Nebraska Railway Co. v. Lett

Maxwell, Ch. J. On the thirteenth day of December, 1875, the Brown-ville, Eort Kearney & Pacific Eailway Company and the Midland Pacific Eailway Company were consolidated, the new company taking the name of the Nebraska Eailway Company; In November, 1877, the defendant commenced an action against the Nebraska Eailway Company for the value of services rendered by him as president of the Brownville, Eort Kearney & Pacific Eailway Company from September 18, 1871, to October 18, 1875, in securing the right of way for and in aiding in the construction of said B., Et. K. & P. E. E. The defendant recovered a judgment in the court below for the sum of $7,500. The cause is brought into this court by petition in error. On the trial of the cause the following articles of agreement were introduced in evidence. “Articles of. agreement made and concluded this 18th day of September, 1871, by and between Benj E. Smith and "William Dennison of Columbus, state of Ohio, and J. N. Converse of Union City, state of Indi — 256 — ana, and such, others as may hereafter he associated with them of the first part, and the Brownville, Eort Kearney and Pacific Bailroad Company, a company organized under the laws of the state of Nebraska, party of the second part, Witnesseth: That the said-party of the first part for and in consideration of the covenants and agreements hereinafter mentioned, do for themselves, their heirs, executors, administrators and assigns, covenant, promise, and agree to and with the said party of the second part, their successors and assigns, by these presents, that they the said party of the first part shall and will take and accept the road bed of the party of the second part in its present unfinished condition, being partly graded, and together with all the ties which they may have purchased; said road extending from Brownville, Nebraska, westward to the west line of Gage county, and that they will within two years from the date of these presents, complete the grading, tieing, bridging, ironing, and equipment of said Brownville, Eort Kearney and Pacific Bailroad to the west line-'of Gage county, Nebraska, a distance of about seventy-five miles, and will furnish all the rails, chairs, fishplates, spikes, and other materials that may be necessary to construct a railroad of narrow or three feet guage, or a railroad of the ordinary guage of four feet eight and one-half inches, at the option of the party of the first part. “If the said party of the first part concludes to construct a narrow gauge road, then the iron rails shall weigh not less than thirty-two pounds to the lineal yard, and if the same be of the ordinary gauge the rails shall weigh not less than forty-five pounds to the lineal yard. That the party of the first part shall secure and pay for all rights of way hereafter to be obtained,, also for the engraving or printing of all stocks, or bonds, and the stamping and recording of the mortgage given — 257 — to secure the same. The party of the first part further agrees to furnish all the necessary locomotives, box cars, passenger and freight cars, which equipments in rolling stock shall not be less than $1,000 per mile in value, and such equipments to correspond with the gauge which may be adopted by said party of the first part. Said party of the first part do further promise and agree'to build all necessary sidings, switches, and frogs (said sidings to measure same as main track), engine houses, passenger and freight depots, repair shops, water tanks, etc., and to pay to the said party of the second part, or on its behalf, all of the indebtedness of the same of every nature which has been incurred in grading and constructing said railroad, provided said indebtedness shall not exceed the sum of $50,000. And said party of the first part further agrees to iron and equip ten miles of said road from Brown-ville westward on or before the first day of. December, 1871. It is further understood that the party of the first part shall not be required to construct said road beyond the distance of ten miles faster than they may be able to sell the first mortgage bonds hereinafter referred to at not less than seventy cents on the dollar with accrued interest, unless they may prefer so to do. In consideration whereof the said party of the second part does hereby promise and agree do exercise their authority, so far as their official acts may be necessary, in securing the right of way, depot grounds, gravel beds, stone quarries, etc., the issuing of stocks, bonds, and mortgages as the party of the first part may from time to time direct, provided the party of the first part shall pay all expenses necessary for the same. Said party of the second part shall do and perform all other official acts necessary in the location and construction of the line of said road as the party of the first part shall direct. Said party of the second part for thern — 258 — selves, their successors and assigns, do further promise and agree to issue to the said party of the first part the stock of said company to an amount equal to the sum of $20,000 per mile, and deposit the same with <3-. Moody, Esq., of Columbus, Ohio, as trustee, to be by him delivered to the party of the first part as soon as ten miles of iron has beén laid and rolling stock put on same, as heretofore specified in this agreement, on said Brownville, Eort Kearney & Pacific Railroad: Provided, That the stock issued or to be issued to Brownville precinct to the amount of one hundred thousand dollars, and sixty thousand dollars to be issued to the city of Brownville, and the amounts of stock necessary to be issued to bona fide subscribers to the capital stock of said company, and which has been or may hereafter be paid up in full, shall be and are hereby excepted out of the amount to be so deposited with said trustee; and no more stock shall be issued by said company except by consent and request of the party of the first part. Said party of the second part do further agree to execute and deliver to the said party of the first part “first mortgage bonds” of the said party of the second part to the amount of twelve thousand dollars per mile on said railroad for a distance of seventy-five miles: Provided, That if said party of the first part shall determine to build said road of the ordinary, or four feet eight and one-half inch guage, the said party of the second part shall issue and deliver to said party of the first part first mortgage bonds on said road to the amount of twenty thousand dollars per mile, Which bonds shall be secured by a mortgage upon the road bed, rolling stock, franchises, etc., of said railroad, and shall be payable in gold coin of the United States, in not less than twenty years, and shall be at seven per cent interest per annum,-payable in like coin semi-annually; principal payable in New York — 259 — City and at other places, as said party of the first part may direct; said bonds to be prepared and executed as the party of the first part may direct, and delivered to the trustee named in said bonds, to be by him delivered to said party of the first part from time to time as they may require in the construction of said railroad. Said party of the second part do further agree that they may deliver to said party of the first part fifty-two thousand dollars of “Brownville precinct bonds,” now in New York, on their payment of the amount due Johnson & Brown on same, which is a part of the indebtedness of said party of the second part heretofore referred to, and they also agree to deliver to said party of the first part the further sum of thirty thousand dollars in like bonds now in the possession of the said party of the second part. Said party of the second part do further promise and agree to and with the party of the first part to set over, transfer, assign, and deliver to the said party of the first part all donations, subscriptions, or subsidies of every character, either of money, lands, or property that may have been heretofore or which shall hereafter be obtained by said party of the second part, as fast as they shall come in possession of the same, except sixty thousand dollars voted by the city of Brownville to said company, and such bonds and money as have already been paid in and expended on said railroad and in connection therewith; said party of the first part to have the free use of the road and equipments until the completion of this contract. Said party of the first part agree to pay the indebtedness of the company, not exceeding fifty thousand dollars, within sixty days from the date of these presents; and upon the delivery to the said party of the first part of the precinct bonds of Brownville precinct, heretofore referred to, said party of the second part agree to pay all other indebtedness over and above fifty thousand — 260 — .dollars, if any such there be, within ten days from the date of these presents. It is expressly understood that under this agreement the party of the second part turn over and are to turn over to the party of the first part all the property owned and assets acquired or to be acquired by said company, with the exceptions herein-before stated, and that the company may perform such official duties as may. be necessary for a board of directors, and that all expenses or outlay required shall be borne by the party of the first part: Provided, that the board of directors shall receive no compensation for taking any official action where the same is attended with no expense. It is expressly stipulated and guaranteed by the party of the second part, that the fifty-two thousand dollars of bonds with Johnson & Brown, of New York, cannot be sold for less than fifty-seven cents on the dollar, with interest at eight per cent on their face from February 28, 1871, and that said bonds can be redeemed at any time by the payment of twenty-six thousand dollars, with interest at the rate of eight per cent per annum from February 28,1871, and that said sum of twenty-six thousand dollars need not be paid until said bonds are sold.' That the remaining indebtedness does not exceed twenty-two thousand dollars.” This contract is signed by Smith, Dennison, and Converse, for the party of the first part, and by the Brownville, Fort Kearney & Pacific Railroad Company, by its attorney in fact, whose action was fully ratified by the board of directors of said corporation on the 20th day of September, 1871. The plaintiff in error set up the foregoing contract in its answer as a defense to the action, and alleged that the defendant in error was a member of the construction company, parties of the first part in the above instrument, and as such had agreed to pay all expenses incurred by said corporation in procuring the right of — 261 — ’way, or other exercise of its corporate power. The defendant in error (plaintiff in the court below) in his reply “ denies that he became subject to or liable for the execution of said construction contract made with Converse, McCann & Co., in any manner, except for such a liability as might arise incidently by reason of his being a member of said co-partnership, or firm of Converse, McCann & Co., like any other member of said firm. That said firm was composed of ten other persons besides this plaintiff, all jointly liable with this plaintiff to said Brownville, Eort Kearney & Pacific Railroad Company for the performance of the said construction contract, and this plaintiff denies that any of the services rendered by this plaintiff .to said Brownville, Eort Kearney & Pacific Railroad Company, and sued for in this action, or that any of the moneys by this plaintiff advanced to the said Brownville, Eort Kearney & Pacific Railroad Company, sued for in this action, were rendered or advanced as a member of the firm of Converse, McCann & Co. — said construction company — or were rendered or advanced to the said, firm of Converse, McCann & Co., or were any of them in any way embraced or included within the terms or provisions of the said construction contract, or even referred to therein,” etc. Turning to the petition we find the cause of action set forth as follows: “ That from the 18th day of September, 1871, until October 12, 1875, inclusive, he was the president of the said Brownville, Eort Kearney & Pacific Railroad Company, and that during said time he devoted his whole time to promoting the interests of said company in procuring the right of way and in all things aiding the construction and management of said railroad company, and that said services so rendered by plaintiff were reasonably worth the sum of three thousand dollars for each and every year,” etc. — 262 — ¥e have in this agreement: First. A promise by the construction company — of which Lett was a member — to pay to the party of the second part, or on its behalf, all of the indebtedness of the same of every nature incurred in grading and constructing the railroad, not to exceed the sum of fifty thousand dollars. Second. The corporation was to secure the necessary right of way, depot grounds, gravel beds, stone quarries, etc., and was to issue stocks, bonds, and mortgages from time to time as directed by the construction company. The construction company to pay all necessary expenses of the same. Third. The corporation was to turn over to the construction company all the property owned, and assets acquired or to be acquired, with certain exceptions specifically designated, and the corporation was required to perform such official acts as were necessary to be performed by a board of directors, all expenses and outlay to be borne by the construction company. "We are told that there is no proof that Mr. Lett was in the employment of Converse, McCann & Co. But it was unnecessary to prove an employment. It is admitted that he was a member of the firm, and as a member of such firm had agreed to pay for all services rendered by him as president of the corporation. The two leading features of the contract of partnership are, a common interest in the stock of the company, and a personal responsibility for the partnership engagements. 3 Kent Com., 24. Each individual member of a partnership is answerable in solido for the whole amount of the debts, without reference to the proportion of his interest, or'the nature of the stipulation between him and his associates. Id. 32. It is clear that no services were rendered by Lett as president of the corporation, which he as a member of — 263 — the construction company was not required to pay for. The court therefore should have instructed the jury to find for the defendant. "While it is clear that Lett cannot maintain an action against the defendant in the court below, for the services set forth in the petition, it, is apparent from the testimony that he rendered valuable services to the construction company while he was a member thereof, for which it is possible he may have a claim against his former partners. It is unnecessary to review the various errors assigned, as his liability as a partner is decisive of the case. The judgment of the district court is reversed and the cause remanded for further proceedings. Reversed and Remanded.