Court Opinion

ID: 5461746
Source: CourtListenerOpinion
Date Created: 2022-01-09 19:38:40.970935+00
Date Added: 2024-06-11T08:32:55.076495
License: Public Domain

By the Court, Gilbert, J.
This action was brought upon an agreement, bearing date September 10, 1856, whereby the defendants agreed, in consideration that the plaintiff would aid and use his influence in procuring the mortgage bondholders of the Chicago, Alton and St. Louis Railroad Company, to fund the interest due, and to fall due, on their bonds, within three years from the 2d day of October then next, they, the defendants, would, in case they should get possession of the road of said company, under arrangements then in progress, procure the directors of that company, or any new company to be formed, under a proposed sale of the road, to agree by a vote to pay certain coupons of said company, held by the plaintiff, then past due, and such as should thereafter fall due within a period specified ; and that if the defendants should continue in the control of the road themselves, or through directors of either company named by them, they would'cause the company so controlling said road, to pay said past due coupons, with interest; one half in one year, the residue in two years, and the others as they should fall due. hTo question was made of the performance of the contract by the plaintiff. At the time of the execution of this contract, the property of said corporation was incumbered by three mortgages, amounting, in the aggregate, to four millions and a half. Its franchises and property had been leased for twenty years, from 31st August, 1865; the corporation was hopelessly insolvent, and its franchises and property had been assigned to trustees, who then held the same upon trust, for the payment of its debts and *348liabilities. The “arrangements then in progress,” mentioned in the contract, consisted of negotiations and agreements between the defendants and other persons largely-interested in said corporation, the main object of which was the formation of a new corporation out of the debris of the old one, the board of directors of which'should be "composed of nine persons, five of whom should be in the interest of said Matteson, and four of whom should be in the interest of said Litchfield. The evidence shows that the new corporation was formed, and that the. plaintiff was familiar with these arrangements during their progress, and after the completion of them."
The question is, whether this agreement is among that class which is deemed contrary to public policy, and, therefore, illegal and void. The law upon this subject inculcates a high morality, and the courts, in administering the rule, from time to time, so far from relaxing it, have constantly shown a disposition to apply it with increasing rigor. The rule is, that an agreement, which is designed, or which, in" its nature and effect, tends to lead persons who are charged with the performance of trusts or duties for the benefit of others, to violate or betray them, is contrary to public policy, and void. (Fuller v. Dame, 18 Pick. 472. Davison v. Seymour, 1 Bosw. 88. Satterlee v. Jones, 3 Duer, 102. Devlin v. Brady, 32 Barb. 518. Spinks v. Davis, 32 Miss. Rep. 152. Marshall v. Balt. and Ohio R. R. Co., 16 How. 314.) There is no difference in principle, whether the trust, which it is meant to pervert, is public or private; nor is it material that nothing actually fraudulent or illegal was done under the. contract. It is enough that such is the tendency of it. (Cases supra.)
The agreement under consideration contained a simple and plain engagement, on the part of the defendants, to control the action of the directors and trustees of the existing corporation, or those of the corporation which was thereafter formed under their auspices, and to cause such: *349directors or trustees to agree, by vote, to pay the plaintiff’s claim, without reference to the legality thereof, or to the interests of their cestuis que trust; and, in fine, to pay the plaintiff at all events, regardless of their duty to the corporation or its creditors.
[Kings General Term,
February 15, 1868.
We are of opinion that the case before us is clearly within the operation of the principle stated.
In the view thus taken of the case, it becomes unneces-. sary to consider the rights of the defendants, arising out of the surrender, by the plaintiff, of the bonds and coupons in question.
Judgment must be entered for the defendants, with costs.
• Lott, L. F. Barnard, Gilbert and Taj>pen, Justices.]