166 Mass. 97 | Mass. | 1896
According to the averments of the present bills, the demurrers to the bills in equity brought by the corporation were sustained, upon the ground that the remedy, if any, was by actions at law. Those, bills in equity have not been laid before us, nor is there anything to show how far the averments therein contained were similar to those of the present bills. It is now averred that the former bills in equity alleged “ some of the facts hereinbefore set forth.” There is nothing to show what facts were then omitted, but so far as concerns the question whether the remedy of the corporation was at law or in equity, we think it may be assumed, as the defendant Coolidge now asserts, that the averments in the suits brought by the corporation and those in the present suits are substantially alike. We treat them so for the purposes of the present decision.
Acting on this assumption, we will first consider whether the demurrers in those former suits were rightly sustained.
The first of those suits included as defendants the two members of the firm of Houghton, Coolidge, and Company, who were then surviving, and the administratrix of the estate of Coolidge, who was then deceased.
The firm had been the selling agent of the corporation, under a contract which defined its duties and obligations, and by the terms of which the firm was to receive a commission of four and a half per cent on sales of goods, and interest at the rate of six per cent per year on advancements made for the corporation. . The substance of the charges against the firm is that it mismanaged the business, and fraudulently misrepresented to the corporation its condition, and thereby induced the corporation to continue to carry on its works, when otherwise it would have stopped them or reduced the manufacture; and by means of the corporation’s thus continuing to carry on its works the firm was enabled to receive its commissions on sales and interest on advancements.
There is no distinct averment to show at what date the contract was made, nor whether it was in writing, nor how long it
The present plaintiffs now contend that the corporation was entitled to relief in equity on three grounds, as follows:
1. That the corporation was entitled to repudiate the contract with the firm, because it was invalid when made, and also because it became vitiated afterwards, and therefore the corporation was entitled to recover all the profits made by the firm under the contract, and that this could only be done in equity.
2. That the corporation was entitled to have the accounts of the firm reopened, and a new accounting made.
3. That the corporation was entitled to maintain a bill in equity against its directors to recover for their misconduct.
We will consider these several grounds in their order.
In the first place, it does not appear that the contract between the corporation and the firm was invalid when made. Even if it be assumed, though this is not distinctly averred, that the members of the firm were all directors of the corporation at that time,, it is well settled that a corporation may contract with persons who are directors to act as selling agent, provided this is done openly, and with the express or implied assent of all the stockholders. Such assent may be implied from long continued acquiescence. Kelley v. Newburyport & Amesbury Horse Railroad, 141 Mass. 496, 499, and cases there cited. Barr v. New York, Lake Erie, & Western Railroad, 125 N. Y. 263. Such cpntract, though open to suspicion, is not invalid per se.
There is no averment that any stockholder in the corporation was ignorant of the terms of the contract, or of the relation of the members of the firm to the corporation, at the time when the contract was made, or at any time thereafter; or even 'that the terms of the contract were unreasonable in themselves. We
It is apparent that the corporation could not recover back the sums .received by the firm for commissions and interest, on the ground that the contract was invalid in its inception. The plaintiffs contend, however, that it became invalid afterwards by reason of the negligent and fraudulent acts of the firm. If the corporation might have repudiated the contract on this ground, it did not do so, but it continued to act under the contract, and to treat it as subsisting and valid until June 29,1891. Under these circumstances, after the termination of the agency, it was not the right of the corporation to treat the contract with the firm as wholly invalid. The agency was a continuing one, and under it many acts were performed for the corporation, some of which were beneficial. The averment is, that in certain respects the firm conducted the business with negligence, and in certain other respects with fraud. Assuming this to be true, the remedy of the corporation was by asserting a claim for damages for breach of contract or for breach of duty.. At that stage of affairs, it did not have the right to repudiate the agency entirely, and recover all profits made by the firm.
The plaintiffs contend, in the second place, that the bill against the firm could have been maintained as a bill for an account, or for reopening accounts. The specific averments of facts which relate to this contention are, that the firm received large sums for commissions, and for interest on advancements; that for several years it reported sales in excess of its actual sales; that' the goods actually sold by it during the year 1887 were sold for ’ prices amounting to $25,000 more than the prices in fact received and accounted for by the firm; that at other times it
If the firm reported an excess of sales over those actually made, the natural result would be that it would be held to account for the prices of more goods than it had actually sold. But when we find no averment that the firm has ever failed to account in full for the sums received by it from either actual or reported sales of goods, it becomes obvious that the true meaning of the averments in respect to the accounting is only that the firm charged commissions prematurely.
There is no averment that there was any charge for commissions or interest at a greater rate than the contract allowed, or that the firm ever actually received any money for goods sold which it did not account for and pay over, subject to such deductions as the contract allowed. If during the year 1887 the goods actually sold were sold for prices amounting to $25,000 more than the prices in fact received by the firm, there is no averment that this loss was either fraudulent or negligent on its part. Taking all the averments together, and construing them reasonably, in reference to what they omit as well as to what they contain, it does not appear that the corporation was finally ignorant of any of the actual transactions made in its behalf by the firm. The corporation had all the means and elements necessary for stating the accounts correctly, so far as commissions and interest were concerned. According to the averments of the bill, the corporation was misled for a time; but since it must be assumed, in the absence of averments to the contrary, that the corporation had knowledge of all the goods consigned by it to the firm, and that the firm fully accounted for and paid over the prices of all goods sold by it, except for the $25,000, which it did not itself receive, it appears that the corporation stood in no need of any new statement of the accounts by the firm. Frue v. Loring, 120 Mass. 507.
We have, then, to consider whether this remedy would cease with the death of Coolidge.
We may assume that the injury to the corporation and the benefit to the estate of Coolidge were too indirect to furnish of themselves a reason for the survival of the remedy. Read v. Hatch, 19 Pick. 47. Cutting v. Tower, 14 Gray, 183. Cummings v. Bird, 115 Mass. 346. Leggate v. Moulton, 115 Mass. 552. Cutter v. Hamlen, 147 Mass. 471. Phillips v. Homfray, 24 Ch. D. 439, 454, 463. Finlay v. Chirney, 20 Q. B. D. 494. But where a relation has existed which involved the performance of certain duties for pay, and especially where that relation was of a fiduciary character and there was a failure to perform those duties, the remedy has been held to survive. The decision most closely in point of any which has come to our notice is Concha v. Murrieta, 40 Ch. D. 543. But this exception to the application of the maxim, Actio personalis moritur.■ cum persona, has often been stated. Batthyany v. Walford, 36 Ch. D. 269, 279-281. Phillips v. Homfray, 24 Ch. D. 439, 456. Morgan v. Ravey, 6 H. & N. 265. Sollers v. Lawrence, Willes, 413, 421.
We have also to consider whether there is any ground upon which these suits by the present plaintiffs can stand, as against Houghton and Clapp.
The plaintiffs’ counsel in their brief say that, as long as the suits of the corporation were under the management of the counsel then retained by the corporation, the plaintiffs were safe in relying on an honest effort to recover against the defendants; and again, that the plaintiffs have not at any time charged that the directors in any way failed in their duties until they abandoned the attempt to recover by their action on June 27, 1893. It is thus conceded that the directors did all that they were asked to do, till after they had encountered the adverse decision of the single justice, which was rendered on May 29,1893.
The bills allege that the counsel of the corporation, before the directors’ vote of June 27 was passed, advised the corporation that it had a good cause of action against all the individual defendants. It is not alleged at what date this advice was given, or that it was after the decision of May 29, or that it was the opinion of the counsel of the corporation that it would be best to seek to amend the bills in equity into actions at law, or to bring independent actions at law, or that the counsel of the corporation had any other opinion or purpose except to prosecute an appeal from the decision of the single justice, and thus to obtain the judgment of the full court as to its correctness; although it is alleged that the counsel for these plaintiffs had frequent interviews with the counsel for the corporation prior to June 26, 1893, in which the proper course to pursue was fully discussed, and the counsel for these plaintiffs communicated to the counsel for the corporation their own opinion as to the proper course to pursue, in order to recover against the defend
The two directors who, according to the averments, “ were not under the influence and control of the defendants, but represented the true interests ‘ of the corporation; and favored an earnest effort to recover in behalf of the corporation against the defendants,” united in the final vote of the directors of June 27, declining to take the action requested by the plaintiffs’ counsel; as appears by the exhibit annexed to the plaintiffs’ bills showing that the vote was unanimously passed.
So far as appears, on looking through the averments of the bills, and the exhibits annexed, the directors were never asked to apply for leave to amend the bills in equity by changing them into actions at law, or to bring an independent action at law against either Houghton or Clapp; nor did the counsel for the plaintiffs ever suggest to the counsel for the corporation the expediency of applying for leave so to amend the bills in equity, or of bringing actions at law against Houghton or Clapp; nor, so far as appears, did the counsel for the corporation ever advise the bringing of actions at law against either of them.
We have been brought to the conclusion that the only remedy which the corporation .had against Houghton and Clapp was at law, and it follows, from the views hereinbefore expressed, that an action at law against the selling agent to recover the profits made by it, as money had and received to the plaintiffs’ use, could not have been maintained. The action would have to rest on a different ground. Whether an action at law to recover damages would have proved to be an expedient remedy, or whether the difficulties to be encountered would have rendered
There were requests to put the conduct of the litigation into the hands of the plaintiffs, with full powers, and an offer to assume the expense and conduct the litigation in such way as they might be advised; but that is not the same thing as asking the corporation itself to proceed at law. The offer of the plaintiffs may have served to emphasize the requests which were made, but it did not add to them.
Under this state of things, the plaintiffs are entitled to have the administratrix of Coolidge answer to their bill, but they cannot maintain the bill as against Clapp, or the administrator of the estate of Houghton, who has died since these suits were begun. Brewer v. Boston Theatre, 104 Mass. 378. Dunphy v. Traveller Newspaper Asssociation, 146 Mass. 495.
The above conclusions have the sanction of a majority of the court. Ordered accordingly.