Horace B. Woodruff et al., Respondents, v. The Rochester and Pittsburgh Railroad Company, Appellant

Horace B. Woodruff et al., Respondents, v. The Rochester and Pittsburgh Railroad Company, Appellant. B. H. & Co., a construction company, contracted with defendant to construct a portion of its road. That firm made a -contract with T. & Co., for the construction by the latter firm of part of the road covered by the contract with defendant, and plaintiffs contracted with T. & Co., to construct part of the road included in their contract. Plaintiffs in the performance of their contract cut through an elevation. After the cutting was substantially completed, the earth from the sides caved in and plaintiffs removed it upon the request of the engineers in charge of the work and under an agreement that the work was to be taken outside of their contract, at a price specified. In an action to recover for the work so done the contract between defend ant and B. H. & Co., was not produced in evidence. It appeared, however, that such a contract existed, and that the work was in a general way under the supervision of that firm; also, that it employed and paid all the engineers and entered into sub-contracts for the performance of the work. Held, that the evidence failed to show any liability on defendant’s part, as it did not disclose that the work was done under any express or implied contract with defendant; that no authority on the part of the engineers to bind defendant appeared, and no such authority could be implied from the circumstances; also, that the fact defendant did not produce the contract with B. H. & Co., did not impose upon it the burden of showing want of authority. Also, held, the fact that defendant took possession of the work after its completion, was not, in the absence of evidence of any knowledge on its part of the agreement with the engineers, a ratification of such agreement. By the contract between plaintiffs and T. & Co., the former agreed to construct and finish the work under the directions and to the satisfaction of the chief engineer. It included all “ excavations and embankments connected with or incident to the construction of said railroad.” It was also provided that no claim for extra work should be allowed unless done “in pursuance of a written order from the engineer in charge and the claim made at the first settlement after the work was done.” The contract between B. H. & Co., and T. & Co., contained similar provisions. Held, that assuming B. H. & Co., or the engineers could be considered as agents of defendant, still no liability on the part of the latter was shown; that if the work in question was “ extra work” within the meaning of the contracts (as to which quaere) no allowance could be made therefor without proof of performance of the conditions precedent contained in the contract, i. e., that the work was done in pursuance of a written order of the engineer in charge and that the claim was made at the first settlement; that no authority existed in the engineer to alter or change the contract in this respect, or to create obligations binding upon defendant not embraced therein. (Argued December 6, 1887; decided January 17, 1888.) Appeal from judgment of the General Term of the Supreme Court in the fifth judicial department, entered upon an order made October 24, 1885, which affirmed a judgment in favor of plaintiffs entered upon a verdict. This action was brought to recover for certain work alleged to have been done by plaintiffs as “ extra work ” in the performance of a contract for the construction of part of defendant’s road. The material facts are stated in the opinion. Thomas F. Wentnoorth for appellant. The engineers could not bind the defendant for extra work except in the manner prescribed by the contract. (Thayer v. Vt. C. R. R. Co. 24 Vt. 440; Vt. C. R. R. Co. v. Thayer, 22 id. 365; Vanderwerker v. Vt. C. R. R. Co., 27 id. 125, 130; White v. S. R. & S. G. R. R. Co., 50 Cal. 419; Herrick v. Estate of Belknap, 27 id. 673; Shaw v. Wolverton Water- Wks. Co. 6 Exch. 137; 1 Redf. on Law of Railways [5th ed.], 431, 433, § 3.) There is no presumption of law that the persons whom the respondents claim directed them to do this alleged work were empowered by the appellant to do so. (Chicago & N. W. R. Co. v. James, 22 Wisc. 197; Walworth Co. Bk. v. Farmers’ Loan and Trust Co., 14 id. 197; Morawitz on Corp., §§ 58-61, rule 5; Dabney v. Stevens, 40 How. Pr. 341; 66 N. Y. 681; Olcott v. Tioga R. R. Co., 27 id. 557; Niagara Falls Suspension Bridge Co. v. Bachman, 66 id. 262, 270; Alexander v. Cauldwell, 83 id. 485; Knight v. Lancy, 4 E. D. Smith, 381.) A person dealing with an officer of a corporation whose duties are regulated by the by-laws is chargeable with notice of his authority and of the limitations and restrictions upon it contained in the act of incorporation or by-laws. (Alexander v. cauldwell, 83 N. Y. 480; Blen v. Bear River Water Co., 20 Cal. 602; Olcott v. Tioga R. R. Co., 27 N. Y. 557; Rinsley v. I. B. & W. R. R. Co., 1 Hun, 202; 62 N. Y. 245; Adriance v. Roome, 52 Barb. 399, 411; Vanderwerker v. Vermont Cent. R. R. Co., 27 Vt. 125, 166; Dabney v. Stevens, 40 N. Y. 341; 46 id. 681; 10 Abb. N. S. 39.) The respondents have failed to show that the alleged contract was within -the scope of the employment of Wilson or any of the defendant’s engineers. (Powrie v. Kansas Pac. R. Co., 1 Culv. 529; 27 Grat. [Va. Ct. App.], 120; 63 Penn. St. 381; Farmers' Bank [Buck Co] v. McKee, 2 id. 318; 20 Cal. 602; McCullough v. Morse, 5 Denio, 564, 577; Livingston v. Lynch, 4 Johns. Ch. 573; Chapman v. Chicago & N. W. R. Co. 26 Wis. 302; Alex ander v. Cauldwell, 83 N. Y. 485; Angel & Ames on Corp., §§ 288, 301; Chicago & N. W. R. Co. v. James, 22 Wis. 197; Angel & Ames on Corp., § 309; 30 Conn. 380; 6 Gray, 450; 116 Mass. 177; Lafayette & Ind. R. R. Co. v. Ehman, 30 Ind. 83.) Express authority must be shown if ratification is not proved. The concurrence of a majority of the board of directors, when duly assembled, is requisite to constitute a valid act. (McCullough v. Morse, 5 Den. 577; Livingston v. Lynch, 4 Johns. Ch. 573; Yellow Jacket Silver Mining Co. v. Stevenson, 5 Nev. 228; Peck v. Detr. Nov. Works, 27 Mich. 13; Silliman v. Fredericksburg, Orange & Char. R. R. Co., 27 Gratt. 119; 17 Am. R. 157.) Acts of special agents, even in the presence of a minority of the board, are not evidence of assent by a corporation when they exceed their powers. (Angel & Ames on Corp. § 304; Barcus v. Hannible Plank Road Co., 26 Mo. 102; Dabney v. Stevens, 40 How. Pr. 341; Chicago & N. W. R. Co. v. James, 22 Wis. 197; Morawitz on Corp. §§ 58-61.) Implied ratification cannot he presumed in the absence of proof that the board of trustees had notice or knowledge of the material facts, even where benefit is received. (Roach v. Coe, 1 E. D. Smith, 175; Howell v. Christy, 3 Lans. 238, 243; Smith v. Kidd, 68 N. Y. 130, 142; Taylor on Law of Corp. §§ 211, 214; Kuhn v. Salisbury, 33 N. Y. 648; G. C. & L. R. R. Co. v. Kelly, 77 Ill. 437; Story on Agency [8th ed.], § 902, note, §§ 239, 258; Leviland v. Creen, 40 Wis. 431.) The defendant never having assented to the alleged contract, having no knowledge of all the material facts, is hot bound. (Dana on Agency, § 239; Dana v. Munro, 38 Barb. 528, 534; Hotchkiss v. Kent, 8 Mich. 526; Story on Agency, 282, § 239; note 1.) Knowledge of the engineer or the chief engineer is not such knowledge as satisfies the essential requirements, to wit, that there can be no assent by the corporation itself of the terms and conditions of that to which assent is given. (Dabney v. Stevens, 40 How. Pr. 341, 351; Yellow Jacket Silver Mining Co. v. Stevenson, 5 Nev. 228; Twelfth Street Market Co. v. Jackson, 102 Penn. 269; Moore v. Patterson, 28 id. 505 Angel & Ames on Corp. § 304; Owing v. Hall, 9 Peters. [U. S.], 629; Fawcett v. N. H. Organ Co., 47 Conn. 224; Taylor on Laws of Corp. §§ 200-206.) Any admission, act or declaration of any of the engineers is not evidence against the-appellant, nor is the appellant affected by any knowledge on their part, they having no such authority. (Taylor on Law of Corp. §§ 210, 211; East River Bank v. Hoyt, 41 Barb. 441; Kalamazoo Novelty Mfg. Co. v. McAllister, 36 Mich. 327; Henry v. Northern Bk., 63 Ala. 527; Tracy v. Gutthrie Co., 47 Ia. 27; 1 Rorer on Railroads [ed. 1884], 661.) Norris Morey for respondents. Corporations can be bound by implied contracts, to be deduced by inference from corporate acts, without either a vote, or deed, or writing. (2 Kent’s. Com. 291; Peterson v. Mayor, etc., 17 N. Y. 449, 453.) Parties are not confined to any particular mode of proof to-establish the authority of an agent of a corporation to do an act within the scope of its ordinary business. (Phillips v. Campbell, 43 N. Y. 271, 272; Bank of U. S. v. Dandridge, 12 Wheat. 79.) The doctrine of equitable estoppel which prevents a principal from questioning an act of his agent done in his business, and not within the scope of the agent’s authority, where the principal has not disaffirmed the act within a reasonable time after it came to his knowledge, applies to members of a corporate body as well as to persons acting in a private-capacity. (Sheldon, etc., Co. v. Eichmeyer, etc., Co., 90 N. Y. 607; Kent v. Quicksilver Mining Co., 78 id. 159, 184; N. H. &. D. Bridge Co. v. Phœnix Bank, 3 N. Y. 156; Bennett v. Buchan, 76 N. Y. 386, 390; Holden v. N. Y. & E. Bank, 72 id. 286, 293; Morawitz on Corp. §§ 78, 79, 82, 95; Bank of U. S. v. Dandridge, 12 Wheat. 64, 70.) If the person for whom the services are rendered has reason, to expect or to believe that the person expects to be paid for his labor, and does nothing to disabuse him of this expectation, but allows him to go on rendering important service for him., the law will imply a promise to pay what the services are really worth. (Wood on Master and Servant, § 95; Scott v. M. U. & W. G. R. R. Co., 86 N. Y. 200; Castle v. Lewis, 78 N. Y. 134, 135; Nixon v. T. V. R. R. Co., 7 Hare, 136.) [MAJORITY — Earl, J.] Earl, J. The corporation defendant was organized November 30, 1881, by the consolidation of certain New York and Pennsylvania railroad companies, and it entered into contract with Brown, Howard & Go., a construction company, to construct and complete the unfinished portion of its road. On the 1st of August, 1882, that ■ company entered into a contract with George H. Thompson & Go. to build the Buffalo division of the road; and on the 18th day of August, 1882, Thompson & Go. entered into a contract with the plaintiffs to - construct a portion of the Buffalo division. The two contracts were in all essentials alike, except as to the amount of work to be performed and the prices to be paid therefor, the price in the former contract for excavation being twenty-seven cents per cubic yard, and in the latter contract twenty cents per cubic yard. The plaintiffs’ contract with Thompson •& Co. and the contract of Thompson & Go. with Brown, Howard & Go., both alike required the contractors to “ construct and finish in the most substantial and workman-like manner, to the satisfaction and acceptance of the chief enigineer, etc., the graduation, etc., and such other work as may be required, etc., the said work to be finished as described in the following specifications, and agreeably to the directions from time to time ” of the engineers. • Among the specifications was the following: “ Gradation. — Under this head will be included all excavations and embankments required for the formation of of the road-bed, cutting all ditches or drains about or contiguous to the road; the foundations of culverts, bridges, walls, trestle-work and foundations of buildings ; the excavations and embankments necessary for reconstructing turnkpikes or common roads, in cases where they are destroyed or interfered with in the formation of the railroad, and all other excavations or embankments connected with or incident to the construction of said railroad.” “ Extra Work. — ¡Nor shall any claim be allowed for extra work, unless the same shall be done in pursuance of a written order from the engineer in charge, and the claim made at the first settlement after the work was executed, unless the chief engineer, at his discretion, should direct the claim, or such part as he may deem just and equitable, to be allowed.” In pursuance of their contract with Thompson & Co. the plaintiffs entered upon their work, and at a certain point upon the road they cut through a considerable elevation, and after they had substantially completed the cutting, a large amount of earth from one of the sides caved into the cutting at four different times in the months of December, 1881, and January and February, 1882, and this earth the plaintiffs excavated and removed each time. It is for the expense of this work mainly that this action was brought, the plaintiffs claiming that they did it under contract with the defendant and for its benefit. The defendant interposed to the complaint a general denial and an allegation of payment. To maintain their action, it was incumbent upon the plaintiffs to show, by satisfactory evidence, that they did the work for the defendant under an express or implied contract with it; and this, from a careful perusal of the evidence, we think they failed to show. The contract between the defendant and Brown, Howard & Co. was not produced, and precisely what its terms were we do not know. But it appears beyond question that. Brown, Howard & Co. were under some sort of contract with the defendant to construct and complete its road. All the work was, in a general way, under their supervision, and they hired and paid all the engineers and entered into sub-contracts for the performance of the work. The proof on the part of the plaintiffs tends to show that they did this work for which the action was brought upon the request of the engineers in charge of the work, and under an agreement made with them by which such work was taken outside of their contract with Thompson & Co., and was to be paid for at •cost and ten per cent added. We fail to find any evidence in the case tending legitimately to show that these engineers had .any authority whatever from the defendant to bind it for this work, or on its behalf to enter into any contract with reference thereto. It is not pretended that they were clothed with any special authority so to do ; and it cannot be inferred or presumed that while they were in the employment of Brown, Howard & Co., they had any authority to bind the defendant by any contract which they should make. It is true that we do not know the precise relations which existed between Brown, Howard & Co. and the defendant, except that in a general way they were a construction company -engaged under some contract with- the defendant in the ■construction of its road. It cannot be supposed that a construction company was organized, not as contractors to build the defendant’s road, but as agents to take charge of and manage its construction for the defendant, with power to bind it by their contracts and engagements. Such a relation between the construction company and the defendant would be quite extraordinary and, we think,, unusual. The plaintiffs coming into court alleging that they had done work for the defendant under an agreement with it had the burden of establishing their allegations, and if there is any defect or obscurity in the proof it is their misfortune. We know of no rule of law by which it can be held that that proof is supplied because the ■defendant did not produce the contract between it and Brown, Howard & Co. It was open to the plaintiffs to take the evidence of Brown, Howard & Co., or of any of them, and thus obtain some knowledge of their contract with, the defendant; and it was incumbent Upon them to show that the relations between that company and the defendant were such as to make the defendant responsible for the acts of the company’s engineers. ISTor is there any sufficient proof that the defendant in any way ratified the agreement alleged to have been made by the plaintiffs with the engineers. It is not shown that it had any knowledge of the alleged agreement made by these engineers, or that it knew that the earth in question had been removed from the cut on its account and outside of the contracts which had been made for the construction of the road. It is true that after the road was completed it took possession thereof as it had the right to do, and that in that way it had the benefit of the work done by the plaintiffs; but that was no ratification of the contracts made by the engineers and did not make it responsible for such work unless it in some way agreed to pay therefor. It is not needful or profitable for us here to comment upon all the evidence with the view of showing how we reach our conclusion, as upon a new trial further evidence may be given and the deficiency which we think fatal may be supplied. But we will go still further. If it be assumed that Brown, Howard & Co., in some general and undefined way, could be treated as the general agents of the defendant for the construction of the road so that it would be bound by their contracts with Thompson & Co., we should still reach the same conclusion. In that event the defendant would be responsible to Thompson & Go. for all the work embraced within their contract according to the terms thereof and in no other way. Under that contract Thompson & Co. were bound to make “ all the excavations or embankments connected with or incident to the construction of said raih'oad ” on the Buffalo division thereof, and that, we think, included all the excavation which might be necessary until the road was turned over to the defendant as a completed road. If, after a cutting was made the embankment on either side caved in, the contractors would be obliged to excavate and remove the earth at the contract prices. The plain purpose of the contract was to have the road completed and turned over to the defendant in a finished state. And it may well be doubted whether such an excavation would even be extra work. But if extra work, not covered by the precise terms of the contract, then it is provided in the contract that no claim should be allowed for such work “unless the same should be done in pursuance of a written order from the engineer in charge, and the claim made at the first settlement after the work was executed.” This was one of the terms of the contract and we are unahle to perceive that the engineers had any power or authority to alter or change it. It was inserted in the contract to protect the defendant from claims for extra work which might he based upon oral evidence, after the work was completed and when it might be difficult to prove the facts in relation thereto. If the engineers in charge had an unlimited authority to change the contract at their will, and to make special agreements for work fairly embraced therein, then the defendant had very little protection from the reduction of their contract to writing. If these engineers were the agents of the defendant, they were its agents with special powers, simply to do the engineering work and to superintend and direct as to the execution of the contract. But they had no power to alter or vary the terms of the contract or to create obligations binding upon the defendant not embraced in the contract. For these conclusions the cases of Homersham v. Wolverhampton Water-works Company (6 Exch. 137); Thayer v. Vermont Central Railroad Company (24 Vt. 440); Vanderwerker v. Vermont Central Railroad Company (27 id. 125, 130); Herrick v. Belknap’s Estate (27 id. 673); Redfield on the law of Railroads, (Vol. 1 [5th ed.] pp. 431, 433) are sufficient authority. In Redfield the learned author says: “Where the contract contains express provisions that no allowance shall be made against the company for extra work, unless directed in writing under the hand of the engineer, or some other person designated, or unless some other requisite formality be complied with, the party who performs extra work, upon the assurance of any agent of the company that it will be allowed by the company; without the requisite formality, must look to the agent for compensation and cannot recover of the company either at law or in equity.” We are, therefore, of opinion that the judgment should be reversed and a new trial granted, costs to abide event. All concur. Judgment reversed.