Rand v. Farquhar

Pierce, J. April 8, 1903, the plaintiff and the defendants “As Trustees of the Brandon Trust under a declaration of Trust . . . but not individually,” signed and sealed an instrument wherein the plaintiff agreed to “perform all the work for the complete erection and construction in every detail ready for lathing and plastering, of the building to be known as Brandon Hall,” by July 15, 1903, for the sum of $13,900, to be paid in instalments as the work progressed; and upon the understanding "that the contractor shall look only to the funds and property of the trust for all payments due hereunder and not to the trustees or stockholders of the said Brandon Trust personally.” The work, with “extras” to the amount of $2,056.57, was substantially finished July 1, 1903. A statement of the account, with a balance unpaid and overdue of $7,456.57, was rendered to and approved by the trustees August 1, 1903. The authority of the defendants to make a contract which in equity should charge the funds and property of the trust only, is found in the provision of the declaration of trust which reads, “All the powers hereunder may be exercised by a majority of said Trustees, that is, by three of them, and all deeds or other instruments executed by such majority shall be as effectual and binding as if executed by all of the Trustees” “and all persons dealing with said Trustees shall look only to the property of the trust for payment of their claims.” Hussey v. Arnold, 185 Mass. 202. The defendants were specifically and severally named in the instrument of agreement, and “as Trustees of the Brandon Trust. . . but not individually” were described as “party of the second part.” The instrument was signed and sealed by the plaintiff, and on behalf of the Trustees was signed “Trustees of the Brandon Trust — 97 — by Robert Gallagher, Pres. Albert G. Eastman, Treas.,” with a seal affixed opposite each name. The plaintiff contends that the contract, although meant to bind only the trust funds and to exempt the trustees from personal liability, never sprang into being as a valid agreement, because of defective execution, the defect being that it was signed by only two trustees, whereas by the trust declaration it was required to be signed by three trustees, that this was a defect in substance and not merely in form, and that since the contract was under seal no valid ratification of the defective execution could be made by parol by the non-signing trustees. As a matter of law it does not necessarily follow that the instrument was void because it was not signed and sealed by the individual hand of at least a majority of the trustees. From the fact that all the trustees approved the bill rendered for the work, and from other attendant facts, it could be found that the signature, “Trustees of the Brandon Trust,” was adopted as the name of the defendants under which the trustees or a majority of them should enter into contracts and execute instruments in furtherance of the business management of the trust. The right to adopt a name for business purposes is universally conceded to be the right of individuals, partnerships and corporations. Melledge v. Boston Iron Co. 5 Cush. 158,173,176. There is no legal inhibition to the exercise of a like power by the trustees of a trust created for business purposes. If the associate name was signed and the instrument was sealed without formal authority, it would nevertheless become binding upon the trust as an act of the trustees within the declaration of trust if they or a majority of them expressly or impliedly by parol afterwards adopted it. Cady v. Shepherd, 11 Pick. 400. Swan v. Stedman, 4 Met. 548. Merrifield v. Parritt, 11 Cush. 590. McIntyre v. Park, 11 Gray, 102. Moreover, it is plain that the defendants could not be held to be personally liable against the words and spirit of their undertaking because they, in pursuance of the business of the trust, had attempted and had failed to executeproperly an instrument within their authority to make. Sumner v. Williams, 8 Mass. 162, 184. Abbey v. Chase, 6 Cush. 54. Shoe & Leather National Bank v. Dix, 123 Mass. 148.' King v. Stowell, 211 Mass. 246, 250. There was evidence of authorization, of recognition, adoption and ratification of the contract under seal of April 8, 1903. It — 98 — follows that the ruling, “If the defendants, or a majority of them, authorized the contract of April 8, 1903, with Rand [the plaintiff] and it was signed by the persons whose signatures it purports to bear, that contract was duly executed and is a valid contract binding on the plaintiff and the defendants,” was rightly given, and that the exception of the plaintiff must be overruled. The second request of the plaintiff that “The defendants are personally liable on all contracts made by their co-trustee, Eastman, within the scope or apparent scope of his authority, unless personal liability was particularly excluded,” could not have been given rightly. The plaintiff’s contract contains the provision “ that the contractor shall look only to the funds and property of the trust for all payments due hereunder and not to the Trustees or stockholders of the said Brandon Trust personally.” The plaintiff also testified "that he knew he was contracting with the defendants as trustees of the Brandon Trust and that he had read and fully understood that the trustees had not assumed personal liability.” The plaintiff had knowledge of the actual authority of the trustees, he therefore could not rely upon implied powers. If the express provision of the contract against personal liability was waived by the trustees, or had been otherwise abrogated, the burden was on the plaintiff to prove the fact. The exception to the refusal to give this request must be overruled. As a result of negotiations with one of the trustees (Eastman), in regard to the additional labor required to install the interior finish of the building the plaintiff had erected under the contract of April 8, 1903, the plaintiff “drew up” a letter and gave it to Eastman, which reads: “I agree to furnish the carpenters’ labor to finish the Brandon Hall ... in the following manner, I to furnish a general foreman who will keep the workmen’s time, including his own, on the pay roll. I agree to pay the said men every Saturday and the Brandon Company are to furnish me the full amount of the pay roll for two weeks on Friday previous to the second week pay day, and in each successive week until the building is finished, for which service by me rendered you hereby agree to pay me twelve per cent, on total above pay roll when carpenter work on the building is finished.” The proposals of this letter were accepted by the trustees and the plaintiff furnished the labor to install the interior finish. — 99 — There was evidence to support the contention of the plaintiff that it was understood that the provision against personal liability in the original contract should be eliminated; there was also evidence that the plaintiff "agreed to furnish the labor for the erection of the trim on the same basis as the original contract,” and “that this work was an extra under the original contract.” The additional work was completed as early as December 4,1903. The total amount claimed by the plaintiff to be due him under the new contract, including his commission, is $7,724.64. After August 1, 1903, he was paid in instalments the total sum of $10,050. These payments, with the exception of one of $2,000, one of $1,000, and one of $1,500, were approximately the amounts of the pay rolls, and could have been found to have been determined by the amounts needed to meet the pay rolls. The plaintiff testified that as he received the payments he applied them to the balance $7,456.57 due upon the first contract “until it was squared;” that the balance $2,593.43 he applied to the second contract and that there was a balance still due on the second contract of $5,131.21, which is the sum he seeks to recover with interest. He further testified "that he did not understand that what money he drew ... he could apply only to the pay roll.” In consideration of the terms of the letter and the actions of the plaintiff and the defendants as regards the payments, the issue was fairly presented whether within the fair understanding of the parties the payments were made by the defendants to be applied to the second contract. This issue was properly submitted to the jury, with the instruction “if that was in effect the direction by Mr. Eastman, representing the debtors, the plaintiff had no right to apply those payments to an old debt.” The plaintiff’s third request could not have been given rightly, as the plaintiff knew that the co-trustee, Eastman, acted with limited authority, the extent of which the plaintiff was bound to ascertain at his peril. The judge stated he would give the substance of the fourth request, and as there was no criticism of the manner in which the request was dealt with the exception must be treated as waived. The fifth request, "The burden of proof is on the defendants to show that they have exempted themselves from personal liability,” manifestly could not have been given. Had the plaintiff de — 100 — sired an instruction as to the burden of producing evidence to meet or rebut a presumption or otherwise, the request should have been framed to present the rule of law applicable to such a situation. The sixth and seventh requests ask for an instruction as a matter of law upon conflicting facts, and were rightly denied. The ninth request has been fully treated and was rightly denied. The-tenth request is not argued and is treated as waived. All the issues were fairly and fully presented to the jury, and we find no reversible error. Exceptions overruled.