Morville v. American Tract Society

Colt, J.

The plaintiff paid five thousand dollars to tne American Tract Society, under an agreement with the treasurer of that society that it should be repaid to him in case thecsociety should not be allowed to retain its catholic condition, and unless fifty thousand dollars be raised within five years for evangelization purposes. A receipt for the money, signed by the treasurer, and reciting that agreement, was given to the plaintiff. There was a failure of one of the conditions named, but the society refused to pay the money back to the plaintiff.

The right of the plaintiff to recover the money so given was submitted by the parties to three arbitrators, by a submission entered into before a justice of the peace under the Gen. Sts. *136 e. 147. An award in favor of the plaintiff wws duly returned to the Superior Court, and many objections were there made by the defendant to its acceptance. It is necessary to consider only those which were relied on at the argument.

1. The defendant insisted that the contract made with the plaintiff and the submission to arbitration of the claims arising under it, were not within the chartered powers of the society. The act of incorporation provides that the persons therein nipned shall be a body politic, “ for the purpose of publishing pious and useful books and tracts for distribution among the ignorant and destitute; ” with power to “ sue and be sued, plead and be impleaded, appear in court, defend and prosecute to final judgment and execution; ” and “ take, possess and apply, to the purposes of said corporation, any moneys which may be given for immediate use; and may hold, as a permanent fund, any estate, whether real or personal, the yearly income of which shall not exceed fifteen hundred dollars, and the same shall be faithfully appropriated to the object aforesaid, and not otherwise.” St. 1816, g. 72, § 1. Under these provisions, it is contended that the society had no power to take money which was not given for immediate use, and to agree to repay the same if certain conditions were not complied with.

The power to make all such contracts as are necessary and usual in the course of business, or are reasonably incident to the objects for which a private corporation is created, is always implied, where there is no positive restriction in the charter. Thus it is not necessary that there should be express authority to borrow money, or to make negotiable paper, if such is the usual and proper means of accomplishing that object. It is the purpose of the charter of the defendant to create a corporation with power to receive and expend for the purposes named all money given for immediate use. If this was all, there would be strength in the position that the power to receive and hold money to any considerable amount or for any great length of time, on deposit, or in trust for any purpose, was not conferred by the charter. But there is another clause which gives the right to hold real and personal estate for the purpose of securing a limited annual income to be appropriated to the objects of the society. Under this provision we think this contract can be supported. *137 It must be treated as valid, unless it appears affirmatively to be a contract to do something which is beyond the reasonable exercise of the power granted. We cannot say as matter of law that the right given to a corporation to take and hold property for the purpose of securing a specified yearly income does not imply the right to receive money within the limits named, upon giving an agreement to return it upon conditions which are not illegal and do not violate its charter, and under which the income of the money is secured to the corporation, so long as the right to hold the fund so obtained continues. To hold otherwise would be to declare void many conditional gifts to charitable and educational institutions. It is enough that an award by arbitrators, having full power to settle the facts as well as the law between the parties, cannot be set aside because the defendant is held responsible on such a contract.

There is another answer to this objection which is equally satisfactory. The question is upon the acceptance of the award; no question of pleading is involved. The award is binding, if in any form of action the plaintiff is entitled to recover. If the defendant were to be allowed the full benefit of the point made, the plaintiff could only be prevented from enforcing his express contract.. The money of the plaintiff was taken and is still held by the defendant under an agreement which it is contended it had no power to make, and which, if it had power to make, it has wholly failed on its part to perform. It was money of the plaintiff, now in the possession of the defendant, which in equity and good conscience it ought now to pay over, and which may be recovered in an action for money had and received. The illegality is not that which arises when the contract is in violation of public policy or of sound morals, and under which the law will give no aid to either party. The plaintiff himself is chargeable with no illegal act, and the corporation is the only one at fault in exceeding its corporate powers by making the express contract. The plaintiff is not seeking to enforce that contract, but only to recover his own money and prevent the defendant from unjustly retaining the benefit of its own illegal act. He is doing nothing which must be regarded as a necessary affirmance of an illegal act.

*138 The right to recover the money upon the implied promise, under like circumstances, has been heretofore recognized by this court.

In White v. Franklin Bank, 22 Pick. 181, where an express contract was made by a bank for the payment of a deposit at a future day certain, against the prohibition of the Rev. Sts. a. 36, § 57, it was held that, while no action could be maintained by the depositor upon the express contract, yet he might recover back the money, without a previous demand, in an action commenced before the expiration of the time, the parties not being in pari delicto, and the action being in disaffirmance of the illegal contract. The general proposition, that where money is paid on a contract which is merely prohibited by statute, and the receiver is the principal offender, it may be recovered back, was laid down in that case by Wilde, J., who declared it to be, not only consonant with principles of sound policy and justice, but to have been now settled by authority, whatever doubt may have been formerly entertained. “ To decide,” he adds, “ that this action cannot be maintained, would be to secure to the defendants the fruits of an illegal transaction, and would operate as a temptation to all banks to violate the statute, by taking advantage of the unwary, and of those who may have no actual knowledge of the existence of the prohibition.”

Again, in Dill v. Wareham, 7 Met. 438 , where a town made a contract with reference to certain fisheries within its limits which it had no authority to make, and which it refused to perform, it was decided that the plaintiff might recover back money paid in advance on the contract, as money had and received by the town to his use.

The same principle is recognized in New York. Utica Ins. Co. v. Scott, 19 Johns. 1 . Utica Ins Co. v. Cadwell, 3 Wend. 296 . Utica Ins. Co. v. Bloodyood, 4 Wend. 652 .

2. The evidence, offered in support of the objection that the defendant was induced to enter into the agreement of submission to arbitration by the concealment of material facts, fails to support that objection. The authority to appropriate part of the money to life memberships was given by the plaintiff to the defendant’s treasurer. The defendant produced at the hearing before the arbitrators evidence of such payments by the treasurer, *139 and the) were allowed by the arbitrators in reduction of the five thousand dollars claimed by the plaintiff. Nor can we see that the transaction can be regarded as any evidence of a waiver of the conditions upon which the balance of the money was held.

3. As to the objections that the award exceeded the submission, and that the claim submitted was materially altered in its terms, it is sufficient to say that the evidence relied on in support of them was submitted in defence at the hearing before the arbitrators, and had the effect only to reduce the plaintiff’s claim, not to increase its amount or to change its character.

4. For the purpose of showing that the award was so grossly erroneous, unjust and unwarranted by, and contrary to, the evidence, as to constitute misconduct on the part of the arbitrators, the defendant offered evidence of all the evidence heard before the arbitrators. But this evidence thus offered is not reported in the bill of exceptions. We cannot, therefore, see that the defendant suffered any injury by its rejection, and need not consider the question whether, or how far, such evidence could under any circumstances be admitted.

5. The more important objection remains to be considered. It is alleged that the plaintiff, without the knowledge of the defendant, consulted and advised with one Snow, who was after-wards selected as one of the arbitrators, while the case was under consideration between the parties, in relation to facts material to the decision, and that Snow formed and expressed an opinion in favor of the plaintiff before he was appointed arbitrator.

At the hearing, upon the motion to accept the award, in the Superior Court, Snow and the plaintiff were both witnesses; the judge found upon the evidence certain facts reported in the bill of exceptions, and ordered judgment for the plaintiff. The question, therefore, is whether, upon ■ these findings, that judgment is erroneous in law. We are of opinion that it is not. The question is mostly one of fact. The judgment must stand, unless, upon the facts found, the award was legally invalid.

It does not appear that after the submission, or after Snow had notice that he was wanted as an arbitrator, any ex parte communication was made by the plaintiff to him for the purpose of influencing him in the plaintiff’s favor, or prejudicing him *140 against the other party. The facts found by the court, namely, that Snow and the plaintiff were familiarly acquainted and frequently visited each other’s houses; that before the submission was entered into, the plaintiff had honestly stated the principal facts in the case to him; and that, upon these facts, Snow had expressed the opinion that no commercial house could stand upon such a transaction, do not compel us to the conclusion that he was, from undue bias and partiality, an unfit arbitrator upon the matter involved in the controversy. The proposition stated by him is one with reference to which few men, upon the facts in this case, would differ. The main question was as to the liability under this contract of a corporation possessed only of limited powers. The opinion that an individual or a mercantile firm with different or unlimited powers could not escape liability does not prove that Snow had so far prejudged the defendant’s case as to disqualify him as an arbitrator. There is nothing to show that he acted as, or understood that he was, the agent of the plaintiff after or before he became arbitrator. His fitness is not impaired by the fact that the plaintiff admitted that he relied on him to look out for his interest. There does not appear on the part of either any fraud, collusion, false statement or perversion of the facts in the case.

It is to be considered that this was a submission under the statute by which the award of a majority is made binding; that it is not uncommon in such cases for each party to choose a neighbor and friend who is understood to have some previous knowledge of the matter in dispute, while the third man is chosen by the other two, or mutually agreed upon by the parties. There is nothing to show that these were not so chosen. Arbitrators, not avowedly selected as partisans, are indeed bound, as in the execution óf a joint trust, to look impartially at the true merits of the matter submitted to their judgment; but under the circumstances here indicated, the mere previous intimacy of the parties is of little weight without some proof of misbehavior while the cause is actually pending. But, above all, it is to be considered that the judge saw as witnesses the parties charged with improper conduct; that they were the only witnesses in support of the charge; and that he had full opportunity to judge of their honesty and fairness, the age and intel *141 lectual ability of each, and the probability that one was improperly swayed in the discharge of his duty by the other.

We cannot decide, as matter of law, that he was not justified in finding as a fact that the plaintiff was not chargeable with improper conduct such as would avoid the award, and that the arbitrator was not unfitted to serve by previous prejudice and bias. Strong v. Strong, 9 Cush. 560 , and 12 Cush. 135 . Fox v. Hazelton, 10 Pick. 275 . Conrad v. Massasoit Ins. Co. 4 Allen, 20 . Johnson v. Holyoke Water Power Co. 107 Mass. 472 .

Exceptions overruled.