Low v. Connecticut & Passumpsic Rivers Railroad

45 N.H. 370
CourtSupreme Court of New Hampshire
DecidedJuly 15, 1864
StatusPublished
Cited by3 cases

This text of 45 N.H. 370 (Low v. Connecticut & Passumpsic Rivers Railroad) is published on Counsel Stack Legal Research, covering Supreme Court of New Hampshire primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Low v. Connecticut & Passumpsic Rivers Railroad, 45 N.H. 370 (N.H. 1864).

Opinion

Bellows, J.

The great question is whether the plaintiff is entitled to recover of the corporation in any form for services rendered by him antecedent to its organization, but which were necessary to enable it to complete that organization j and if so whether the action of assumpsit can be maintained.

In considering the first question it will be assumed for the present that the services were necessary, that they were rendered at the request of one or more of the original corporators, or of those who were associated with them, and that the corporation accepted those services after its organization, and enjoyed the benefit of them. Under such circumstances, we are inclined to the opinion that it would become the duty of the corporation to pay for such services; and that in some form this duty could be enforced.

Questions of a similar character have repeatedly arisen in England where the projectors or promoters of railway enterprises, who were about to solicit acts of incorporation, had agreed with the proprietors of land over which such railways were destined to pass, and who were prepared to oppose such acts of incorporation, to pay certain sums of money for the land to be taken, and for residential damages, in consideration that they should withdraw their opposition. In such cases where opposition was so withdrawn, and the charters obtained, and the companies organized, it has been repeatedly held that a duty was imposed upon the corporation to perform the contract of the projectors, upon the principle, it would seem, that a corporation is in equity, bound by the contracts of its projectors preliminary to its incorporation when it afterwards taires the benefit of such contract. In Preston v. Liverpool, Manchester & Newcastle upon Tyne Railway Co. 7 Eng. Law & Eq. 124, the Vice Chancellor lays down the doctrine thus : "Where the projectors of a company enter into contracts in behalf of a body not existing at the time, but to be called into existence afterwards, then if the body for whom the projectors assumed to act, does come into existence, it cannot take the benefit of the contract without performing that part of it which the projectors undertook that it should perform.”

This was a case where the projectors agreed to pay the complainant £5000, for the land to be taken for the railway, and residential damages, and the plaintiff therefore assented that his land should so be taken. This agreement was in writing between the plaintiff and the executive directors of the Lancashire & North Yorkshire Railway Company,which [376]*376was afterwards united with another and rival enterprise, under the name of the defendant corporation, and the two companies agreed to adopt the contract with the plaintiff. Upon a bill in equity the court held that the plaintiff was entitled to relief against the defendants, although the construction of the contract was referred to a court of law, for an opinion.

The same general doctrine is recognized in Gooday v. Colchester & Stour Valley Railway Company, 15 Eng. Law & Eq. 596; so is Edwards v. Grand Junction Railway, 1 Mylne & Cr. 650; and Stanley v. Chester & Birkenhead Railway Company, 9 Simons, 264; affirmed by the Chancellor in 3 Mylne & Cr. 793. These cases are all suits in equity and the doctrine of these is recognized in Redfield on Railways, 638, sec. 5; and some of them quoted and considered in sec. 7, p. 641, and seq.

In the application of this doctrine to cases of agreements to pay money in consideration of withdrawing opposition to a charter, there might be serious objections, as suggested by Judge Redfield in sec. 15 of his work on railways, as being contrary to public policy; but in respect to agreements not open to such objections, — that is agreements that would bind parties in existence and capable of contracting, — we think the principle is sound and well sustained by authority. If, then, this be a sound principle in respect to agreements made before the corporate existence, commenced, it must surely apply with increased force, to agreements made after the charter, and before the organization, of the corporation.

Indeed, in the American courts, agreements made with corporations after their charter, but before organization, suchas agreements to take and pay for shares in the capital stock, have been repeatedly enforced, and even by suits at law. Such are the cases of Chester Glass Company v. Dewey, 16 Mass. 94, and Salem Mill Dam Company v. Ropes, 6 Pick. 23, where subscribers for stock before organization were held liable for assessments to pay preliminary expenses incurred in obtaining the act of incorporation, and ascertaining the practicability of the enterprise; but not for the general objects of the corporation until all the shares were subscribed for. So is Kennebec & Portland R. R. v. Palmer, 34 Maine Rep. 365; and Penobscot Railroad Company v. Dummer, 40 Maine Rep. 172. The same principle is recognized in Phillips Limerick Academy v. Davis, 11 Mass. 116, and Wallindford Manufacturing Company v. Fox, 12 Vt. 304; Greaves v. Turnpike Company, 1 Sneed’s Tenn. Rep. 491; Lake Ontario R. R. Company v. Mason, 16 N. Y. (2 Smith,) 451; Tonica &c. R. R. Company v. McNeeley, 21 Ill. 71; Vermont Central R. R. v. Clayes, 21 Vt. 30; Angell & Ames on Corporations, 495, and cases cited.

These cases go upon the ground that where such subscriber is received and acts as a member of the corporation, after the organization, and as the owner of the shares agreed to be taken, he is liable on his subscription though made before the organization was effected; for, having taken the benefit of his subscription, he must also take the burthen along with it. This, as it will be seen, is simply the converse of the doctrine [377]*377which binds the corporation by a contract made by the projectors, and of which the corporation afterwards takes the benefit. In a large proportion of cases the subscriptions for stock necessarily precede the organization of the corporation and the choice of officers,- but upon the subscribers being received and acting as members, they would be bound by such subscriptions.

The question, then, arises whether a suit at law can be maintained to recover of the corporation the value of these services. As before observed, the English cases referred to are bills in equity, and the reasoning of the courts tends to exclude the idea of suits at law. See especially Edwards v. Grand Junction Railway, 1 Mylne & Cr. 650. Where, however, the charter provided that the cost of obtaining it should be paid out of the first sums subscribed,, it was held that debt would lie against the corporation by an attorney who had solicited- and obtained the charter, to recover for the costs, charges and expenses. Tilson & al. v. Warwick Gas Light Company, 4 B. & C. 962. See Chitty on Con. 250, and cases cited.

In the case above' cited one count of the declaration was special, setting out the statute, and there were other counts for work and labor, and the court were inclined to hold that a recovery might be had on either count. In Hall v. Vt. & Mass. R. Company, 28 Vt.

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Bluebook (online)
45 N.H. 370, Counsel Stack Legal Research, https://law.counselstack.com/opinion/low-v-connecticut-passumpsic-rivers-railroad-nh-1864.