Case Name: USHER v. NEW YORK CENT. & H. R. R. CO.
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1902-11-14
Citations: 78 N.Y.S. 508
Docket Number: 
Parties: USHER v. NEW YORK CENT. & H. R. R. CO.
Judges: Argued before GOODRICH, P. J., and BARTLETT, JENKS, WOODWARD, and HIRSCHBERG, JJ.
Reporter: West's New York Supplement
Volume: 78
Pages: 508–516

Head Matter:
USHER v. NEW YORK CENT. & H. R. R. CO.
(Supreme Court, Appellate Division, Second Department.
November 14, 1902.)
1. Railroads — Agreement to Hire Injured Employe por Life — Reasonableness.
A contract whereby the division superintendent of a railroad company agreed with an employe who had been seriously injured by its negligence, in consideration of a release of his claim for damages, to employ him for life as flagman at a certain crossing at about half the salary he had been previously able to earn, was not invalid as unreasonable.
8. Same — Ultra Vires Contract — Estoppel to Assert Defense.
Where the division superintendent of a railroad company agreed with an employs who had been seriously injured by its negligence, in consideration of a release of his claim for damages, to employ him for life as a flagman at a certain crossing, and the railroad company accepted the conditions of the contract, keeping the release until the employS’s claim against it was barred by limitations, etc., it could not afterwards object that the contract was ultra vires.
Woodward and Jenks, JJ., dissenting.
Appeal.from trial term, Rockland county.
Action by John H. Usher against the New York Central & Hudson River Railroad Company. From a judgment for plaintiff, and from an order denying a new trial, defendant appeals.
Affirmed.
Argued before GOODRICH, P. J., and BARTLETT, JENKS, WOODWARD, and HIRSCHBERG, JJ.
Thomas Emery, for appellant.
A. S. Tompkins, for 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 $35, 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 6th 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. Insurance Co., 162 N. Y. 453, 57 N. E. 78, 49 L. R. A. 471, 76 Am. St. Rep. 347, 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 bylaw, 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 imposi tion 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 employés 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 case, where an employé has been rendered nearly helpless by the company's fault, and without any fault of his own, it could hardly be said 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 contracts under such circumstances are by no means unusual, and, to whatever other objection they may be obnoxious, they would seem to be free 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 plaintiff's claim for damages can scarcely be disputed, inasmuch as 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 limitation, 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 consideration 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 & A. R. Co. v. May's Landing, etc., R. Co., 48 N. J. Raw, 530, 7 Atl. 523; Brewing Co. v. Flannery, 137 Ill. 309, 27 N. E. 286; People's Gaslight & Coke Co. v. Chicago Gaslight & Coke Co., 20 Ill. App. 473; Center Town Co. v. Fletcher, 46 Kan. 524, 26 Pac. 951; Arms Co. v. Barlow, 63 N. Y. 62, 70, 20 Am. Rep. 504; Raft Co. v. Roach, 97 N. Y. 378; Holmes & Griggs Mfg. Co. v. Holmes & Wessell Metal Co., 127 N. Y. 252, 27 N. E. 831, 24 Am. St. Rep. 448; Linkauf v. Lombard, 137 N. Y. 417, 33 N. E. 472, 20 L. R. A. 48, 33 Am. St. Rep. 743. The judgment and order should be affirmed.
Judgment and order affirmed, with costs. All concur, except WOODWARD and JENKS, JJ., who dissent.