Stanton v. N.Y. & E. Ry. Co.

• Decision Date: 10 July 1890
• Citation: 22 A. 300,59 Conn. 272
• Court: Connecticut Supreme Court
• Parties: STANTON et al. v. NEW YORK & E. RY. CO. et al.

22 A. 300

59 Conn. 272

STANTON et al.

v. NEW YORK & E. RY. CO. et al.

Supreme Court of Errors of Connecticut.

July 10, 1890.

Appeal from superior court, Fairfield county; Thayer, Judge.

Suit by Daniel N. Stanton and another against the New York & Eastern Railway Company and others. From a judgment overruling his remonstrance against the acceptance of a report of a committee, refusing to allow his claim, Henry Hungerford appeals.

S. Tweedy and J. S. Seymour, for appellant.

J. B. Hurlbutt, for appellees.

ANDREWS, C. J. The New York & Eastern Railway Company was a railroad corporation organized under the general railroad law of this state for the purpose of building and operating a railroad from the western line of the state in the town of Greenwich to the town of New Haven, a distance of 46 miles, and included a bridge across the Housatonic river. At the March term, 1875, of the superior court in Fairfield county, upon the application of Daniel N. Stanton and others, Levi Warner, Esq., was duly appointed receiver of all the property and assets of this corporation. Mr. Warner accepted the trust, and gave bond, as required by the decree of the court. At the same term of the court it was ordered that all persons having claims against the corporation should present them to the receiver within 90 days after the publication of the order. Among others, Henry Hungerford, or Norwalk, presented to the receiver in due time a claim against the corporation, amounting to $200,000. At a later term of the court such proceedings were had that Julius B. Curtis, Esq., was appointed a committee of the court to examine and adjust all the claims so presented to the receiver and not allowed by him, and to make report to the court of his doings in the premises. Mr. Hungerford appeared before the committee, and offered testimony in support of his claim. Various proceedings were had in court and before the committee from time to time, and the committee returned his completed report to the court in June, 1889. Thereupon Mr. Hungerford came into court, and remonstrated against its acceptance. The court overruled the remonstrance, accepted the report, and rendered judgment pursuant thereto. Mr. Hungerford now brings the case to this court by appeal. For a clear understanding of the questions raised by the appeal a somewhat more extended statement is required.

On the 12th day of September, 1873, Henry Hungerford entered into a contract with Samuel E. Olmstead, William C. Street, William T. Minor, and Henry R. Parrott, as follows:

"Whereas, the New York & Eastern Railway Company are desirous of procuring lands for the right of way, for depots, side tracks, gravel-pits, and, other necessary purposes for their railroad, as called for by the terms of the contract between said railway company and D. N. Stanton and A. P. Balch, and within the limits herein provided,—the assent of the said Stanton and Balch in writing having been obtained thereto,—from the line of the state of New York to the western line of the city of New Haven and from Stratford to Derby: Now, therefore, for that purpose the following memorandum of agreement is this day entered into by and between Samuel E. Olmstead, William C. Street, William T. Minor, and Henry R. Parrott, a committee of the directors of the said railway company, duly authorized thereto, the party of the first part, and Henry Hunger ford, of Norwalk, Connecticut, party of the second part: The party of the first part for all the lands necessary for the above purposes on the line of their said railroad between the western line of the state of Connecticut in the town of Greenwich and the western line of the city of New Haven, and for all expenses for procuring the same except engineering, which shall be paid by the party of the first part, agrees to give the party of the second part five hundred thousand dollars of the capital stock of the said railway company, fully paid up. The said party of the second part will at once, as soon as the engineer has located any part of the line of said railroad, proceed to purchase and procure all such necessary lands on said line at his own charge and expense, and within a reasonable time; and, as fast as required by said company, will causa such lands to be conveyed to said railway company, or to be taken under the statute laws of the state, that said company may enter thereon, and construct their road. The engineer shall lay out such additional lines as may be indicated and required by said party of the second part, subject to the approval of the said company and of the said Stanton & Balch, to enable him to make the most advantageous terms in purchasing said lands for the building of the said road on the most feasible and direct route, as provided by said contract. It is mutually agreed and understood that the party of the second part shall commence at once to procure said lands on such portions of said route as may be required by the party of the first part, and located by said engineer, and as soon as and when he shall cause to be conveyed to said company, or shall procure under the statute the said lands, or any portion thereof, then the party of the first part shall pay to the party of the second part or assigns, according to said engineer's estimate per mile for the property conveyed, compared with his gross estimate, in relative proportion to the sum of five hundred thousand dollars; and, when all of said lands are so conveyed and procured, then the remaining portion, if any, of said five hundred thousand dollars capital stock, fully paid up, shall be paid to the party of the second part or assigns. If said five hundred thousand dollars of capital stock shall be insufficient to purchase and procure said lands, then any additional amount to be used for such purpose shall be a matter of further agreement. Nothing in this agreement shall be so construed as to hold the said party of the second part liable in any way for procuring charters for draw-bridges over navigable waters. It is further mutually agreed between the parties hereto that, if any portion of the said right of way between the aforesaid boundaries shall not be taken by said company, then so much of said five hundred thousand dollars as shall be a fair relative proportion of the estimated cost of said right of way, depot grounds, etc., not taken, shall be withheld by the party of the first part in the final settlement between the parties hereto; and the party of the second part shall have no claim of any kind against said company for time or expenses in so purchasing or procuring said right of way, and that no part of said five hundred thousand dollars of stock or its proceeds shall be used to pay for such time or expenses, except any balance that may be left after purchasing and procuring said lands. In case any disagreement should arise between said parties hereto in regard to any matter provided for or pertaining to this memorandum of agreement, such disagreement or difference shall be submitted to the arbitration of three disinterested persons, either agreed on by the parties or one appointed by each party; and the decision of such arbitrators shall be final and conclusive on the parties to this agreement. In witness whereof the parties hereto, by their own proper hands and seals, have signed this memorandum agreement this twelfth day of September, one thousand eight hundred and seventy-three. S. E. Olmstead. [l. s.] Wm. C. Street, [l. s.] H. R. Parrott. [l. s.] Wm. T. Minor, [l. s.] Henry Hungerford. [l. s.]"

At that time there was no legally incorporated New York & Eastern Railway Company. There was a voluntary association of individuals calling itself by that name, and which was the preliminary organization formed for the purpose of promoting and procuring the complete incorporation of the company. Of this voluntary association the Messrs. Olmstead, Street, Minor, and Parrott were the officers and directors. Mr. Hungerford commenced at once the performance of the contract on his part, and obtained contracts from many of the owners of land along the line of the proposed railroad; and expended in such work, as he claimed, much time and a large amount of money. On the 10th day of February, 1874, the company became duly and legally incorporated by filing with the secretary of the state its articles of incorporation, as provided by the statute. Mr. Olmstead was made the president of the corporation, as he had been of the preliminary organization, and Messrs. Street, Minor, and Parrott were made directors. On the 27th day of April, 1874, the corporation, by a duly-authorized committee of its directors, consisting of the Messrs. Olmstead, Street, Minor, and Parrott, ratified and declared in writing the contract of the 12th day of September, 1873, (except that part that had reference to the line of road between the towns of Stratford and Derby,) to be a binding contract between Mr. Hungerford and the corporation. The ratification was annexed to the contract, and is as follows: "The New York & Eastern Railway Company having been, since the execution of the foregoing contract, duly and legally organized, and the committee named herein having been appointed by the directors of said company and duly authorized to make this agreement, it is hereby agreed by and between the said committee and said Henry Hunger ford that the foregoing contract is ratified and declared to be a binding contract upon the parties except as to that part of the same which provides for the procuring of land for the right of way from Stratford to Derby, which is not to be procured by said Hunger ford. The amount for that reason to be deducted from the compensation of $500,000 in the paid-up capital stock of said company, to be paid to said Hunger ford or his assigns, is to be a matter of further negotiation and settlement between the parties; and if they cannot agree it is to be fixed upon in the same manner as agreed in said...