Hetfield v. Addicks

Opinion by Mr. Justice Williams, This judgment is sui generis. The action grows out of the following facts. The Beacon Construction Company, of which the defendant was a member and an officer, engaged to construct the gas works in the city of Boston for the Bay State Gas Company. It was to receive payment largely in the bonds and stock of the gas company, and was desirous to negotiate these at par for the purpose of raising money with which to complete its contract. It prepared a contract of subscription which it placed before those from whom it sought subscriptions to the stock and bonds of the gas company, and the plaintiff [6] was among those from whom a subscription was sought and obtained. The contract provided that the sums that might be subscribed for the stock or bonds should be payable in ten equal monthly installments, beginning with April 1, 1885, and proceeded thus: “ Those desiring to do so can pay in full at any time, interest being allowed at four per cent per annum.” The sales of the stock and bonds were not made as fast as had been anticipated, and in January, 1887, when the plaintiff subscribed for the purchase of them to the extent of six thousand dollars, the same form of contract was stil-l in use, and was that which was presented to the plaintiff and signed by him. He paid up in four installments, and afterwards received the stock and bonds for which he subscribed. What he now claims is that he should be paid interest upon his anticipated payments from the time they were made to the time when the securities were delivered to him. Whether this is the proper construction of his contract or not is a question that would have arisen on the trial if a trial had taken place, but the defendant chose to demur to the plaintiff’s statement of his cause of action. The learned judge of the court below overruled the demurrer and gave the defendant fifteen days in which to plead, and after the fifteen days had expired judgment was entered against him “because of the failure of the defendant to plead.” This is in effect a judgment for want of a plea, and for anything that appears on-the record it should be so treated, and allowed to stand. But both parties assure us that it was intended as a judgment upon the issue raised by the demurrer and for that reason we look into the pleadings. The statement sets out the contract of subscription and its terms, and a copy of the contract is attached and made part of the statement filed. It alleges that the plaintiff was induced to make the contract by Mr. Addicks who was “purporting to act for the Beacon Construction Company ; ” that he subscribed to the amount of six thousand dollars ; that he paid this sum in four installments instead of ten ; that he has received the securities subscribed for but has not received the interest promised him.in case he made payments before they were due. He accordingly asks to recover the interest which he alleges he should have received by reason of having to some extent anticipated the payment of his subscrip [7] tion. The contract thus declared on is that of the construction company, and the breach set out is the failure of the company to pay interest in accordance with its contract. The defendant demurred to this statement. The reasons assigned in support of the demurrer raise three questions. The first of these relates to the fact that the plaintiff’s subscription was made after ten months from April 1, 1885, had expired, and asserts that for this reason he is not entitled to interest upon payments made in advance of his obligation to pay. But the construction company prepared and presented to the plaintiff the contract declared on. The fact that they continued to use it after January 1,1886, was an assertion of their purpose to be bound by its provisions; and while subscriptions 'made after that time could not be paid within ten months after April 1, 1885, they could be paid within ten months from the time of making them. If the persons subscribing paid in full before ten months ended, they were entitled to the interest promised upon the money paid before it was due. The second question is whether, assuming the contract to pay interest to be established, it is not ultra vires ? But why? The construction company was not selling its own stock, or promising to stockholders to pay interest or dividends that had not been earned. It was selling securities that it owned, had presumably bought and paid for, and had the same power over as it had over the materials or machinery owned by it. It could sell on such terms and at such price as it saw fit to offer, in the same manner that an individual, owning the same securities, could have done. Its promise to pay interest upon payments made in advance of their falling due, was perfectly valid. It was a commercial transaction, a matter of bargain and sale, to which the doctrine of ultra vires has no application. The third question is whether the plaintiff has stated a cause of action against Addicks? He has stated one against the construction company beyond any doubt. The contract sued on is that of the company. The breach alleged is that of the company. How Addicks is responsible for this breach does not appear. No act of omission or commission on his part is alleged as a ground of liability for the failure of the construe [8] tion company to keep its promise with the plaintiff. This point is well taken. The judgment of the .court below is therefore reversed and judgment is now entered on the demurrer in favor of the defendant. See also the next case.