BLEWETT V.'J'JtONT ST. CABLE BY. CO.
625
BLEWE'rr
tI.FBONT ST. CABLE
Ry. Co.
FBeNT ST. CABLE
Ry. Co. v.
BLEWETl.
(C1.rcuU Oourt oj
Ninth. Circuit. Jul7 18, 1891.)
L
BOImIl-AOTION J'OR PENALTY-MEASURE OJ' DllIAGIl8.
A bond executed by defendant to plaintiff, in a penalty equal to the value of certain .lands conveyed by plaintiff on the same date, recited that the land was conveyed to al/. "assignee" of defendant as a part of a bonus given to secure the building of a certain cable railroad, and was conditioned for the construction of tne road. road was not buUt, and the bond was sued on. Held, that the whole penalty could be recovered, as the value of the property was a proper meas,. ure of damages for the breach of the contract. 49 Fed. Rep. 126, affirmed.
Th"
2.8AKlI......INTSRiST-WHEN ALLOWABLE.
8. PJJtOL
Wher:e the damages equal or exceed penalty of the bond, the rule is in favor of allowing from and after the date of the breach; but as the lots were Wholly unproductive, yielding no income; and this fact was expressly taken into . by the court in disallowing interest, its finding was in the nature of the verdict of a'jury, and should not be disturbed. 49 Fed. Rep. 126, affirmed. Parol evidence was nllt admissible to show that the deed which was delivered to and purported to vest the title unconditionally in the assignee. was not to .take effect if the road was not buUt on account of failure to secure additional bonuS. 49 Fed; Rep. l26, affirmed. EVIDBNCE TO VAaT WRITING.
·· PLEADINcr,-,AMENDJIlENT8-DISCRETION OJ' CoURT.
..
. Defendant having set up such parol agreement in his answer, the court sus· ,tained ., demurrer. thereto, and at the trial allowed plaintiff to amend his com,plaint br alleging that the sole consideration for the conveyance was the.bond, and the sole considerB'tion for the bond was the conveyance. Held. that thiS amend· m.ent was within the court's discretion, not being·variantfrom the recitals of the bonQ., and could not have prejudiced defendant, as the evidence admitted in sup· 1>0l't thereof could properly have been admitted under the allegations of the plead· lngs before the amendment.
Cross Errors to the Circuit Court of the United States for the Difiltrict of Wasbington, Northern Division. Action by Edward Blewett against the Front Street Cable Railway
Company on a penal bond. Jury waived, and trial to the court. Findings and judgment for plaintiff for the amount of the penalty, withollt interest. 49 Fed. Rep. 126. Both parties bring error. Affirmed. Burke, Shepard JcWoods, (ThO'flUUJ R. Shepard, of counsel,) for plaintiff. Hughes, !Iastings &: Stedman, (C. C. Hughes, of counsel,) for defendant. Before McKENNA. and GILBERT, Circuit Judges, and DEADY, District Judge. GILBERT, Circuit Judge. This is a writ of error to the cirr.uit court for the state of Washington. Edward Blewett, the plaintiff, brought an action against the defendant to recover upon breach of a bond. The complaint alleges that on November 23, 1889, the defendant executed to plaintiff a. bond in the penal sum of $18,000, upon the condition following:
"The condition oftbe foregoing obligation ill sucb tbat wbl'reas, the said ;Edward;Blewett has granted and conveyed to.Jacob Furth, assignee of the ,Front StreetOable Railway Company, the following described property, [deicribing certain lots,] heretofore deeded to Jacob Furth as a part of a bonus gi'Ven tosoouretbe building of the cable'road hereinafter mentioned: Now,
v.51F.no.10-40
therefore, if the North Seattle Cable Railway Com pany. a corporation organized and asand existing under;t.be.Il\1Vs of,;tlla signs. shall, within ten (1O) months from the date of these presents, construct, ,a rail)Vay of "the, same gauge as the ready for railway of the Front"Street eftble'Rail'wl¥ybbmpany,'and operate cars both ways thereon. from the present terminus, [describing the line of road to be built.] then>:th1l1i. olllig:atioDiShall be void.. otherwise 'to! be and remain in full force and effect." Tp e"Q9UlcplaiIlt t,W,9' deeds ,,;ere thenssignee of defendant, conveyirigJp-e,,lQts, the ,borid for anaggregate consideration recited thereio' of 818,Oe();snd that there has' been a, total, breach of the condition b()M"bythe 4efendant, ,to the'plaintiff's dama.ge in the sum of$18,00P, lVith interest from September 24, and costs. :po,rtions ofthe complaint, but admitting theexecUllon bond and .the deeds, proceeds to set i,tr )Ul:)sta.nce· as, follows.: .' That on or about -November 1, 1889, the plaintiff, induce to struct theeable }'ll,ilway'rnentiohed'inthebond and for the benefit of plaintiffYa .prQPBsed, that'.'ifdefen(ia.nt, ·wQuld .cbnstruct said railway he would, as a bonus for the. construction of the same and an inducemept.; f9r, defendant tpe lots mentionedinthe ,bond; hut ,that itwas,undel'stoodand agreed that, if a l/uffiCient i Qbt.ajned,Jo warrant of the road, constructed, plaintiff would donalA the lotll pursuance pf such agreellleuttheplaintiff executed the deeds and delivered the same to Jacob };'urth, under the to hold said deeds in escrow. and should understanding that not'deliver the ·same todetendantuntil defendant had ·constructed and put in operation the rail way, and, in:ense of failure tberein, then the said Furth was to reconvey' the lots to plaintiff, and defendant should be exonetatedfrom any claim or demond. That in pursuanCe of such defendant executed the bOnd, and at the time of delivering the same, ttfplaintt:ff it' was expressly' agreed,tpat,if defendant should be unable t6tlecnre'sufficient subsiayas above set forth, then the bond should be null and void,l1nd of'1l(j binding foreeupon defendant. That the defendaniwas uriahle toprocliresufficient subsidy, and accordingly, on October 1, 1890, Jacob Furth tendered a reconveyance of the lots, but plaintiff refused to accept the same; and that said Furth has Iil#ays been said'tidie;; but the plain'refuses aaUle. Aderriurrer to this affirmative defense sustained. "; 0d the trbtlthe plllintlft' was allowed to amend his by adding anallegatiol1 tothetl£rect that the true and only !i'eluiHcol1sideratidu:or, the; d'eeds wag' thtFmaking and delivery of the bond, and the actual consideration of the bond was the making and deof We', ,and', . of all slmultal1eo:a$.',l;pecause a Jury, and the ,c,ourt were' m,ade:/h',l, 'fllyo.r his da.Pla.ges :6oth,pa,rtieli,ha'1e: sued out writs of errpr, the i
was
BLEWETT,V. FRONT ST. CABJ.E BY. CO.
627
plaintiff assigning as error the refusal (if the court to allow interest upon the amount fixed as damages in the bond, the defendant making three principal assignments of errOl;: First, error in sustaining the demurrer to its affirmative defense; second, error in construing the penal sum named in the bond to be liquidated damages, and adopting the same as the measure of defendant's liability to plaintiff; third, error in allowing plaintiff to amend' his complaint as above mentioned. The first question to be considered is whether there was error in sustaining the plaintiff's demurrer to the affirmative defense. This defense as pleaded contains inconsistent averments. It assumes that Furth could occupy the position of grantee in the deeds, and at the same time hold the deeds in escrow. It also fails to show that Furth was a party to the understanding therein set forth, or agreed to be bound by its terms. Viewed in the most favorable light that can be claimed for it, it can only be regarded as an attempt to vary the terms of the bond by proving the existence of a contemporaneous oral understanding. The bond recites that the lots have been granted and conveyed to Jacf}b Furth, "assignee" of defimdant. The affirmative defense attempts to 'say that the deeds to Furth were delivered to him in escrow, to be by him delivered to the company upon a certain contingency, on the faillots were to be reconveyed to the plaintiff. The bond ure of which provides that the penalty therein fixed shall be incurred upon the failure of the company to construct and operate the road within 10 months from date. The oral understanding would deuy this, and in its stead would prove that the bond, although sealed and delIvered, was not to take eflect or operate as a bond unless sufficient subscriptions were secured to justify the enterprise named in the bond. Counsel lor defendant contends that the true meaning of this pleading is that Furth was to hold the title to the lots in trust, and that the court should so construe it. This construction would no.t only be a departure from tpe rule but, if adopted, would not alter the effect of construction of of the pleading. The ohjection that it contradicts the terms of the written contract would in no degree be obviated. There is no allegation here of fraud, accident, or mistake in executing the bonds or the deeds, or in delivering the aame, and this ca"e does not fall within any of the exceptions under which evidence of a contemporaneous parol agreement or understanding may be admitted to alter, contmdict, or vary the terms of the written instruments; and there was no error in sustaining the demurrer. Neither do we find any error in the second assignment. It is stipulated that the lots were worth $18,000. The deeds recite that sum as the consideration of their conveyance. The bond fixes that amount as the penalty in case of breach. The breach was total. The lots were still worth $18,000. The plaintiff could not compel their reconveyanee to him. If the offer of Jacob Furth to reconvey has any eflect, it is to admit that the value of the lots was the measure of plaintitt"8 damages. It is true the bond by its language does not deelare that $18,000 shall be deemed liquidated damages in case of breach. This omission, al-
FEDERAL REPORTER ;
vol. 51.
though a strongcirc'urnstance, is 'not a controlling consideration in <lODstruing the bond. The court may construe the 'penalty as liquidated damages in cases where the parties have not so nominated it. The construction will depend upon the intention of the parties, to be ascertainedfrom the whole tenor and subject of the agreement. Considering the circumstances under which this bond was made, the objects to be accom plished, and the purpose of the conveyances, together with the difficulty of computing the actual damage upon ahy other hypothesis, there is strong reason for holding that the parties to this agreement, by fixing the valueDf the lots as the penalty in the bond, intended thereby to liquidate the damages in case of total breach of the conditions of the bond; But it is not necessary to hold that the penal sum is liquidated damages.' The evidence proved that $18,000 was the true measure of the plaintiff's damage. What benefit he might have derived from the comtlletionand operation of the road does not appear, but it does clearly appearthat the loss he suffered was, 'at least, the full value of the property he had conveyed away , .and for which he had received nothing in return. ' , The permission to aman(l :the complaint, which is assigned as error, was a matter within the disoretion of the court. The amendment ,could not prejudice:the defendant. The new aUegations thus illtroduced were not variant f:tdmthe recitals of the bond :and deeds. The evidence which was offered to sUstain them would have been properly admitted under the pleadinlrs before the amendment was made. ' It remains to be considered whether there was error in not allowing the plaintiff interest in addition to the amount found due hiro as edamages. It is conceded that $18,000 is the limit of the damages that plaintiff can recover, but it is claimed that, inasmuch as that amount became due totbe plaintiff immediately upon breach ofthe bond, he should recover interest upon it from that date, or at least from the commencement of the BUit. The weight of American authority is in favor of allowing interest beyond the penalty from and after the date of the breach, the damages equal or exceed the penal sum. It is alin all cases lowed, not as additional damages for the breach, but as damages for wrongfully withholding a payment that has become due. In this case, however, the court below, in relusing toallow interest, expressly took into consideration the fact that the lots which the plaintiff had conveyed, and for the value of which he obtained judgment, were and are wholly unproductive, yielding no income, and, the finding of the court upon the amount of' damages being in the mitttre of the verdict of a jury, we are indisposed' to disturb it; The judgment is affirmed.
UNITED STATl!:S tl. DALLES MILITARY ROAD CO.
629
UNITED STATES t7. DALLE!l MILITARY ROAD
Co. tt aI.
(CWcu.U OO'lllrt of A.ppeaZ., Ninth Oircuit. July 18, 1892.)
£Q1fITY-PLEAS-REPLICATIONS-SUIT TO FORFEIT LAND GRANTS.
Act Congo Feb. 25, 1867, granted certain lands to the state of Oregon to aid In tbe construction of a military road, and authorized the sale of the lands on the certificate of the governor of the state that the road was completed. The state granted the lands to a road company, and thereafter the governor issued the required cer· tificate, and the lands were sold. Subsequently, in pursuance of Act Cong. March 2, 18lS9, (25 St. at Large, 850,) a suit was brought to deolare the forfeiture of the lands on the ground that the road was never built as required by the act of congress, and that the governor's certificate was procured by fraud. Defendants flied two pleas, supported by answer: (1) That the issuance of the certificate was without any fraud on the part of the road company; and (2) that defendants were bona fide purchasers without notice of the alleged fraud. The circuit court heli!' these pleas sufficient in law, and dismissed the bill. On appeal to the supreme court, this llecree was reversed, the court, holding that the government was entitled to , file repliQt\tions to the pleas, and saying that" congress intended a full and ·legal investigation of the facts. and did not intend that the important interests.1nvolved should be determined upon the untested allegations of the defendants." Subsequently: replications were to the pleaa. HeZd, that the {lase WSlII thereafter to be triM on the issues raised by the pleas, and, if defendants were found to be bona fide purchasers,the bill 'should be dismissed, irrespective of the questionlll of the building of the road, or of fraud in obtaining the governor's Evidence that the governor's certificate of the completion of the road was procured by fraud was inadmissible, when such fraud was not shown to have been com· mitted br. the road compa\lY or its grantees, or anyone acting in its or their behalf, or that eIther had any knowledge thereof. ' '
.. SAME-EVIDENCE-BoNA FIDE PURCHASERS.
... LAND GRANTS-FORFEITURE-EvIDENCE.
The act of congress having determined that the lands might be sold on the governor's certificate of the completion of the road, and the subsequent act Of 1874 (18 St. at Large, 80) having authorized the issuance of patents upon the same evidence, bona fide purchasers from the ,road company had a right to rely 011 such certificate, and, in the absence of any fraud or notice of fraud, evidence that the road was never in fact constructed as required bv the act was immaterial. The lIoct of 1867 provides that such lands may be sold in quantities not exceeding 80 sebtions, "when the governol" of said state shall certify to the secretary of the interior that 10 continuous miles of said road are completed; and so on, from time to time, until said road shall be completed." HeZd, that the fact that the governor's certitlcate was not given until the whole road was completed did not aftect. its validity.
,'- S,urE-.;MILITARY ROAD-CERTIFICATE OJ' COMPLETION.
,6, SAME.
The cel'titlcate of the governor that he had "made a careful examination of' the said road since its completion, and that the same is built in all respects as required by the above-recited acts," was a sufficient certitlcate that the road had been "construoted and completed. "
,6, SAME-BONA FIDE PuRCHASERS-NOTICB.
The 'fact tbat the governor's certitlcate of the completion of tne road was dated only about eight months, after the date of the state act granting the lands, to the road company was not sufficient to put a purchaser from.the road compallyon inquiry, since there was nothing tosho"IV that the work may not have been commencedbefore the date of such grant.
-T.
SAME-DEED-BONA FIDE PURCHASER8.
In a suit by the United States to forfeit certain lands granted in aid of a mllitary road, defendants claimed to be bona ftd,e purchasers under a deed which declared that the road company "does hereby alien, release, grant, blU'gain, sell, and convey" to tl1l1 grantee, "nis heirs and assigns, the undivided oJ;lehalf of all the right, title, and interest" of the grantor "in and to all the lands lying and being in the state of Oregon, "granted or intended to be granted to the lltate of Oregon by the act of oongress approved JUly 2,1864, * * * and granted by;the state of Oregon," to the grantor by Act Or. Oct. 24, 1864, "and the undivided one half of the ,right, title, snd interest" of the grantor "to said grant of land under the several actll aforesaid, whether listed and approved or otherwise, also tbe undivided one halt of all future right, title, and interest, olaim, propert.T, and demand," whiohthe (l'rantor "mS7