Court Opinion

ID: 5550477
Source: CourtListenerOpinion
Date Created: 2022-01-10 21:33:58.3908+00
Date Added: 2024-06-11T08:35:04.347002
License: Public Domain

The Chancellor.
The bill in this case had two objects : 1. To obtain a liquidation, upon equitable principles, of the demand of the defendants, While, Taylor and White, for damages, for the non-fulfilment of the contract of the plaintiff with them : 2. To compel the other defendants, who were members of the Granville Cotton Manufacturing Company, to account to and with the plaintiff, and to contribute, proporlionably, to the payment of the damages to be assessed in favour of While, Taylor and White. The prayer of the bill is, that they may be decreed to pay whatever sums the plaintiff “ may be obliged to lay out and expend on the contract aforesaid, or in defence of the suits at law, against him.”
The defendants, White, Taylor and White, are entitled to a just indemnity, for the loss and injury sustained by them. The decree of the Court of Errors, in this very case, directed this Court, by a reference, or an issue, to ascertain.lhe *360damages, if any, sustained by White, Taylor and White, by the non execution or rescinding of the contract on the part of the present plaintiff.
The Chief Justice, in the opinion delivered by him in the Court of Errors, in this case, (17 Johns. Rep. 365.) declared, that White, Taylor and White, were entitled to be fully remunerated, for all the damages and losses they had actually sustained; and that he should consider a loss of profits as a legitimate head of damages; and, in short, that they were entitled “ to a just equivalent for their labour, materials, and loss of profit.” Mr. Justice Yales, in the opinion which he delivered in that case, (17 Johns. Rep. 368, 369.) only said, generally, that White, Taylor and White, were entitled to “ compensation and damages,” to be fairly and satisfactorily ascertained, by a reference, or by an issue. To meet the sense of the Court of Errors, as far as we may venture to infer it from those two opinions, (for the decree speaks only of the damages,) and as far as the rule of damages can be prescribed, with justice and precision, I shall direct the master, in order to ascertain and report the damages sustained, to state and report, particularly, the amount due for the work done, and materials furnished, and for all other expenses, by While, Taylor and White, actually and bona fide incurred, under the contract, prior to the first day of August, 1815, when all further execution of the contract was abandoned, by reason of the notice of the inability, or refusal, of the plaintiff to fulfil it. And I shall further direct, that he ascertain and report, in addition thereto, the amount of the actual loss and injury (if any) which these defendants sustained, by reason of such abandonment of the contract.
2. The next point, is, whether the plaintiff is entitled to contribution from the remaining defendants, in respect to those damages ?
The decision of the Supreme Court, upon the contract now in question, was, that the plaintiff contracted with White, *361Taylor and While, in his personal, or individual capacity, and was bound to answer, in his own person and estate, for the damages. This was, also, my opinion, when the cause was formerly before me, on the motion to dissolve the injunction ; (2 Johns. Ch. Rep. 526.) and the decree of the Court of Errors assumes the same principle, when it declares, that White, Taylor and White were to levy, on their execution at law, the damages to be assessed in this Court. (17 Johns. Rep. 373.) I apprehend, then, that the defendants, White, Taylor and While, have no concern witlT this question of contribution, and that they are not to be delayed in their right to have their damages assessed and levied, until the question of contribution is settled. A similar point arose before me, in the case of Brinkerhoff v. Lansing, (4 Johns. Ch. Rep. 65.) and the same opinion was declared. But the point itself becomes immaterial at present, for, upon a consideration of the case, it does not appear to me, that the plaintiff is entitled to charge the other members of the association, in their individual persons, or property, nor, perhaps, even to the amount actually paid in upon their shares, for any part of the damages.
The company could not be bound, beyond the capital paid in, and the president and directors had no power, un-' der the articles of association, to bind the members, individually. Whoever dealt with the company, as such, and without resorting to a personal covenant, was to be presumed to deal with them, according to the terms of their constitution, and to give the credit to the funds of the company, actually paid in, or to be paid in, under assessments duly made. He had no right to look to the credit of the individual members, unless these individual members entered into a personal covenant, or contract. As a check to extravagance and abuse, in the management of the company concerns, every member, under the 6th article, reserved to himself "the right to withdraw himself from fur*362ther responsibility, by refusing to pay any move assessments, under the penalty of the forfeiture of his shares, and of all previous payments made thereon. This construction is the only reasonable and just one; and it cannot be supposed, that individuals, who consented to take certain shares upon these terms, intended to place their whole fortunes at the power and disposal of the directors. There is no such power to be inferred in this case ; and if such was to be the construction, it would lead to the most alarming and distressing consequences to the members of the numerous associations, of a similar nature. When a man enters into a commercial copartnership, he certainly, as Lord Kenyon observed, “ commits his dearest rights to the discretion of everyone,' who forms a part of that partnership in which he engages. One partner may pledge the credit of the other to any amount.” But the persons who composed the association in this case, were not part: ners, in a commercial sense, so as that the promise of one would bind the others personally: they were rather part owners, and tenants in common, possessing aliquot shares in the common stock, and with an authority, perhaps, vested in the directors, to control the disposition and management of it, and to bind the capital to the extent collected and paid in. Any member of the company could withdraw himself from further contribution under the assessment, by the forfeiture of his shares. ,
The plaintiff, by his contract of the 25 th of April, 1815, with White, Taylor and While, had no right to bind the company, or even the capital stock paid in. He had no authqrity, even from the directors, to make this contract; it was an act entirely unauthorized. The company could not act and contract in its associate capacity ; but by a resolution of the board of directors, or by means of a general agent, duly appointed by such a resolution, in pursuance of the 4th article of the constitution of the com*363pany : Nor did the assessment of the 27th of April, made subsequent to the date of the contract, impose any other, or further obligation on the members of the company, than to pay that assessment, or submit to the forfeiture. It was no ratification, by the company at large, of the contract in question ; and though the assessment may have been made purposely to meet the first instalment under that contract, and though this fact may have been known to all the members of the company, yet they were not chargeable with any breach of faith in refusing to pay, and in submitting to the penalty. They only exercised a right reserved to them by the constitution of the company, and the contract was not their contract, nor made by any agent of theirs, duly authorised for that purpose. Neither the plaintiff nor White, Taylor and White, could complain of any surprise, or imposition, by the refusal of the members to pay j for they were subscribers to the articles of the association, and knew the tenor of them. Nor did the resolution of the directors, calling for that assessment, impose any personal obligation upon the two directors, Hitchcock and Raymond to fulfil that contract, or unite with the plaintiff in a personal responsibility. There was no personal assumption of the contract by that resolution. It only shows, that those directors were willing to meet the contract, quasi directors, so far as the company were willing to furnish the funds. The letter of the plaintiff, and of those directors, of the date of the 20th of May, 1815, to White, Taylor and White, contained nothing more. As far as funds had been furnished, so far, possibly, those directors, in their official capacity, were bound to comply with the contract in question, but no further.
I have already observed, that there is not the requisite evidence, that the two directors, Raymond and Hitchcock, ever authorised the making of the contract. The association was a regularly organized company, with a president and directors, treasurer, and clerk to the board; and we *364may safely ask, where is the resolution of the board, reciting and approving of the contract in question, or giving to the plaintiff general powers to make a contract, in his discretion ? The absence of any such resolution, is sufficient to warrant the conclusion, that the contract was never submitted to the consideration of the board of directors, and that it never received their united deliberation and consent. The two directors, as well as the other individuals of the company, in their answer, deny, that they ever gave any such assent; and the weight of evidence is in support of the answers, and decidedly shows, that the plaintiff made the contract at his own risk, and upon his own judgment, without the authority, consent, or advice, either of the directors, or of the members at large.
There is some contrariety of testimony, respecting the assent of W. Raymond, jun., the director; but the assent pretended, or alluded to, by some of the witnesses, was too loose and equivocally expressed, to be of any force.It was not the assent intended by the creation of the board of directors. The directors, quasi directors, could not deliberate and act, but in their joint capacity. Here was no joint consultation or discussion of the board; and it would be idle, and quite repugnant to good sense and sound construction, to consider loose conversations with one individual, and then with another, in succession, when they were not assembled as a board, as amounting to any thing on the part of these persons, as directors, or as giving any validity tc- the precipitate and rash conduct of the plaintiff. To bind the directors, and through them, to bind the funds of the company, the directors must have assembled in coun■ci*, and deliberated concurrently, and unitedly, and expressed their assent, by a resolution, duly announced and recorded. To reduce their assent down to mere street conversation, with them, successively, in detail, would be to subvert the meaning and .utility of the institution of such a council, and destroy all the check and safely, which was in contem*365plation. And, however contradictory and uncertain the testimony may be as to Raymond, there is uncontradicted proof, that the other director, Hitchcock, expressed his dissent from the contract. So did Hall, Dayton, and N. W* Raymond, express their disapprobation; and several witnesses testify, that the plaintiff himself, on the day he made the contract, and immediately after it was made, was sensible of his want of authority to make it; for he observed, that “ he had run the company in debt this day, to 15,000 dollars, and he did not know how they would like it.” There is, then, no well founded pretence on the part of the plaintiff, of a right to call on the company at large, or on one individual of it, to contribute to the damages which White, Taylor and White, may recover against him. He was no general agent of the company. There is no evidence of such character given to him. And if he was a special agent, by being president, yet a special agent, constituted for a particular, purpose, and under a limited power, cannot bind his principal, beyond his authority. This is a very clear and settled rule. (Nixon v. Hyserotts, 5 Johns. Rep. 58. Gibson v. Colt et al. 7 Johns. Rep. 390. Fenn v. Harrison, 3 Term Rep. 757. 2 Emerigon, 384. 443.) But the counsel for the defendants (White, Taylor and White excepted) observed, at the hearing, that he was authorized to agree to a reference, and to an accounting in respect to the purchase of the land on which the manufacturing house was built, and as to the expenses incurred in building the factory; and so far a reference may be had, as between the plaintiff and the residue of the defendants. But this reference is to have no connection with the one in respect to White, Taylor and White, and if is to be •conducted, as if the suits were distinct. Under this view, shall grant the reference acceded to.
Decree accordingly.