128 Ky. 295 | Ky. Ct. App. | 1908
Opinion op the Court by
Affirming.
William Preston Bybee about the 6th day of February, 1899, was negotiating with the prison commissioners of the Eddyville penitentiary for a contract by which he was to lease or hire the services of not less than 50, nor more than 100, of the convicts, to be used for the manufacture' of brushes for a period of four ye,ars from the 1st day of January, 1899, with the* privilege of extending the contract for four more years, and for which he was to pay the Commonwealth 35 cents per day for each convict hired to him, the payments to be made on the 10th day of each month for the labor of the preceding month. The prison commissioners required, as a condition precedent to- the proposed contract, the execution by the lessee of a bond conditioned in the sum> of’$3,000 for the faithful performance of the contract on the part of the léssee and the prompt payment of the contract price for the hired convicts. In order to meet the requirements of the commissioners, Bybee had prepared a bond conditioned as required with the Fidel
Before the prison commissioners would consent to the assignment of the contract of Bybee & McClelland to the Albin Company, they required of the assignee a bond conditioned for the faithful performance of its contract. In order to meet this requirement, the assignee applied to the Fidelity- & Deposit Company of Maryland to go on its bond, but its general ágent, Willis S. Mullen,-declined to do so unless some provision was made for the • payment of the indebtedness of Bybee & McClelland-to the State of Kentucky, which at that time-amounted-to $2,492.72. Mullen did not- admit that his company was surety
Upon the trial of the case the circuit judge held that the Fidelity & Deposit Company of Maryland was not a surety on the bond of Bybee & McClelland, and dismissed the petition a.s to it, and awarded, a judgment in favor of the Commonwealth against the Albin Company for $1,385. This judgment it now seeks to reverse on this appeal.
The first question with which we are confronted is the legal effect of what was done at the time of the assignment by Bybee & McClelland to the Albin Company towards securing the payment to the State of the amount admitted to have been due to it from Bybee & McClelland. If, as is contended by the Albin Company, the deposit of the notes with Willis S. Mullen was alone to indemnify the surety company against the claim of the Commonwealth as surety for the money due by Bybee & McClelland, then the State’s claim to this fund falls to the ground, because the trial court dismissed the petition as to the Fidelity & Deposit Company of Maryland, and the State is not complaining of this ruling. But, if the deposit was
It would be difficult to show a reason for making a distinction between the purposes for-which- the cash and the notes were placed in the hands of Mullen. Nobody disputes that all of the cash paid over to the trustee was to- be by him turned over to the State in payment of the debt due by Bybee & McClelland, and nobody disputes that, as fast as the notes were collected (if collected at all), the money was to be paid over at. once to the State. Now, if the cash was to. be paid to the State, why is it that the notes were only held for indemnification? The notes were to be turned into cash,, and when so> converted the cash was
The counterclaim for damages against the State for the alleged fraud of its commissioner in falsely representing the value of the plant which Bybee & McClelland desired to sell was not sustained by the evidence. Herman Albin, who alone deposed upon this question, claims that J.-- M. Richardson-,- one of the commissioners, made false statements to him as to what Bybee. & McClelland were making out of their contract; but it is difficult to understand, upon what
We are of opinion that the plea of ultra vires is not sustained. The incorporators and stockholders of the Albin Company are Herman Albin, his wife, and a man by the name of Sales, all living in Louisville, Ky. Herman Albin is shown to be the dominant spirit and controller of the corporation. It was incor porated under chapter 50 of the General Statutes of Kentucky of 1888, and by its articles of incorporation has the power to make contracts and acquire by purchase or otherwise property, both real and personal, and sell, convey, and transfer the same, possessing the same powers as private individuals enjoy. The general nature of the corporation was to sell or trade in merchandise, principally furniture, carpets, personal and house furnishings, and such other wares that may be deemed advisable to be carried. Whether or not this corporation had the power to enter into a contract with the State and lease from it convicts, and carry on the business of manufacturing brushes, we need not now stop to inquire, for that question is not before us. The notes in question were .given for the purchase from Bybee & McClelland of their machinery, stock on hand, and .their contract with the State. Certainly the purchase of the machinery and the stock on hand was clearly within .the purview of this trading corporation, which" was . authorized to buy both real and! personal property and to, sell and
In the case of Underwood, etc., v. Newport Lyceum, 5 B. Mon. 129, 41 Am. Dec. 260, it was held that the Newport Lyceum, although it had no authority, under its charter, to issue bankbills or to do a banking-business, yet it could not escape, under the plea of ultra vires, from paying a debt incurred in having bankbills and other material for carrying on the business of banking prepared and printed., The court said that, although to carry on the business of banking was ultra, vires, yet the defendant corporation had general power to purchase the articles named, and would have to pay for them, although it could not use them after they were purchased. So, in the case at bar, the Albin Company had a general right to buy the machinery and stock on hand and the contract from Bybee & McClelland, and cannot escape paying the purchase price therefor, although it might be conceded that to carry on the business of broom making in the penitentiary would be beyond its power-under its charter. In Bigelow on Estoppel, p. 467, it is. said: “However, if a contract with a corporation has been performed in good faith by the other party, and the corporation has received the benefits thereof, it probably cannot interpose against its duties assumed thereunder the defense of ultra vires.” In 29 Am. & Eng. Encyc. of Law (2 Ed.) tit. “Ultra Vires,” p. 50, it is said: “It is now very well settled that a corporation cannot avail itself of the defense
Upon the whole case, we are clearly of opinion that the judgment of the trial court in awarding the Commonwealth a judgment against the Albin Company for the amount of the notes and cash in the hands of the trustee, Willis S. Mullen, was correct, and it is therefore affirmed.