Fuller v. Dame, 35 Mass. 472

Fuller v. Dame

35 Mass. 472 | Mass. | 1837

Shaw C. J.

delivered the opinion of the Court. The plaintiffs bring their action as indorsees of a promissory note ; but as they took the note by indorsement after it had become due, they are presumed to have taken it with notice of the consideration, and of all the circumstances under which it was given ; it is open, therefore, to the same defence, as if the suit were prosecuted in the name of the promisee.

It appears by the case reported, that the note was not originally delivered to the promisee, but to third persons, to hold and deliver the same to the promisee, upon a condition expressed in an agreement of even date with the note and signed by the parties. The agreement and the note, therefore, being made at the same time, and relating to the same subject, are to be taken together, as different parts of one and the same transaction, to the same effect as if the stipulations in both had been incorporated into one instrument. This agreement states the consideration upon which the note was made, and discloses the object of the parties and the purposes of the transaction. Several grounds of defence were taken to this action :

First, that the note was given without any legal consid eration ;

Second, that it was made deliverable to the promisee, and payable, upon a condition precedent, to wit, the actual location and making of the principal depository of the Worcester Rail Road Corporation, at the place desired and designated, which condition, it was insisted, had not happened, at the time of the commencement of this action ; and .

Third, that the object, tendency and effect of this contract, was to induce the promisee, or other persons to be employed and called into action by him, to exert an influence upon the decision of questions affecting both public and private rights, with a view to considerations, other than those affecting those rights ; that such contracts tend injuriously to affect the rights and interests of third persons, are contrary to public policy, and so inoperative and void in law.

Upon the last ground, the Court are of opinion that this contract was obviously contrary to public policy, to open, upright and fair dealing, and cannot, therefore, in point of law, be supported. At the time when this contract was entered into, the *480Boston and Worcester Rail Road Corporation had been incorporated, with ample powers ; the termini of the road were not definitively fixed, otherwise than at Worcester and Boston, but at no particular places within those towns respectively. At that time Mr. Fuller was a proprietor in the rail road corporation, and he was then a member of the Massachusetts legislature, though he was not a member the ensuing year, when the South Cove company was incorporated. After the agreement, the South Cove company was incorporated, with a large capi tal, and Mr. Fuller became a member and stockholder in that company.

We think, in the first place, that this cannot be regarded as a contract and payment for professional services. Nothing in the terms of the agreement, or in the nature of the objects to be accomplished, indicates that the promisee was to act as the advocate and counsel, or as the accredited agent and attorney of Mr. Dame, in procuring any of the acts done, upon the accomplishment of which the money was to be paid. The acts to be done were to get up a large joint stock company to procure the Worcester Rail Road Corporation, either by the aid of such a company or otherwise, to fix its place of termination and deposit at the place desired by Mr. Dame. The interest of Mr. Dame, to be subserved by this location, was incidental and collateral, and not in any sense the object or purpose of so fixing that location, so far as either the rail road corporation or the South Cove Corporation were concerned. It was not a case, therefore, in which Mr. Dame had any right, or any occa sion, to be heard by counsel, or to be represented by a known and accredited agent. The fullest and freest latitude ought to be given, for all persons interested, in matters of property, character, and generally in their social rights, to be heard by their counsel, before public bodies, as well as before judicial tribunals, in all cases where those rights are drawn in question ; but then the fact appearing that persons do so act in a representative capacity and appear as counsel for others, prevents any injurious effects from such proceeding. Such counsel, agent or attorney is considered as standing in the place of his principal, governed solely by a regard to his interests, and his arguments and representations are weighed and considered accordingly.

*481Again ; the Court are of opinion, that this does not stand upon the ground, that the promise is void, because it was given to induce the person to whom it was made, to do an unlawful act. Tt is an undoubted principle of law, that where a promise is made to one, in consideration of doing an unlawful act, as to commit an assault, or practise a fraud on a third person, such promise is void in law. It was strongly pressed by the counsel for the plaintiffs, that when a contract is made in general terms, broad enough to include things lawful and unlawful, it shall be presumed that they intended those only which were lawful. For instance, if A should stipulate to procure and obtain from B a sum of money for the use of C, it might be obtained by a demand or a suit at law, which are lawful means, or by fraud or violence, which are unlawful. It should be presumed that the lawful and not the unlawful means, were intended. If this defence were placed solely upon the position, that this was a contract void on the ground of containing stipulations to do unlawful acts, this would be a cogent and perhaps an unanswerable argument in reply.

But this is not the true nature of the defence. The law goes further than merely to annul contracts, where the obvious and avowed purpose is to do or cause the doing of unlawful acts; it avoids contracts and promises made with a view to place one under wrong influences, those which offer him a temptation to do that which may injuriously affect the rights and interests of third persons. A person having property, and being of sound mind, may make a will in favor of whom he pleases. A common friend may lawfully represent to him, the expediency and fitness of making a bequest in favor of a particular individual and may repeat that representation, both in conversation and in w riling. Writing letters at the request of another and for his benefit, would under ordinary circumstances, be a proper consideration for a promisé of compensation. But any promise to pay another for soliciting a will in his favor, would be void. Debenham v. Ox, 1 Ves. sen. 276. A man might entertain a \>.vv sincere opinion, that a marriage between a certain gentleman of his acquaintance, and a lady of considerable fortune, would be highly beneficial and contribute to the happiness of both i m-rios, and he might lawfully' propose this to *482one or both. But any promise of reward made to him to induce him to do this, or any promise made afterwards in consideration of such service, would be void.

This is founded upon the general consideration of fitness and expediency. Such advice and solicitation, in whatever form the agency may be exerted, are understood to be disinterested, and to flow from a single regard to the interests of the parties. They are lawful only so far as they are free and disinterested. If such advice and solicitation, thus understood to be pure and disinterested, may be justly offered from mercenary motives, they would produce all the consequences of absolute misrepresentation and falsehood. It is understood to be the offer of disinterested good offices, and the measure proposed, to be recommended, by the unbiased judgment of the person offering it; whereas, it is in fact an offer flowing from unavowed motives of pecuniary interest, and the recommendation is the result of a judgment biased by a hope of a large reward. If rewards might be taken in consideration of the exertion of direr* or indirect influence, either by the person acting under it, 01 by others who should be influenced and moved by him, it would destroy all confidence, it would lead to false and unfair representations and dealings, and be productive of infinite mischief.

, The case in question is, we think, clearly within the operation of this salutary principle. Without considering other aspects of the contract, we are of opinion, that it was contrary to public policy, and to upright and fair dealing, as it tended injuriously to affect the public interest in establishing the fittest and most suitable location for the termination of the Worcestei rail road, for the accommodation of the public' travel; 2. As it affected the interests of the proprietors of the Worcester rail road ; 3. As it affected the interests of the joint stock company incorporated under the name of the South Cove Corporation.

The Boston and Worcester rail road was established for public accommodation and convenience, in the transportation of passengers and merchandise. Like a county road, it was in many respects a common highway. It has been so held in case of turnpike roads. Commonwealth v. Wilkinson, 16 Pick. 175. It may be said, that it was to be constructed and located by the corporation. True, as in case of a turnpike road. *483it is constructed in the first instance at the expense of a private company of adventurers, under the sanction of the legislature, incorporated for that express purpose, and they are to be reimbursed by a toll, levied and regulated by law for their remuneration. The work is not the less a public work ; and the public accommodation s the ultimate object. It is also true, that it was left to the corporation and the directors, to fix the termination and place of deposit. In doing this a confidence was reposed in them, acting as agents for the public, a confidence which, it seems, could be safely so reposed, when it is considered, that the interests of the corporation as a company of passenger and freight carriers for profit, was identical with the interests of those who were to be carried, and had goods to be carried, that is, with the public interest. This confidence, however, could only be safely so reposed under the belief that all the directors and "members of the company should exercise their best and their unbiased judgment upon the question of such fitness, without being influenced by distinct and extraneous interests, having no connexion with the accommodation of the public or the interests of the company. Any attempt, therefore, to create and bring into efficient operation, such undue influence, has all the injurious effects of a fraud upon the public, by causing a question which ought to be decided with a sole and single regard to public interests, to be affected and controlled by considerations having no regard to such interests. It is no answer to say, that by the act of incorporation the executive authority was vested in a board of directors, and Mr. Fuller was not a director. He was a member of the company and might be chosen a director. He1 was an elector of the directors, and they were directly responsible to the stockholders. The immediate act of location was with the directors, but the efficient authority was with the members and stockholders of the corporation, who elect the directors. The election may depend upon the known views and opinions of candidates upon this very question of location. They had a right to his disinterested judgment and advice upon the question of location ; and this could not be exercised whilst he held and relied on a promise for a large sum of money, the payment of which depended upon the decision of this question by the directors

*484Nor is it any satisfactory answer to say, that when the agree ment was entered into, he had come to the opinion that the location in question was the best for the interests of the public, and for the interests of the corporation. That opinion might be changed by new views, and new offers ; and besides, the terms, upon which this boon was to be obtained, was still an open question. But upon all these questions the influence of the promise of separate and distinct advantage, deprived him of the power of exercising a free, disinterested and unbiased judgment.

2. It was contrary to public policy, and the principles ol fair dealing, as it affected the private interests of the two companies. Mr. Fuller was one of the original proprietors of the Worcester rail. road. His associates had a right to believe, that in all his acts as 'such stockholder, in choosing directors, in framing by-laws, and doing other acts, pursuant to the powers of the corporation, he had a common, and in proportion to his shares, an equal interest, and they had a right to rely on his judgment, his recommendations of directors and other acts, with all the confidence inspired by such a belief. A contract assuring him separate and distinct advantages, operated to mislead and deceive them, and thus had a tendency to operate as a fraud upon them. It is not easy to distinguish this from the case of a composition deed, where ostensibly all the creditors stipulate to release the common debtor upon the payment of their debts at a certain rate of discount; any stipulation for a separate and distinct advantage, is held to be a fraud upon other creditors, and void. Case v. Gerrish, 15 Pick. 49.

3. The same considerations apply to the case of Mr. Fuller as a member and stockholder in the South Cove Corporation, by whose act, by contract with the Worcester Rail Road Corporation, the location of the.depot was to be fixed. It is no objection to the force of this argument, that this company was not incorporated until after the agreement was made, and that Mr. Fuller did not at first become a member of it. It is obvious, that the establishment of such a company, was contemplated when the agreement was made, and thrt there was nothing in the agreement* to prevent Mr. Fuller from becoming a memoer, as he in fact did. The members of this company *485had a right to have the question, whether they should contract with the Worcester Rail Road Corporation and the terms on which they should so contract, settled and decided by a sole regard to the interests of that corporation as a company of owners, purchasers and adventurers. Any influence from any quarter, created by the promise of a sum of money, to induce them so to contract, and to yield to particular terms, with a view to separate and extraneous interests, operated as a fraud upon them, and rendered such promise void.

If these principles are important to be observed in the ordinary intercourse of society, and in regard to the conduct of individuals in their important relations, such as wills and marriages, it seems to us a fortiori that they are required to b^ "observed in the formation and conduct of associations, corporations and joint stock companies, where very large and important interests are confided and administered, where most important questions are decided, directly or indirectly, by the major vote of the associates, and where the judgment of each is, to a great degree, affected and influenced by the judgment and conduct of others. It seems to us that the strictest 'good faith, and purity of intention and purpose are absolutely requisite.

We are aware that there is no stipulation in this contract, that it should be kept secret. There is certainly no intimation that it should be disclosed to either of these companies, or otherwise made public. ' The contract was of such a nature, that it would be likely to defeat its purpose to make it public , it is therefore reasonable to presume that it was not intended to be made public. In point of fact, it does not appear that it was known to any one, but the parties interested and the depositaries of the note and agreement, until after the object was accomplished. But it is enough for the purposes of the present argument, which goes to establish a general rule, that such agreement might be kept secret, from all those on whom the influence was intended to be exerted, and that in general it would be for the interest of the parties to keep it secret, and thus that it would be productive of all the injurious consequences alluded to.

If one stockholder ir, a joint stock company or one not a *486stockholder, can be furnished with the means of paying a bonus or premium upon shares, paying the differences between ostensible sales of shares and the real value, he may create a fictitious value to shares, promote a false confidence in the stability and measures of such company, and thus produce injurious consequences to a great extent.

It is obvious, that if one large landholder may make a valid conditional promise to pay a large sum of money to a stockholder, or influential citizen, on condition that a work of great public improvement may be so fixed as to enhance the value of his estate, all other great landholders may make like promises, on similar conditions, and great public works, which should be conducted with a view to the public interest, and to the just rights of those who make advances for the public benefit, would be in danger of being overlooked, and sacrificed ip a mercenary conflict of separate, local and private interests.

Plaintiffs nonsuit.