Havana City Ry. Co. v. Ceballos

139 F. 538, 71 C.C.A. 326, 1905 U.S. App. LEXIS 3894

• Court: Court of Appeals for the Second Circuit
• Decided: June 23, 1905
• Docket: No. 160
• Status: Published

Opinion

COX1i~, Circuit Judge

(after stating the facts as above). An examination of the receipt, which is the foundation of this action, discloses the fact that it is simply an escrow contract by which the defendant held the assignment in accordance with the agreement between the complainant and Pla. In other words, after Pla had secured the right to use electricty and the complainant had paid him $1~,OOO the defendant was to deliver the assignment to the complainant and not until then. This escrow contract was drawn up by the complainant's president and uses the words "which trust I hereby accept" but we think the complainant places an erroneous interpretation upon these words when it insists that in all subsequent matters relating to the Havana concession the defendant acted as the complainant's trustee. The language of the instrument itself leaves no doubt as to the nature of the trust-namely, to hold the assignment in escrow as agreed.

- A clear and ~comprehensive treatm°ent of the subject of escrows will be found in 16 Cyc. 561. At page 575 the writer says:

"Until the escrow contract has been made, the depositary has no rights or authority enforceable at law. When this has been made and the instrument deposited, the depositary is not the agent of the grantor, obligor, or promisor alone, but he is the agent of both parties. When the condition upon the happening of which the instrument is to take e~ect is performed, the depositary becomes the mere agent or trustee of the grantee and the depositary's possession is the possession of the grantee. The depositary must have the power to judge whether the condition has been performed, in order to act, unless he is relieved of this duty by the stipulations of the parties. Where he has such power and exercises it, the nonperformance of the condition cannot be asserted against bona Me purchasers. A depositary who violates the terms of the escrow contract is liable in damages for the loss suffered thereby."

The condition upon which the defendant was to deliver the paper held by him in escrow never arose, and therefore he did not and could not violate the escrow contract. He was not a party to any other contract with the complainant.

By the terms of the agreement of October 22, 1895, both parties agreed to use their influ’ence and energies to procure the grant of electricity as soon as possible. It does not appear that complainant made any affirmative move to secure this grant. It does appear that Pla did endeavor to secure it, but was unable to do so owing in part, no doubt, to the disturbed condition of the island of Cuba at the time in question. On the 24th of August, 1897, Pla wrote the complainant’s president, Alexander, saying that he had been working to secure the change to electricity, had been unable to do so and was convinced that further effort was useless. The letter concludes as follows: “You will consider our agreement can-celled and this will serve to notify you.” It is said that the statements of fact in this letter are not worthy of credit because of statements made by Pla and others to Alexander a year afterwards and testified to by him. This testimony was clearly hearsay even though it came out on cross-examination. But even though it be true that both parties wholly ignored their contract obligation to procure the right to use electricity it is not easy to perceive how the defendant is affected thereby. He was under no obligation to procure a grant of electricity for either Pla or the complainant. An examination of the record makes it quite evident that neither party regarded the concession of the October agreement as of great value until other parties with capital, energy and skill had organized the Havana trolley system and made it a success. Pla did not agree to assign his horse car line concession; he only agreed to assign the electrical concession if he got it. We cannot see that others, not parties to this agreement, were precluded from entering the field as competitors, even though they knew of the relations between Pla and complainant. If Pla has broken his contract he is liable in damages, but in order to make the defendant liable it must appear that he has violated some duty or obligation which he owed to the complainant. He may have been a “go-between”; his knowledge of the Spanish language made his serviced as an interpreter valuable, but he was not an agent or a trustee; he was not employed or paid by the complainant; he received no money for it; he incurred no obligation on its behalf. The transaction with defendant took place in 1895. Two years afterwards the contract was canceled by Pla and more than a year after the cancellation, December 16,1898, the horse car concession was assigned to defendant. The complainant’s theory seems to be that the defendant, while acting in a fiduciary relation to the complainant, took advantage of the knowledge thus obtained to prevent the complainant from obtaining the concession in order that he might procure it for himself. To state the proposition more plainly the defendant is charged with having combined with Pla to defraud the complainant of valuable rights. We do not pause to analyze the legal aspects of this contention for the reason that it cannot be sustained upon the facts; the evidence falls far short of proving a fraudulent conspiracy. The defendant did not act in his individual capacity until long after it was manifest that the grant of electricity under the contract of October, 1895, could not be obtained.

The decree is affirmed.