Wilson v. Kings County Elevated Railroad — 24 N.Y. St. Rep. 81

Majority

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Thomas H. Wilson, Resp’t, v. The Kings County Elevated Railroad Company, App’lt.^[1]

(Court of Appeals, Second Division,

Filed June 4, 1889.)

Headnote

1. Corporations—Contract—Burden of proof upon whom to prove AUTHORITY OF PERSON ASSUMING TO ACT FOR CORPORATION.

The purposes of a corporation can be manifested only through agencies duly authorized or having, apparent authority to represent it, and persons dealing with the officers thereof, or with persons assuming to represent it, are chargeable with notice of the purposes of its creation and its powers, and with the authority, actual or apparent, of its officers or agents with whom they deal, and when they seek to charge the corporation with liability upon a contract made apparently in its behalf, the burden is upon them to prove the authority of the person assuming to act as such officer or agent, to make it.

2. Same—Facts bearing upon question of contract.

In an action brought by plaintiff to recover the amount of money advanced and expended, and compensation for his services rendered in contemplation of having a contract for the construction of defendant’s road, and an opportunity to perform it, Held, that the fact that the money advanced by plaintiff was for the benefit of defendant, and in the line of' business essential to the leading purposes of its organization, is a circumstance properly for consideration in its relation to other facts bearing upon the situation.

3. Same.

Held, that it is also an important fact that plaintiff was ready and able to take and perform the contemplated contract; and that it was denied him without causes chargeable to any fault on his part.

4. Same—When compensation for services and disbursements allowed.

Held, that the facts that plaintiff, at defendant’s request, devoted his entire time and services during a certain period to the interests of defendant, that they were of an ascertained value; that he incurred expenses and made disbursements to a certain amount, and that he did all this in reliance upon an understanding that the contract was to be given him, justified the referee, in view of the fact that plaintiff was denied the contract, upon the faith of which he had proceeded, in awarding to. plaintiff compensation for the services, and reimbursement for the moneys, expended.

5. Evidence—When stricken out—Failure to give further proof.

Where the question is one of order of proof, if there is a failure of' further proof to give to any of it the connection requisite to its legitimate effect as evidence, it may be made the subject of a motion to strike out, but where no such motion appears to have been made, it cannot be assumed on review that the evidence so received, and not rendered competent, was finally considered by a referee upon its merits.

6. Same—When objection to reception of not available.

A general objection is not available for the predication of error upon a ruling permitting the reception of evidence claimed to be incompetent.

Appeal from judgment of the general term of the supreme court in the first judicial department affirming;

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judgment entered on report of referee against the defendant for $13,276 and costs.

P. Mitchell and A. J. Skinner, for app’lt; James M. Townsend, for resp’t.

The defendant was organized as a corporation about the year 1879, and its purpose was to construct ■and operate an elevated railroad in the city of Brooklyn. The plaintiff, in June, 1882, contemplated taking a contract for the construction of the road, and with that view thenceforward until in March, 1883, devoted his time and .attention to the matter, and advanced and expended some money in that behalf preparatory to making of such contract, and to the performance of the, work of construction. He, having finally failed to obtain the contract, brought this action to recover the amount of money advanced and expended, and compensation for his services so rendered by him in contemplation of having the contract and the opportunity to perform it. The main question on the merits is, whether there was any agreement made with the plaintiff, by the defendant, or by persons having authority to represent it in doing so, that he should be employed to do the work of construction of the road, and whether the plaintiff’s services and money were bestowed and expended at the re Bt of the defendant.

referee found those facts with the plaintiff, and that his services were rendered and the money paid out and expended by him in reliance upon such agreement of the defendant, and that on March 15, 1883, the plaintiff without his fault, was duly notified to do and pay nothing futher on account of the defendant, and the contract, which the defendant undertook to make with the plaintiff, was not made. The contention of the defendant’s counsel is>' that those findings of the referee had no support in the evidence. The defendant’s purposes could be manifested only through agencies duly authorized, or having apparent authority to represent it; and persons dealing with the officers of a corporation, or with persons assuming to represent it, are chargeable with notice of the purpose of its creation, and its powers, and with the authority, actual or apparent, of its officers or agents with whom they deal, and when they seek to charge the corporation with liability upon a contract made apparently in its behalf, the burden is upon them to prove the authority of the person assuming to act as such officer or agent, to so make it. Adriance v. Roome, 52 Barb., 399 ; Alexander v. Cauldwell, 83 N. Y.,, 480 ; Woodruff v. Rochester and P. R. R. Co., 108 id., 39; 13 N. Y. State Rep., 901. The question of authority was evidently one of some difficulty upon the evidence; but since the referee has found the requisite facts to support the conclusions of law, all reasonably permissible intendments will, on

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this review, be allowed to sustain, so far as they may, his conclusions of fact. There is no direct proof of any pre-existing authority to represent the defendant in the persons with whom the plaintiff negotiated in the outset, or upon whose request he performed the services or advanced ■the money for the purposes of such negotiation or request, and whatever there is to support such authority, rests in circumstances and future events, and in the inferences derivable from them.

The attention of the plaintiff was first called to the subject of becoming contractor for the work, by Mr. Serrell, who assumed to be the chief engineer of the defendant, and by whom the plaintiff was introduced to Mr. Lowrey, of the firm of Macfarland, Reynolds & Lowrey, who were said to be defendant’s counsel, and with Serrell and Lowrey, and more especially with the latter, the plaintiff’s negotiations were had. And in respect to making with the plaintiff the contract for the performance of the work, Judge Shea, also assuming to represent the defendant, took an active part. A proposed contract between the defendant and plaintiff was, in July, 1882, drawn by Lowrey, and submitted by him to the plaintiff. It was not executed.

The plaintiff was soon after informed by Judge Shea that, for certain reasons, it was advisable that the defendant’s contract for the construction of the road be made with Henry J. Davidson, and that the plaintiff should become the assignee of the contract, or sub-contractor, in such manner as to be subrogated to the rights of Davidson under the contract, to. which the plaintiff assented. Upon that subject, to the same effect, some correspondence was had between Davidson and the plaintiff, and between the latter and Lowrey. The plaintiff had in the meantime made, in writing, and submitted to Lowrey, his proposal to construct and equip the road.

At a meeting of the board of directors of the defendant, held September 13, 1882, a statement was made, on behalf of the committee, to whom the matter was submitted at a meeting of May, 1881, that the negotiations which had been conducted for many months had resulted in an arrangement by which it was expected that the work might be commenced; that theré was in contemplation a contract with Davidson, who proposed to make with the plaintiff an agreement, the draft of which, with that proposed between the company and Davidson, was submitted to the board, and after having considered them, the board declared its. approval of the latter, and, subject to the production of the certificate, thereinafter mentioned, of Judge Shea, the board assented to and approved the proposed agreement between Davidson and the plaintiff, and agreed that upon its execution he should be accepted, recognized and dealt with by the company as fully subrogated to the rights, and' substituted as to all the liabilities of Davidson under the

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■contract of the latter, and that such contract should become ■operative when Judge Shea should deliver to the secretary ■of the company his certificate or opinidn to the effect that the agreement was in order and should be executed by the company, and that the officers were thereupon authorized and instructed to execute the agreement, and affix to it the corporate seal of the defendant.

At the same meeting Mr. Serrell was appointed engineer, and Macfarland, Reynolds and Lowrey, attorneys and counsel for the company, upon terms mentioned in the resolution. And on the day following, Mr. Lowery forwarded to the plaintiff a copy of the portion of the resolution relating to the contracts of Davidson with the company and himself.' 'There does not appear to have been any formal appointment of engineer and counsel for the company until done by those resolutions, but the persons therein named as such, were before then so designated as engineer and counsel in a printed circular, which purported to also contain the name of the officers and directors of the company," and they were apparently so treated. By those resolutions, the negotiations with the plaintiff in relation to the contract for the work, may be deemed to have been recognized, and in some sense treated as having been had with him in behalf of the company, and they bear somewhat upon the authority of Serrell, Lowrey and Shfea to represent the company upon the subject of such negotiations, and those matters incidental to it. It may also be inferred from what then occurred, that the plaintiff was justified in supposing that he would become the contractor for the work, and that what he did was in contemplation that such relation would'be consummated. It may, from what appears, be assumed that plans •and drawings of the proposed road were essential, preparatory to the commencement of the work, and perhaps for an •estimate of it. In the unexecuted contract, drawn in July, Mr. Serrell was referred to as the engineer who should prepare them, and in the contract submitted to the board of •directors in September, 1882, reference was also made to the plans, profiles, specifications, etc., of the company’s -engineer, and his assistants. In view of their preparation, ' the plaintiff advanced money to the engineer, Serrell, to enable him to make the drawings, etc., and he finally being unable to satisfactorily prepare them, a Philadelphia party, competent to do it, was employed and paid by the plaintiff for that purpose. They were made by that party and having been submitted to the inspection of the president of the -company, were by him approved.

The expenses incurred for the preparation of the plans, drawings, etc., including the payment made to Serrell for that purpose, constituted a considerable portion of the

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plaintiff’s claim allowed by the referee. This disbursement, the evidence on the part of the plaintiff tends to prove, was made with the knowledge and consent of the engineer and Lowrey, and at the request of the latter, assuming to represent the defendant. And the same may be said of the ser fices and other expenses of the plaintiff. While the authority of Lowrey, as counsel, did not enable him to incur the liability of the defendant to the plaintiff for such disbursements, services and expenses, there was something in the action of the board in September, in view of what he had done, which tended to recognize him as the representative of the company for some proposes connected with the negotiation with the plaintiff, and this w~as a fact which may properly have been considered by the referee in relation to subsequent events. It was through Lowrey that the arrangement, so far as it had progressed, was made with plaintiff, which produced the proposed contract submitted to the board of directors. He drew those contracts, the resolutions through him were submitted to the plaintiff, and he thereafter assumed to continue to represent the company so far as related to the means employed preparatory to contracting the work. The plaintiff seems to have been a practical man, in the business of constructing railroads. Such experience was essential to the preparation for the work. It may be observed that the only immediate object of the company was the construction of its road. This was the first thing to be done, and whatever was essentially preparatory to that result was within its apparent design and purpose. The president did not, nor did the directors personally,, appear to give it much attention. The secretary, so far as appears, did nothing beyond his duties as such. The active men were the engineer, and Lowrey of the attorneys and counsel for the company. Judge Shea, it seems, represented largely the stockholders. He was also somewhat active, and of him the president of the defendant testified : “ Judge Shea was acting as counsel for the company; I understand he was acting in that capacity; he had general charge of the negotiations and arrangements to be made during the whole term of my presidency, I should say.” The inference was warranted that those three parties, the engineer, the counsel and the judge, were acting in harmony, with a view to doing what was requisite to produce the construction of the road.

This was apparently the object, and it was with a view to that end that the plaintiff’s services and disbursements for which recovery was directed by the referee were rendered and made by him. Although it may not be easy of satisfactory demonstration in a brief space', we think the circumstances already referred to, and others appearing in the

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record, permitted the conclusion, that the plaintiff had the right to assume that the persons before mentioned with whom he negotiated and dealt in the matter, legitimately represented the defendant in that respect, and that they were acting within the authority apparently recognized by the company. The difficulty in reaching this conclusion would have been naturally increased if the action and resolutions of the board of directors of September, 1882,had not been putin evidence, and the fact that the money advanced by the plaintiff, was for the benefit of the defendant, and in the line of business essential to the leading purpose of its organization, is a circumstance properly for consideration in its relation to other facts bearing upon the situation. Peterson v. The Mayor, 17 N. Y., 449 ; Wild v. N. Y. & A. S. Mining Co., 59 id., 644; Scott v. Middletown, etc., R. R. Co., 86 id., 200. This view is deducible only from the evidence the most favorable to the plaintiff. And however difficult it may appear to have been, upon the evidence as a whole, to satisfactorily reach the conclusion of the referee, it is sufficient for the purposes of this review that there was some evidence to support every fact essential to the result. It was also an important fact that the plaintiff was ready and able to take and perform the contemplated contract, and that it was denied him without causes chargeable to any fault on his part. The fact was so found upon conflicting evidence in that respect.

It is contended that there was no support for the allowance to the plaintiff for his services and expenses during the period mentioned. The referee found on that subject that in pursuance of such" employment before mentioned, the plaintiff at the request of the defendant devoted his entire time and services from June 7, 1882, to March 15, 1883, to the interests of the defendants; that his services were reasonably worth at the rate of $5,000 per annum; and that he necessarily paid out and expended in traveling and hotel expenses, for the services of his employees, and other necessary disbursements, $3,260.65, and that the services were rendered and the moneys paid out and expended upon the agreement (before mentioned in the referee’s report), and in reliance by the plaintiff thereon.

The facts that the plaintiff so devoted his entire time and services during such period, that they were of such value, and that he incurred such expenses and made such disbursements in the matter mentioned, were supported by the evidence, as was also the fact that he did it in reliance upon the understanding referred to. And those findings of fact are entitled to the same consideration as those before mentioned. In that view, when the plaintiff was denied the contract, upon the faith of which he had proceeded, the referee, upon the facts as found by him, was justified in awarding to the plaintiff such compensation for

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services, and such reimbursement for moneys so expended in that behalf for the benefit of the defendant. These views lead to .the conclusion that none of the findings of fact by the referee are not entirely without the support of evidence. And, therefore, neither of the exceptions to them is well taken.

There were several exceptions taken by the defendant’s counsel to the reception of evidence, the competency of which was dependent upon further evidence. And, upon the assurance of the plaintiff’s counsel that it would be supplied, the evidence was received conditionally. The question was one of order of proof, and if there was a failure of further proof to give to any of it connection requisite to its legitimate effect as evidence, it properly may have been made the subject of a motion to strike out. Mo such motion appears to have been made, and it cannot be assumed on this review that evidence (if there was any such) so received, not rendered competent; was finally considered by the referee upon the merits. First Unitarian Society v. Faulkner, 91 U. S., 415 ; Place v. Minster, 65 N. Y., 89 ; Bayliss v. Cockcroft, 81 id., 363.

The same may be said of the evidence of Mr. Francis, at the time it was received. He represented the Philadelphia party, who prepared the plans, etc., of the road. The interview between him and the plaintiff had relation to an estimate of the work desired of his principal, and to drawings required and made of the proposed road.

There was a small portion of his evidence not apparently within the purpose of the ruling upon the general objection, and which very likely may have been excluded, upon a specific objection to it. But as it was not so taken, nor any motion made to strike out, there was no exception presenting error in that particular respect. The plaintiff was permitted to put in evidence his book of memoranda made by him, to which the defendant took a general objection and exception. This did not appear to be competent evidence. But as it was not set out in the record, we are not advised of its contents, or whether they were of such character that the defendant could have been prejudiced by the evidence. There is a further reason why the general objection is not available for the predication of error upon the ruling. The plaintiff’s memoranda may have been rendered competent by his evidence, verifying the entries as -original and correct, and showing that he was unable to recollect the items, independently of the memoranda. Guy v. Mead, 22 N. Y., 462 ; Howard v. Marshal, 77 id., 592 ; Peck v. Valentine, 94 id., 569 .

And as it may be that the specific objection could have been obviated, the general objection was not well taken.

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Fountain v. Pettee, 38 N. Y., 184 ; Bergmann v. Jones, 94 id., 51.

After a careful examination of the record, the conclusion is that there was was no error to the prejudice of the defendant in any of the rulings of the referee to which exception was taken.

The judgment should be affirmed.

All concur.