Queen v. Second Avenue Railroad — 35 N.Y. Super. Ct. 154

Majority

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MONTGOMERY QUEEN, Plaintiff and Appellant, v. THE SECOND AVENUE RAILROAD CO., Defendant and Respondent.

Headnote

I. Corporations.—Railroads. —Contracts with, Powers of Officers, etc., to make.

1. The president and one of the directors (although constituting a majority of the executive committee) have no authority to make a 'contract with A., that he, except for a good and sufficient cause shown for his removal, should have the perma/nent and supreme control in the management of the company’s road and interests, nor can the executive committee make such a contract unless, perhaps, the by-laws, or the board of directors under the authority of a by-law, confer such authority.

Semble. Neither the board of directors, nor the corporation itself, could make such a contract.

II. Contracts.—Substitution of one for another.

1. When, after the attempt to enter into such contract between A. and the president and one of the directors, A. became a director (and therefore presumed to have knowledge of the by-laws, which prescribed that one of the principal officers should be a vice-president, who should be annually elected, and should hold his office at the pleasure of the board of directors, and until his successor should be duly chosen, unless sooner removed by the board. And also prescribed, that there should be a superintendent, who should have, subject to the direction of the president, the special superintendence of the track, cars, repairs, and running of the road, etc.), and was afterwards elected vice-president, at a meeting of the directors, at which meeting the board of directors passed a resolution as follows : “ Resolved, That the vice-president perform the duties of general superintendent of the road, with the right to employ . . . ; and that the salary of the vice-president be $6,000 per annum ; ” and after the passage of such resolution, entered upon the discharge of the powers and duties imposed on the vice-president by that resolution and the by-laws, and for the salary fixed thereby, he must be deemed to have acquiesced in said action of the board of directors, and by such acquiescence to have entered into a new contract, the terms of which were embodied in the resolution. This new contract took the place of the former one so far as it was inconsistent with the provisions of the former one. By this resolution, the duties which were performed by A., and the salary therefor, were attached to and made incidents of the office of vice-president, and could only be exercised, and received, by the occu

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pant of that office, and by him only so long as he filled the office; under the by-laws the occupant of that office was removable by the board of directors at pleasure ; when the board exercised that power, the right of the occupant to exercise the duties and receive the salary incident to the office necessarily fell with his removal. When A. accepted the office of vice-president, he took it cum onere; as such officer, he was bound to fulfil the duties of the office, and entitled to receive the salary, and was also subject to removal at pleasure, and to all the incidents of such removal, among them the cessation of salary at the moment of removal.

Before Barbour, Oh. J., Monell and Freedman, JJ.

Decided November 30, 1872.

This is an appeal from a judgment entered in favor of the defendant against the plaintiff on a dismissal of the complaint on the trial.

The motion to dismiss was made upon the pleadings, the admissions made by plaintiff’s counsel in his opening to the jury, and upon .documentary evidence read by the counsel for the respective parties in the course of their arguments.

From these sources it was made to appear that the plaintiff, in the month of December, 1868, was requested by the officers of the defendant to investigate into, and ascertain, the condition and affairs of defendant’s road; that he was a man noted for his successful management of horse railroads ; that he made such investigation, and reported the result thereof. That thereupon, in February or March, 1869, an arrangement was entered into between plaintiff on the one side, and Mr. Wadsworth, the president, and Mr. Kent, one of the directors of the road, who together constituted a majority of the executive committee of the road, on the other side, whereby it was agreed, among other things, that the plaintiff, except for a good and sufficient cause shown for his removal, should have the permanent and supreme control in the management of the company’s road and

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interests, at a salary of six thousand dollars per year, and an increase thereof in proportion to a certain increase of the company’s profits. That thereupon, to wit, March 2d, 1869, plaintiff was elected a director of the company, to fill a vacancy then existing ; that at the annual meeting of stockholders, held April 5th, 1869, he was elected a director for a full term, and that at a meeting of the board of directors, held the next day, he was elected vice-president of the company. The bylaws, under which such elections were had, contained the following provisions:

Section 4 provided, that the principal officers of the company should be a president, a vice-president, a treasurer, a secretary, and a superintendent.

Section 5 provided, that the president, vice-president, treasurer, secretary, and superintendent of the company, should be annually elected * * *

and should hold their offices at the pleasure of the Board of Directors, and until their successors should be duly chosen, unless sooner removed by the board.

Section 10 of the by-laws was in these words: “There shall be a vice-president, who shall perform the duties of the president, in case of his absence or inability to act, and if that office be vacant, he shall act as president until a successor in said office is chosen.”

Section 13 of the by-laws, also read in evidence, provided, that the superintendent should have, subject to the direction of the president, the special superintendence of the track and cars, and the repairs and running of the road, and a general supervision of the depot, stables, and workshops, and over all the conductors, starters, drivers, hostlers, mechanics, and laborers in the company’s employ : it also imposed upon him other duties and powers necessary to carry out what evidently were the main objects of the office.

It further appeared that the arrangement which had been entered into between Mr. Wadsworth, Mr. Kent,

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and the plaintiff, was imparted to the Board of Directors at the same meeting, at which plaintiff was elected vice-president, and that thereupon the following resolution was passed by the board, viz. :

Resolved, That the vice-president perform the duties of general superintendent of the road, with the right to employ Mr. John W. Smith, the former superintendent, or such other person as he may see fit in his place, to assist him until the further action of the board ; and the salary of the vice-president be six thousand dollars per annum.

It also appeared that on the day of the passage of that resolution, to wit, April 6,1869, plaintiff assumed the management of the road, and that he continued in such management and in the receipt of a salary at the rate of six thousand dollars per annum, until July 6, 1870, when he was removed from such management, and also from the vice-presidency, by a vote of the Board of Directors, without any cause being assigned for such a removal.

Aug. Sherman, attorney, and Ira Shafer, of counsel, for appellant.

John H. Platt, attorney, John Slosson and John E. Burrill, of counsel, for respondent.

Upon this state of facts, plaintiff’s counsel conceded that, if the original arrangement as to plaintiff’s employment was for a longer term than one year, it was void under the statute of frauds. But he claimed that it was a good contract for a year at all events, and being good for that period, and plaintiff having gone on under it not only for that length of time, but also for part of another year, the presumption of law is that the second year was upon the same terms as the first, and that defendant was

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"bound to keep Mm during the whole of the second year, unless there was cause for his discharge.

The said counsel also conceded that, according to the strict language of section 5 of the by-laws, the Board of Directors possessed the power to remove any officer of the company with or without cause, and that, if the plaintiff occupied simply the character of vice-president, if his relation to the company was simply that of vice-president, the board had the right, power, and authority to remove Mm at any moment with or without cause. But he claimed that the plaintiff, when he assumed control, did it as manager and superintendent entirely aside from his office and character as vice-president, and that he was simply clothed with the character and authority of that officer, for the purpose of being more effectually enabled to carry out his general plans as managing superintendent.

The said counsel finally conceded that if the resolution of the 6th of April, 1869, cut off all prior negotiations, and plaintiff’s actions were based on that resolution, the plaintiff would be compelled to stand or fall in Ms character as vice-president or superintendent. But he insisted that the said resolution was consistent with the prior arrangement, and passed in furtherance thereof ; that the said prior arrangement constituted the real contract between plaintiff and defendant, and that, as such a contract, to run for not more than one year, was not required by any statute or rule of law to be in writing, it could be proved by parol evidence, and should be construed with reference to the resolution and the intent of the parties who made it, and should at least be submitted to the jury as a question of fact. In this view of the case, it was claimed that plaintiff had an unquestionable right to go to the jury as to his right to recover the balance of his salary for the second year, amounting to $4,500.

This view, however, rests wholly upon the assump

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tion that the arrangement between Mr. Wadsworth, Mr. Kent, and the plaintiff was a contract binding upon the defendant—an assumption which further investigation shows to be wholly without foundation.

The defendant is a corporation, and, as such, is incapable of doing any act, except through agents. The acts of such agents, in order to be binding upon the corporation, must either be done in the line of such agency, and within the limits of the authority conferred on them, or be ratified by the corporation.

It is one of the fundamental conditions into which the corporators enter by becoming members of the corporation, that the corporate concern shall be managed in the manner prescribed by the act of incorporation, and the by-laws enacted in accordance therewith. The duties and powers of such officers or agents as the corporation may, by its by-laws, recognize, are generally regulated by such by-laws. And as there is no grant of power in the mere name by which any such officer or agent may be designated, all persons dealing with him are chargeable with notice of his authority, and of the limitations and restrictions upon it contained in the act of incorporation and by-laws.

Mow, the arrangement claimed by plaintiff to have been entered into between himself, Mr. Wadsworth, and Mr. Kent, was, that he, the said plaintiff, except for a good and sufficient cause shown for his removal, should have the permanent and supreme control in the management of said company’s road and interests. That the making of such a contract was beyond the scope of the authority of Mr. Wadsworth as president, and even beyond the powers of the executive committee, was'shown by those sections of the by-laws which defined and prescribed the powers and duties of the president, the superintendent and the executive committee. A fair and impartial interpretation of these sections admits of no other conclusion. Indeed it may well be doubted

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whether the entire board of directors, or even the corporation itself, could have invested the plaintiff with such permanent and supreme control as the literal reading of plaintiff’s statement of the original arrangement calls for, and which, if conferred, would have worked, in the one case, an abdication, and, in the other, an abolition, of the board of directors. Even if we assume, therefore, that the said original arrangement amounted to a contract between the executive committee and the plaintiff, such contract, under that section of the bylaws which required the executive committee to keep regular minutes to be submitted to the board of directors for approval at the next meeting of the board, could only have been an ad interim contract, made subject to the ratification of the board, and which was liable to be modified or superseded by the action of the board. And when, therefore, we find that the matter was, on the 6th of April, 1869, laid before the board, of which' plaintiff was a member, and that the board acted upon it by the passage of the resolution referred to—when we find, that up to the passage of that resolution the powers and duties of vice-president and of superintendent had been entirely different and distinct ; that the office of vice-president, except in case of the inability of the president to perform his functions, had so far been a comparatively unimportant one, while the powers and duties of the superintendent had been those of an active manager, and had included, among other things, subject only to the supervisory powers of the president, the special superintendence of the track and cars, and the repairs and running of the road, and a general supervision of the depot, stables, and workshops, and over all the conductors, starters, drivers, hostlers, mechanics, and laborers in the company’s employ,—when we find, that by the resolution referred to the said powers ■ and duties of the superintendent were transferred to' the plaintiff as vice-president, and in consideration

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thereof a salary of six thousand dollars attached to the office of vice-president,—and when, in addition to all this, we find that the plaintiff, who by that time had been a director for five weeks, and presumptively was fully conversant with the by-laws, did not object upon the ground of the incomprehensiveness or insufficiency of the resolution, or in any wise question the determination made by the board ; but that, on the contrary, he thereupon entered upon the discharge of the powers and duties imposed upon him by said resolution and the by-laws, and, for the salary fixed by the same resolution, continued so to perform duty for a period of fifteen months without objection or question,— we can come to no other conclusion than that plaintiff acquiesced in the action of the board of directors, and that, so far as the passage of said resolution and plaintiff’s acquiescence therein constituted a new contract, it was one that was inconsistent with the prior arrangement entered into between plaintiff and the executive committee. Being inconsistent, such new contract became, at least to the extent of its inconsistency, a substitute for the prior arrangement.

Proin this it follows that the learned judge below correctly held, that under the resolution of April 6th, 1869, plaintiff1 was an officer of the company, and that his tenure of office was subject to the fifth section of the bylaws, and consequently terminable at the pleasure of the board.

The complaint was properly dismissed, and the judgment appealed from must be affirmed, with costs.