Asa Low v. The Connecticut & Passumpsic Rivers R.R., 46 N.H. 284 (1865) - Opinion

This action cannot be maintained, because there being no express promisé or request to perform, the services must have been alleged and proved, or, at least, the facts must have been such that a request could be inferred; but there was no party in existence when the services were performed, except the original corporators, competent to make the re-, quest, and they did not make it, nor did a majority of them know of the services; nor could they have made it for the new corporation created by the division of the charter.

The acceptance of the subscriptions afterwards could-not make the corporation chargeable. The services were not performed upon any property of the defendants, so as to be incorporated with the property and make part of its value, nor were they property themselves, of which, by accepting it, the defendants would become purchasers, and, if they had been, the declaration would not have been adapted to the ease. On these grounds no action at law can be maintained. 1 Chitty’s Pleading 338; 1 Sanders’ Rep. note 1.

The services were of such a nature that the defendants could not have rejected them after they were performed, nor could they refuse the benefit of them. There was, therefore, no voluntary acceptance of them. The services consisted, not in directly obtaining subscriptions by the defendant himself, but in exciting an interest in the enterprise. The subscription books were paid for b.y the corporation, and placed in the hands of persons, other than Mr. Low, who received the subscriptions, and returned the books to the company, Low having neither the possession of them, nor any interest in or right to them. The services resulted in nothing valuable to the plaintiff, if the defendants had not received the benefit of them. The defendants took nothing from the plaintiff, nor from any one, which the plaintiff had a right to withhold from them. Those who received the subscriptions had a better right than the plaintiff, to dispose of them — a perfect right to them as against the plaintiff. The subscribers, too, had a right to have their subscriptions received. The subscriptions constituted, when accepted, contracts between the subscribers and the defendants, and the obtaining of them was no more for the benefit of the corporation than of the subscribers. A corporation receives the benefit of services performed in obtaining its charter. If the acceptance of the benefit of the services of the plaintiff is to make the defendants chargeable, there is no reason why accepting the benefit of services performed in obtaining their charter should not charge them, but it would not. It was so decided in Hall v. Railroad, 28 Vt. Rep. 401, which is a Vermont authority. It would make no difference whether the services were performed before or after the corporation was in esse, because the liability would result, not from the performance of the services, but from the acceptance of them with notice of the performance.

Services performed for one, without his request, does not make him chargeable. Bartholomew v. Jackson, 20 Johnson’s Rep. 28; 1 U. S. Dig. p. 277, sec. 245; even though he is ever so much benefited by them.

There was no necessity for performing the services in controversy without authority, because the original corporators might have been applied to. The fact that thev were not called on is strong evidence that the services were intended to be gratuitous. Hughes v. Parker, 20 N. H. 69; Low v. Railroad, 45 N. H. 379.

Between the case in controversy and the cases of subscriptions to stock, referred to in the former opinion, I see no analogy. In those cases the subscribers made express written promises to corporations in being, upon sufficient consideration, to take stock and pay for it, which promises were accepted by the corporations prior to any revocation of them, and after organization.

In the case Preston v. Railway, in 7 Law & Equity Reports, referred to in the former opinion, there was an express contract made by the promoters with Preston in behalf of the company, which, with full knowledge of the contract, and the benefits to be derived from it, was accepted and ratified by the corporation, after its charter was obtained, by setting out the line of the railway over Preston’s lands, and giving him notice that the lands would be required. Besides, the mode of instituting railway enterprises in England differs from that in practice here. The promoters of railways in England form preliminary associations, which become the corporations, and are identical with them, and the corporations are, therefore, charged with their acts, and their knowledge, and bound by their contracts. Redfield on Railways, 631, 632, 633, 634, 635, 636 and 637, secs, I, II and III. The English cases are, therefore, not applicable here. The promoters in England associate together, and are recognized, in law, as associates before incorporation. They make contracts, and become incorporated, and are bound after incorporation by contracts made before incorporation, but, because the corporation is not, in law, the contracting party, the remedy upon the contract is in chancery for a specific performance, only, on the ground of privity of interest, there being no privity of contract, and the contract not being negotiable.

The provision at the close of the 4th section of the original charter, by implication, excludes any claim for the plaintiff’s services — "Expressio unius exclusio alterius est.” Sherwin v. Bugbee, 16 Vt. Rep. 445. The surveys mentioned in the 4th section would be necessary, in order to determine whether the road could be built at all, and whether, therefore, it would be expedient to obtain a charter, or take any steps towards building the road, and would require an actual expenditure of money. Other preliminary services are usually performed without such expenditure. Hence the distinction made in the charter.

The instruction requested in respect to evidence of general notoriety should have been given. General notoriety is strongly analogous to general reputation. In matters of private interest, both stand on the same ground as to admissibility. The court, by the charge, gave the jury to understand that evidence of notoriety was competent to prove notice, and was to be considered for that purpose. See 1 Greenleaf on Evidence, secs. 137, 138.

"The value put upon the (plaintiff’s) services, by the persons who employed him on account of the corporation,” was no more than the opinions of persons who had no authority to act for the corporation, as to the value of the services. Low v. Railroad, 45 N. H. Rep. 381, 382, 383.

The plaintiff’s testimony as to-what was said about the pecuniary ability of the signers of paper which he carried to Canada, was a statement of mere hearsay, and incompetent for any purpose.

The clause in E. B. Chase’s deposition which the court ruled out was competent. The statement, "it was understood that we were not to have any compensation, so understood and talked by the directors,” properly construed, means that it was "so understood and talked by all the directors.” The plaintiff was one of the first board of directors, and continued to be a co-director with Chase and others, for several successive years next after the organization. To this point see Clough v. Bowman, 15 N. H. 514. A reasonable degree of certainty is all that should be required in the expressions of a witness.

The first question is upon the instructions of the court in regard to the services of the plaintiff in procuring a division of the charter. Those instructions were, that, if the Vermont Central Bail-road, while unlawfully using the route of the defendants’ road, were making unreasonable opposition to the bill, and the plaintiff threatened to have them enjoined against such use, that would not prevent him from recovering for his services in procuring the passage of the bill, though the opposition of the Vermont Central Bailroad was withdrawn in consequence of the threat. The request was to charge the jury that no recovery could be had for such service in procuring a withdrawal of this opposition by means of such threat; and it was upon the ground that this act of the plaintiff was against public policy and illegal. We think, however, that these instructions were right. If the Vermont Central Bailroad-was making opposition to this bill upon grounds, not of a public character, but to protect or advance its private interests, the plaintiff might lawfully induce that corporation to withdraw such opposition by considerations bearing upon its private interests.

In repeated instances this has been sanctioned by the English courts, in cases where individuals and turnpike and bridge companies have been induced to cease their opposition to the incorporation or extension of railways by indemnities for the injuries likely to be caused by such railways. There might be cases where the withdrawal of opposition to' such bills, caused by compensation secured to the persons making it, would be against public policy and illegal, although such opposition was merely of a private nature, as when the fact of compensation was by design concealed from the legislature by the parties, knowing that the nature of the case was such that the legislature would be misled by the withdrawal of opposition, and might be induced to do what, with a knowledge of all the circumstances, they would not do. If, however, the opposition was of a private character, and merety to protect private interests, and it was afterwards withdrawn in consideration of a satisfactory indemnity for the injury anticipated, and there was no purpose to conceal the arrangement from the legislature, we do not perceive that it would be open to objection; and the cases are numerous in England where such arrangements are held to be valid. Among those eases are Howden v. Simpson, 10 Ad. & El. 793, in the Exchequer Chamber, on Error from the Queen’s Bench in 1839, affirmed in the House of Lords; see Red. on Rail. 646, n. 1; Vauxhall Bridge Co. v. Earl Spencer, 2 Mad. 356; Edwards v. Grand, Junction Railway, 1 My. & Cr. 650, quoted in Redfield on Railways, 641, sec. 7, and Hawkes v. Eastern Counties Railway Co., 15 Law & Eq. 358, decided in 1852, where there was a very able opinion of the Lord Chancellor, Lord St. Leonards. In that case the railway company had a bill in Parliament to authorize them to build a branch, or ‘an extension of their railroad, which would cross the land of the plaintiff, who, on that account, opposed the passage of the bill; but he was eventually induced to withdraw his opposition in consideration of their agreement to buy his estate of about six acres of land and a house thereon for £8000, and the further sum of £5000 by way of additional compensation, for removing his business, &c. Whereupon he did withdraw his opposition, and the bill passed. On a bill in equity, specific performance of this agreement was decreed, although the road was not built, or the land taken. In this opinion to the same point are cited Stanley v. The Chester & Birkenhead Railway, 1 Rail. Cases 58, and Gooday v. The Colchester & Stour Valley R. R., 15 Law & Eq. 596.

The cases fully establish the doctrine in England that where opposition is made to a railway project in Parliament merely to protect a private interest, and the party is induced to withdraw that opposition in consideration of an indemnity secured to him, the courts will enforce such indemnity, unless from the peculiar circumstances of the case the legislature were liable to be misled, and to do what it would not have done had not the transaction been concealed from its knowledge. In such cases the concealment is an important element in determining the character of the transaction; see Howden v. Simpson, before cited; and it is, therefore, judicious in many instances to let the substance of the arrangement appear in the bill to avoid all appearance of concealment. If, however, the opposition be obviously of a private nature, and is afterwards withdrawn upon satisfactory indemnity openly given and received, although not stated in the bill, we think there could ordinarily be no objection to it, and yet all arrangements of this kind ought to be watched with a jealous scrutiny by courts of justice.

It has been argued by the counsel for the defendants, that the views of the English courts are undergoing some change of late upon these subjects, and in confirmation of this view we are referred to Redfield on Rail. sec. 15, p. 663. We see, however, no evidence of any substantial change of the doctrines stated by us, as the result of the decisions referred to. On the contrary, Judge Redfield, on page 664, thinks there is no question that land owners and bridge and turnpike and existing railway companies, may stipulate for reasonable indemnity against injury from new railways as the price of withdrawing opposition, though he holds that the only proper mode of securing such indemnity is by inserting it in such charters. Applying these principles t° this case, it appears that the Vermont Central Railroad, while using the defendants’ route below White River, opposed the passage of the bill dividing the defendants’ original grant, and therp is nothing tending to show that the opposition was upon other than private grounds. The court refused the instructions asked for, that plaintiff could not recover for his services in so inducing the Vermont Central Railroad to withdraw their opposition; but did instruct the jury that a threat to restrain the further unlawful use of that route, to induce that railroad to withdraw an unreasonable opposition to the bill, would not prevent the plaintiff’s recovering for his services.

In the first place we think the court was right in declining to give the instructions asked for, because it could not be a conclusion of law that plaintiff was not entitled to recover, inasmuch as the evidence tended to show that the opposition was upon private grounds alone; and there was no evidence of a contrary tendency, and we think there was no error in the instructions actually given, because, according to the principles we have laid down, there could be no illegality in inducing the Vermont Central Railroad to withdraw an unreasonable opposition which was dictated by private and not public motives, by means of threats to prevent the further unlawful use of the defendants’ franchise. There appears to have been no request for instructions as to the character of the opposition, whether upon public or private grounds, or whether the inducements to withdraw it were concealed or not from the legislature; and in the absence of anything further, it is to be presumed that proper instructions were given, and besides, there is no evidence of concealment, nor anything tending to show that the legislature was misled.

It is urged by the defendants that this division is in effect a new incorporation, and therefore that the defendants cannot be liable for services rendered in obtaining-this division, which is alleged to be a new charter. The objection to the recovery for these services is based upon the decision in Hall v. Vt. & Mass. Railroad Co., 28 Vt. 401; but it will be perceived that the doctrine of that case was that there was no implied promise to pay for services in obtaining a charter, and as there was no subsequent promise to pay, the plaintiff could not recover, and besides it is said that those services appeared to be voluntary. We think, moreover, that this division must be regarded as a modification of the original charter, and that the original corporation still exists, although the extent of its franchise has been altered. In this respect it is much like towns and other municipal corporations, which may be changed from time to time by adding other territory, or taking from it a part of what originally belonged to it. So, as to railway and turnpike companies, which may receive extensions of their franchises without destroying their original charters. But, however this may be, the plaintiff’s case is put upon the ground of an antecedent request by defendant, implied from taking the benéfits of those services. By section 4 of the original charter of the defendant corporation, provision was made for the payment by the corporators of the expenses of surveys and examinations, and of preliminary surveys already made and making, and all manner of incidental expenses relating thereto, and it was urged by the defendants’ counsel that this provision excluded all liability for the services in question.

It will be perceived, however, that the plaintiff's claim is.not put upon the ground of the liability of the corporation independent of any subsequent action or promise, as would be the case for services about surveys under that section, and therefore the maxim expressio unius est exchcsio alteritcs can have no application, for here the plaintiff rests his claim upon subsequent acts of the defendant equivalent to a provision after the corporation was organized, and not upon any original obligation to pay. Even if the two cases stood upon similar footing the application of the maxim would, to say the least, be doubtful, for it is always to be applied with great caution. Broome’s Legal Maxims, *506; but for the reasons before stated, it is unnecessary to consider this further.

The defendants’ counsel asked for instructions that general notoriety was not competent to prove notice of plaintiff’s services, and the court did charge the jury that mere notoriety was not of itself sufficient, but that the public nature of the services rendered might be considered in connection with other evidence, and in this we do not perceive any error. It is true that general notoriety is not evidence, and none such appears to have been received; nor do we understand that any effect was given to it in the instructions, but the jury were simply allowed to take into view the public nature of those services in connection with other evidence.

The evidence of what the plaintiff did to ascertain the pecuniary ability of some of the subscribers was proper to consider, to show the diligence of the plaintiff in this service.

It appeared from the testimony of E. B. Chase that he performed services of a similar character for the defendant, and that he neither claimed nor received any compensation; and it was proposed to read a clause in his deposition to the effect that it was understood and talked by the directors that they were to receive no compensation, it appearing that both the witness and the plaintiff were members of the first board off;directors. This part of the deposition was rejected as incompetent, and we think rightly rejected. Assuming that it related to compensation to those who had obtained subscriptions, it must have been after those services had been rendered by the plaintiff, and these statements could only be admissible upon the ground that they were made by the plaintiff in his presence, and not objected to by him. That it was so talked by the directors without showing that plaintiff said to or was present at such conversation, would not tend legally to prove any. admission by him; and before he can be affected by such evidence the proof must show him present at least-, and in a situation to hear what was said. The case of Stone v. Little, 44 N. H. 610, is decisive on this point. It is urged that the term the directors necessarily means all the directors, but to this we cannot assent. It may, or may not, and we think it is for the party offering the deposition to remove the uncertainty, and that not being done the statement was rightly rejected. It is urged further by the defendants’ counsel, that the nature of the plaintiffs services was such that they could not be rejected by the corporation. It was, however, determined otherwise in the former case. If the plaintiff had, by the request of a corporator and under a promise of compensation, obtained at considerable expense all the subscriptions for stock that were made, and, on presenting the books to the original corporators, with a statement of his services and his claim for compensation, they had accepted the subscriptions without objection to his claim, we think it quite clear that the corporation would be bound, as much as if the antecedent request had been made by an authorized agent of the corporation; and this is substantially the ground upon which the plaintiffs case is here put. It is true, as urged by the defendants’ counsel, that plaintiff was not all the time engaged in the act of obtaining signatures for stock, but his efforts to awaken an interest in the enterprise were but the preparatory steps in the work of obtaining the subscriptions.

Upon the subject of notice to the corporation of the existence of the plaintiff’s claim, the defendants’ counsel requested the court to instruct the jury that the corporation-was not liable unless a majority of the original corporators promised he should be paid, or the corporation accepted the services and took the benefit of them, with prior notice thfit the plaintiff claimed compensation for them, and that notice to any number of the corporators short of a majority of them, or of the holders of a majority of the stock, would not be notice to the corporation. The court declined to give them instructions in form requested, but did instruct the jury "that to bind the corporation by such ratification, it would be essential that it had previous knowledge or notice of the existence of the claim, or of the material facts upon which it was founded, or that it was put upon inquiry with respect to it; and as to what should be regarded as sufficient notice, and what should put the stockr holders upon inquiry, they were instructed that if the holders of a majority of the stock, at the time when the corporation was organized by the choice of officers, had such information of what had been done by the plaintiff in the business of the corporation as would-lead them to understand that he(had performed services for which he was justly entitled to compensation from the corporation, and without inquiry proceeded to organize the corporation, and so received the benefit of his services, the corporation would be bound to pay him a reasonable compensation for the benefit received. As we understand it, this is in accordance with the views laid down in the former case. It is very clearly not necessary that the precise character and extent of the claim should have been notified to the stockholders, but it is enough to put them upon inquiry to have notice that services have been rendered of such a nature as to raise the presumption that they were to be paid for. The fact that some services of a similar character were often, or usually, rendered without compensation, could not affect the principle of law that was to guide the jury, although it might very properly bear upon the question whether compensation might reasonably be claimed. Whether it might or might not be in this particular case, would depend in some-degree upon the extent of those services, their value, the amount of time and money expended in performing them, and.a variety of other circumstances, all of which it would come within the province of the jury to consider.

It is urged, also, that, the court declined to instruct the jury as requested, that the plaintiff could not recover unless a majority of the original corporators promised that he should be paid, or unless the corporation accepted them, &c.; and the defendant calls attention to the statement in the case that in the course of his services he was requested in letters and otherwise by some of the oi’iginal corporators, to persevere in his exertions; and it is urged that the jury, for want of the instructions prayed for on this point, may have understood that such a request would bind the corporation. It will be perceived, however, by the case that the persons who took the principal lead in the movement of getting up the stock were not then corporators, and that it was with them he v/as chiefly in communication, they having assured him he should be paid for his services, and the injury to his business.

The instructions to the jury obviously put the case upon the ground of acceptance and ratification by the corporation, and not upon the ground of a previous promise by the original promoters or grantees. The court says that though the promoters of the enterprise who undertook to employ the plaintiff had no authority to bind the corporation by a contract, yet if the plaintiff went on in an arrangement with them to perform such services, and the defendants, with due notice, received the benefits of them, they would be deemed to have ratified the arrangement so far as to he bound for the services, if they were not gratuitous.

In this, we think that in the terms, “ promoters of the enterprise who" undertook to employ the plaintiff,” may fairly be included the original grantees, and therefore it must be considered as assumed by the court that they had no authority to bind the corporation; and so we think it must have been understood by the jury. If there was any reason to apprehend that the jury might have been misled on this point, the verdict ought to be set aside, but upon a careful consideration of the case we see no reason for such apprehension.

It is urged, also, that, as there was no express promise to pay, a previous request was necessary; and as there was no party in existence to make such a request, the action must fail. This point, however, was fully considered in the former case, both upon principle and authority, and we are fully satisfied, with the conclusion there reached. The English cases cited, in repeated instances, hold that an arrangement made by the promoters of railway enterprises, previous even to any act of incorporation, may become obligatory upon the corporation afterwards created, where they had accepted the benefits arising from it; and this, even, where that benefit was merely the withdrawing of opposition to the act of incorporation. In those cases, there was clearly no party in existence when the arrangement was made that could be bound. Here, it was otherwise, for the grantees bad been incorporated. It appears in this case, that, on the plaintiff’s objecting to engaging in this business on account of his own private affairs at home, he was assured by the promoters of the enterprise before referred to, that he should be paid for his services and the injury to his business; and the court instructed the jury that although they could not give the plaintiff anything on account of damage to his private business, yet when they came to inquire what the nature of the plaintiffs services was, they were at liberty to consider the value put upon the services by the persons who employed him on account of the corporation, as a circumstance tending to show what the value of his services was; and if those persons said he should be paid for the amount of the damage to his business, that was an indication of the value which they put upon the services. As an estimate, simply, of the value of those services, they could not, we think, be considered by the jury, because these persons could not be regarded as authorized to act for the corporation; and therefore it was immaterial what value they put upon his services.

If this point of the charge can be sustained, it must be upon the ground that payment for these services according to the promise made by the promoters of the enterprise, was part.of the burden assumed by the defendants when they accepted the benefits of that arrangement. As has been stated before, the instructions to the jury put the plaintiff’s right to recover upon the question whether the defendant corporation, on due notice of the terms on which these services were rendered, accepted the benefits arising from them, and thus ratified the agreement under which they were performed; and we think it must be assumed that the jury have found such.acceptance and ratification, otherwise the verdict must have been for the defendant.

In that aspect of the case the agreement between the plaintiff and these persons must be considered as accepted and ratified by the defendants, provided they had due notice of it; and on that point the instructions were that the defendants should have had previous knowledge or notice of the existence of the claim, or of the material facts upon which it was founded, or that it was put upon inquiry in regard to it.

The material facts on which the claim was founded were the arrangement with the promoters of the enterprise to render these services, and that he should be paid for them and the damage to his business, and the fact that he did render them; and it would seem to follow, from the acceptance and ratification by the corporation, that it was bound to pay the plaintiff according to the terms of that agreement.

In this view of the case the instructions of the court were sufficiently favorable to the defendants. The court, indeed, might have gone further, and have directed the jury that if they found that the defendants, after due notice, had accepted the benefits arising from the plaintiff’s services, rendered in pursuance of this arrangement, they would be bound to make good the promises of compensation, instead of directing them that they might consider the value put upon those services by these persons, when they promised to pay the plaintiff for the damage done to his business. If, then, there was any error in this part of the instructions, it was not in favor of the plaintiff; nor do we perceive that in any state of the case it could prejudice the defendants.

"With these views there must be