Henderson v. Seaboard Air-Line Railway

Hill, J. A full statement of the pleadings in this case was reported when it was here on exceptions to the sustaining of a demurrer to the petition. See Seaboard Air-Line Railway v. Ocilla Southern Railroad Co., 143 Ga. 407 (85 S. E. 91). On the pleadings as they then were, this court held that an equitable cause of action was set out against the Ocilla Southern Railroad Company. It was then said that “The petition alleged that the plaintiff leased the rails and fastenings to Henderson, who either assigned the lease of sublet the property to that company, which was in possession and had adopted the contract, and that the defendants had failed to pay the rent and refused to deliver the leased property.” When the case went back for trial there was no. evidence before the auditor, to whom the case was referred, of a sublease by Henderson to the Ocilla Southern Railroad Company, nor of an adoption by that company of the terms of the lease contract between [387] the receivers of the Seaboard Air-Line Kailway and J. A. J. Henderson by the Ocilla Southern Kailroad Company. Henderson individually (who was also president of the Ocilla Southern Kailroad Company) had knowledge of the contract; for he was a party to it and is bound by it. The Ocilla Southern Kailroad Company had constructive notice of it; for the contract was recorded. The question arises, therefore, is the Ocilla Southern Kailroad Company bound by the terms of the contract by adoption or otherwise, and is it liable thereunder as well as Henderson individually? The trial court sustained exceptions to the auditor’s report, holding, in effect, that the Ocilla Southern Kailroad Company also was liable on the contract. The effect of the court’s ruling is to hold the Ocilla Southern Kailroad Company liable according to the terms of the contract. We think this is error; for as already observed, there is nothing in the record to show that the lease contract was transferred to or adopted by that company. But is the Ocilla Southern Kailroad Company liable for the reason that Henderson was a promoter of that railroad? There are authorities which hold that in. such cases, where the corporation accepts the benefit of a promoter’s agreement, the corporation is bound thereby; as, for instance, where there was an agreement to pay certain unpaid rent of a building, and on the corporation coming into existence the promoter was elected president, and the company took possession of the building, it was charged with the president’s knowledge respecting the agreement, and bound thereby. See Chase v. Redfield Creamery Co., 12 S. D. 529 (81 N. W. 951); Ehrich on Promoters, § 62, p. 112; Mitchell v. Gifford, 133 Ga. 823 (67 S. E. 197); In re Quality Shoe Shop (Pa.), 212 Fed. 321. But under the facts of this case it can not be said that Henderson was a promoter. We think this case is not governed by the above line of decisions, but is controlled by another principle. As already said, there is nothing in the record to show that the Ocilla Southern Kailroad Company adopted the contract. It is therefore not bound by its terms. Whether the plaintiff could recover from it the value of the rails, etc., is a question not made in this case, and is therefore not before us for decision. Erom the foregoing, we conclude that 'the judgment of the court below should be affirmed in part and reversed in part. It is affirmed as to the judgment against J. A. J. Henderson individually, and reversed as to that part of the judgment holding the Ocilla [388] Southern Railroad Company liable under the terms of the contract. On another hearing the case can be tried in accordance with the above rulings. None of the other questions raised by the plaintiffs in error requirp a reference. Judgment affirmed in part, and reversed in part. All the Justices concur.