The Bankrupt Streetcar Company Ordered to Keep a Mansion Lit

Judge Hanford, sitting in the United States circuit court, yesterday decided that the receiver of the Grant Street Electric Railway Company must continue to illuminate the residence of G. E. M. Pratt. The suit was brought by Charles E. Cottling, Edwin Packard, Samuel Spencer, Charles S. Tuckerman and Frank O. Webster against the Grant Street Electric Railway Company, Fred E. Sander, Incorporated, the Atlantic Trust Company and Dexter Morton Co., bankers.

The receiver had petitioned the court to vacate an order requiring him to perform the conditions of a contract under which the defendant corporation became bound to pay for the electric current for lighting Mr. Pratt's residence. The order had been made on the petition of Fred E. Sander, president of the corporation. The receiver argued that the corporation never contracted or became obligated to pay for the lights.

Judge Hanford found that the defendant corporation owned machinery and appliances for creating electricity, but could not use them without a license or permission from the city of Seattle to place poles and wires in the streets and alleys. Mr. Pratt had acquired ownership of a franchise granted by the city for that purpose. The defendant was a close corporation: Mr. Sander and his wife owned most of the stock and, with Mr. Bruns, constituted the board of trustees. Mr. Sander was president and manager, with unlimited power to transact all its financial business and bind the corporation by any contract he might enter into for its benefit.

Mr. Sander was also president and factotum of another corporation bearing the name 'Fred E. Sander, Incorporated.' In his individual name he entered into an executory contract with Mr. Pratt by which he agreed to purchase the franchise for $500 and to furnish electric current sufficient for a specified number of lights in Mr. Pratt's residence for five years, making the necessary connections free of expense. Pursuant to that contract the defendant corporation paid the $500 directly to Mr. Pratt by a check drawn on Dexter Morton & Co., and until it went into the hands of the receiver it paid the monthly bills for electricity used in lighting Mr. Pratt's residence. In consideration of those payments Mr. Pratt assigned and transferred the franchise to Fred E. Sander, Incorporated. That corporation never paid anything on account of the contract and never made any use of the franchise other than to assign and transfer it, along with other property and franchises, to the defendant corporation.

Mr. Sander and Mr. Bruns testified positively that the contract with Mr. Pratt, although made in the name of Fred E. Sander as an individual, was in fact made for the use and benefit of the defendant corporation, and was so understood by its officers at the time; and that the defendant corporation, with full knowledge of the terms and manner of the contract, did actually assume the payments stipulated. The court held that the defendant was the principal contracting party and Sander its agent, and that a receiver would not be permitted to shirk a liability the corporation had assumed and from which it had profited. The application was denied.