Bell's Gap Railroad v. Christy , 79 Pa. 54 ( 1875 )

Mr. Justice Paxson

delivered the opinion of the court, May 24th 1875.

This case lacks all the elements of a contract, either express or implied. The most that it amounts to is the expenditure by the plaintiff of a certain amount of his time and money in the furtherance of a scheme of constructing a railroad. He attended meetings ; visited Harrisburg for the purpose of obtaining a charter; assisted in making a preliminary survey, and paid some of the expenses thereof. There was no contract with any one for the payment of his services, beyond the statement of some of the parties interested in the project that they would see him paid. All this was prior to the charter, or to any organization of the company. The road which the plaintiff had in view when he made the survey, as appears from his own testimony, was a broad gauge road, to run from Bell’s Mills to Erie, and he evidently relied upon aid from New York capitalists to build it, with the expectation of retaining an important position in the company. He did not succeed in obtaining the required aid, and the road to Erie was never constructed or even commenced. Instead thereof, a short local narrow gauge road, called the Bell’s Gap Railroad, was built, with the object in part to develop certain coal lands in the vicinity. The stock was principally taken in the neighborhood. The plaintiff, and others interested with him, were among those named as corporators in the act incorporating the company, but they failed to obtain the control of its organization. Subsequently, the plaintiff brought suit against the company to recover compensation for his services, as before stated, claiming that the company were bound by the promises of the original projectors of the enterprise, inasmuch as said company had accepted the result of his labors and enjoyed its benefits.

None of the cases cited by the defendant in error sustains his position. The Erie and Waterford Plankroad Company v. Brown, 1 Casey 156; and the Bedford Railroad Company v. Bowser, 12 Wright 29, were suits upon subscriptions to stock. The case of the Edinboro’ Academy v. Robinson was a subscription in aid of an academy. There is not the slightest analogy between either of these cases and the one under consideration. In Burton v. The Liverpool, Manchester and New Castle-upon-Tyne Junction Railway Company, 7 Eng. Law & Eq. Rep. 124, the contract was between the plaintiff and an organized company. This was a case where the projectors agreed to pay the complainant 5000Í. for the land to be taken for the railway and incidental damages, and the plaintiff thereupon assented that his land should be so taken. The agreement was in writing between the plaintiff and the executive directors of Lancashire and North Yorkshire Railway Company, which was afterwards united with another rival enterprise, under the name of the defendant corporation, and the two companies agreed to adopt the contract with the plaintiff. It is true the company had not yet obtained its charter, but it was still, an organization in esse, had a board of directors who assumed to make contracts binding upon the company when it should become thereafter fully clothed with corporate powers. In Low v. The Railroad Company, 45 N. H. (1 Hadley) 472, a charter had been obtained, and the services for which the suit was brought were rendered in promoting the organization of the company under the charter, procuring subscriptions to the capital stock, &e. It was held by the court in that case that, “ where, after the charter and before the organization of a corporation, services are rendered which are necessary to complete that organization, and after it has been perfected, the corporation elects to take the benefit of such services, knowing that they were rendered with the understanding that compensation was to be made, it will be held liable to pay for the services upon the ground that it must take the burthen with the benefit; but that£ no promise to pay would be implied from the fact that such services were rendered at the request of any number of the corporators less than a majority.’ ”

We do not desire to controvert the principle, established in England, and to some extent recognised in this country, that when the projectors of a company enter into contracts in behalf of a body not existing at'the time, but to be called into existence after-wards, then if the body for whom the projectors assumed to act does come into existence, it cannot take the benefit of the contract without performing that part of it which the projectors undertook that it should perform. Conceding to this principle its full force and effect, we are unable to see its application to the facts of this case. It may very well be that where a number of persons not incorporated are yet informally associated together in the pursuit of a common object, and with the intent to procure a charter in the furtherance of their design, they may authorize certain acts to be done by one or more of their number, with an understanding that compensation shall be made therefor by the company when fully formed. And if such acts are necessary to the organization and its objects, and are subsequently accepted by the company, and the benefits thereof enjoyed by them, they must take such benefits cum onere, and make compensation therefor. But the projectors or promoters of the enterprise within the meaning of the rule referred to, evidently must be a majority at least of such persons, and not one, two, or three, or a small minority thereof. Such minority can have no more authority to bind the association or corporation in its incipient or inchoate condition than they would have to bind it if fully organized. In this case the two or three persons who it is alleged promised the plaintiff to see him paid, bound no one but themselves. They had no authority to speak for any one else. In the absence of any such authority and of any satisfactory proof that the result of the plaintiff s labor and expenditures was accepted and enjoyed by the corporation, that it used the plaintiff’s survey or located its road upon any considerable portion of the line thereof, the court below should have instructed the jury that the defendants were not liable.

It is to be observed that in all the cases which were brought to the attention of the court, the services were either performed after the charter had been obtained, and there was therefore an inchoate corporation, or there was an informal organization, as in the case, cited in 7 Eng. Law & Eq. Rep., preparatory to obtaining a charter, and the employment was authorized by the organization as such, and was not the mere employment by individuals having no authority, express or implied, to contract for any one.

We think the court erred in their answer to the defendant’s third point. Under all the evidence in the cause it should have been affirmed. There was, also, error in not affirming the defendant’s fourth point. It appeared from the defendant’s own testimony that the road for which he had made the survey was a broad gauge road with a different terminus, being from Bell’s Mills to Erie, and was essentially a different route from that on which the Bell’s Gap Railroad was laid out and constructed.

This covers the third and fourth assignments of error. The remaining assignments need not be discussed.

The judgment is reversed and a venire facias de novo awarded.