Strang v. Richmond, P. & C.R. Co.

• Decision Date: 01 May 1900
• Docket Number: 331.
• Court: U.S. Court of Appeals — Fourth Circuit
• Parties: STRANG v. RICHMOND P. & C.R. CO. et al.

101 F. 511

STRANG v. RICHMOND P. & C.R. CO. et al.

No. 331.

United States Court of Appeals, Fourth Circuit.

May 1, 1900

This case comes up on appeal from a decree of the circuit court of the United States for the Eastern district of Virginia, in equity. 93 F. 71. The bill is filed by William B. Strang Jr., against the Richmond, Petersburg & Carolina Railroad Company and others. The nature of the appeal renders it necessary to set out somewhat in detail the allegations of the pleadings. The bill sets out the corporate character of the defendant, a corporation under the laws of Virginia and of North Carolina, with authority to acquire all the property and works of the Virginia & Carolina Railroad Company, a company organized for the purpose of locating, constructing equipping, maintaining, and operating a railroad from Richmond to a point on the line between North Carolina and Virginia, in Mecklenburg county, and authorized to extend construct, equip, and operate its road from any point on the Virginia line to such point on the Raleigh & Gaston Railroad as should be found meet and practicable. It then alleges: That for the purpose of paying for rights of way station grounds, and all other necessary lands and real estate, and for constructing, acquiring, completing, and equipping the lines of railway aforesaid, or which it should thereafter be authorized by law to construct, own, and acquire, the said Richmond, Petersburg & Carolina Railroad Company executed a mortgage to the Mercantile Trust Company of Baltimore, dated September 11, 1897, to secure certain bonds and coupons, the total issue of bonds no to exceed $2,300,000; bonds to be payable in 1947; interest at 5 per cent. per annum. That said mortgage conveyed to the trust company, in trust as aforesaid, all its line of railway and property described as follows: 'Commencing at a point at or near Hermitage road, on the Richmond, Fredericksburg &amp Potomac Railroad, near the city of Richmond, in the state of Virginia, which is to proceed via Richmond and Petersburg to a point at or near Ridgeway, in the state of North Carolina, which said main line of railway is one hundred and three (103) or more miles in length; and all second or additional tracks which the railroad now owns, or may hereafter construct or acquire; and all lands, tenements, and hereditaments acquired or appropriated, or which may hereafter be acquired or be appropriated, for right of way, and all easements and appurtenances thereto belonging; and all railways and rights of way, depot grounds, tracks, bridges, viaducts, culverts, fences, and other structures, depots, station houses, engine houses, car houses, freight houses, wood houses, warehouses, machine shops, work shops, erections, and fixtures, whether now held or hereafter acquired, for the use of or in connection with the said main line or branches; also all locomotives, tenders, cars, and other rolling stock and equipment; all rails, ties, chairs, splice and angle bars, and machinery, tools, implements, fuel, and materials of every description, whether now owned or hereafter acquired, used, or acquired for the construction, operation, repair, or replacement of said main line and branches; also all leases, leasable interests, contracts, agreements, corporate franchises, and charters which it has now or may acquire, including the franchises to be a corporation; also all franchises connected with or relating to said main line and branches, or the construction, maintenance, or use thereof, now held or hereafter acquired by grant from the legislature or otherwise, including all corporate franchises exercised or possessed at any time by the railroad company, together with the income, advantages, and appurtenances in any way appertaining to the above-mentioned railway premises; and also the income, tolls, rents, issues, and profits of said main line and branches. ' That thereafter, to wit, on October 18, 1898, the railroad company entered into an agreement with the plaintiff whereby the said plaintiff agreed to construct, furnish, and build a complete roadbed between Ridgeway, N.C., a point on the Raleigh & Gaston Railroad, and Hermitage road, Virginia, on the line of the Richmond, Fredericksburg & Potomac Railroad, a distance of about 103 miles, together with the necessary depots, water stations, section houses, buildings, and terminals, in consideration of which the defendant agreed to pay the plaintiff in its aforesaid bonds secured by the said mortgage, to an amount provided for therein, or in cash representing the proceeds of said bonds, which should not be less than $1,800,000. That the Richmond, Petersburg & Carolina Railroad Company also agreed that that part of its railroad completed, should be turned over the plaintiff, with the right to issuance of bonds therefor under the aforesaid mortgage; and that plaintiff agreed, out of said bonds or the proceeds thereof, to reimburse the said defendant railroad for all sums expended by it on construction, evidenced by its receipted vouchers therefor. That defendant railroad company further agreed that plaintiff should have full control of the engineering of said railroad and the construction thereof, and the right to purchase all lands necessary therefor, as well as material and supplies; and further agreed to furnish plaintiff, to assist him in completion of the undertaking, all the necessary plans, specifications, drawings, engineers' reports, surveys, and data then in possession of defendant company. That defendant further agreed that the cost of construction of the road, as well as the equipment thereof, and the terminal facilities required, should not exceed the sum to be produced by the sale of the bonds, $1,800,000, less $100,000, to be paid to the Colonial Construction Company; but that the cash derived from the sale of the bonds, not less than the sum stated, would be sufficient to construct the road so far as the same was then uncompleted, and leave a fair and reasonable profit to plaintiff in addition thereto. The bill then charges: That De Witt Smith, a defendant, as president of the company, had knowledge of this contract, and then had and now has vested in him titles to the various terminal properties in Virginia and North Carolina, and contracts therefor, as well as for rights of way, all of which he holds in his own name, but in fact in trust for the railroad company, in which plaintiff has an interest and right under his contract with the railroad company. That various of the bonds secured by the deed to the Mercantile Trust Company are now in possession of the railroad company, and that said company has the right to demand certification of other bonds on completion of the work and on acquiring title to rights of way and terminals; all of which bonds, or the proceeds thereof, are to become, upon the completion of the aforesaid work by plaintiff or the acquirement of title, the property of plaintiff. That upon making the agreement with defendant railroad company the plaintiff entered into possession of said line of railroad, and is now in possession thereof, and is now and has been engaged in the preliminary work of construction thereof. That the plaintiff has demanded the delivery of the plans and specifications in possession of defendant, but it has refused to deliver the same. That this refusal has damaged the plaintiff, and has prevented him from placing his contracts for necessary bridges, ironwork, mason work, and other necessary contracts for completion of said railroad. That since the agreement was made, the railroad company and Smith, without the consent of plaintiff, are endeavoring and are threatening to cancel out the consent of plaintiff, are endeavoring and are threatening to cancel the mortgage and the bonds secured thereby upon which plaintiff relies as his security for payment of the construction of the railroad, and which bonds have been pledged and set apart as a fund for the payment of the sums to become due to plaintiff for construction of the railroad. That plaintiff is now, and has always been, ready and willing to complete and perform said agreement, and has entered upon the performance thereof, and is now in possession of said property, engaged in work therein. After praying subpoena, this is the prayer of the bill: 'The plaintiff, therefore, prays for a decree enjoining the defendant the Richmond, Petersburg & Carolina Railroad Company and the Mercantile Trust Company from canceling said mortgage or the bonds, or any of them, secured by the same; adjudging that the defendant De Witt Smith holds the title of all terminals and rights of way along the line of said railroad, as well as all contracts therefore, as trustee for said railroad, and that an injunction issue restraining him from parting therewith, and compelling him to transfer the title thereto to the defendant the Richmond, Petersburg & Carolina Railroad Company, and that said defendant railroad be enjoined from interfering in any manner, pending the hearing and determination of this cause, with the possession of the plaintiff of said railroad; requiring the defendant railroad company to fulfill said contract on its part; and declaring the said bonds secured by the mortgage aforesaid as a fund for the payment of the construction of said railroad, and requiring the defendant to issue and deliver the said bonds, and the defendant, trust company to certify the same as required by the terms and pro?visions of said mortgage. That an injunction issue, pending the hearing and determination of this cause, restraining and enjoining the defendant the Richmond, Petersburg & Carolina Railroad Company and the Mercantile Trust Company, from canceling, satisfying, or in any manner interfering with the said bonds and deed of...