101 Mich. 14 | Mich. | 1894
This action was commenced by attachment to recover against the defendant company the value of certain merchandise. Plaintiff claims under a written guaranty, signed by Milo Davis, chief engineer of the rail-. road company, as follows:
*15 “Iron Range & Huron Bay R. R. Co.
“ Milo Davis, Chief Engineer and Superintendent of Construction.
“Arvon, Mich., May 23, 1891.
■“ Michigan Slate Company,
“Arvon.
“ Gentlemen: Please deliver to "Wallace Dingman such
supplies as he may order for the construction of the I. R. & H. B. R. R.,» until further notice, and the same will either be taken out of his estimate from month to month, or taken from his final estimate, or, in case of his failure to complete the job, from last estimate given him, as the case may be, if not otherwise paid; and the Michigan Slate Company is hereby guaranteed against any loss from said DingmaAs failure to pay for any goods, tools, and supplies of all descriptions furnished from this date.
“ Milo Davis, Chief Engineer.”
Claim is also made upon the common counts in assumpsit for goods sold and delivered. A bill of particulars was filed, showing a claim of indebtedness of upwards of $36,000. The plea was the general issue, and there was also filed and served an affidavit of C. H. Buhl, president of the defendant company, to the effect that the railroad company never executed or caused to be executed the written agreement counted upon in the plaintifffs declaration, and that Milo Davis, chief engineer, mentioned in the declaration, had no authority to execute any such promise or agreement in behalf of the defendant company.
It appears that on June 30, 1890, articles of association of the defendant company were filed in the office of the Secretary of State. The purpose of the incorporation, as stated in the articles of association, was the construction of a railroad from some point on Huron Bay, Baraga county, Mich., through the counties of Baraga and Marquette, to the towns of Champion, Republic, and Michigamme. On July 26, 1890, a contract was made between James M. Turner and the defendant company, by which Turner agreed to undertake forthwith, and to complete
The claim of the plaintiff company is that it is entitled to recover against the defendant company for so much of the goods described in the bill of particulars as were furnished prior to May 23, 1891, or up to the time the written guaranty was . made, because of certain oral arrange
The main features of the case relative to the organization of the defendant company, its contract with James M. Turner to construct its road, as well as the contract between Turner and Wallace Dingman, together with the appointment of Milo Davis as chief engineer of the defendant company and his powers and duties, are set out in the case of Hirschmann v. Railroad Co., 97 Mich. 384, and will not be repeated here. It was said in that case that—
“ The testimony brings the case within any one of several well-established rules:
“1. If the company relinquished to Turner the matter of the construction of this road, and Turner knew that Davis was contracting these obligations in the name and*18 upon the credit of the company, Turner must be deemed to have adopted them. His knowledge was the company's knowledge, and the company is liable.
“ 2. If the officers of the company were advised that Davis had incurred the June indebtedness to plaintiffs in the name and upon the credit of the company, and with •that, knowledge did not protest, but, pn the contrary, corresponded directly with the plaintiffs, and paid that account, plaintiffs were justified in relying upon that action as an assurance of Davis' authority, and extending further credit, and defendant is estopped from denying the authority of Davis.
“3. If Davis, in the exercise of the authority given to him by the contract, in view of Dingman’s inability, was prosecuting the work for and on behalf of the company, and incurred this indebtedness in such prosecution of the work, the plaintiffs were entitled to recover.
“4. If Davis was entering into contracts for the work upon the road, employing men and purchasing supplies in the name of the company and upon its credit, and the officers of the company knew of the fact, or had been advised of instances of like conduct, and remained silent, the company cannot now be heat'd to say that such person so acting was without authority.”
It is therefore to be seen whether this case falls within any of the above-mentioned principles.
Some time in August, 1890, Mr. C. M. Turner, as he testifies, commenced selling goods for the-plaintiff to Wallace Dingman. Some of these goods were paid for by Dingman, and some by Davis, for the defendant company. The account was balanced, Mr. Turner says, about March 1, 1891, all but $100, which was carried over to the March account. In that month Mr. Davis came to Arvon, and asked him why he did not sell the goods that were wanted at the camps; that a large amount was wanted. Mr. Turner told him that Dingman was in bad shape pecuniarily for so large an amount, when Davis said: “ Once you get the business, you get orders for the goods, and I will guarantee that you get your pay. I will see
Prior to this, and. about the 1st of May, C. M. Turner had called upon Davis for money. There was then due the plaintiff about $10,000, and he procured an order for that amount of money, as follows:
“Arvon, Mich., May 15, 1891.
“Iron Range & Huron Bat R. R. Co.:
“Please pay Michigan Slate Company the sum of $10,-029.94, the balance of amount due on account, and charge same to me.
“Wallace Dingman,
. “By Geo. L. Davis.
“Milo Davis,
“Chief Engineer.”
With this order Mr. Turner was given a letter to Mr. Peirce, chief accountant of the defendant company, as follows:
“Arvon, Mich., May 15, 1891.
“D. R. Peirce,
“ Chief Accountant I. R. & H. B. R. R.,
“ Detroit, Mich.
“ Dear Sir: The Michigan Slate Company is in such a
*20 shape that they must have the amount of their bill against W. Dingman. We have barely enough money to pay the rolls, and the only way I could see to help them out was to sign an order on the railroad company for the amount of their bill.
“Yours truly,
“Milo Davis, Chief Engineer."
Mr. Turner says that at this time James M. Turner had failed in business, and the Michigan Slate Company was in need of the money. He took the order and letter, and came to Detroit to see Mr. Buhl. He testifies that Mr. Buhl told him at that time that they had made up the monthly account of estimates, and had no money on hand for that matter, and could not pay it. He says further that he thinks Mr. Buhl directed him to file the order with Mr. Peirce, but that Peirce objected to it, because at that time it was not signed by Mr. Dingman; that he took it home, and Dingman’s signature and O. K. was procured, and he then sent it to Peirce. Mr.. Turner further says that he then saw Davis, who assured him that if he continue. to sell goods he would get his pay, and that Davis agreed to guarantee the slate company against all loss arising from sales of goods to Dingman, and that Davis afterwards put it in writing. He continued to sell goods under the written guaranty until the balance of the bill was made.
The defendant’s contention is that neither Mr. James .M. Turner nor Mr. Davis had authority to bind the defendant company. The relation of Mr. James M. Turner to the company was peculiar. He was the originator of the scheme for the building of the road. The contract between Buhl, Stephens, and Turner is fully set out in Hirschmann v. Railroad Co , supra. The contract provided substantially that the parties associated for the purpose of “constructing, owning, and operating" the road, and that it was to be sold as an entirety within three
By the terms of the Dingman contract, the defendant company had the right at any time, if Dingman neglected or refused to prosecute the owork with a sufficient force to complete it within the agreed time, to take possession and complete it. It is also contended by plaintiff that in the fall of 1890, and before the goods in question were furnished, the defendant company, through Davis, discovered that Dingman was not competent to carry on the work and finish the contract, and' so, availing itself of the foregoing clause in the contract, the company took charge
“ If possible, I would like this letting of the construction contract to you wiped out of the organization, and the contract between ns three to read just as we have*24 talked, viz.: Mr. Buhl and myself furnish the money, if necessary, up to $500,000. We each own one-third, for which you give us your notes from time to time, secured by your one-third of the stock and bonds. That’s all there is to it, and I am ignorant of the necessity of dragging in and lumbering up an agreement with a contract to you for the construction of the road.”
Mr. Turner, in his testimony, says:
'“Mr. Buhl, Mr. Stephens, and myself are the company; but it was thought, as the contract ran to me, that I better not appear as a stockholder, in order to have it all legal.”
We have seen that Mr. Davis held himself out as the agent of the company to various parties from whom goods were purchased, and to men whom he employed for the company, and that the affairs of the company were largely conducted by him, or under his direction, from the spring of 1891 forward.
James M. Turner was the active party for Buhl, Stephens, and Turner. .The whole affairs of the company were in their hands. Mr. Turner, while so acting, gave direction to Davis. Mr. Turner says:
“ I was to look after the building of the road up here, and employ the men to see to it. After Mr. Davis came up here, I gave him most of his orders direct from my office as between us three.”
He says further:
“Davis’ duties were to see that our men and teams were fed, and it was impossible to feed men and horses unless somebody became responsible for it.”
He also says that he said to C. M. Turner, if he would make the arrangement with Davis, and turn in the bills .at the end of each month, so as to be checked up and charged to the various persons, that the company would pay for all the supplies that he would furnish. James M. Turner also testified that when the June estimates were
The court, upon this testimony, and the claims made by the plaintiff, directed the jury substantially that if they found that Davis was the agent of the defendant company, with power to pledge the credit of the company to pay for goods of the kind in question furnished along the line of the road, and that he did in behalf of the company verbally agree that the company would pay for them, and plaintiff furnished the goods in conformity with the agreement, relying upon that agreement, and looking solely to the defendant for the price, and not to Mr. Dingman, they should find for the plaintiff for the value of the goods furnished before the time the written guaranty was made; but, if the' plaintiff looked both to the company and to Dingman for such goods, they must find for the defendant, as, in order to recover, they must find that plaintiff looked only to the company, and not to Dingman at all. As to the goods sold under the written guaranty, the court instructed the jury that, if they found that Davis was authorized to make the guaranty in behalf of the company, it would bind the company, and, if they
“ Had Turner, by virtue of his relations with Buhl and Stephens, or by virtue of any instructions from them, power to guarantee payment to the plaintiff for the supplies in question; or had he the power, by virtue of that relation or those instructions, to authorize Milo Davis to make such a guaranty; or had Milo Davis, because of the fact that he was chief engineer of the road, or because of any authority from the railroad company, power to make such a guaranty?”
The court below directed the jury that the fact of Davis being chief engineer did not of itself imply such authority, so that question is not involved here.
It is evident from the manner in which the whole business of the construction of the road was conducted that substantially Buhl, Stephens, and Turner were the company, and their acts are binding upon the company itself. The company cannot adopt the acts that are advantageous to it and reject those which are disadvantageous. It is true that there was no formal corporate action, except the
“ Conceding that the president must exercise his powers of management in subordination to the board, yet when, as in this case, the stockholders, being the owners, have seen fit to vest certain extraordinary powers of management in the president, and certain other powers in the treasurer and superintendent, and the directors, with full knowledge of this, elect a man to fill all those offices, and thereafter put no restraint upon his management, the board must be held to have consented to his exercising all the power reasonably included in the language by which it was conferred. * * * * * * * * * *
“ What the owners consent to expressly or permissively they ought not to be allowed afterwards to deny.”
It is substantially shown that all parties connected with this enterprise agreed that the whole business should be done by and through Buhl, Stephens, and Turner; and it-was so done. No one else had any voice in it, or took any part in it. No one else seems to have put a dollar of money in to carry out the contracts. Buhl and Stephens furnished it all, except what Mr. Joy put in originally, and that appears to have been arranged for. Buhl and Stephens then empowered Turner to act for the three, and he did so act, and his acts must be held binding upon the defendant company. This is supported by abundant authority: Eureka Iron & Steel Works v. Bresnahan, 60 Mich. 332; Preston Nat. Bank v. Purifier Co., supra; Bank of Middlebury v. Railroad Co., 30 Vt. 159; Orr Water-Ditch Co. v. Reno Water Co., 19 Nev. 60; Hull v.
We think, under the facts of this case, the principle laid down in Bice v. Building Co., 96 Mich. 24, plainly applicable. In that case the defendant company had the right, under its contract with Wilson & Moore, at any time when the contractors failed to prosecute the work with diligence, to provide materials itself, and deduct the cost from the money due on the contract. When the defendant found that the plaintiffs would furnish no more materials to Wilson & Moore, or upon their credit, -it agreed to make the payment directly to the plaintiffs, and it was held that the case was not within the statute of frauds; citing Nelson v. Boynton, 3 Metc. 396. The Court further said:
“The object to be accomplished by the defendant company was the immediate acquisition of those materials to put into the building. The purpose was not to benefit Wilson & Moore, or to obtain any forbearance for them, but to benefit the defendant company.”
So, in the present case, the purpose of this arrange
This rule was recognized in Calkins v. Chandler, 36 Mich. 320, and it was there said:
“But where the third party is himself to receive the benefit for which his promise is exchanged, it is not usually material whether the original debtor remains liable or not.”
This case was cited with approval in Perkins v. Hershey, 77 Mich. 504.
We think, therefore, the principles found to be established in Hirschmann v. Railroad Co., supra, have been fully established here, and under the findings of the jury the defendant is properly held liable, not only upon the verbal arrangement made by Davis with C. M. Turner for the plaintiff, but also upon the written guaranty of Davis.
Many other errors are assigned upon this record, but we do not think it profitable to discuss them. The main features of the case involve the statement of many facts. The theory of both parties was laid before the jury in a full and fair charge, and the jury have determined the issues in favor of the plaintiff.
Judgment must be affirmbd.