John A. Roebling's Sons Co. v. Barre & Montpelier Traction & Power Co.

Stafford, J. The defendant is a Vermont corporation running an electric railroad between Barre and Montpelier, and is sued for six miles of copper feed wire which the plaintiff, a corporation of another state, claims to1 have sold and delivered to it in August, 1898. The defense is that the wire, although received by the defendant and made a part of its plant, was purchased by Ferguson & Richardson, a firm of contractors, who, it is claimed, were bound to and did furnish it, as a part of the equipment, under their contract with the road. Ferguson, of the firm of contractors, was likewise a director of the defendant and a member of its executive committee. It was he who ordered the wire of the plaintiff. In doing so he claimed to be acting for the corporation as director and committee-man, and so' far as the plaintiff’s understanding and intention are concerned the wire was furnished upon the. credit of the defendant. Kennedy, the president of the defendant and at the same time a member of the executive committee, saw the bills of the wire soon after it came and noticed that it had been procured on the credit of the defendant. He also knew that it was being made a part of the plant. Yet he took no steps to^ notify the plaintiff that it must not look to the defendant for its pay. Thus a majority of the executive committee acted in a way to bind the defendant if the committee itself could have bound it. McNeil v. Boston Chamber of Commerce, 154 Mass. 277. The third member knew nothing of the transaction and took no active part in the management. There were nine directors, indeed, but the whole business of the corporation was managed by the officers of the board, and the officers took their instructions from Ferguson who was allowed to control everything. This appears from the testimony of the directors themselves. Kennedy, Ferguson and Flynn, three of the number, were themselves the exec — 137 — ntive committee whose conduct and attitude have been described. Bush testified that the general business of the company was left to' the committee. Howland said the same. Miles declared that he let it run itself. Humphrey, the nominal treasurer, left all the duties of his office to Butman, the assistant treasurer, and knew no more of the money business of the concern than as if he had not been treasurer. Butman himself repeatedly dealt with the plaintiff on the basis of the company owing for the wire and sent it a check for $800 on account. Pierson, the only other director, died before the wire was ordered. We find no evidence to1 the contrary. A claim was advanced that the road, from the time the cars began to run until after the wire- had been put up, was being operated by Ferguson as contractor for the purpose of testing it, and not by him as an officer of the corporation. An offer was made to show this and a ruling obtained that it might be shown; but the testimony produced had no tendency to support the offer. A few answers, if taken alone, might be thought to do so, but read in connection with other answers of the same witness and with the unquestioned facts, they cannot be considered to have the effect claimed. It wa^ June 28th when the cars began to run. It was the last of August when the wire was ordered. It was the first of September when the wire was received, and the end of September when the last of it was installed. From July 3d the superintendent of the road was Smith. The assistant, and only acting, treasurer was Butman. The man who controlled the corporation was Ferguson. During these three months the road was in active operation in the name of the defendant. There is no> pretense that anything was left to be done towards its construction unless it was the supplying of the wire in question. The daily receipts were collected by — 138 — the superintendent and deposited to the credit of the defendant and disbursed by the assistant treasurer for the expenses of the company, including the wages of the employees and the salary of the superintendent. Books of account were kept by the assistant treasurer showing receipts and disbursements. The wire was put up by the superintendent under direction of Ferguson and the work paid for in the first instance by the defendant and sometime later, perhaps after this controversy aro¡se, charged over to- the builders. Smith testified that he kept the account of this work separate because he did not regard it as “any part of our work,”— that is, any part of the work of the corporation which he, as superintendent, was carrying on, which could only mean the operating of the road. The wire was necessary for the safe and regular conduct of the business of transportation and was especially desired and called for by the superintendent and president in anticipation of an unusual amount of traffic which would attend the opening of a fair at Barre on the 7th of September. During these three months, as afterwards, the bills against the company were approved by the superintendent and by him sent to and paid by the assistant treasurer. The contract for the construction of the road gave the contractors no' right to operate it after it was constructed. The defendant had been fully organized and was doing business-before the contract for constructing the road was entered into. All the directors understood how the business Was being done. We shall now notice the answers alluded to above. Humphrey, the nominal treasurer, referred to already, who does not testify to any means of knowledge except that he was frequently over the road, says that the orders for running it were given by Ferguson & Richardson, and that “as far as he knew” the corporation was not running the road; that “there — 139 — was somebody else running the road: We hadn’t accepted1 it.” But later he says the road was never accepted, although he admits that it has long been operated by the defendant. It is evident that he is giving merely his opinion of the situation and not testifying to' any matter of fact in conflict with those above recited. An attempt was made to show by Kennedy, the president, that the road was not being operated for-the corporation, but he declines to make that statement, saying only that Ferguson was the man in control. Smith says he received instructions from Ferguson and from Barnes, an agent of Ferguson & Richardson. To say that these^answers taken in connection with the uncontroverted facts have any tendency to show that the road was not being operated by the defendant, is hardly possible. We are aware that the bill of exceptions affirms that there was evidence tending to show that the road was being operated by the contractors as such,, but the bill malees the transcript of the testimony controlling and a careful examination of the whole has led us to the-conclusion we have just stated. So we must add to the facts summed up in the beginning the further fact that the wire was purchased and appropriated at a time when the road was being operated by the defendant. The question then is whether the corporation is bound by the action of the committee. A by-law provided for “an executive committee of three to perform the general duties of directors, the assent of the directors to be had before the acts of such committee shall be binding upon them.” But we do not regard that as altering the rule of law touching the power of directors to act through a committee. It can not mean that ordinary every-day matters must be specifically authorized one by one, for that would make the committee useless, and on the other hand matters. — 140 — requiring the exercise of discretionary powers could not be delegated even if the by-law! had been silent upon the subject. The principle that a board of directors is the depositary •of discretionary powers to be exercised by the board itself and not to be delegated by it to any smaller body even of its •own members is entirely consistent with the other principle that it may delegate authoritj’’ to perform such duties as are required in the usual and ordinary course of its business. The act here questioned was the procuring of material or supplies necessary for the prompt and orderly conduct of its daily business and for the safety of human life, and in our opinion falls within the second principle. The authority to1 perform such an act must be held to have been conferred by the unanimous acquiescence of the directors in the course of business which had been pursued. The directors were all consenting to- the operating of the road by the committee. By so consenting they did exercise their judgment and discretion, and impliedly authorized those who were actually operating to do the things and procure the supplies needful therefor. The latter, as agents of the board, were therefore acting within the scope of their authority in procuring them. Hooker v. Eagle Bank of Rochester, 30 N. Y. 83, 86 Am. Dec. 351; Olcott v. Tioga R. Co., 27 N. Y. 546, 84 Am. Dec. 298, 303; McNeil v. Boston Chamber of Commerce, 154 Mass. 277. If the officer who purchased the material on the credit of the corporation was under contract with the latter to furnish it himself that may afford a subject for adjustment or litigation between the officer and the corporation, but is not •enough to defeat a plaintiff otherwise entitled to recover. — 141 — There being no dispute as to the amount due the plaintiff, if entitled to recover, it moved the court for a verdict,, and we think its motion ought to have been' granted. Judgment reversed, and came remanded.