Court Opinion

ID: 7987364
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:27:08.392635+00
Date Added: 2024-06-11T16:35:14.407425
License: Public Domain

Cooper, J.,
delivered the opinion of the court.
The agreement between the directors of the .respective companies was clearly beyond the corporate powers of either company to make, and it had not been fully executed when the appellant withdrew from it. There are -some decisions which proceed on the apparent postulate that an ultra vires agreement, executed fully by one of the corporations, or so far executed that the status quo cannot be restored, may be made the basis of an action. But in many of these cases it will be found that the measure of recovery would be the same, whether the injury done to the plaintiff by the failure of the defendant to perform, or the benefit received by the defendant under the agreement, is taken as the standard. Cases of this sort may therefore be well assigned to that other and far more numerous class, in which the right of recovery is not rested upon the invalid agreement, but is recognized to exist notwithstanding the agreement, upon the principle that the defendant may not repudiate the contract and yet retain the benefit which has been derived under it.
The decided weight of authority in England and America is that no action lies upon the invalid contract, that no decree can be made by a court of equity for its specific performance, nor a recovery had at law for its breach; but that, by proceeding in the proper court, the plaintiff may recover to the extent of the benefit received by the defendant from the execution of the agreement by the' plaintiff. Penn Co. v. Railroad Co., 118 U. S., 290; Davis v. Railroad Co., 131 Mass., 258; Pearce v. Railroad Co., 21 How., 441; *677Ashbury Railroad, etc., Co. v. Riche, L. R., 7 H. L., 653; 9 Ex., 224; In re Cork v. Foughal, L. R., 4 Chy., 748.
The chancellor, by the very extraordinary course pursued in this case, has not only specifically executed the ultra vires agreement, but has done it by a.peremptory injunction, by taking the property of the appellant from its possession and turning it over to persons not parties to the suit, and who were not appointed receivers of the court. At the final hearing the court found itself in the anomalous position of not being in condition to afford relief by final decree, because, pending the suit, the complainant had worked out its own redress by receiving from the “joint committee” provided for by the agreement which it relies on, its proportion of the proceeds of the enterprise. The court therefore dismissed the complainant’s bill, but taxed the defendant with the costs.
It is to be regretted that an amicable settlement was not agreed on by the parties. The complainant should have promptly accepted the offer made by the defendant, to allow it two-fifths of the net proceeds of the season’s work. In view of the condition in which the matter has been brought by the course pursued by the court below, it may be difficult to reach a complete settlement along strictly legal lines. The extent of the right of complainant is sufficiently indicated by what we have said. We will not now attempt to direct in what manner the accpuut shall .be taken, but will only reverse the decree, and remand the cause for further proceedings.

Reversed and remanded.