Foot & Hodges v. Rutland & Whitehall Railroad

Corporations. Contract. Booh account. Auditor. S. contracted with the defendants to build their railroad and bear all the expenses of litigation growing out of its construction, and it was agreed that he might use the defendants’ name in all necessary litigation. H, one of the defendants’ directors, of which there were five, was also the agent of S., in relation to the execution of this contract. The plaintiffs not being aware of any agreement that S. was to bear the whole expense of the litigation, by the employment of H., rendered professional services, as attorneys, in a suit against S. by, a rival corporation, in which, however, the defendants were really interested, and charged their services to the defendants. This charge constituted the first item of the plaintiffs’ account. The remaining items were for professional services rendered in a suit brought by the plaintiffs in favor of H. against the same rival corporation, which suit was brought after consultation by the plaintiff's with IT. and the two other managing directors of the defendants, and with their approval, but nothing was said as to whom- charges were to be made therefor. The object of this suit was to protect the defendants’ interests, but the two other directors, participating with H. in the consultation with the plaintiffs, which resulted in bringing the suit, though aware of this fact, still supposed that the plaintiffs’ services were to be rendered entirely upon the credit of S, These services were originally charged by the plaintiffs to H. No action was ever taken by the board of the defendants’ directors in regard to the employment of counsel for the defendants. The auditor allowed the whole of the plaintiffs’ account, and reported the foregoing facts n regard to it; Held, that as to the first item, the plaintiffs were authorized to consider themselves employed by the defendants, and to charge it to them, as they did; and in regard to the remaining items, the supreme court held that the same authority existed, and notwithstanding the original charge of them to H., construed the report as intending to state that the services were rendered on the credit of the defendants, and therefore rendered judgment for the plaintiffs for their whole account. Corporations are bound by the acts of their servants and agents, within the ordinary line of their duty, without any formal vote conferring sttch authority; and the action of their directors, though acting separately, if in the usual sphere of directors, is binding upon the corporation.

Book Account. The auditor reported that the plaintiffs were attorneys, and that their account was for professional services and attendant expenses rendered and incurred under the following circumstances: In 1849, shortly after the defendants organized as a corporation, they entered into a contract with R. & Gr. L. Schuyler, by which the latter agreed to construct the whole line of the defendants’ railroad, at a certain price per mile, and it was provided therein that the Schuylers should bear the whole expense of constructing such railroad, including both land damages and all law suits and necessary legal proceedings incident thereto, and that they should have the right, at their own cost, to use the name of the defendants in all legal proceedings in any way connected with the building of such railroad and the protection of its interests. The board of directors of the Rutland and Whitehall Railroad Company consisted of five members, only three of whom were citizens of Vermont and participated actively in the management of the affairs of the road, viz: Arunah W. Hyde, Benjamin F. Langdon and William C. Kittredge. These three persons were directors from the organization of the corporation until after the last item of the plaintiffs’ account accrued. Hyde was also the agent of the Schuylers during the same period, in all matters relating to their contract with the defendants, already referred to. it appeared that Hyde acted in the name of the defendants, with the knowledge of their directors, in settling the land damages, and that he did the greater part of the business of that character. At the October Term, 1849, of the United States circuit court in this State, a suit in chancery was commenced in favor of the Rutland and Washington Railroad Company, a rival corporation owning a road nearly parallel to that of the defendants, against R. & G-. L. Schuyler, for the purpose of procuring an injunction against the construction of a certain portion of the defendants’ railroad. The plaintiffs were retained by Hyde at that term as solicitors to defend that action, but it did not appear that at the time of their employment anything was said respecting the party to whom the charge for the plaintiffs’ services was to be made; The first item in the plaintiffs’ account was the only charge relating to this suit, and was the only item originally charged to the defendants by the plaintiffs. In 1850, while the contractors on the Rutland and Washington Railroad and the Rutland and Whitehall Railroad were both at work constructing their respective roads near the village of Castleton, the former were about to turn the courses of certain streams in that neighborhood, in such a manner as to occasion apprehensions; among those interested in building the latter road, of serious and permanent injury to their road. Hodges, one of the plaintiffs, went from Rutland to Castleton in compliance with a request by telegraph, sent him by Langdon or Hyde, which message was sent with the approval of Kittredge, and there had a consultation with Langdon and Hyde respecting the proceedings which had occasioned these apprehensions, and the proper method of stopping them. Hodges advised that a suit in chancery should be commenced in the name of Hyde (who was the owner of the land through which the water courses were proposed to be turned) against the Rutland and Washington Railroad Company for the purpose of obtaining an injunction against such change of their channels, and, as the result of this consultation, Hodges was directed by Hyde to commence such a. suit, which was accordingly done, and for the plaintiffs’ services in the prosecution thereof, all the remaining items of their account accrued, .except the second item, which was for time and expenses in going to Castleton to attend the above mentioned consultation. The only purpose for which the suit in chancery in the name of Hyde against the Rutland and Washington Railroad -Company was commenced, was incidentally to protect and defend the interests of the defendants, and Hyde, Langdon and Kittredge were each cognizant of this fact at and from the time of the commencement of the suit. The board of directors of the Rutland and Whitehall Railroad Company never gave any express authority to Hyde, or any other person, to employ any counsel on account of the company in any case, and the subject of the employment of counsel was never before the board at any of their meetings. Langdon and Kittredge, at the time of the plaintiffs' employment by Hyde to bring the chancery suit in the latter’s favor, understood that the plaintiffs were employed on the account of the Sehuylers, and never contemplated the incurring of any liability on the part of the defendants, by reason of such employment. But Hodges did not know at the time of his consultation with Hyde and Langdon, that either of them was acting in any other capacity than as directors of the defendants, and while their account was accruing the plaintiffs were not aware of the terms' of the contract between the Schuylers and the defendants, above set forth, and had no reason to suppose that the Schuylers were to be liable for the expenses of the legal proceedings arising out of the construction of the defendants’ road. The services performed by the plaintiffs and charged in their' account presented against the defendants, were in furtherance of the interests and objects of the defendants and for their benefit. The first item of the plaintiffs’ account was charged by them originally to the defendants ; the second item to Hyde, Fuller & Hyde* of which firm Arunah W. Hyde was a member, and the remainder of the account to Hyde. Upon these facts the auditor reported that the defendants were indebted to the plaintiffs in the amount of their account presented before him, with interest. In the county court the defendants objected to the acceptance of this report, and claimed that upon the facts reported the judgment should be for the defendants, but the court, at the March Term, 1859, — Pierpoint, J., presiding, — rendered judgment, pro forma, for the plaintiffs, for the amount reported by the' auditor, to which the defendants excepted.