Upon a special contract executed on the part of the plaintiff,
indebitatus assumpsit will lie for the price.
A simple contract is not merged in a sealed instrument which
merely recognizes the debt and fixes the mode of ascertaining its
amount.
Upon general counts, a special agreement executed may be given
in evidence.
The recital of a prior in a later agreement, after it has been
executed, does not extinguish the former.
Wherever a corporation aggregate is acting within the scope of
the legitimate purposes of its institution, all parol contracts
made by its authorized agents are express promises of the
corporation, and all duties imposed on them by law and all benefits
conferred at their request raise implied promises for the
enforcement of which an action lies.
The technical doctrine that a corporation could not contract
except under its seal -- or in other words, could not make a
promise -- if it ever had been fully settled, must have been
productive of great mischief. Indeed, as soon as the doctrine was
established that its regularly appointed agents could contract in
their name without seal, it was impossible to support it, for
otherwise the party who trusted it must have been without remedy
against the corporation. Accordingly it would seem to be a sound
rule that whenever a corporation is acting within the scope of the
legitimate purposes of the institution, all parol contracts made by
its authorized agents are express promises of the corporation; and
all duties imposed on them by law, and all benefits conferred at
their request raise implied promises, for the enforcement of which
an action will lie.
Error to the Circuit Court for the District of Columbia in an
action of
indebitatus assumpsit brought by the defendant
in error against the president, directors, and company of the Bank
of Columbia in their corporate capacity. There were four counts
only in the declaration.
1st,
indebitatus assumpsit for matters properly
chargeable in account; 2d,
indebitatus assumpsit for work
and labor done; 3d,
quantum merit, and 4th,
insimul
computassent.
The defendant pleaded
nonassumpsit and a tender.
On the trial below, the defendant took three bills of
exceptions.
The 1st stated that the plaintiff read in evidence a sealed
agreement, dated 10 December, 1807, between Patterson and a duly
authorized committee of the directors of the bank under their
private seals. It recites that a difference of opinion had arisen
between
Page 11 U. S. 300
Patterson and the committee for building the new banking house
as to certain work extra of an agreement made between Patterson and
the said committee in 1804, and thereto annexed, whereupon it was
agreed that all the work done by Patterson should be measured and
valued by two persons therein mentioned according to certain rates,
called in Georgetown old prices, and the sum certified by them
should be taken by both parties, in their settlement, as the amount
thereof. It was also thereby agreed that the outhouses, respecting
which there had been no specific agreement, should be measured and
valued by the same persons in the same manner. The agreement of
1804 referred to in and annexed to the agreement of 1807 was also
offered in evidence by the plaintiff, and states that Patterson had
agreed with the committee to do all the carpenter's work required,
agreeably to the plan of the new bank, and states particularly the
manner in which it was to be done, and that "in consideration of
the work being done" as stated, the committee agreed to pay
Patterson $3,625 as full consideration, and that if, when the work
should be finished, the committee should be of opinion that that
sum was too much, Patterson agreed to have the work measured, at
the expense of the bank, by two persons mutually appointed, who
should take the old prices as the standard, and in case the bill of
measurement did not amount to the sum of $3,625, Patterson agreed
to take the amount of measurement for full satisfaction. The
plaintiff then read in evidence a paper of particulars of the work,
certified by the persons named in the agreement of 1807. The
defendants offered in evidence the plan of the building, and that
it was built principally according to that plan, and the agreement,
and that any work other than that stated in the plan and agreement
was to be charged separately as extra work, and that it was so
charged by Patterson, before 10 December, 1807, the date of the 2d
agreement, who presented the account (so charged) to the
defendants, claiming the amount of the same, and claiming also for
the work done under the agreement of 1804, the sum of $3,625, and
proved that while the work was going on, the defendants paid
Patterson sundry large sums of money on account thereof.
Page 11 U. S. 301
The court was thereupon prayed by the defendants to instruct the
jury that if it believed that the agreement of 1804 was assented to
by Patterson and the committee as binding between them, and that
the work therein contracted for was done by Patterson, and that the
sum of $3,625 therein mentioned was claimed by him on account of
the same, then the plaintiff could recover for no such work, but
could only recover for the work done extra of the said agreement,
which instruction the court refused to give.
Page 11 U. S. 302
STORY J. delivered the opinion of the Court as follows:
Several exceptions have been taken to the opinion of the court
below, which will be considered in the order in which the
objections arising out of them have been presented to us. We are
sorry to say that the practice of filing numerous bills of
exceptions is very inconvenient,
Page 11 U. S. 303
for all the points of law might be brought before the Court in a
single bill, with a simplicity, which would relieve the bar and the
bench from every unnecessary embarrassment.
As the argument on the first exception has proceeded upon the
ground that the agreement of 1804 was completely executed and
performed, and the objection relates only to a supposed mistake in
the form of the declaration, it will at present be considered in
this view. And we take it to be incontrovertibly settled that
indebitatus assumpsit will lie to recover the stipulated
price due on a special contract, nor under seal, where the contract
has been completely executed, and that it is not in such case
necessary to declare upon the special agreement.
Gordon v.
Martin, Fitzgibbon 303;
Musson v. Price, 4 East 147;
Cook v. Munstone, 4 Bos. & Pul. 351;
Clarke v.
Gray, 6 East. 564, 569; 2 Sand. 350, note 2.
In the case before the Court we have no doubt that
indebitatus assumpsit was a proper form of action to
recover as well for the work done under the contract of 1804 as for
the extra work. It may therefore safely be admitted (as is
contended by the plaintiff in error) that where there is a special
agreement for building a house, and some alterations or additions
are made, the special agreement shall notwithstanding be considered
as subsisting so far as it can be traced.
Pepper v.
Burland, Peake 103. The first exception, therefore, wholly
fails.
Under the second exception, the plaintiff in error has made
various objections.
1. The first is that though a promise would be implied by law
for the extra work against the corporation, yet that such promise
was extinguished by operation of law by the provisions of the
sealed contract of 1807. It is undoubtedly true that a security
under seal extinguishes a simple contract debt, because it is of a
higher nature. Cro.Car. 415; Raym. 449; 2 Jones 158; 1 Burr 9; 5
Com.Dig. tit. Pleader 2, G. 12. But this effect never has been
attributed to a sealed instrument which merely recognizes an
existing debt and provides a mode to ascertain its amount and
liquidation. At most, the sealed agreement of 1807 could not be
Page 11 U. S. 304
construed to extend beyond this import. In no sense could it be
considered as a higher security for the money originally due. This
objection therefore cannot prevail even supposing that the
agreement were the deed of the corporation.
2. A second objection is that the special agreements connected
with the certificates of admeasurement were inadmissible evidence
under the general counts, and could be admissible only under counts
framed on the special agreements.
To this objection an answer has already in part been given. And
we would further observe that if the agreements connected with the
admeasurements were the means of ascertaining the value of the
work, the evidence was pertinent under every count. 2 Saund. 122,
note 2. And if the certificates of admeasurement were of the nature
of an award, they were clearly admissible under the
insimul
computassent count.
Keen. v. Batshore, 1 Esp.
194.
3. Another objection is that as the agreement of 1807 is sealed,
and is connected by reference with the prior agreement, they are to
be construed as one sealed instrument, and assumpsit will not lie
upon an instrument under seal.
The foundation of this objection utterly fails, for the
agreement is not under the seal of the corporation, but the seals
of the committee, and if it were otherwise it is too plain for
argument that the original agreement was not extinguished, but
referred to, as a subsisting agreement. It is quite impossible to
contend that the mere recital of a prior in a later agreement,
after it has been executed, extinguishes the former.
Two other objections are made under this exception, but as they
are answered in the preceding observations, it is unnecessary to
notice them further.
Under the third exception, the only objections relied on are in
principle the same as the objections urged under the former
exceptions, and they admit the same answers.
Page 11 U. S. 305
The case has thus been considered all along as though the
contracts were made between the plaintiff's administrator and the
Corporation, and indeed some points in the argument have proceeded
upon this ground. It is very clear, however, that neither the first
nor second agreements were made by the corporation, but by the
committee in its own name. In consideration of the work being done,
the committee, and not the corporation, personally and expressly
agree to pay the stipulated price. A question has therefore
occurred how far the corporation was capable of contracting except
under their corporate seal, and if it were capable, as no special
agreement is found in the case, how far the facts proved show an
express or an implied contract on the part of the corporation.
Anciently it seems to have been held that corporations could not
do anything without deed. 13 H. 8, 12; 4 H. 7, 6; 7 H. 7, 9.
Afterwards the rule seems to have been relaxed, and they were,
for convenience's sake, permitted to act in ordinary matters
without deed, as to retain a servant, cook, or butler. Plow. 91b;
2. Sand. 305; and gradually this relaxation widened to embrace
other objects. Bro. Corp. 51; 3. Salk. 191; 3 Lev. 107; Moore 512.
At length it seems to have been established that though it could
not contract directly except under its corporate seal, yet it might
by mere vote or other corporate act, not under its corporate seal,
appoint an agent whose acts and contracts, within the scope of his
authority, would be binding on the corporation.
Rex v.
Bigg, 3. P.Wms. 419, and courts of equity, in this respect
seeming to follow the law, have decreed a specific performance of
an agreement made by a major part of a corporation, and entered in
the corporation books, although not under the corporate seal, 1
Fonb. 305; Phil. ed. note (o). The sole ground upon which such an
agreement can be enforced, must be the capacity of the corporation,
to make an unsealed contract.
As it is conceded in the present case that the committee were
fully authorized to make agreements, there could then be no doubt
that a contract made by them in the name of the Corporation, and
not in their own names,
Page 11 U. S. 306
would have been binding on the corporation. As, however, the
committee did not so contract, if the principles of law on this
subject stopped here, there would be no remedy for the plaintiff
except against the committee.
The technical doctrine that a corporation could not contract
except under its seal, or in other words could not make a promise,
if it ever had been fully settled, must have been productive of
great mischiefs. Indeed, as soon as the doctrine was established
that its regularly appointed agent could contract in their name
without seal, it was impossible to support it, for otherwise the
party who trusted such contract would be without remedy against the
corporation. Accordingly it would seem to be a sound rule of law
that wherever a corporation is acting within the scope of the
legitimate purposes of its institution, all parol contracts made by
its authorized agents are express promises of the corporation, and
all duties imposed on them by law, and all benefits conferred at
their request, raise implied promises for the enforcement of which
an action may well lie. And it seems to the Court that adjudged
cases fully support the position.
Bank of England v.
Moffat, 3. Bro.Ch. 262;
Rex. v. Bank of England,
Dong. 524, and note
ibidem; Gray v. Portland
Bank, 3 Mass. 364;
Worcester Turnpike Corporation v.
Willard, 5 Mass. 80;
Gilmore v. Pope, 5 Mass. 491;
Andover & Medford Turnpike Corporation v. Gould, 6
Mass. 40.
In the case before the Court these principles assume a peculiar
importance. The act incorporating the Bank of Columbia (Act of
Maryland, 1793, ch. 30), contains no express provision authorizing
the corporation to make contracts. And it follows that upon
principles of the common law, it might contract under its corporate
seal. No power is directly given to issue notes not under seal. The
corporation is made capable to have, purchase, receive, enjoy, and
retain lands, tenements, hereditaments, goods, chattels, and
effects of what kind, nature, or quality soever, and the same to
sell, grant, demise, alien, or dispose of, and the board of
directors is authorized to determine the manner of doing business
and the rules and forms to be pursued; to appoint and pay the
various officers and dispose of
Page 11 U. S. 307
the money or credit of the bank in the common course of banking
for the interest and benefit of the proprietors. Unless, therefore,
a corporation not expressly authorized may make a promise, it might
be a serious question how far the bank notes of this bank were
legally binding upon the corporation, and how far a depositor in
the bank could possess a legal remedy for his property confided to
the good faith of the corporation. In respect to insurance
companies also, it would be a difficult question to decide whether
the law would enable a party to recover back a premium the
consideration of which had totally failed. Public policy,
therefore, as well as law, in the judgment of the Court, fully
justifies the doctrine which we have endeavored to establish.
Indeed the opposite doctrine, if it were yielded to, is so purely
technical that it could answer no salutary purpose and would almost
universally contravene the public convenience. Where authorities do
not irresistibly require an acquiescence in such technical
niceties, the Court feels no disposition to extend their
influence.
Let us now consider what is the evidence in this case from which
the jury might legally infer an express or an implied promise of
the corporation. The contracts were for the exclusive use and
benefit of the corporation, and made by their agents for purposes
authorized by their charter. The corporation proceeds on the faith
of those contracts to pay money from time to time to the
plaintiff's intestate. Although, then, an action might have laid
against the committee personally, upon its express contract, yet as
the whole benefit resulted to the corporation, it seems to the
Court that from this evidence the jury might legally infer that the
corporation had adopted the contracts of the committee, and had
voted to pay the whole sum which should become due under the
contracts, and that the plaintiff's intestate had accepted its
engagement. As to the extra work, respecting which there was no
specific agreement, the evidence was yet more strong to bind the
corporation.
In every way of considering the case, it appears to the Court
that there was no error in the court below and that the judgment
ought to be
Affirmed.
