Cleaveland v. Stewart

By the Court.

Nisbet, J.,

delivering the opinion.

I do not consider, as claimed by counsel, that this case is [1.] controlled by tliat of Ghent vs. Adams, in 2 Kelly R. 214. In that case, tbe instrument sued on was made by certain individuals, with the addition of the letters J. I. C. tp each of their names. The Court ruled that they were not individually liable upon the face of the paper; that the letters J. I. C. indicated their character as Justices of tbe Inferior Court, and as public agents; and that credit must have been given to them in that character. Being public agents — the agents in fact of a political or public corporation — • persons dealing with them are presumed to know that fact, and to contract with them in that character. It is argued that the Oackchumpna Academy is a public corporation, and upon 4he reasoning in Ghent vs. Adams; if it is, these defendants are not personally liable. But in our judgment, it is not. Incorporation gives to many institutions, as hanks, rail-road companies, colleges and schools, a certain public character ; the public are interested in them, and they subserve valuable public purposes; but they are not legally public incorporations. A corporation is public when it has for its object the government of a portion of tbe State; and although in such a case it involves some private interests, yet as it is endowed with some portion of political power, the term public has been deemed appropriate. Another class of public corporations are those which are founded for public — although not political or municipal — purposes, and the whole interest in which belongs to tbe government. Thus, a hank, organized by the government for public purposes, is a public corporation if the whole of the stock and all the interest in it, reside in the government. Ang. & Am. Corp. Introduction 9; Dartmouth College vs. Woodward, 4 Wheat. R. 518; 2 Kent, 275, So the Trustees of the University of Alabama, were held for the same reasons, a public corporation 5 Stew, & Por. Ala. R. 17; and so would, no doubt, *292 the University of Georgia be held; and so also the Central Bank of Georgia. But as to the last named, there juay be doubt.

Towns, cities, counties and parishes, are public corporations. Ang. & Am. Corp. 25; 1 Bald. C. C. R. 222 ; 2 Kent Com. 275.

But'banks founded on private capital, hospitals founded on private benefactions, and colleges founded and endowed by private enterprise and liberality, although the funds may in part be derived from the bounty of the government, are private corporations, 4 Wheat, R. 518; 7 Serg. & Rawle 559 ; 2 Kent. Com. 274, 275; 1 Sum. C. C. R. 276; 9 Wheat. R. 907. An incorporated academy, founded on private funds, is, like a college, a private corporation. It is no denial of this position, that they are entitled, under certain conditions, to share in the academic fund. This bounty the academy can receive or not. It is the beneficiary of the State, but that gives the State no rights over it; it may withdraw its bounty, but it has no visitorial powers over it. This principle was settled in the case of Allen vs. McKeen, reported in 1 Sum. C. C. R. 276. That case made the question whether Bowdoin College was or not a public incorporation ; it was argued that it was, because its funds had been generally derived from the bounty of the government. Mr. Story, in a learned opinion, decided that it was a private corporation; and that it was so, notwithstanding its fwnds had been generally derived from the bounty of the government. [2.] The instrument upon which this action is founded, is in the following words:

“We the Trustees of Oakchumpna Academy, promise to pay A. C. Cleaveland or his order, six hundred dollars, for teaching a school at said Academy, during eleven months of the year eighteen hundred and forty. We pay the same money on the first day of the year eighteen hundred and forty-one.

This 26th Oct., 1839. Edmund Stewart,

Wm. Robertson,

Nathan Respass,

W. Worthy,

John Barker.”

A plea of incompetency from intemperance, false charges for tuition the previous year, and such general character, that the signers of the above paper were unable to make up the school; was filed. There was no plea filed to the effect that they were not personally bound, and that the credit was given to the corporation. In addition to the before recited instrument, the record exhibits a *293 paper signed by Cleaveland, and bearing even date with it, in which he binds himself to the Trustees of Oakchumpna Academy to perform, all the duties of a teacher, from the 1st day of February, 1840, to the 25th December thereafter, and relinquishes to them all claim to the money that might be coming to the academy from the State. The suit was brought against the defendants in their individual character, to charge them personally. The defendants demurred to the writ, upon the ground that they were not liable personally, and the Court overruled the demurrer. Upon the trial, however, the paper signed by Cleaveland being in evidence, the presiding judge charged the jury, that taking the two papers together as evidence of the contract, the defendants were not liable in their personal characters. To this charge the plaintiff excepts. We think that the paper signed by Cleaveland, so far from disproving that the contract was by these defendants personally, and that the credit was given to them individually, strengthens that idea. The paper made by Cleaveland, is in the nature of a covenant with the trustees, and not with the academy in its corporate character, that he will discharge the duties of teacher. In it he relinquishes to them the dividend which might accrue to the institution, from the State; which relinquishment seems to us to imply, th'at he was not looking to the academy, as a corporation,, for his money, but to them; and also that they had assumed to pay him, and required this relinquishment that they might control the whole income of the institution, and thus protect themselves. Thus viewing this paper-, and looking at it and the instrument together, we think these defendants were personally liable. Judging as we do, however, that the paper made by Cleaveland, has but little to do in any way with the question, we lay it aside. The real question is, were these defendants liable personally upon the instrument sued on? We think the learned judge presiding below, was right in the view he took of this question on the demurrer, and wrong in his charge to the jury.

I quote from Chancellor Kent the two rules, which, to my mind, apply to this question, and by which it is to be tested; premising that, upon the supposition that this corporation, and not the individuals, is bound, it is bound by the act of its agents; and therefore the" question is one of liability between the defendants, as agents, and their principal. “It is a general rule,” says Chancellor Kent, “standing on strong foundations, and pervading every system of jurisprudence, that when an agent is duly constituted, and names *294 his principal, and contracts in his name, and does not exceed his-authority, the principalis responsible, a.nd not the agent.” 2 Kent Com. 630. Such is the rule on one side; upon the other, it is as follows : “ But if the agent binds himself personally, and engages expressly in his own name, he will be held responsible, Jhough he should in the contract or covenant give himself the description or character of an agent.” 2 Kent Com. 632. Looking at this case in the light of these two rules, I remark, that the corporate name of this institution is not subscribed to this instrument,in its own proper designation, by its officers, or any one purporting to be its agent. The paper is signed by five individuals, who are, to all appearance, joint promissors. In the body of the instrument, they make a personal undertaking to pay; they say, “we the Trustees of the Oakchumpna Academy, promise,” &c., and afterwards, “we pay the same money,” &e. An assumpsit is not found in the instrument on the part of the corporation. If the instrument had declared “ that the Oakchumpna Academy promise to pay,” signed as it is, perhaps the question would have been different; or if these defendants, being the agents, had described themselves as such by their signature, the authorities would then have justified a doubt. The true and only safe way for an agent to execute a contract, is to sign the name of his principal, adding thereto, -by himself, agent. What, then, causes this paper to differ from any personal undertaking in writing! It is said, in this, that in the body of the instrument they describe themselvesi as “ the Trustees of the Oakchumpna Academy.” That, say the counsel, characterises this as the undertaking of the Oakchumpna Academy. We think it only descriptive of their condition — only descriptio personarían. They are to be construed ■ as saying, that they who are Trustees of Oakchumpna Academy promise, &c. — they do not the less promise to pay because they are trustees, nor is their liability the less or more because they choose to say that they are trustees of this academy. Suppose they had said, we ministers of the gospel, or we lawyers, or we blacksmiths promise to pay, their liability would not have been increased or lessened by such a description of themselves. The only advantage they derive from this description of themselves is, the evidence it affords of their right to go back upon this corporation — if indeed it was its debt — for remuneration, in the event of their having it to pay. , I shall now proceed to show that this view of this paper is sustained by authority. And first, the rule as laid down by Chancellor Kent covers this case fully — it *295 is just the case described by the rule. These defendants, weAvill ■assume, are in this transaction the agents of the Oakchumpna Academy. N ow, if they have bound themselves personally, and have engaged expressly in their own names, they will be held responsible though they have in the contract given themselves the description or character of agents. But in this case they have bound themselves personally, they have engaged expressly in their own names to pay this money, therefore they are liable, although they describe themselves in the contract as trustees of tlie'Oakchumpna Academy. Mr. Story remarks, to the same effeet with Chancellor Kent, as follows : “If from the nature and terms of the instrument, it clearly appears, not only that the party is an agent, but that he means to hind his principal, and to act for him, and not to draw, •accept or indorse the bill on his own account, that construction will be adopted, however inartificial the language, in furtherance of the actual intention of the instrument.” Now, it can not be said that there is any evidence on this paper that these defendants meant to bind their principal, nor can suc'h intention be inferred from the nature of the instrument; for as I have before remarked, there is nothing in the paper which can make it differ at all — unless the description of these persons as trustees can — from an out and out personal undertaking; aside from that, it is a perfect case of personal liability. But that description does not change the character of the paper; so -say the authorities, for Mr. Story proceeds— “ But if the terms of the instrument are not thus explicit, although it may appear that the party is an -agent, he will be deemed to have contracted in his personal character.” Story on Agency, 146. The like doctrine is held upon the highest authority in England. The case of Appleton vs. Binks, reported in 5 East, 178 is a leading common law case. There the defendant had covenanted for himself, his heirs, executors, and for another-, the court held that he was personally bound notwithstanding, although he described himself in the deed as covenanting for andón account of another. In Burrell vs. Jones, 3 B. and Ald. R. 47, (5 Eng. C. L. R. 223,) certain solicitors 'had undertaken to pay to a landlord a sum of money as rent, in these words, to wit? “We, as solicitors to the assignees, undertake to pay,” &e., their individual names being subscribed. It was ruled that they were personally liable, notwithstanding the description of themselves as solicitors. Abbot, C. J., said: “I am of opinion that the expression-used in this undertaking, ‘ we, as solicitors,’ binds those who personally signed it.” *296 Bayley, J., said : “I am of the same opinion. It is clear that an agent may so contract as to make himself personally liable, and I think that the words here used, ‘ we undertake,’ are sufficient to place the defendants in that situation. The language of an instrument is to be taken most strongly against the party using it. Now, when the party used the words ‘ we undertake to pay,’ they in effect say, that they are the persons to whom the other party is to look for payment.” Best, J., remarks: “ The terms ‘ as solicitors,’ are merely descriptive of the character they fill, and which has induced them to undertake.” This case is in its features the same .with the one I now review. These defendants say, “we promise to pay,” “we pay the same money,” &c., just as the solicitors did in the case in B. If Aid.

In the case of Tippets vs. Walker et al, 4 Mass. R. 594 , a committee appointed by the directors of a turnpike company, covenanted under their hand and seal, with the plaintiff,' describing themselves in the instrument as a committee of the directors of that company. Parker, C. J., held them personally liable. So in a later case, to wit, Stackpole vs. Arnold, reported in 11 Mass. 29 , the same learned judge lays down the following rule : “No person is to be considered the agent of another, unless he stipulates for his principal by name, stating his agency in the instrument which he signs.” In Duvall vs. Craig et al, 2 Wheat R. 45, Robert Johnson and Elijah Craig entered into a covenant of warranty, describing themselves as the trustees cf one John Craig?and as sufiji trustees undertook to warrant, and sign their names as trustees, and were held p'ersonally liable. “If,”.'says Story, J., “the trustee chooses to bind himself by a personal covenant, he is liable at law for a breach thereof, in the same manner as any other person, although he describes himself as covenanting as trustee; for in such case the covenant binds him personally, and the addition of the words as trustee, is but a description of the character in which he acts, for his own protection.” In Fash vs. Ross, 2 Hill S. C. R. 294, Johnson, J., rules as follows : “An- agent may, if he will, undertake to do the act for his principal, and if he does, he is bound, although he describe himself as agent.” The case of Tafft vs. Brewster, 9 Johns. R. 334, is also a strong case in support of these principles; but as I must believe that they are already impregnably fortified, I shall do no more than refer to the authorities already quoted, as well as others.

Story on Agency 146, sec. 155; Ang. & Am. Corp. 253; Paley on Agency, by Lloyd, ch. 6, sec. 1, p. 378 to 402; 11 Mass. R. 27, 29 ; *297 Leadbitter vs. Farrow, 5 M. & S. R. 345; Kennedy vs. Gouveia, 3 Dow. & Ryl. R. 503; Stephens vs. Hill, 5 Esp. R. 247; 2 Kent Com. 630, 631; 4 Mass. R. 595 ; White vs. Skinner, 13 Johns. R. 301; 9 id. 334; Appleton vs. Binks, 5 East R. 148; Claybill vs. Fitzgerald, 1 Wils. R. 28, 58; 2 Vernon R. 280; Ryan & Moody 229; 1 Car. & Payne, 648; 2 Wheat. R. 45; 3 Chitty on Com. & Manuf. 211, 212.

The Court below permitted the defendants to go into proof [3.] that the plaintiff contracted with them as agents of the corporation, without having plead that fact, and in this particular, exception is taken, and clearly well taken. The general issue was not filed jn this case; there is no plea at all, but one special plea to which I have before adverted. Now, the Court permits the defendants to give in evidence the law incorporating this academy, and other evidence the effect of which is to discharge themselves, under the view of the case taken by the Court, and that, too, without notice to the plaintiff, and without plea. This is plainly a case where the defence should be spread on the record. This defence is clearly within the requirement of our statute, that a defendant shall plainly, distinctly, and fully set forth in writing his grounds of defence. u

The presiding judge having determined that the defendants were not personally liable, withdrew all the evidence in favour of the plaintiff from the jury, and directed them to find for the defendants^ In this particular also, exception is taken, and, we think, well taken. The rule in cases of the kind now before us, further is, that “ the liability of thé principal depends upon the facts that the act was done in the exercise and within the limits of the powers delegated, and especially, that it was the intent of the parties that the principal and not the agent should be bound. In ascertaining these facts as connected with the execution of a written instrument, it lias been held that parol testimony is admissible,” Ang. & Am. 236. This Court has ruled to the same effect in two instances. 1 Kelly R. 429; 2 ib. 218; 5 Wheat. R. 326; 1 Cowen R. 536; 12 Mass. R. 240 ; 1 Cranch R. 345; 6 Ad. & Ell. R. 468; 8 Meeson & Welsby R. 440; Story on Agency, 190, 191, 334, 335, 336. According to this rule, it was competent, if the pleadings Would have permitted it, for the defendants to prove that the academy was incorporated, that they acted as its agents, and that the plaintiff' looked to the -incorporation for his money. So also on the other hand, particularly as the Court had ruled that *298 they were not personally liable, and the plaintiff’s action being against them in their individual characters, it was competent for 'him to sustain his action by proof that the contract was personal, ■and that he gave credit to them individually. There was some evidence, as we learn from the record, that the plaintiff gave them and not the corporation, the credit. Whatever it amounted to, whether little or much, the jury were the judges. ' It ought to have been submitted to them, and in withholding it, we think the Court erred. We do not believe that the Court erred in refusing the evidence offered by the plaintiff, to prove that it was the custom of the members of this corporation to take themselves the income of the school, and become personally responsible for the teacher’s salary. But as this point was not insisted on by the plaintiff in error, I shall not discuss it.

Let the judgment of the Court below be reversed.