Sullivan v. Campbell — 2 N.Y. Super. Ct. 271

Majority

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Michael Sullivan versus Duncan P. Campbell, James Renwick, Phillip Rhinelander, and others.

Headnote

The plaintiff, with one M’D., entered into an agreement under seal, with the N. Y. Hydraulic Manufacturing and Bridge Co., (a private association under that name,) to construct two bulk-heads, connected with a Canal, which the Company was about to make. This agreement was executed by the defendant, Campbell, as President of that Company, and by Rhinelander, as Treasurer; and was declared to have been entered into “ agreeably to their articles of associa- “ tion.” In addition to the work which was done, under the contract, the plaintiff by the direction of Campbell and Rhinelander, performed other labor in excavating the Cand, for which he brought an action of assumpsit against all the associates. The Company was formed under certain articles of association, which provided that persons having dealings with the Company, should not have recourse for their debts against the separate property of its members, but should be considered as giving credit to their joint funds solely; and that the trustees or agents of the Company should have no authority to bind it by any contract, unless it contained a restriction to the effect aforesaid.

The defendants insisted, that the reference in the agreement to the aritcles of association, was sufficient to charge the plaintiff with notice of their articles, and that he could not, under any circumstances, recover a judgment against the defendants jointly, as they were not partners, and as Campbell and Rhinelander had no power to bind them.

Held, that the plaintiff having performed labor for the benefit of the associates* might maintain an action upon a quantum meruit, either against the agents, as having tirade themselves personally liable, or against the individuals composing the association ; and the plaintiff had judgment against all the defendants.

Assumpsit for work and labor performed for the defendants, in digging a certain Canal for them.

The defendants had associated themselves together by certain articles of agreement, under the name of the “ New-York Hydraulic, Manufacturing and Bridge Company,” for the purpose of establishing and carrying on certain works at or near Kings-bridge. By the 13th section of the articles of association, it was,

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among other things stipulated, that “ the stock and property” of the Company should alone be responsible for their “ debts and “ engagements;” and that “ no person who should deal with the “ Company, or to whom they might become in any wise indebted, “ should, under any pretence whatever, have recourse against “ the separate property of any of the members of said Company, “ or against their persons, further than might be necessary to se- “ cure the faithful application of their funds to the purposes “ for which they were liable.” And it was further provided, that " any person accepting any bill, note, check, or other con- “ tract of the Company, signed by the President, and counter- “ signed by the Treasurer, or dealing with the Company in any other “ manner whatever, should be considered as thereby giving credit “ to their joint stock or property, and as disavowing the right to “ have recourse to the person or property of any member. And " all suits, to be brought against the Company, were to be brought “ against the President for the time being: it being expressly “ understood, that all persons dealing with the Company agreed “ to these terms, and were bound by them.”

By the 18th article, it was provided, that “ for the full and “ perfect information of all persons, who might have dealings “ with the Company, every instrument or contract by which the “ Company might be charged or held liable, should declare plainly “ and specially,” “ that payment should be made out of the trust- “ estate of the Company, and not otherwise,—in such way as that “ all persons, having dealings with the Company, might be made “ to consent, that they would look for payment to the said trust- “ estate specially, and not to the individual property of the stock- “ holders.” And it was also, by the same article, further provided, “ that the directors and trustees should have no authority to “ make any contract or engagement which should bind or render “ the individual property of any stockholder in any way liable ; “ and no contract or engagement could be legally made with the “ directors or trustees, in the name of the Company, unless it con- “ tained a limitation, setting forth that payment was to be made “ in the manner before specified.”

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Of the Company so formed, the defendant, Campbell, was President, and Rhinelander, Treasurer. The plaintiff, together with one MfDermott, had entered into certain articles of agreement, under seal, with the Company, (executed by their said President and Treasurer,) “ to build, construct, and complete two abutments, “ or bulk-heads, at Kingsbridge, according to a certain survey or “ plan thereof, made by the defendant Renwick.” This contract recited that it was made “ agreeably to the articles of association,” and purported to be between “ The New-York Hydraulic Manu- “ facturing and Bridge Company,” of the one part, and the plaintiff and M'Dermott of the other part.

The defendants had severally admitted that they were interested in the stock of this Company ; and Campbell and Rhinelander had also admitted that the plaintiff had been employed by them to make a Canal for the association ; and that after he had made some progress in his work, he was stopped by them, for the want of funds belonging to the Company. For the work thus performed upon the canal, this action was brought by the plaintiff.

The cause was tried before Mr. Justice Oakley. At the trial, the plaintiff proved by parol, that the work performed upon the canal, had no connexion with the agreement as to the bulk-heads; and he also introduced evidence to support his bill of particulars.

The defendants insisted, I. That the work was, in fact, executed under the written contract. IL That Campbell and Rhine-lander had no power to'bind their associates by any parol contract, as they were not partners. III. That the plaintiff had notice of the articles of association, having himself made reference to them in his written contract.

As to this last point, there was no evidence, (except that furnished by the written contract,) to show that.the plaintiff had ever seen the articles of association, or was aware of their contents. On the contrary, M‘Dermott, who was examined as a witness, testified that he was wholly ignorant of the articles, and that they were not exhibited to him at the time the written contract was made.

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Upon this testimony, as the defence rested chiefly on questions of law, the plaintiff, by consent of parties, took a verdict for six hundred and fifty dollars, subject to the opinion of the court upon a case; and if the court should be of opinion that the action was well founded, then the items of the account were to be submitted to referees. If, however, the opinion of the court should be adverse to the plaintiff’s claim, in its present form, then a judgment of non-suit was to be entered.

The cause was now argued by Mr. Thomas L. Wells, for the plaintiff, and by Mr. Scott and Mr. Anthon, for the defendants.

For the plaintiff it was contended, I. That the evidence proved that it was not the intention of the parties, that the work upon the canal should form a part of the written agreement

II. That the members of the Company were to be considered as partners, and as such had received the benefit of the plaintiff’s labor. That the articles of association were binding upon its members alone, and could not bind strangers, unless they had full notice of the articles of association,, and manifested a consent to be bound by them.

III. That the defendants were bound to give full information to persons dealing with them, as to the extent of their responsibility, and to set it forth in their contracts in such way, that the contracting parties might, without misapprehension, assent to their terms.

• The defendants, on the other hand, insisted, I. that they were not liable as partners, there being no agreement between them to share jointly in the profits or loss of their association. No one of the associates had the power of binding the others, or using his credit, or holding out a joint liability as the foundation of credit They were mere share-holders in a public Company, and as such could not be made personally liable for its debts.

II. That the contract, under seal, between the plaintiffs and the defendants, remained in force and unrescinded at the time the work

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was done ; consequently no recovery could be had under the deduration in this cause.

III. The contract was made by the New-York Hydraulic, Manufac taring and Bridge Company, acting according to their articles of association. The action, therefore, should have been brought against the President for the time being, the'plaintiff having had notice of the existence of the articles of association. [18 J. R. 363.]

IV. M’Dermott should have been joined as plaintiff, the contract, under seal, having been originally made-w.itli him as well as Sullivan.

The plaintiff, with one M‘Dermott, entered into an article of agreement with the New-York Hydraulic, Manufacturing and Bridge Company, whereby they agreed to build, for the Company, two abutments, or bulk-heads, at Kingsbridge, connected with the canal, which the Company was about to make. This Company was a private association, under the above style, and the defendants were members of it. The contract with the plaintiff and McDermott was executed by Campbell, as President, and Rhinelander, as Treasurer, and is declared to have been entered into agreeably to the articles of association of the said Company. In addition to the work done under the contract, the plaintiff, by the direction of Campbell and Rhinelander, performed other labor in excavating the canal, and this action is brought to recover compensation for such labor.

The Company was formed under certain articles' of association. The 13th section of these articles provides, that no person dealing with the Company, shall have recourse, for any debt or demand, against the separate property of the members of the association, but shall be deemed to have given credit solely to the joint funds of the Company; and that all suits against the Company should be brought against the President for the time being.The 18th section provides, that for the information of all persons

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dealing with the Company, any contract made by them, shall distinctly declare, that payment is to be made out of the joint funds of the Company, and not otherwise ; and it was also expressly provided by the said section, that the trustees or agents of the Company should have no authority to bind it, by any contract, unless it contained a limitation or restriction that payment was to be made in the manner before specified. It is contended by the defendants, that by the reference in the agreement, entered into by the plaintiff and McDermott, to the articles of association, the plaintiff is charged with notice of the nature of these articles, and must be considered, in his subsequent contract, for excavating the canal, as acting in reference to them, and as waiving any right to resort for payment to the members of the Company, as individuals. This position is not well founded. The contract in question was by parol, and being attended by no restriction as to the right of the plaintiff to demand payment, is clearly not binding on the Company as such, nor could it be enforced against the joint stock of the Company, by a suit against, their.President, as directed by the articles of association. The President and Treasurer of the Company, were agents, acting under special and limited powers, as it respected their right to bind the Company, and were bound to conform strictly to them. Not having done so, their act is not binding on their principals.

The plaintiff, however, having performed labor for the benefit of the association, has a clear right to maintain his action, not upon the contract itself, but upon a quantum meruit, either against the agents of the Company, as having rendered themselves personally responsible, or against the individuals, composing the association, on the ground that they have received the benefit of the plaintiff’s labor. I think it may be maintained against the latter. The plaintiff must be considered as performing his labor without any reference to the nature of the association, and in pursuance of the directions of agents, whose limited or special authority was not known to him. Under such circumstances, the defendants, as members of the association, have reaped the benefit of the plaintiff’s labor, and are bound to pay for it.

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There must, therefore, be judgment for the plaintiff, subject to a reference to ascertain the value of the labor performed on canal, as distinguished from that doiie, under the special contract, for the building of the bulk-heads.

Judgment for the plaintiff.

[Wells and Van Wagenen, Attys, for the plff.