Case Name: John H. Usher, Respondent, v. The New York Central and Hudson River Railroad Company, Appellant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1902
Citations: 76 A.D. 422
Docket Number: 
Parties: John H. Usher, Respondent, v. The New York Central and Hudson River Railroad Company, Appellant.
Judges: 
Reporter: Appellate Division Reports
Volume: 76
Pages: 422–433

Head Matter:
John H. Usher, Respondent, v. The New York Central and Hudson River Railroad Company, Appellant.
Bailroad division superintendent — right of, to make a contract with an injured employee to employ him for life—ultra vires contracts, when enforced.
A contract made between a division superintendent of a railroad and a person who, while a brakeman in the employ of the railroad company, had sustained in j uries which resulted in the amputation of his leg, by which the brakeman, who was contemplating the institution of a suit against the railroad company to recover damages for the injuries sustained by him, executed a. general release to the railroad company in consideration of a check for one-half of his wages for the period that he had been disabled and a promise that he would be employed by the railroad, company as long as he should live as a flagman at a certain crossing at one-half the wages which he had previously received, is not unreasonable in that it infringes upon the powers of succeeding corporate . officers.
Assuming that such a contract was beyond the scope of the division superintendent’s authority and was ultra vires as to the railroad company, the latter can- " not assert that fact in defense to an action brought against it to recover dam- , ages for the breach of the contract, where it appears that the railroad company has retained, the release executed by the plaintiff, and that the claim released thereby is now barred by the Statute of Limitations.
Woodward and Jenks, JJ., dissented.
A corporation, when sued, cannot set up ultra vires as a defense to an action for . a breach of contract or even, for specific performance when it has had the full benefit of the contract and the other party has duly performed it; nor will such a plea avail, whether for or against a corporation, when it will not advance the ends of justice.
Appeal by the defendant, The New York Central and Hudson River Railroad Company, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Rockland on the 20th day of May, 1901, upon the verdict of a jury, and also from an order entered in said clerk’s office on the 14th day of June, 1901, denying the defendant’s motion for a new trial made upon the minutes.
Thomas Emery, Herbert E. Kinney and Robert d. Kutschbock, for the appellant.
A. S. Tompkins, for the respondent.

Opinion:
Hirschberg, J.:
The action is brought to recover damages for the breach of a contract by which the plaintiff claims that the defendant employed him .to work for life at a monthly compensation of thirty-five dollars, or about half pay. There was evidence from which the jury was justified in concluding that such a contract was entered into on June 6, 1895,- between the plaintiff and William G. Watson, now deceased, .then superintendent of the Hudson River division of one of the defendant's railroads. The plaintiff had been injured the previous March while in the defendant's employ as brakeman, the injury resulting in the amputation of his leg, and he claimed the right to damages in consequence of it; and the evidence tends to establish that in the interview between him and Watson on June sixth he received a check for $128, being one-half wages for the period -that he was laid up, and also received from Watson the promise of .the life employment as flagman at Conger's crossing. The plaintiff, in consideration of the payment and as the proof tends to show of the promise of permanent employment, then executed a general release to the defendant, whereupon he was given the promised employment and retained in it until November, 1900, when he was -discharged without cause.
The main contention on the part of the appellant is that the contract, if made, was not binding upon the company, for the reason that the division superintendent had no power to make it in the absence of express authority and that the contract was in itself unreasonable. In Carney v. N. Y. Life Ins. Co. (162 N. Y. 453) it was held that a contract by which a person was employed for life, made by the executive officers of a life insurance company assuming to act under a by-law, previously adopted by the board of trustees, empowering them " to appoint, remove and fix the compensation of each and every person except agents employed by the company," was unreasonable, and not contemplated thereby. The court held that because the term of office of the trustees was limited by statute, it must be assumed that they would not adopt a by law authorizing the imposition of unreasonable contracts upon their successors in office. The contract was executory on both sides, and the decision rested upon the construction of the by-law and a judicial determination of the power designed to be conferred by it. By a parity of reasoning it may be conceded in this case that the general employment by the executive- officers of the defendant of their employees for life would be unreasonable and beyond the power conferred upon them or upon the defendant by the statute- from •which it derives its corporate life and functions. But the case presented is not one of a simple' and naked contract' of employment, ,but is the case of the immediate and final settlement and adjustment of a claim for compensation for serious injuries alleged to have been occasioned by the defendant's negligence^ and the reasoning of the decision cited has no necessary application. In such a casé where an employee has been rendered nearly helpless by the company's fault and without any fault of his own, it could hardly bé. sáid to be unreasonable, in consideration of a, release of his claim for damages, for the company to agree to put him to such work as-he-.was still competent to perform in his crippled condition, to pay him for it one-half of what he was previously able to earn and to-keep him at it for life, that is, during good behavior, obedience and competency. It is within general knowledge that such contracta .under such circumstances are by no means unustial, and to whatever -other objection they may be obnoxious they would seem to- be f-reé from the taint of unreason as infringing upon the powers of succeeding corporate officers.
But even, if the contract was beyond the scope of the division superintendent's authority, .and ultra vires as to the defendant, the defendant is not in position to assert the fact in defense of the -plaintiff's claim.. That Watson had authority to settle the- plain-, tiff's claim for damages can scarcely be disputed inasmuch ah the defendant has taken a release of the claim from the plaintiff' .through his agency, has kept it until the plaintiff's claim is barred-by the Statute, of Limitations, has asserted it as a defense in the answer, and. has produced -it upon the trial. The settlement - of the plaintiff's claim for damages is not an act-which is ultra vires, and: assuming that the agreement of hiring is such, yet the plaintiff " has fully performed his part of the contract and his cause of action-cannot be restored to him. The transaction between Watson and the plaintiff was in effect but a single agreement by which the latter released his claim and the former agreed to hire him for life in -consideration of .such release. To permit the defense now under - con sideration, would relieve the defendant from all liability on a contract which the plaintiff fully performed when he relinquished his-claim. A corporation, when sued, cannot set up ultra vires as a defense to an action for breach of contract, or even for specific performance, when- it has had the full benefit of the contract and the-other party has duly performed it; nor will such a plea avail,, whether interposed for or against a corporation, when it will not advance justice but will accomplish a legal wrong. (Camden & Atlantic R. R. Co. v. May's Landing, etc., R. R. Co., 48 N. J. L.. 530; Heims Brewing Co. v. Flannery, 137 I11. 309; People's Gaslight & Coke Co. v. Chicago Gaslight & Coke Co., 20 I11. App. 473.; Town Co. v. Fletcher, 46 Kans. 524; Whitney Arms Co. v. Barlow, 63 N. Y. 62, 70; Rider Life Raft Co. v. Roach, 97 id. 378; Holmes & Griggs Mfg. Co. v. H. & W. M. Co., 127 id. 252; Linkauf v. Lombard, 137 id. 417.)
The judgment and order should be affirmed.
All concurred, except Woodward, J., who read for reversal, with whom Jerks, J., concurred.