3 F. 423 | U.S. Cir. Ct. | 1880
The demurrer to the original bill having been sustained on the ground of the immorality of a material part of the contract,
The amended bill makes certain averments, intended to show the right of plaintiff to recover, notwithstanding the insertion of this vicious clause in the original contract.
The question to be determined is the sufficiency of these averments, or of any of them, to entitle plaintiff to the relief sought.
1. The plaintiff now claims that it is rightfully in possession of the right of way, and of the telegraph line in question, by virtue of the provisions of the act of congress of July 2, 1864, entitled “An act for increased facilities of telegraph communication between the Atlantic and Pacific states, and the territory of Idaho.” I had occasion to comment upon this act in my opinion upon the demurrer to the original bill, and the conclusion reached was that the act was intended to authorize the United States Telegraph Company, either with or without the consent of the railway company, to construct and operate a-line of telegraph along and upon the right of way of the railway company. Whether this right was assigned and transferred to the present plaintiff by a valid contract, was not considered, and that question is now to be determined. The allegations of the amended bill, being admitted, sufficiently show that the United States Telegraph Company had, by virtue of the laws of New York, by which it was created, a right to make an assignment and transfer of ail its franchises and property to another telegraph company.
Counsel for respondents insist, however, that this right was
I am also of the opinion that the amended bill, taken as true, shows a transfer of those rights to the plaintiff. It follows from this that the plaintiff has rights in respect to the
2. There is another ground upon which I should feel constrained to hold that the plaintiff has, by the amended bill, shown an interest in the telegraph lines and property in controversy which a court of equity should protect. Even if we assume that the contract is void, the property accumulated or constructed under it must, as between the parties, be disposed of according to equity, and tlio court will not refuse to deal with that property on the ground that it was acquired under an illegal contract. Such is the doctrine established by the supreme court of the United States. The case of Planters’ Bank v. Union Bank, 16 Wall. 483, was a suit to recover money received for the sale of confederate bonds. In the course of the opinion Mr. Justice Strong said: “It may he that no action would lie against a purchaser of the bonds, or against the defendants, on any engagement made by them to sell. Such a contract would have been illegal. But when the illegal transaction has been consummated; when no courfc has been called upon to give aid to it; when the proceeds of the sale have been actually received, and received in that which the law recognizes as having had value ; and when they have been carried to the credit of the plaintiffs, tlie case is different. The court is there not asked to enforce an illegal contract. The plaintiffs do not require the aid of any illegal transaction to establish their ease. It is enough that the defendants have in hand a thing of value that belongs to them. Some of tho authorities show that, though an illegal contract wall not bo executed, yet, when it has been executed by the parties themselves, and the illegal object of it has been accomplished, the money or thing which was the price of it may he a legal consideration between the parties for a promise, express or implied, and the court will not unravel the transactions to discover its origin.” Id. 499-500.
In Brooks v. Martin it was held, upon full consideration, that after a partnership transaction, confessedly in violation of an act of congress, has been carried out, a partner in whose hands the profits are cannot refuse to account for and divide them on the ground of the illegal character of the original contract. All of these cases admit the invalidity of a contract bottomed in immorality or in a violation of a statute, and they all agree that where a party comes into court and asks relief upon such a contract it must be denied. But they make a distinction between those cases in which a court is asked to enforce such a contract, and those in which a court is asked to deal with property which has been acquired as the result of the execution thereof. Such property may constitute the subject-matter of a suit at law or in equity, notwithstanding the invalidity of the contract under which it was acquired. Applying this doctrine to the case in hand, we find, according to the allegations of the amended bill, that besides the property acquired by plaintiff from the United States Telegraph Company (and which became and is a part of the line) the plaintiff has expended upon said line over one hundred thousand dollars in excess of the contributions made by the railway company under the contract.
The fact seems to be that, by expenditures made by the plaintiff, and by contributions from the railway company, the line has been constructed, reconstructed, and maintained. If the contract were set aside it would, I think, leave the parties joint owners of the property, and a case for equity jurisdiction, in the adjustment and settlement of their respective interests, would be presented.
3. I reserve for further consideration hereafter the question of the effect of the parol agreement set out in the amended
4. It is insisted by counsel for defendants that the contract set out .in the bill (assuming its validity) is one which requires the performance of continuous duties, involving the exercise of skill, personal labor, and cultivated judgment; and that, therefore, a court of equity will neither decree its specific performance nor enjoin its violation. That the contract is in its nature incapable of being enforced by a decree for specific performance is very clear, (Marble Co. v. Ripley, 10 Wall. 339;) but it does not follow that a party to such a contract can have no injunction to restrain its breach. It is now settled, I think, by the decided weight of authority, that in such cases, although the affirmative specific performance of the contract is beyond the power of the court, its performance will be negatively enforced by enjoining its breach. Pomeroy on Specific Performance, §§ 24, 25, 310, 311, and 312, and cases cited. If, therefore, the contract shall be finally held valid by reason of the elimination of the vicious clause, or on any other ground, it will follow that the injunction was properly granted. If it should be held that the contract is void, it will still, in my judgment, follow that the defendant should be restrained from taking possession of the property accumulated, under the circumstances stated in tho amended bill, until an accounting and settlement can be had.
The demurrer to the amended bill is overruled. Defendants may answer if they see fit. If they stand upon their
See ante, 1.