Foot & Hodges v. Rutland & Whitehall Railroad

Aldis J. The questions which are presented to us for cofisideration in this case arise upon an auditor’s report. The auditor has allowed all the items of the plaintiffs’ account as charged* and then proceeds to set forth the facts which he finds proved in the case, without in terms submitting any question of law to the court. It is claimed that the facts as found do not justify the conclusion of the auditor in this respect, viz: that no privity of contract is established between the plaintiffs and the defendants. It appears that by a contract between the defendants and JR. & G-. L. Schuyler, the Schuylers were to build the defendants’ road and to incur all expenses of the character which compose the plaintiffs’ account; that one Hyde was the agent of the Schuy [637] lers, and authorized by them to incur all necessary legal expenses in the construction of the road, and that Hyde used the name of the railroad company with the knowledge of .the directors; that the plaintiffs were employed by Hyde as to the first item in their account, and as to the remaining items by Hyde, who was one of the directors of the defendants, and by two of the other five directors, the two other directors supposing, though nothing was said to that effect, that the plaintiffs were to look to the Schuylers for their pay. There never was any action of the defendants’ board of directors employing the plaintiffs, or authorizing Hyde to act for them; but the board did authorize the Schuylers to do all acts in the construction of the road which the defendants might do, and to use the name of the defendants in all matters of business, when necessary. I. It has been frequently settled, and needs no citation of authorities to show, that corporations are bound by the acts of servants and agents in their employment, and within their ordinary line of duty, without any formal vote conferring such authority ; and that the action of directors, though acting separately, if in the usual sphere of directors, binds the company. In this case the action of three of the five directors in employing the plaintiffs to perform the services charged, (which includes the whole of the plaintiffs’ account except the first charge,) would bind the defendants, unless it was understood by the plaintiffs that they were to charge for their services, not the corporation, but some other person, either the Schuylers or Hyde. So the employment by Hyde as to the first item would, prima facie, bind the company, as he was apparently acting as their agent in all such business. The charge for the first item was for professional services in defending a suit brought by the Rutland and Washington Railroad Company against the Schuylers, but in which the defendants were the real, though the Schuylers were the nominal parties. This charge was originally made to the defendants, and not to the Schuylers. If it had appeared in the case that the plaintiffs, when they rendered these services, knew that the Schuylers were to bear the expenses of all such legal proceedings, then clearly the plaintiffs could not recover for their services so rendered. But the report shows that they had [638] no such knowledge, but on the contrary, their whole account accrued in entire ignorance of this agreement between the Schuylers and the defendants. As this charge was originally made to the defendants, was for services in business connected with building their road, and was rendered' at the request of Hyde, who was one of their directors, and who was also their ostensible agent, through the Schuylei’s, for all such business, we think that the plaintiffs having no knowledge of the agreement by which the Schuylers were to bear all such expenses, were authorized to consider themselves as employed by the defendants, and to charge these fees, as they did, to the defendants. As to the remainder of the account, so far as the question arises as to the proof of employment, apparently by the railroad company, the case is still stronger for the plaintiffs, for as to these services they were employed by Hyde and two other directors, being a majority of the board, and no intimation given that they were to look to any other person than the defendants. So as to the business in which they were so employed, the case shows, to quote its language, “that the only purpose for which the suit was commenced was incidentally to protect and defend the interests of the defendants, and that the three directors who employed the plaintiffs were each cognizant of this fact.” So far, the right to charge the defendants is clear, and we should have found no difficulty with the case if another fact had not been stated by the auditor, viz: that the plaintiffs originally charged these items of the account to Hyde, and not to the defendants. Such a charge standing alone and unexplained, would show that in fact the plaintiffs rendered their services upon the credit of Hyde, and not upon the credit of the company. Upon this vital point the auditor has not in express terms stated upon whose credit he finds the services were rendered. The entry on the plaintiffs’ book, as we have already said, would show it was upon Hyde’s credit. On the other hand, the facts, that the services were not for the benefit of Hyde, but solely for the benefit of the company, and upon consultation with and apparently jipon employment by a majority of the directors, would tend strongly fo rebut that presumption. We have, however, witfh [639] considerable hesitation, come to the conclusion to construe the report as intending to state that the credit was given to the company. We do so, because, first, the general finding of the auditor is for the plaintiffs upon the whole account, and it is reasonable to give that construction to this report which sustains the finding; and, secondly, because we cannot perceive how the auditor could have come to this conclusion on behalf of the plaintiffs, unless he had found the credit given to the defendants. The judgment is therefore affirmed.