Hood v. New York & New Haven Railroad , 22 Conn. 502 ( 1852 )

Ellsworth, J.

This case was before the court at its last

session, when we granted a new trial, for a verdict against evidence. The question now presented,' was not then adjudicated, though it was alluded to, in the arguments of counsel, and in the opinion of the court, as one of great importance. There was another ground for granting the new trial, entirely satisfactory to the majority of the judges, and this was passed by. It is now distinctly presented for our judgment, and is the only question on the record.

After the fullest consideration, with the aid derived from the learned and able arguments at the bar, a majority of the court do not hesitate to hold, there must be a new trial.

It will be noticed, that the suit is upon a special promise of the defendants to carry the plaintiff from New Haven to Collinsville ; not an action against common carriers, for an injury suffered, while passing over their road, nor as founded upon a responsibility growing out of such relations. This would not answer—for the defendants could not be common carriers, except on their own road; so, the pleader declares! upon a special undertaking of the defendants, aside from their) appropriate line of duty, and the attempt is, to subject on that undertaking, and on nothing else. *

It is found, that the defendants had no power to enter into the undertaking in question, and therefore, as a ground of claim, it must be agreed, the undertaking merely is of no avail, for the reason, that the directors, having no authority, did not, in legal estimation, make the contract for the company. The question is, are the defendants estopped setting up this in their defence ? The statement of the case carries on its very face, conviction to the mind, that it can not be so. The defendants estopped from denying that they have done, what they never could have done ! It is a question of power, under the charter; and however individuals may be liable and estopped, who untruly hold themselves out as clothed with power, the defendants can not be es-topped, on any such principle of law known to the court. The notion of an estoppel in pais, to which class, if any, this estoppel belongs, proceeds on the idea of acquiescence or consent; a consent expressly or impliedly given by the party claimed to be estopped. Of course, there must be a legal possibility, or there ^an be no real or supposed acquiescence and consent, and where consent may be given, silence may be sufficient proof, that it is given; and so, a course of known action may be sufficient proof; for the law requires no exact form. But as we say, it does require a legal possibility, and where there is none, courts can not consistently hold, there is an estoppel. The case of Buckley against The Derby Fishing Company, 2 Conn. R.,252, and that class of cases, which abound in the books, is a good illustration of the distinction above alluded to. If a corporation has the power to do a thing, and is in the habit of doing it, in a particular way, it may bind itself to third persons, though it do not pursue the exact mode prescribed in the charter; for the mode is not exclusive, but concurrent. So, too, where a provision in the charter is designed to protect the corporation, the corporation may waive this provision, and this may be proved to be done, by a repetition of acts of a like or similar character. But the question here, is, as we have said, one of power, not of form.

The plaintiff introduced circumstantial evidence on the trial, to prove, that the directors of the company made the contract, and particularly, that their subordinate agents had, for some six months previously, been in the practice of contracting with other persons, as they did with the plaintiff. Suppose this is true, and that the knowledge and consent of the directors may be properly inferred, from this continued practice of the directors ; this will not place the plaintiff’s case, in our judgment, on any higher ground, than if the directors had, by a formal vote, contracted with the plaintiff, to carry him to Collinsville. It being a question of power, silent acquiescence in the acts of subordinate agents does not make a stronger case ; for, if a formal contract is not obligatory on the company, one proved by inferior or circumstantial evidence certainly is not. The kind of evidence is quite immaterial. Should the directors of a savings bank, or of any bank, contract’ with a ship-builder, for a steamship, to navigate the ocean, would this contract bind the company? Certainly not; because the directors have no power to make it; nor would they have more, were they to make such contracts, from day to-day. The legislature has absolutely' marked the limit of their power, and they can not exceed it, under the charter; and if the directors, even with all the stockholders at their side, transcend the limits of the charter, and make contracts foreign to their business, they only act for themselves. The reason is, there can be no consent of the corporation. The consent of individual stockholders, however repeated, is not their consent, nor is it admissible proof, to establish consent; so that, if it were true, every stockholder had expressed his consent, it would make no difference in the case. If this is not so, there are no restrictions or limitations on chartered companies, and they may do anything and everything the directors please, which is not absolutely unlawful. • The exercise of power is held to proVe itself; which is absurd.

No one will say, that the first contract made by the directors, to carry to Collinsville, or Litchfield, or New Hartford, or Northampton, would be obligatory on the company; yet it must be so, if stockholders are, of course, bound by every contract of their directors. Were the charter a public one, it is agreed, the company would not be bound by such acts, however repeated ; but in truth, a private charter is not essentially different from a public one, in this respect; for, the plaintiff must have known, that the defendants were incorporated by the legislature, for the purpose of making or using only a railroad. Their very name, as well as the location and business of their road, is sufficient notice, that they are not incorporated for running stages throughout the state; and no person can assume or suppose, the defendants are to go beyond the appropriate business of a railroad. The idea of an imposition on the public, as to these stages running off from the road, to and from Litchfield and other places, as the defendants’ stages, is incredible and preposterous. The public know where the charter may be seen, and what it contains.

Many cases were read, on the argument, to prove that a-* corporation is considered for civil purposes, as a person, and subject to the same rules of law. We do not question this, but we do not see how it helps the plaintiff’s case. They hold, that a principal that can give authority, whether a corporation or person, may, when one assumes to act for him, and he does not object to it, be estopped denying his agency; but an infant is never estopped, nor a married woman, nor ought a body of- stockholders to be, united as they are, under a specific charter ; especially when the directors have disregarded it, and assumed to act according to their own pleasure. Could the, company by legal possibility, do the act, it would be otherwise.

But, it is said, the jury have found, that the stockholders, in fact, gave their consent, and it may not now be denied. We have already shown, this can make no difference; but we say further, that this notion of their consent is altogether untenable and unjust. We know, certainly, the stockholders did not, all of them, give their consent. Some were minors, married women, executors and administrators, trustees, officers of the law in possession, and some were, at the time, out of the country. So the body of stockholders was changing from day to day. Now, to hold that the entire body of stockholders gave their consent to the contract in question, and that therefore it is good, is absurd and puerile. But, suppose they did; this was not a corporate act, and has, therefore, no corporate character. W e repeat, that the directors and stockholders have no corporate powers or relations, and can give no corporate consent, but what is within the appropriate business of the charter.

Again, it is said, the defendants ought not to be permitted to call in question the acts of their agents. Why not, as much as other principals, whose agents transcend their authority, and abuse their trust ? If it is replied, the directors have suffered this course of things, for months, when they could have arrested it, at once, we ask, whose agents they were ? Certainly not of the innocent stockholders. The directors represent them only, while they act within the scope of the charter; the charter is the measure of their power; and sad would it be, if directors could trample upon this, and yet bind the stockholders as firmly, as if they were acting within it. If the directors have done wrong, let them suffer the consequences.

We have not thought it necessary to comment particularly on the numerous authorities, cited at the bar, on the several points made, for we find nothing in any of them, inconsistent with the views expressed.

Gill & Johnson is in direct accordance with what we have said. We place our judgment upon a plain principle of equity and law, viz,, that these .defendants are not bound, by a contract they had no power to make, and are not estopped setting up this matter in defence.

We advise a new trial.

In this opinion, Church, C. J., and Storrs, J. concurred. Waite, J., having tried the cause in the court below, was disqualified, and Hinman, J., dissented.

New trial to be granted.