Danforth v. President of the Schoharie & Duanesburgh Turnpike Road

Majority

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Danforth against the President, Directors and Company of the Schoharie and Duanesburgh Turnpike Road.

Headnote

Whetfe thcie is a covenant to pay money* and part has been paid., ns sumpsit will lié on the implied promise to pay the balance.^

Assumpsit will Tie against & corporation Orí an implied promise.

THIS was an action of assumpsit¡ The declaration contained three counts :

In the first count the plantiff stated that the defendants, of the first part, and the plaintiff of the other part, on the 26th of May, 2810, entered into articles of agreement, under the seal of the said corporation, and under the hand and seal of the said plaintiff ¡ and then proceeded to set forth the said articles of agreement; whereby the plaintiff covenanted, on or before the 1st of October, 1811, to make a turnpike road, for a certain distance, supposed to be eightand a half miles; or Should it exceed, or fall short of that distance, the pay was to be in proportion j that is,at the rate of six. thousand dollars for every eight and a half miles, five miles of which road were to be completed on or before the 1st of Novem ber, then next; and it was further covenanted, that the plantiff should so far complete the remainder of the road, from the termination of the said five miles, that it should be passable for sleighs, wagons &c. by the 1st December then next; in consideration whereof, the defendant covenanted to pay the plaintiff the sum of six thousand dollars, in the following manner :—* Three thousand dollars on or before the 1st- of November then next, to be paid as the work goes on ; five thousand dpllars before the 1st July, 1811, and one thousand dollars in the stock of the said company, when the Whole route shoüld be completed. It was then stated, that afterwards, on the. 5th of October, 1812, the defendant covenanted with the plaintiff, that if he would execute

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and deliver to them a bond, in the sum of six hundred dollars-conditioned to put the road, mentioned in the above agreement, in such repair as the law directs, at any time after the 1st of APril' anc* before the 1st of August then next, that they, the defendants, would pay him the sum, or sums, of money mentioned in the above articles of agreement. The plaintiff then averred, that on the 7th of October, in the year aforesaid, he did deli ver the defendants guch a bond, and that there then was, and still is, due to him, the sum of four thousand dollars, on the said agreement ; and that the defendants did not, at the day and year last aforesaid, pay him the said sum of money; and being so liable, the said defendants, afterwards, to wit, on the said 7th day of October, undertook, and faithfully promised the said plaintiff, to pay him the said last-mentioned sum of money, when thereto requested.

In the second count, the plaintiff, after setting forth the articles of agreement, averred that he proceeded to make the road at the time required by the said articles, and that the defendants did not purchase the land and ground mentioned therein, in such time that he could complete the road by the time he had covenanted ; and therefore, afterwards, on the 5th of October, 1812, the defendants covenanted, that if he would execute and deliver to them a bond, Sec. ; as in the first count.

The third count was a general indebitatus assumpsit for work and labour. ,

To this declaration there was a general demurrer and joinder.

M'Gowen, in support of the demurrer.

A corporation aggregate cannot be charged on any contract, unless under their corporate seal.^[14] If this action is founded on the first agreement stated in the declaration, which is averred to have been under seal, then it should have been covenant, not assumpsit. Assumpsit never lies against a corporation, except in cases especially provided in the act or charter' of incorporation. An agreement by a corporation, not under seal, will not be enforced in equity.^[15] A corporation' may do an act of record, and are estopped to say that it is not their deed,^[6] but it can do no act in pais, unless under their corporate seal. .

S. Foot, contra.

The position of Blackstone, and which is. laid down in Bac. Ab. where the same authority is cited, is not supported by the cases. Whatever may have been the rule

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th~cient1y, on~ this subject,. it has been relaxed .~n modern times. in the, case of Maxwell v. Dulwick College, decided 14th .Tuly, 1783,^[14] it is said, that an agreement of a major part of a corporation, entered in their books, though not under their corporate seal, will be decreed in equity. In the case of the Attorney General v. Davy,^[15] decided in I T41, i1ord Hard2viclce says, it is not necessary that every corporate act should be under the seal of the corporation, as to choose a chaplain, or to present to a living.^[6] It has been admitted, that a corporation may ap point a servant or bai1i~ without deed.^[7]

R~jd, in his treatise on~ the law of corporations, though he 1ays~ down the general rule, that a corporation aggregate cannot dispose of their real estate, or appoint a person to do an act in which their real property is concerned, yet they may do other acts to bind them, without seal. A seal is only evidence of assent to an act, and that assent is as well shown by a resolution or entry made in the minutes of the corporation. ' \ -

Chitty^[8] says, assumpsit does not lie against a corporation, which cannot contract by paroi, unless in the case of contracts sanctioned by statute ; and he cites 6 Vin. Ab. 317. pl. 49. and 5 East's Rep. 239.; but Viner only says case will not lie on an express promise. The case in East was of a promise relative to the tolls of the corporation. In the case of the King v. the Bank of England^[9] it was held that a special action in the case will lie .against a corporation, to compel a transfer of stock. It is true that in Breckbill v. Turnpike Company,^[10] in the supreme court of Pennsylvania, it was dec.i ded, that indebitatus assumpsit would not lie against a corporation on an in~piied pl1omise. lii the case of the M. Ins. Co. of Alex. v. Young,^[11] the pøtht wasargued, and the authorities cited, in the supreme court of the U. S. but no decision was made on the question. In Gray v. The Portland Bank,^[12] it was held; that a special action on the case lies against an incorporated bank, for, refusing to permit an original stockholder to subscribe and hold the new stock created by the corporation. In Stafford v. the Corporation of Albany,^[13] this court held that assurnp~it would lie against a corporation, on the implied promise to pay the amount of damages assessed by a jury, for the land of the plaintiff taken by the corporation.

That there was a covenant in this case, can be no objection,

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to the action of assumpsit, to pay the balance due on the agree- • ment.^[14]

it has been decided in the supreme court of the U. S. that assumP^t will lie against a corporation, on an implied promise, or a promise not under seal.^[15]

délivered the opinion of the court. This case comes before the court on a general demurrer to the decíaration. The action is assumpsit, and the two first counts in the declaration set forth articles of agreement entered into between the parties, under seal, relative to the making of a road. All necessary averments of performance, on the part of the plaintiff, and breaches on the part of the defendants, are duly made, and ,set forth, and' a balance of 4000 dollars, is alleged to be due the plaintiff; and thereupon a special promise is alleged, on the part of the defendants, to pay such balance. The third count is for work, labour, and services, &c.; and alleges a promise to pay, &c. '

"No objection was made, on the argument, to the form of the action, or that it should have been covenant, founded upon the articles entered into between the parties. The action is founded upon the promise to pay the balance, and the covenant is only set out as inducement. (2 Term. Rep. 483, note.) The objection taken to the declaration goes on the broad ground, that an action of assumpsit, will not lie against a corporation; for they cannot make a valid and binding contract, except under their corporate seal. The proposition, in this latitude, is certainly not tenable. Although it may be laid down by elementary writers, as a general rule, that corporations can do Ho act without a seal, and such would seem to be the doctrine of some old adjudged cases; yet the law of the present day seems to be otherwise well settled. Corporations, in many cases, have been considered bound by their acts and agreements, not under seal. In Rex v. Bigg, (3 Peer. Wms. 419.) it was held that a corporation might, without seal, duly authorize an agent to sign notes. And in Rex v. The Bank of England, (Doug. 424.) the court refused to grant a mandamus to the bank, to transfer stock, because there was a remedy by an action on the case, if they refuse, and a special action of assumpsit was afterwards

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brought against the bank. The principle of this case has been recognised in this court.^[1]

An attempt has, in some cases, been made,.to distinguish between express and implied promises, as to the liability of a corporation. ( 3 Mas. Rep. 364 . 3 Dal. 496 .) But in a late case of the Bank of Columbia v. Paterson’s administrators,^[2] decided in the Supreme Court of the United States, all such distinctions are disregarded, and the court seem to go the full length, of giving the same remedies, against bodies corporate, in matters of contracts, as against individuals. The old cases arethere reviewed, showing that the law has been progressively altering, with respect to the validity of acts done by corporations, not under their seal. The court observe, upon the English authorities referred to, that as soon as it was settled, that a regular appointed agent of a corporation, could contract, in its name, without a seal, it was impossible to maintain any longer, that a corporation was not liable upon promises ; otherwise, there would be no remedy against the corporation; and the court concluded, by saying, that-it is a sound rule of law, that whenever a corporation is acting within the scope of the legitimate purposes of the corporation, all paroi contracts made by its Authorized agent, are express promises .of the corporation, and all duties imposed upon them by law, and all benefits conferred, at their request, raise implied promises, for the enforcement of which, an action will lie. It is unnecessary, upon the present demurrer, to go the full length of this case, or to decide any thing more than that a corporation may make a valid contract, not under its seal. Whether the promise in this case was made by the board of directors, and entered upon their minutes, or by a committee, or other agent duly authorized for that purpose, or in any other manner that would be binding, are questions which must arise and be determined upon the proof offered at the trial, and cannot properly come under consideration upon the present demurrer. We are accordingly of opinion, that the plaintiff is entitled to judgment.

Judgment for the plaintiff,^[3]

(a) (a) See Shipley and others v. Mechanics' Bank, ( 10 Johns. Rep. 484 .)

(b) (b) 6) This case was citecj and read to the court, from a Gazette, dated March 18,1815.

(c) (c) In Hayden v. The Middlesex Turnpike, (10 Tyng's Mass. Rep. 397.) the Supreme Court of Massachusetts, decided that assumpsit would lie against a corporation, where there $s an express stipulation by an agent of the corporation, or a duty arising from some act or request of such agent, within their authority,