Case ID: iowa_27/html/0099-01.html
Source: Caselaw Access Project
Author: {"author": "Wright, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Des Moines Valley R. R. Co. v. Graff et al.
    
    1. Contract! mutuality: railroad subscriptions. If one promise to pay another a sum of money if he will do a particular act, and he does the act, the contract is not void for want of mutuality, and the promisor is liable, though the promisee did not at the time of the promise engage to do the act; for, upon the performance of the condition by the promisee, the contract becomes clothed with a valid consideration which relates back and renders the promise obligatory. It is accordingly held, that if certain subscribers promise and undertake to pay a railroad company a certain sum or sums if it will build its road to a designated place, the subsequent completion of the road, according to the terms of the promise, furnishes in itself a consideration, removes the objection of want of mutuality, and renders the promise binding upon the subscribers.
    
      3. Railroad ¡ subscriptions in hands op trustees : rights on company. Defendants, as a committee acting in belialf of the citizens of ,P., entered into an undertaking to furnish the right of way, depot grounds and cattle yards, and “ to obtain subscriptions for the Des Moines Valley Railroad Company, in accordance with the blank notes furnished by the company for that purpose, to an amount of at least ten thousand dollars, provided said company run its track through P.” Defendants, in accordance with this undertaking, obtained a lage amount of subscriptions in the form of notes conditioned to be paid so soon as trains were running from K. to P., and ■ • containing a proviso that they were to be void if the trains were not >. thus running on or before a certain date. The road was not completed to P. until about two and a half months after this date. In an equitable proceeding by the company to require defendants, upon their refusal, to make known the name of each subscriber, the .. . ¿mount of each subscription, and to deliver the notes thus held by them over to the company, it was held, on demurrer to the petition containing these averments, that the facts alleged entitled plaintiffs to the relief asked, that the defendants were mere trustees in hold, ing the subscription notes, and not entitled to interpose the defense, which properly belonged to the subscribers or makers of the notes, and which they might not desire to avail themselves of, that the notes were void because the road was not completed to P. at the date stipulated.
    
      Appeal from Marion Distriet Oourt.
    
    Tuesday, April 13.
    In equity. — Demurrer to petition sustained, and plaintiff appeals.
    The facts as shown by the petition are these: In April, 1864, defendants, as a committee appointed by the citizens of Pella, undertook in writing, for and on behalf of said citizens, to furnish the right of way, depot grounds and cattle yards, “ and to obtain and secure subscriptions for said company in accordance with blank notes already presented by said company for that purpose, to an amount of at least ten thousand dollars.” * * “ Provided said company runs its track through Pella as heretofore surveyed.” The consideration for this agreement was the undertaking of the company to build its road through said town of Pella. Defendants in accordance with said agreement obtained a large amount of subscriptions, equal or near said $10,000, the same being in the form of promissory notes. These notes provided for the payment to the company of so many dollars, so soon as the trains were running from Keokuk to Pella: provided that they were to be void if the said trains were not runíling on or before the 1st of October, 1864.
    They are in defendants’ hands, but their numbe/, vf; ** whom made, the amount of each, or their aggi>gga,te' amount, petitioner cannot state. It is claimed tha( if f defendants failed to obtain the full amount of avafiaj$£j> r subscriptions, then they should pay the deficiency, ánd^'^)^ they should disclose what notes or subscriptions they have^INi*-' - and surrender the same to plaintiff. The subscribers to these notes and these defendants were citizens residing in and near Pella, who were to be and were greatly benefited by the construction of said road, and plaintiff was induced to build its road to that place by the promises and obligations contained in said contract.
    The road was not completed to Pella until about two and one-half months after the said 1st-of October, 1864. To excuse the delay, the petition sets up the character of the season, being rainy, etc., and also the then existing, rebellion, rendering it impossible to obtain men to work, etc. In all other respects plaintiff fulfilled its contract.
    The prayer is that defendants be required to make known the name of each subscriber, the amount of each subscription, its form and condition, and to deliver the same to the plaintiff, and that they be adjudged to pay any deficiency of said subscription, or the whole of said $10,000 (less a certain payment of $500), in case of their failure-to deliver up said subscriptions and notes.
    
      So far as material to be noted, the grounds of the demurrer were: 1. The facts stated were not sufficient to entitle plaintiff to the relief asked. 2. It appeared that plaintiff failed to comply with certain conditions precedent. 3. No sufficient excuse is stated for the failure to complete the road by the time fixed.
    
      Henry Strong and Stone, Ayres & Qurtis for the appellant.
    
      Seevers <& Quits for the appellees.
   Wright, J.

Iffy first impression was against this bill. Subsequent reflection, and a more careful examination of its averments and objects, have led me to believe that the demurrer was improperly sustained.

There need be no controversy as to many, and, indeed, most of the positions assumed by appellees. Thus, it is conceded that the excuses set up for not completing the road by the time fixed are of no moment. Plaintiff made its engagement; failed to provide against bad weather or other contingency; and it was its own fault or folly that, by reason of these matters, it was unable to fulfill its contract. Having voluntarily assumed the obligation, the contract was binding; and neither accident nor necessity would excuse.

So, too, it is admitted that the contract would not be binding, if not supported by a sufficient consideration; nor should it be enforced, if wanting in mutuality. Nor do I controvert the proposition that, as a rule, specific performance will not be decreed, if adequate compensation can be made in damages for the breach of a contract of a personal character; or if the delivery of the thing, m specie, be really not important. And if this controversy was between plaintiff and the makers of the notes, and they should insist upon plaintiff’s failure to comply with its contract as to the time of completing the road, I should feel constrained to hold against the right to recover. This was substantially held in B. & M. R. R. Co. v. Boestler, 15 Iowa, 555, and Thompson v. Oliver. 18 id. 417.

But I do not believe that, as to this question, appellees occupy the position of the subscribers; of which, however> more hereafter. Then, as to the want mutuality and a consideration : it is plain jaw that, if A. promise to pay B. a s,um of money if he will do a particular act, and B. does the act, A. is liable, though B. did not, at the time of the promise, engage to do the act; for, upon the performance of the condition by the promisee, the contract is clothed with a valid consideration, which relates bach, and the promise at once becomes obligatory. Goodpaster v. Porter, 11 Iowa, 161, and cases there cited. Plaintiff alleges performance on its part; and thus is a consideration shown, and the objection of a want of mutuality removed. The rule as to specific performance has no place; for plaintiff seeks to charge defendants as trustees, as parties occupying a trust relation, having funds or property in their hands, for which they refuse to account. If they have these subscription notes, plaintiff is entitled to them — could, by bill in equity, compel their surrender, even though defendants might, at law, be liable in damages for a breach of their agreement to procure and deliver. In such a case, plaintiff might elect to recover the specific notes, or their value, by an action at law upon the contract. The solvency or insolvency of defendants is of no moment, under such circumstances. Plaintiff would have a right to insist upon the execution of the trust. For, in equity, the notes would belong to the company, and defendants could not, by a violation of their trust duty, defeat the recovery of the specific articles. It would make no difference that the money might answer as well as the notes. Defendants would be in no position to insist upon this. It is the will, the election, of the beneficiary, and not of the delinquent trustee, that is to be consulted in such cases.

The real and difficult point in the case, however, is, whether plaintiff shows itself entitled to these notes, as against these defendants. The argument against the right, if there be any, is found in the fact that the road was not completed by qg^ 0f October, and no sufficient excuse for the failure is shown.

But it must be remembered that defendants' contract contains no condition as to the completion of the road, at least as to time. The only proviso is, that the track shall be run through Pella. There is no condition that these notes are not to be delivered if there is a failure to run trains by the 1st of October, or any other time. The condition is m the notes, but not in defendants’ obligation. They must stand by their contract, and not upon that of others.

Not only so, but, as I have already suggested, defendants are trustees — trustees holding property in which plaintiff is beneficially interested. The charge is that these subscription notes were made and are now in defendant’s hands. It is their duty, in my judgment, to surrender them. There is no suggestion that the makers have interposed any objection to paying these notes, and non constat that they ever will. It may be that, feeling themselves largely benefited by the completion of the road — though not by the day named — they will waive the breach. It may be that they will pay rather than become involved in litigation. Or, possibly, there may be facts estopping the subscribers from insisting upon the failure of the company to have the trains running by the time named. But, in any event, as the notes were made cmd placed in defendants hands, a/nd a/re still there, their plain duty' is to surrender the same. If they had never recewed them, and plaintiffs were seeking to recover damages for a breach of the agreement, a different question might arise. The notes when made were for the benefit of the company — defendants were mere agents or trustees to hold the same, and it is not for them to refuse to discharge their duty, because, perhaps, the makers have defenses which they will or will not interpose. Suppose, instead of having the notes, they had, at the time of receiving subscriptions, obtained money; or, since that time, had been paid money on the notes, could they be heard to say: the road was not completed by the time named, and we will therefore keep what we have ? ” It seems to me clearly not. In view of their relation to plaintiff, and the terms of their undertaking— assuming the facts to be as stated in the petition • — • defendants cannot -be allowed to stand in the place of the subscribers, and, in their name, interpose a defense or defenses which I cannot but believe to be purely personal.

If defendants had obtained deeds in the name of the company for the right of way, depot grounds or cattle yards, as contemplated by their agreement, and as clearly provided for as their obligation to secure the subscriptions, could they withhold the same if demanded by plaintiff, upon the ground that the road was not completed by the time named? It is certainly not so nominated in the bond; ” nor, upon any equitable principle, should they, as trustees, be allowed to deny the superior rights of the beneficiary, by withholding such title papers. And the same must be true as to the subscription notes.

As the record stands, therefore, I think plaintiff is entitled to a discovery of 'the subscription made, and to a surrender thereof, or any money received thereon. This is the vital question in the case, and beyond this I need ■not go at present.

I think the judgment should be reversed. And all the judges being of this opinion, it is so ordered.

Reversed.