Source: http://supreme.nolo.com/us/168/471/case.html
Timestamp: 2019-04-24 02:19:46+00:00

Document:
Two questions arise in this case: first, whether the contract sued on is, under the facts and circumstances disclosed in the bill, void as against public policy; and, if not, whether the case presented is one which calls for the interposition of a court of equity, or should be determined in a court of law.
financial assistance advises them to unite and make a single application. They do so, and thereafter the city council, aware of both interests, of the two applications, of the advice to consolidate and the party by whom it is given, and of all the terms of the consolidation, grants the franchise to only one of the parties. Was the agreement to unite in one application against public policy, and void?
"A joint proposal, the result of honest cooperation, though it might prevent the rivalry of the parties, and thus lessen competition, is not an act forbidden by public policy. Joint adventures are allowed. They are public and avowed, and not secret. The risk as well as the profit is joint and openly assumed. The public may obtain at least, the benefit of the joint responsibility and of the joint ability to do the service. The public agents know, then, all that there is in the transaction, and can more justly estimate the motives of the bidders, and weigh the merits of the bid.
See also Smith v. Greenlee, 13 N.C. 126; Phippen v. Stickney, 3 Metc. 384; Greenwood on Public Policy, p. 190, Rule 177."
It may be noticed that there is nothing in the agreement, reduced to writing or as interpreted by the facts stated, which tends to show any thought or purpose of using corrupt or improper influences to secure the action of the city council. So that, upon the record as it stands, the question is, narrowly, whether any agreement to unite between parties who have applied, or contemplate application, for a franchise is, under all circumstances, necessarily void as against public policy.
"These observations are sufficient to show that the doctrine which would prohibit associations of individuals to bid at the legal public sales of property, as preventing competition, however specious in theory, is too narrow and limited for the practical business of life, and would oftentimes lead inevitably to the evil consequences it was intended to avoid. Instead of encouraging competition, it would destroy it. And sales in many instances could be effected only after a sacrifice of the value, until reduced within the reach of the means of the individual bidders."
of persons formed for the purpose of bidding at this sale, as it may be not only unobjectionable, but oftentimes meritorious, if not necessary, and examine into the object and purposes of it, and if, upon such examination, it is found that the object and purpose are not to prevent competition, but to enable or as an inducement to the persons composing it to participate in the biddings, the sale should be upheld; otherwise if for the purpose of shutting out competition and depressing the sale, so as to obtain the property at a sacrifice."
"Each case must depend upon its own circumstances. The courts are quite competent to inquire into them and to ascertain and determine the true character of each."
The observations thus made show that every case must be determined upon its peculiar facts and circumstances, and the courts, before condemning an agreement to unite in a bid, must see that the agreement is such as really destroys the value of competitive bidding, and these observations, it must be noticed, were made in respect to a case in which a public sale had been ordered. The sale was therefore something which must take place, and the question of making a sale was not discretionary with the sheriff or other officer charged with the duty of making the sale. But here, the City of Richmond was not bound to grant any franchise. It was free to determine whether it would grant or not, and, if it did, what form of street transportation should be adopted, and might also well consider the character, the financial ability, and the situation of the various applicants in determining to whom it would be best for the public interests to grant such a franchise.
"But in this case, the owner of the estate was under no obligation to sell to anyone, and there was no stipulation to resort to any illegal or improper means to mislead the owner, or to induce a sale by any fraud or artifice. We do not think such a contract can be held void as against public policy."
But, as observed, every case must depend upon its own circumstances, and it may be that when the facts in this case are disclosed by the testimony, they will be found to differ materially from those stated in the bill. Inasmuch as we are of the opinion that even if the contract be valid, the plaintiff's remedy is in a court of law, rather than in a court of equity, it is not wise to attempt to definitely determine whether, under the circumstances stated, this contract was or was not void as against public policy, for such determination might prove to be, in the final result, the mere answer to a moot question. It will be more satisfactory to pass upon the question when the surrounding facts are fully developed by testimony.
sufficient and controlling, the city council deemed it not wise to grant this franchise to the two, but gave it to the one. Shall the courts overrule this determination and entrust the franchise to the two, rather than to the one? They have no general supervision over the judgment and action of public authorities. The city holds its grantee responsible for the proper discharge of the duties imposed by its grant of the franchise. It may well have determined that it did not desire the plaintiff to have any interest in it, or anything to do with the management of the street railway, and that the best interests of the city would be subserved by committing it, primarily at least, to the defendants alone. Shall the courts say that such determination was erroneous, or may be overruled, simply because of a private contract between two parties? It must be remembered that, according to the allegations, the city council knew of the union of interests, and yet declined to recognize such union. It may be said that by authorizing these defendants to incorporate, it put it in their power to let the plaintiff and his associates or any one else into the enterprise. Of course, the city council knew that the franchise, when granted, could be alienated by the grantees, and yet, notwithstanding this possible alienation, the fact remains that the city council determined that the primary parties to receive the franchise -- the ones upon whom the burden of the contract should be laid -- were the defendants alone, and not in conjunction with the plaintiff or his associates.
It is obvious that if two interests which it may be believed are now not in harmony, if not decidedly antagonistic, are let into equal control of a franchise such as this, the public interests may suffer. Harmony in management is no inconsiderable factor in securing the best possible results, and if the parties in interest are of two minds as to how the railway shall be managed, what improvements shall be made, and, in general, what shall be done in connection therewith, it is not difficult to perceive that their antagonism may prevent that efficiency which will tend to make the street railway of the greatest advantage to the public.
plaintiff to maintain his action at law for the damages resulting from the defendants' breach of contract, at the same time preserves the city's control over the franchise and upholds its determination as to the party or parties to whom it is willing to entrust such franchise.
impossible for a jury to form a fair estimate of the value of the franchise, and therefore of the damage which the plaintiff has sustained by the repudiation of the contract to give him a half interest in it.
"It is well settled, as a general rule, that an agreement to enter into a partnership which would be literally performed by executing the partnership articles, or to carry on a partnership already established, will not be specifically enforced."
"It is also well settled that the wrongful refusal by a party to a contract of co-partnership to permit the firm to commence business, or, as it is sometimes termed, to launch the partnership business, is ground for an action at law by the injured partner to recover damages of the partner whose wrongful act has defeated the purposes for which the co-partnership was formed. The cases which so hold, both in England and this country, are very numerous. Indeed, the authorities seem to be quite uniform in so holding. The following are a few of the cases referred to: Venning v. Leckie, 13 East.Term R. 7; Gale v. Leckie, 2 Stark. 107; Manning v. Wadsworth, 4 Md. 59; Glover v. Tuck, 24 Wend. 153; Bagley v. Smith, 10 N.Y. 489; Terrill v. Richards, 1 Nott & McC. 20; Ellison v. Chapman, 7 Blackf. 224; Williams v. Henshaw, 11 Pick. 79; Addams v. Totten, 39 Penn.St. 447; Vance v. Blair, 18 Ohio 532; 1 Story, Eq.Jur. sec. 665; Collyer on Part. sec. 245; 2 Lindley on Part. (4th ed.) 1025, and cases cited in notes."
"Upon these facts, it is obvious that if the plaintiff's rights rested solely on a verbal agreement to the effect that he and the defendant would establish and maintain the ferry at their joint expense and for their joint benefit, without reference to the franchise, the plaintiff's only remedy would be an action at law for a breach of contract. He would have no right to participate in the profits of an enterprise to which he had contributed nothing, and could claim no interest in a boat constructed by the defendant at his own expense and for his own use, nor in the earnings thereof. In such cases, it is well settled that when the partnership was never launched, and when one of the co-partners has proceeded to conduct the enterprise in his own name at his own cost, and for his own exclusive benefit, excluding the other party therefrom, and repudiating the partnership agreement, the only remedy of the injured party is an action at law for a breach of contract. There would be in such a case no existing partnership, but only an agreement to form one, which was never consummated by launching the enterprise."
agreements, unsupported by any subsequent acts of the ostensible beneficiary, it is evident that powerful secret combinations would be formed to procure vicious legislation under false pretenses."
These authorities might be multiplied, but they are sufficient to show the general rule controlling actions of this kind. For these reasons and upon these authorities, we are of the opinion that the suit for specific performance cannot be maintained. The decree of the circuit court was one dismissing the bill absolutely. In view of the doubt which rests as to the validity of the contract, we think it should have been a dismissal without prejudice, and the order will be therefore that the case be remanded to the circuit court, with directions to modify the decree so as to make it one dismissing the bill without prejudice to an action at law.
I am of opinion that the object as well as the effect of the contract set out in the bill was to diminish competition in reference to the obtaining of a public franchise. For that reason, it was detrimental to the public interests, and one in respect of which a court of equity ought not to give any aid to either party. In addition to this view, it appears upon the face of the ordinance in question that the City Council of Richmond named the persons by whom that franchise was to be exercised, and a court of equity ought not to force another party into connection with those whom the city council thus designated. Aside from these considerations, I am of opinion that if the plaintiff has any remedy at all, he has an adequate one at law. Upon this last ground, I acquiesce in the judgment of the majority of the Court in this case.
complainant is not entitled to relief in equity. Neither the agreement between Hyer and Shield of August 9, 1895, nor the negotiations of these parties with the Common Council of the City of Richmond contemplated or implied a partnership between them. Not only is it a fact of which we may take notice that street railways are universally constructed and operated by corporations, but it was one of the stipulations of the agreement of August 9, 1895, that "the application and franchise to be presented to the Common Council of the City of Richmond" should "be that of the Richmond Traction Company for the building of an overhead trolley or cable railway system." The franchise of June 17, 1895, was granted by an ordinance of this council to Hyer and his associates under the corporate name of the Richmond Conduit Railway Company, while the rival competing scheme of Shield was applied for under the name and style of the Richmond Traction Company. Not only must the Common Council have understood that it was contracting with a corporation, but there is nothing to show that it placed any special reliance upon the personal qualities of Shield or his associates. Indeed, the facts set forth in the bill in this connection show conclusively there could have been no such reliance.
While the entire stock of the Richmond Traction Company may have been taken in their names, there was nothing to prevent that stock from being transferred at any time to other parties, nor could the city have had any personal claim against Shield or his associates. The transaction was with the corporation, and with the corporation alone, and, in a legal point of view, it was a matter of entire indifference to the city who became the owners of the stock. The entire stock of the company might have been transferred to other parties the day after the charter was granted without any violation of its provisions. In fact, the Common Council is alleged to have understood that the interests of the two companies had been consolidated, and granted the charter to the traction company with knowledge that Hyer and his associates were to participate equally in the enterprise.
"if the stock contracted to be sold is easily obtained in the market, and there are no particular reasons why the vendee should have the particular stock contracted for, he is left to his action for damages. But where the value of the stock is not easily ascertainable, or the stock is not to be obtained readily elsewhere, or there is some particular and reasonable cause for the vendee's requiring the stock contracted to be delivered, a court of equity will decree a specific performance, and compel the vendor to deliver the stock."
This principle is particularly applicable to a case of this kind, where the corporation was but recently formed, the railroad yet unconstructed, and its shares of uncertain value, if, indeed, they had any market value at all. To require the complainant under these circumstances to bring a personal action for a breach of contract against Shield, who is alleged to be hopelessly insolvent and wholly unable to respond in damages, is to offer him the shadow and deny him the substance of relief.

References: v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v.