Fort Worth City Co. v. Smith Bridge Co.

151 U.S. 294 (1894)

FORT WORTH CITY COMPANY
v.
SMITH BRIDGE COMPANY.

No. 565.

Supreme Court of United States.

Submitted January 3, 1894. Decided January 15, 1894. ERROR TO THE CIRCUIT COURT OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF TEXAS.

Mr. Thomas P. Martin for plaintiff in error.

Mr. M.L. Crawford for defendant in error.

MR. CHIEF JUSTICE FULLER delivered the opinion of the court.

This case having been tried by the court under the statute, we can only inquire whether the facts found in the special findings, considered in connection with the pleadings, are sufficient to sustain the judgment, and whether any error was committed upon rulings on matters of law properly preserved by bill of exceptions. Two bills of exception were taken, but they simply present the same questions as the special findings of fact and the conclusions of law deduced therefrom. A stipulation of counsel as to the evidence bearing on the tenth finding appears in the record; but of that we cannot take notice. Tyre & Spring Works Co. v. Spalding, 116 U.S. 541.

Of the five errors assigned in the brief of the counsel, the first, second, fourth, and fifth present the question in various aspects of the power of the Fort Worth City Company to make the contract sued on, or incur the liability for which recovery was had, and the third relates to the failure of the bridge company to complete the bridge within the time stipulated in its contract with the city of Fort Worth.

The court found that the bridge was to be completed on or before November 1, 1888, and that bond was required to be given to the city to secure that result; that it was not completed and turned over until March 19, 1889, but that the delay was caused not by the plaintiff or defendant, but altogether by the city; that time was not of the essence of the contract, and that the defendant was not damaged by the delay. The contract between these parties is attached to the petition, and refers to the contracts by the bridge company with the city and the county, the defendant agreeing to pay the stipulated sum in consideration of the building and construction of the bridge in accordance with the specifications and to the acceptance of the city engineer and the city, and the turning of the bridge over to the city, completed in accordance with this and the other contracts; but as we agree with the court that time was not of the essence, and as the court has found as matter of fact that plaintiff was not in default, and that the defendant was not injured by the delay, the result necessarily follows that the third error assigned is not well taken.

The Fort Worth City Company was organized under the provisions of title twenty of the Revised Statutes of the State of Texas relating to private corporations and the amendments thereto, "for the purchase, subdivision and sale of land in cities, towns, and villages," as authorized by article 566 of those statutes, (one of the articles under title twenty,) as amended by chapter 61 of the Laws of 1885. Sayle's Tex. Civ. Stat. 212; Laws Tex. 1885, 59, c. 61.

The general rule is that corporations have only such powers as are granted and the powers incidental thereto, and in arriving at a conclusion as to the powers of this corporation the applicable provisions of the title under which it was organized must be considered; legislation which will be found to be in harmony with the common law.

Article 575 provided that every private corporation as such has power "to enter into any obligation or contract essential to the transaction of its authorized business;" and article 589, that "no corporation created under the provisions of this title shall employ its stock, means, assets, or other property, directly or indirectly, for any other purpose whatever than to accomplish the legitimate objects of its creation." Sayle's Tex. Stat. 217, 219.

In Green Bay & Minnesota Railroad v. Union Steamboat Co., 107 U.S. 98, 100, it was said: "The charter of a corporation, read in connection with the general laws applicable to it, is the measure of its powers, and a contract manifestly beyond those powers will not sustain an action against the corporation. But whatever, under the charter and other general laws, reasonably construed, may fairly be regarded as incidental to the objects for which the corporation is created, is not to be taken as prohibited."

This corporation was formed under a general law containing, in addition to the provision for the creation of such a corporation, the other provisions we have quoted.

The question of power is reduced, therefore, to this: Whether a corporation created for the purpose of dealing in lands, and to which the powers to purchase, to subdivide, and to sell, and to make any contract essential to the transaction of its business, are expressly granted, possesses as fairly incidental, the power to incur liability in respect of securing better facilities for transit to and from the lots or lands, which it is its business to acquire and dispose of? We entertain no doubt that under these findings the defendant company possessed the power to enter into the contract in question, and that the contract having been fully performed by the bridge company, and the defendant company having the full benefit thereof, the latter cannot now be allowed to say that the power was not properly exercised.

The object of the creation of the corporation was the acquisition and sale of lands on subdivision, and it cannot successfully be denied that that object would be directly promoted by the use of legitimate business methods to render the lands accessible. This involved the expenditure of money or the assumption of liability, but there is no element in this case of any unreasonable excess in that regard, or of the pursuit of any abnormal and extraordinary method. The result sought was in accomplishment of the legitimate objects of the corporation and essential to the transaction of its authorized business, and the power to make the contract was fairly incidental if not expressly granted.

Reference is made to section 6 of article 12 of the Constitution of Texas, which provides: "No corporation shall issue stock or bonds except for money paid, labor done, or property actually received, and all fictitious increase of stock or indebtedness shall be void." But if this section be in any way applicable and could be regarded as invalidating so much of the contract as provided that the consideration should be paid in bonds, which is not to be conceded, the company "having received benefits at the expense of the other contracting party, cannot object that it was not empowered to perform what it promised in return, in the mode in which it promised to perform," and would still remain liable on its contract, otherwise within its lawful powers. Hitchcock v. Galveston, 96 U.S. 341, 351; Central Transportation Co. v. Pullman Co., 139 U.S. 24, 58.

Judgment affirmed.