Crumlish's Adm'r v. Cent. Imp. Co.

38 W. Va. 390 | W. Va. | 1893

BraNNON, Judos :

In a suit in equity in the Circuit Court of Jefferson county by H. II. Crumlish’s'administrator's against the Central Improvement Company there was a fund for payment of creditors of that company and then for division among stockholders. A commissioner was directed to ascertain the debts having right to be paid out of the fund. Various demands were presented before the commissioner for audit as debts; and among them was a judgment in favor of B. If. Jamison & Co. against the Central Improvement Company, an account in favor of R. D. Barclay against same company, and an account in favor of John P. Green against same, which three demands having been disallowed by the commissioner and court, Jamison & Co. and Barclay and Green united in this appeal.

The Jamison JudgmeNt.

A judgment was rendered in 1877 in the court of common pleas, No. 3, of the county of Philadelphia, Pa., in favor of B. If. Jamison & Co. against the Central Improvement Company for twenty five thousand one hundred and sixty eight dollars and eighty five cents and costs; and afterwards, in 1890 upon a writ of scire facias upon this judgment another judgment ivas rendered by the same court for twenty six thousand three hundred and seventy eight dollars and eight cents and costs. Jamison & Co. and II. L. Boyce and the [Fidelity Insurance Trust & Safe Deposit Company each claimed the right to said judgment before the commissioner; and the Norfolk & Western Railroad Company being a large owner of stock in the Central Improvement Company pleaded payment.

Jamison & Co. and Boyce having excepted to the report and appealed, what we have to decide is whether they have any cause to complain of the refusal to allow them the judgment.

Jamison" & Co. by process on said first judgment had attached two hundred and fifty thousand dollars of second mortgage bonds and one hundrad and seventy five thous- and dollars of income bonds of the Shenandoah Valley Railroad Company, held in the hands of a third party for the benefit of the Central Improvement Company. The Shenandoah Valley Railroad Company desiring to make a contract for its completion and make another mortgage to raise money to complete it, and desiring to cancel and retire the bonds so attached, Boyce, the vice president of the Shenandoah Valley Bail road Company, opened negotiations with Jamison & Go. looking to securing those bonds, 'and Jamison & Co. expressed their willingness to take any step which would get their money advanced to the Shenandoah Valley Railroad Company represented by said judgment. Boyce made an arrangement with E. W. Clark & Co., bankers — who were financial agents of the Shenandoah Valley Railroad Company and wished to obtain said bonds for cancellation out of the way of a new series — to furnish the money.

Thereupon, on July 12, 1879, Jamison & Co. and E. "W. Clark & Co. made a written agreement providing that Jamison & Co. should transfer to Clark & Co. all their right, title and interest in and to the bondsaforesaid as also some others; that Jamison & Co should proceed to get judgment upon their attachments, levy on said securities, and sell the same so as to pass title to the purchaser; that, if they should not be bid up to a figure above Jamison & Co.’s judgment, Jamison & Co. were to buy them at the sale, and transfer them to Clark & Co.; that “the said E. W. Clark & Co. are to pay B. K. Jamison & Co. the amount of their judgment against the Central Improvement Company with interest and costs, the amount of said judgment being-twenty five thousand one hundred and sixty eight dollars and eighty five cents, with interest from July 10, 1877, the said payment to be made as follows: Ten thousand dollars in cash, and the balance in the notes of E. W. Clark & Co., drawn in equal amounts,” ele.

The said bonds were sold to Jamison & Co. under said attachments at eleven thousand dollars, which was credited on the judgment, and Jamison & Co. transferred the bonds to Clark & Co., and received from them the ten thousand dollars cash, and their notes in full payment of the amount of said judgment. By reason of said agreement the commissioner reports the judgment as-paid “so far as claimant is concerned;” that is, Jamison & Co. The only object of Jamison & Co. being to get their money, and the language of the writing being, “the said. E. IV. Clark & Co. are to pay (note tbe word “pay”) B. K. Jamison & Co. the amount of their judgment,” these' facts lead mo to the conclusion that the parties contemplated it as a payment, so far as Jamison & Co. were concerned.

But this payment was made by a stranger, without request or ratification by the debtor, so far as appears. Does it satisfy the judgment? As it seems to me, the answer depends upon whether you mean as to the creditor or debtor. It remains a correct legal proposition to the present, that one man, who is under no obligation to pay the debt of another, can not without his request officiously pay that other's debt and charge him with it. If the debtor ratify such payment., the debt is discharged, and he becomes liable to the stranger for money paid to his use. If he re-, fuse to ratify it, he disclaims the payment and the debt stands unpaid as to him. In the one case the stranger would at law sue the debtor for money paid to his use; in the other enforce the debt in the creditor’s name for his use. If his payment is not ratified, he may go into equity praying that, if the debtor ratify it said debtor may be decreed to repay him, or, if the debtor do not ratify the payment, that the debt-be treated as unpaid as between him and the debtor, and that it be enforced in his favor as an equitable assignee. Neely v. Jones, 16 W. Va. 625; Moore v. Ligon, 22 W. Va. 292; Beard v. Arbucklc, 10 W. Va. 133.

But. how as to the creditor? When a stranger pays him the debt of a third party without the request of such third party, as in this case, can the creditor say the debt is yet unpaid and enforce it against the debtor, as is attempted to be done by .Jamison & Co.? Can ho accept such payment and say, because it..was made by a stranger, it is no payment? Ts bis acceptance notan estoppel by conduct in pais, as to him ?

There has been a difference of opinion in this matter. The old English case of Grymes v. Blofield, Cro. Eliz. 541 (decided in Elizabeth’s reign) is the parent of the cases holding that even the creditor accepting payment from a stranger may repudiate, and still enforce his demand as unpaid. That case is said to have decided that a plea of accord and satisfaction by a stranger is not good, while Rolle. Abr. 471 (condition F.) says it was decided just the other way. Denman, C. J. questioned its authority in. Thurman v. Wild, 39 E. C. L. 145. Opposite holding has been made in England in Hawkshaw v. Rawlings, 1 Strange, 24. Its authority is questioned at the close of the opinion by Cresswell, J., in Jones v. Broadhurst, 67 E. C. L. 197, as contrary to an aucient decision in 36 Hen. VI. and against reason and justice. Parke, B., seemed to think it law in Simpson v. Eggington, 10 Exch. 845. It was followed in Edgcombe v. Rodd, 5 East, 294, and Stark v. Thompson, 3 T. B. Mon. 296. Lord Coke held the satisfaction good. Co. Litt. 206b, 207a. See 5 Reb. Pr. (New) 884; 7 Rob. Pr. (New) 548. The cases of Goodwin v. Cremer, 83 E. C. L. 757, and Kemp v. Balls, 28 Eng. Law & Eq. 498, seem to hold that payment must be made by a third person as ageut for and on account of debtor with his assent or ratification. In New York old cases held this doctrine. Clow v. Borst, 6 Johns, 37; Bleakley v. White, 4 Paige, 654. But later, in Wellington v. Kelly, 84 N. Y. 543, Andrews, J., said that the old cases were doubtful, but had not been overruled, but it was not necessary in that case to say whether it should longer be regarded as law, and the sylabus makes a quaere on the point. It was held in Harrison v. Hicks, 1 Port. (Ala.) 423, that “payment of a debt, though made by one not a party to the contract, and though the assent of the debtor to the payment does not appear, is still the extin-guishment of the demand.” The opinion says that, as between the person paying and him for whose benefit it was paid, a question niiglit arise whether it was voluntai’y, which would depend on circumstances of previous request or subsequent express or implied- This doctrine is sustained by Martin v. Quinn, 37 Cal. 55; Gray v. Herman, 75 Wis. 453 (44 N. W. Rep. 248); Cain v. Bryant, 15 Heisk. 45; Leavitt v. Morrow, 6 Ohio St. 71; Webster v. Wyser, 1 Stew. (Ala.) 184; Harvey v. Tama Co., 53 Ia. 228 (5 N. W. Rep. 130). Bish. Cont. §2 11, holds that, if payment “be accepted by creditor in discharge of debt, it has that effect.” Sec. 2 Wharf. Cont. § 1008.

It seems utterly unjust and repugnant to reason, that a creditor accepting payment from a stranger of the third person’s debt should be allowed to maintain an action against the debtor pleading and thereby ratifying such payment, on the technical theory that he is a stranger to the contract. The creditor has himself for this purpose allowed him-to make himself a quasi party, and consents to treat him so, so far as payment • is concerned. To regard the debt paid, so far as he is concerned, is but to hold him to the result of his own’ act. Shall he collect the debt again ? In that case can the stranger recover back ? What matters it to the creditor who pays ? As the Supreme Courts of Wisconsin and Ohio in cases above cited said, this doctrine is against commou sense and justice. It does not at all infringe the rule that one can not at law make another his debtor without request to allow such payment to satisfy the debt as to the creditor; and this Court, while recognizing the rule that one can not officiously pay the debt of another and sue him at law, unless he has ratified it, by allowing the stranger to go into equity and get repayment makes the payment in the eyes of a court of equity operate to satisfy the creditor, and render the stranger a creditor of the debtor. Neeley v. Jones, 16 W. Va. 625. I know that in that case it is held that, “if a payment by a stranger is neither ratified nor authorized ,by the debtor, it will not be held to be a discharge of the dehty” but, though this point is genera], that was a ease-~of..the stranger seeking to make the debtor repay, and the case and opinion intended to lay down the rule at law only as between the stranger paying and the debtor, not as between the creditor and debtor. So I hold that, when Jamison & Co. received the money for this judgment, it operated as a discharge as to them.

But it is said that such payment, though a payment, is .inoperative, because, after it -was made, a writ of scire facias issued to revive the judgment, and a judgment was rendered thereon, that the plaintiffs recover their debt, and thus such payment amounts to nothing. This judgment is not, as with us, according to common-law, a simple award of execution, but a judgment quod recuperet, as in an original action. Such a judgment would be void here by some authorities, 2 Bart. Law Pr. 1031; Lavell v. McCurdy, 77 Va. 763. I have entertained doubts whether it would be void, as distinguished from voidable, though I have not fully examined the subject. But in Pennsylvania a scire facias is a substitute for an action of debt, and the judgment is properly -quod, recuperet. Duff v. Wynkoop, 74 Pa. St. 300; 1 Black, Judgm. § 499. Wo must under the United States constitution give it the same faith and credit hero which it has there. Black v. Smith, 13 W. Va. 780; Gilchrist v. Oil Band Co. 21 W. Va. 115; Stewart v. Stewart, 27 W. Va. 167. If it were a valid judgment, it would nullify the payment above spoken of, on familiar principles. Such would he its effect in Pennsylvania, and it is to its effect there that we look. Custer v. Detterer, 3 Watts & S. 28; McVeah v. Little, 7 Pa. St. 279; Potter v. Hartnett, 148 Pa. St. 15 (23 Atl. 1007); Mills v. Duryee, 7 Cranch 481.

But while a judgment of a sister state, if valid, is given here the same effect it has there, yet consistently with this rulo we can look into its record to see whether it had jurisdiction of the defendant; and looking into the record of this judgment we find no service whatever of the scire facias personal or by return of nihil, or any appearance, and therefore the judgment is void, as would be a judgment here for that cause, Gilchrist v. Oil Land Co. 21 W. Va. 115; Stewart v. Stewart, 27 W. Va. 167; D’Arcy v. Ketcham, 11 How. 165; Thompson v. Whitman, 18 Wall. 457; Knowles v. Gaslight, etc. Co., 19 Wall. 88; Guthrie v. Lowry, 84 Pa. St. 533; Steel v. Smith, 7 Watts & S. 447; Noble v. Oil Co., 79 Pa. St. 354; Story, Const. § 1297; 1 Greenl. Ev. § 548. This is a good reason for disallowing the judgment.

Argument is made, that in Pennsylvania judgment upon two returns of nihil habet is good, and as effective as a return of scire feci. As I lincl no return whatever of the scire facias, I have not so closely examined this question as otherwise I would have done. There seems some authority for the proposition that two returns of nihil will sustain a judgmeut in personam. Compher v. Anawalt, 2 Watts, 490. The cases cited by counsel (Warder v. Tainter, 4 Watts, 274; Taylor v. Young, 71 Pa St. 85; Colley v. Lattimer, 5 Serg. & R. 211; Edmonson v. Nichols, 22 Pa. St. 74; Chambers v. Carson, 2 Whart. 9; Hartman v. Ogborn, 54 Pa. St. 120; Allison v. Rankin, 7 Serg. & K. 269) were cases of scire facias sur mortgage, as to which the rule of judgment of foreclosure upon two nihils seems established in Pennsylvania. The practice of taking judgment on two returns of nihil is properly perhaps confined to scire facias upon a mortgage. The case of Compher v. Anawalt, supra, says, in the opinion, that it is liable to abuse; and I notice, in the case of Custer v. Detterer, 3 Watts & S. 28 (decided only seven years after the former case) the opinion says that, as a judgment on scire facias is a new judgment, two returns of nihil will not do. I should doubt as to personal judgments. But though such a judgment would be good in Pennsylvania, it does not follow that it wobld be good hero, for the Supreme Court of Pennsylvania, in Steel v. Smith, 7 Watts & S. 447, in an opinion delivered by the eminent Chief Justice Gibson held, that a judgment of Louisiana on attachment of property and summons served on one of the joint owners, which by the Louisiana law was good as to all defendants, was a nullity in the courts of Pennsylvania as to parties not served. The only' Pennsylvania statute to which I have access provides that service of process on a corporation shall be on its president or other chief officer, cashier, treasurer, secretary or chief clerk. No service of any kind appears here. For this reason the judgment was properly disallowed.

No plea of nul tiel record was’necessary. It is a chancery suit and concerns the audit of debts on reference before a master; and when the judgment-creditors presented the judgment, adverse interests could contest it on any legal ground without formal plea. I remai’k that it was not this scire facias judgment which was considered on the appeal reported in 33 W. Va. 761 (11 S. E. Rep. 58) but the original one.

But let us suppose that the judgments were valid, and that, treating Clark & Go’s payment simply as a payment, it would be cut off by the judgment so the payment could not now be pleaded. What then ? Jamison & Co., are no longer its owners, but Clark & Co. arc assignees of it, and they are not asking its allowance, but Jamison <⅜ Co. are claiming for their own use. When Clark & Co. paid it, the lawr implied that Jamison & Co. would assign it to tbem, and without assignment actual a court of equity-treats them as its equitable owners. The case of Neely v. Jones, 16 W. Va. 625, in point 4, of the syllabus clearly supports this position. Boyce’s evidence uncontradicted is that Jamison & Co. in the agreement which they made with him, promised to assign the judgment to him, and their attorney did transmit him a copy of the judgment. Now, if this evidence is not forbidden from consideration by the execution of the writing between Clark & Co. and Jamison & Co., then either Clark & Co. or Boyce have an express agreement to assign, tantamount to an assignment, and, though no actual assignment be made, equity regards it as an equitable assignment; and this is the letter of point 5 in Neely v. Jones, supra, and Beard v. Arbuckle, 19 W., Va. 135.

It may be with some force said that, as between Jamison 6 Co. and Boyce, the assignment should go to Boyce, and then there would be no ground for saying that the oral agreement to assign would be excluded by the writing. In fact, Jamison & Co. admit in their petition for the appeal that they assigned it to Boyce; so this court ought not to decree it to them. Thus, I think, law excludes the allowance of this judgment to Jamison & Co., and this conclusion accords with the real justice of the ease. Jamison & Co. only wanted the amount they advanced to the Central Improvement Company. They got it. They do not deny, but admit, they received all the company owed them, but they want now to hold it as collatei’al for a merely personal loan to Boyce.

And now as to U. L. Boyce’s claim to said Jamison & Co.’s judgment. He has no title to it, to his own use. Any shadow of interest that may be vested in him was for other use than his own : First. He negotiated for the acquirement of it from Jamison & Co. for Clark & Co. as financial agents of the Shenandoah Valley Railroad Company, whose vice president Boyce was at that very time, and in whose service and interest he acted touching this j udgment. Clark & Co. paid for the j udgment, and took the contract in their name. Boyce explicitly says as a witness and in a letter to Doran that he was to get assignment of it and transfer it to the parties furnishing the money, and that Clark & Co. furnished the money. Never was a resulting trust more plainly established than that any show of technical right in Boyce was for the use of Clark & Co. And then further consider, that Clark & Co., were agents of the Shennandoah Valley Railroad Company and Boyce its vice president. And that he was acting for it, he does not deny, but admits; and a receipt to his company for hotel bill on the trip to acquire the judgment confirms it.

Thus we conclude that neither Jamison & Co. nor Boyce have right to this judgment. It is urged by counsel that the Shenandoah Valley Railroad Company, in a certain answer, stated that a balance was due on this judgment, treating it thus as not paid. If it belonged to the Fidelity Company, under its mortgage, could the Shenandoah Valley Railroad Company, by this admission, prejudice the right of that company ? It could not. But, if the Shenandoah Valley Railroad Company owned it, it could say, with entire consistency with the fact that Clark & Co. had paid it as regards Jamison & Co., that abalance was due on it fromthe Central Improvement Company, as it had never paid it. As assignee it could say that the Central Improvement Company yet owed a balance.

BARCLAY’S AND GREEN’S DEMANDS.

Barclay filed before the commissioner, and asked payment out of the fund, an account for ten thousand dollars, for, services for four years and one month as president of the Central Improvement Company, and Green filed an account for six thousand two hundred and fifty dollars for two and a half years’ service as treasurer and secretary. Both these gentlemen were stockholders and directors of the company. The commissioner rejected the claims.

The Central Improvement Company is a Pennsylvania corporation having its habitat and chief office there, and there the services were performed and were to be paid for, if at all; and if any contract were implied by law to pay compensation for service of those officers of the corporation, it. would be a Pennsylvania contract. Hence the law of that state operates upon the case specially. We must therefore see whether the law of Pennsylvania would raise an implied contract to pay for such services. Klinck v. Price 4 W. Va. 4; Stevens v. Brown, 20 W. Va. 450; Hefflebower v. Detrich, 27 W. Va. 16. There was no express contract to pay for such services, and, if there can be any recovery therefor, it must be on the theory that the law raises an implied promise to pay for the services.

I think the case of Kilpatrick v. Bridge Co., 49 Pa. St. 118, uncontrollably decides against the allowance of these accounts. It holds that “corporations arc not liable on a quantum meruit, for services performed by their officers. There must be an express contract for compensation, or there can be no recovery.” In that case, Sersill claimed for service as president and Kilpatrick as treasurer, as in this case, and the court held that they could not recover. The court said:

“The salary or compensation of corporate officers is usually fixed by a by-law or by a resolution either of the directors or stockholders, but, where no salary has been fixed, none can be recovered. Corporate offices are usually filled by the chief promoters of the corporation, whose interests in the stock or in other incidental advantages is sup7 posed to be a motive for executing the duties of the office without compensation, and this presumption prevails until overcome be an express prearrangement of salary. Hence, we held in Association v. Stonemetz, 29 Pa. St. 534, as a general principle, that a director of a corporation, elected to serve without compensation, could not recover in an action against the company for services rendered in that capacity, though a subsequent resolution of the board, agreeing to pay him for past services, was shown. ⅜ * * * And the rule is just as applicable to presidents and treasurers and other officers as to directors. ⅜ * * It is well the law is so. Corporate officers have ample opportunities t'o adjust and fix their compensation before the}' render service, and no great mischief is likely to result from compelling them to do so. Butif, on the other hand, actions are to be maintained by corporate officers for services, which, however faithful and valuable, were not rendered on the foot of an express contract, there would be no limitation to corporate liabilities, and stockholders would be devoured by officers.”

In the later case of Martindale v. Wilson Cass Co., 134 Pa. St. 348 (19 Atl. 680) it is held : “The general rule on the subject of compensation to the directors of a private corporation is that they are not entitled to compensation for official services unless it is provided for in the corporate charter or by-laws. In the absence of such provision, a director or president of such corporation can not recover pay for official services, when no agreement for compensation preceded them, no presumption of such agreement arising from their performance.”

A by-law of the Central Improvement Company provided that the directors “shall have,power to appoint all other officer or agents of the company, and fix the compensation and define the duties of all their officers or agents,” but the directors never fixed any compensation. This was a mere power, given to be exercised or not, as the directors might choose, and does not itself give compensation; and the very fact that the directors, having this power, never exercised it, negatives the idea'that any compensation was intended. In re Bolt § Iron Co., 14 Ont. 211.

So it is clear that, under the Pennsylvania law, these officers can recover nothing.

Though not necessary to go further, my examination has led me to the conclusion that the decisions in Pennsylvania reflect the true rule applicable nearly everywhere, in denying pay without express provision or contract, not only to the president, but a treasurer or secretary, when stockholders or directors. The authorities have led my mind to the conclusion that the law raises no implied promise to pay compensation to directors, president or vice president of a private corporation in the absence of provision in bylaw or order of the directors. They are trustees charged with the funds, and can not recover on a quantum meruit. Gridley v. Railroad Co., 71 Ill. 200; Cheeney v. Same, 68 Ill. 570; Association v. Meredith, 49 Md. 389; Bank v. Elliott, 55 Ia. 104 (7 N. W. Rep. 470); Sawyer v. Bank, 6 Allen, 207; Railroad Co. v. Ketchum, 27 Conn. 180; Ogden v. Murray, 39 N. Y. 202; 1 Beach Priv. Corp. § 208.

And if the treasurer, secretary or other executive officer be a stockholder or director, no such promise is raised by law in his favor; but, if not. then the law does raise such promise, and presume that pay was intended from the fact of appointment, and he 'may get compensation. Smith v. Railroad Co. 102 N. Y. 190 (6 N. E. Rep. 397); Holder v. Railroad Co., 71 Ill. 106, 109; Cheeney v. Railroad Co., 68 Ill. 570; 1 Beach. Priv. Corp. § 200; note to Grundy v. Coal Co., 23 Am. & Eng. Corp. Cas. 616 (9 S. W. Rep. 414 Of course, I do not here speak of the mere employes of corporations, they being entitled to compensation.

Therefore, so much of the decree of March 2, 1891, as rejects the claim of B. K. .Jamison & Co. and U. L. Boyce to said judgment, and the said accounts of Ii. D. Barclay and John P. 'Green, is affirmed.