishing and laying conduits, furnishing and drawing in electric cables, and constructing manholes, for the police and fire-alarm telegraph and police-patrol systems of the city, in accordance with the terms of advertisement, and tendered the signature of the proper officers, and seal of the company for the execution of the contract. On the same day the commission refused to carry out the contract, or to proceed any further therein. Thereupon the Safety Insulated Wire & Cable Company brought its action against the mayor and city council of Baltimore for breach of contract; filing with its declaration a bill of particulars, which will hereafter be set out. The defendants appeared, and pleaded the general issue, on which issue was joined. At the trial they asked leave to file a special plea that the charter of the plaintiff does not authorize it to make such a contract as is set forth in the declaration. The filing of this plea was refused; the court being of the opinion that the jury having been sworn, the same matter can be more properly put in under the general issue, and ruled upon by an instruction from the court. At the conclusion of the trial the jury, under the instruction of the court, found a verdict for the defendant. Exceptions were duly taken, and the case comes here upon them and the assignments of error. The bid of the plaintiff, accepted by the defendant, is set out in the record. Under it the plaintiff agreed to furnish the cables, trenching, laying new conduits where necessary, filling in and repaving after conduits are laid, make all connections, and furnish everything in accordance with specifications on file. It then goes on, and states minutely of what the cables shall be composed, the wires insulated, conductors twisted and grouped, the whole encased in lead. How the conduits shall be furnished, the ducts to be of wrought-iron pipe, treated inside and out with preservative coating of asphaltum, with subsidiary ducts. All ducts to be laid on solid earth formation at least two feet below the surface of the street, specifying minutely how the joints and connections shall be made and edges smoothed. How bends shall be constructed and secured. That 12 full-sized manholes shall be made, of best-quality hard brick, laid in first-quality cement, and provided with heavy flanged surface frame, with improved inner cover and lock bar, and also with heavy street cover. Handholes, 190 in number, to be made of cast-iron pans or boxes, with side openings, for connection with pipe ducts, and provided with covers and suitable fastenings. The boxes to be set firmly at a depth of about two feet below the surface of the street. A space the full size of the box to be extended up to the surface of the street, to be provided with heavy iron frame. All excavations to be done for trenching of manholes and handholes in a manner to avoid interference with present underground pipes. All filling to be well rammed, to insure solid foundation for conduits and street traffic. Paving carefully relaid, and made as good as before excavating. House boxes of black walnut, and approved lightning arresters, shall be furnished for all such underground wires at each house as are there connected to aerial currents; and, in all cases where the cable is required to be extended to the top of a pole, there shall be furnished proper poles boxes and lightning arresters. All this work was to be done in the public streets of the city of Baltimore, in the principal part of that city, utilizing the subways and conduits of the Chesapeake & Potomac Telephone Company as far as possible, but continuing and carrying out the work into all portions of the required territory outside of these subways and conduits. The several parts of this contract are the furnishing of the insulated wires and cables, properly constructed; the digging of trenches for the bed of the cables at least two feet deep in the public streets (in some cases it appears that the trenches were nine feet deep); excavating for manholes, carefully avoiding other underground pipes; the masonry work and iron work necessary for them and the handholes; filling all excavations; repairing and restoring all openings in the streets. By the ordinances of the city, every contractor was required to insert in his bond, as one of its conditions, a covenant to hold the city harmless against any suits, loss, or damage for any default or negligence in the work. The charter of the plaintiff was issued under the general provisions of an act of the legislature of the state of New York passed 17th February, 1848, entitled 'An act to authorize the formation of corporations for manufacturing, mining, mechanical or chemical purposes. ' The certificate of incorporation filed under the provisions of this act has this clause: 'Second. The objects for which the said company is formed are as follows, viz.: To carry on the business of manufacturing compositions or compounds, or preparations of India rubber, gutta percha and other gums and substances by any invention, process or method soever for the insulation and protection of wires, cables and other articles soever; and the business of preparing, insulating and protecting wires, cables and other articles soever, by the use, and or application of such compositions or compounds. And the manufacture, with or without the use or aid of such compositions or compounds, tubing, hose, packing, and all other articles soever, and all business, acts and things incident thereto and connected therewith. ' The seventh clause is in these words: 'Seventh. The said company is formed for the purpose of carrying on some part of its business out of the state of New York, namely, in the states of New Jersey, Connecticut, and elsewhere.'

William Pinkney Whyte and M. N. Packard, for plaintiff in error.

William S. Bryan, Jr., and Thomas G. Hayes, for defendant in error.

Before GOFF and SIMONTON, Circuit Judges, and PAUL, District Judge.

SIMONTON Circuit Judge (after stating the facts as above).

The assignments of error present two questions which are decisive of this case: First. Can the defendant set up as a defense the want of authority in the plaintiff, under its charter, to enter into the contract for the breach of which it seeks damages? Second. Has the plaintiff, under its charter, the power to enter into the contract set out in the pleadings?

The action is for the breach of an executory contract. Was there a contract? Were the parties to it competent to contract? In Central Transp. Co. v. Pullman's Palace-Car Co., 139 U.S. 24, 11 Sup.Ct. 478, in which this doctrine is elaborately discussed, the court says:

'Upon the authority and duty of a corporation to exercise the powers granted it by the legislature, and those only, and upon the invalidity of any contract made beyond their powers, or providing for their disuse or alienation, there is no occasion to refer to decisions of other courts, because the judgments of this court especially those delivered within the past twelve years by the late Mr. Justice Miller, afford satisfactory guides and ample illustrations. After collaborating and discussing these cases, the general principle is stated that contracts of a corporation beyond the scope of powers enumerated in its charter (read in the light of any general laws which are applicable), and other powers not fairly incidental thereto, are unlawful and void.'

In that case a nonsuit was ordered because it appeared that the contract sued upon was not within the powers of the charter of the plaintiff corporation. Sustaining the nonsuit, the court says:

'The contract sued on being clearly beyond the powers of the plaintiff corporation, it is unnecessary to determine whether it is ultra vires of the defendant, because, in order to bind either party, it must be within the corporate powers of both. ' Page 54, 139 U.S., and page 478, 11 S.Ct. 'It was argued,' says the court, further, 'that, even if the contract sued on was void because ultra vires and against public policy, yet having been fully performed on the part of the plaintiff, and the benefits of it received by the defendant for the period covered by the declaration, the defendant is estopped to set up the validity of the contract as a defense to this action to recover the compensation agreed on for that period. But this argument, though

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