Allen & Currey Mfg. Co. v. Shreveport Waterworks Co

• Citation: 113 La. 1091,37 So. 980
• Decision Date: 16 January 1905
• Docket Number: 15,240
• Parties: ALLEN & CURREY MFG. CO., Limited, v. SHREVEPORT WATERWORKS CO
• Court: Supreme Court of Louisiana

37 So. 980

113 La. 1091

ALLEN & CURREY MFG. CO., Limited, v. SHREVEPORT WATERWORKS CO

No. 15,240

Supreme Court of Louisiana

January 16, 1905

Appeal fro First Judicial District Court, Parish of Caddo; Thomas Fletcher Bell, Judge.

Action by the Allen & Currey Manufacturing Company, Limited, against the Shreveport Waterworks Company. Judgment for plaintiff and defendant appeals. Reversed.

Farrar Jonas & Kruttschnitt and Wise, Randolph & Randall, for appellant.

Thatcher & Welsh and Alexander & Wilkinson (Fenner, Henderson &amp Fenner, of counsel), for appellee.

PROVOSTY J. LAND, J., recused, having sat in the case below.

OPINION

PROVOSTY, J.

The plaintiffs' lumber manufactory in the city of Shreveport was destroyed by fire, and plaintiffs bring this suit in damages for the loss against the Shreveport Waterworks Company, a private corporation having the waterworks franchise of the city of Shreveport.

The complaint is that in consequence of the neglect and failure of the plaintiff company to keep its hydrants in good order, as it was by its contract expressly obligated to do, the hydrant to which the firemen first attached their hose could not be opened, and that, but for the time lost in vain efforts to open this hydrant, and in detaching the hose from the same and attaching them to the next nearest hydrant, the fire would have been put out, and the loss averted. The trouble with the hydrant was that the shank designed to open the valve turned in its socket, instead of turning the valve; it having become round; its edges or corners by which it was anchored to the valve having disappeared. Plaintiffs contend that these edges or corners had been worn away by use or eaten by rust. Defendant contends that they were wrenched off by a too sudden application of force by the excited firemen, and that, moreover, even if the hydrants had worked to perfection, the fire could not have been put out, it having already attained too much headway. Another contention of defendant is that its contract with regard to the hydrants and keeping them in order was a lease, and its obligations those of a lessor, and that a lessor is not liable in damages for the nonrepair of the thing leased, until he has been put in default with reference thereto, and that there is in this case no allegation, and still less proof, of such putting in default.

But all these questions will not have to be gone into, since the court agrees with defendant on another defense, which in logical order comes up first, and which disposes of the case. It is that plaintiffs are not privy to the contract sued on, and therefore have no action on it. In logical order, that defense must be considered first, for, if plaintiffs have no action on the contract, they have no standing to discuss its nature or its breach.

As a matter of course, plaintiffs do not pretend that a person not privy to a contract may have an action upon it, but they claim that they are privy to the contract between the city and the defendant company.

A person can become a party to a contract in only one of two ways: First, by entering into it himself, either directly or through an agent; or, secondly, by accepting a stipulation made in his favor by the contractants, he remaining a third person and stranger to it until by accepting the stipulation he becomes a party. Such a stipulation is called in the civil law a "stipulation pour autrui"; "autrui" meaning some one else, or a third person; that is to say, a person not party to the contract.

These two ways of becoming a party to a contract are necessarily exclusive of each other, since a person cannot be a party to a contract, either directly or through an agent, and at the same time be autrui, or a third person or stranger to it. If we understand the argument of the learned counsel for plaintiffs rightly, however, their contention is that plaintiffs became parties to this contract in both ways; that is to say, that they are parties because the city entered into the contract as their agent -- that is to say, as the agent of the inhabitants and corporators, among whom they are numbered -- and also because the stipulation of the contract was in their favor, as third persons, and by the present suit they have accepted it. The two contentions were blended in learned counsel's argument, but for clear discussion they must be dealt with separately.

It is as principal that the city entered into the contract, so far as appears from the face of the contract. But the learned counsel argue that the authority given to the city by its charter to provide the means and make regulations for preventing and extinguishing conflagrations, under which the contract was entered into, was thus given for the benefit of the inhabitants or corporators of the city, and to be exercised by the city in her private character, as their representative or agent, and not in her public or governmental character, as the representative or agent of the state or public at large; that these inhabitants or corporators, as the prospective consumers of by far the greater part of the water to be furnished under the contract, and as the owners of by far the greater part of the property to be protected against fire, and as the taxpayers out of whose pockets the payments under the contract would have to come, were, with the defendant company, the main parties in interest (the distinctive corporate interest of the city having been insignificant by comparison), and that therefore they (the inhabitants or corporators, and plaintiffs among them) were the principals in the contract, and the city merely their agent for entering into it.

This argument does not take sufficient account of the separateness between the municipal corporation and its corporators. Whether the city acted in her governmental or in her private character, still she acted as a corporation, and a corporation does not hold any mandate from its corporators to represent them individually in making contracts. Whether there is, or not, under general jurisprudence, any foundation for the contention that it does, there can be absolutely none whatever under the regime of our Civil Code. The provisions of our Code bearing upon the legal relations between the corporation and its corporators are the following:

"Art. 427. A corporation is an intellectual body created by law, composed of individuals united under a common name, the members of which succeed each other, so that the body continues always the same, notwithstanding the change of the individuals which compose it, and which, for certain purposes, is considered a natural person."

"Art. 433. Corporations legally established are substituted for persons, and their union, which renders common to all those who compose them, their interests, their rights and their privileges, is the reason why they are considered one single whole. Hence it follows that they may possess an estate, and have a common treasury for the purpose of depositing their money; that they are capable of receiving legacies and donations; that they may make valid contracts, obligate others and obligate themselves toward others; exercise the rights which belong to them; manage their own affairs; appear in courts of justice, and even enact statutes and regulations for their own government, provided that such statutes and regulations be not contrary to the laws of the political society of which they are members."

"Art. 435. Corporations are intellectual beings, different and distinct from all the persons who compose them.

" Art. 436. The estate and rights of a corporation belong so completely to the body that none of the individuals who compose it can dispose of any part of them," etc.

"Art. 437. According to the above rule, what is due to a corporation is not due to any of the individuals who compose it, and vice versa," etc.

Under these provisions, the corporation and its corporators are distinct, separate, different persons -- as much so, legally speaking, as ordinary persons, and with no more authority to act as agents for each other than ordinary persons have. A departure from this rule has been permitted ex necessitate in certain cases of a highly exceptional character, where the corporator has been allowed to champion the rights of the corporation, but never has the corporation been permitted to champion the individual rights of the corporators.

Doubtless appreciating the strength of this legal situation, the learned counsel seek to escape from it by qualifying the alleged agency of the city. "The inhabitants," they say, "if not technically, were substantially, parties to the contract, because they constituted the corporation, which, in making the contract, acted not only for their benefit, but as their agent." Waiving academic discussion of the distinction here attempted to be drawn between a technical and substantial agency, and bringing the matter at once to the test of a concrete case, we will say that this contract was a commutative contract, into which no agent could enter, unless empowered to bind his principal to something, and that counsel will not gainsay that the city of Shreveport was without authority whatever to bind its inhabitants individually to anything by this contract. She was not, then, their agent for entering into it. It is simply impossible so to constitute an agent that, while having no authority to bind his principal to anything, he may enter into a commutative contract for him -- may stipulate onerous obligations in his favor, but none in return against him.

Another test is this: By ratification, any contract entered into by an agent or by a negotiorum gestor becomes absolutely that of the principal. The agent disappears, and the principal remains in the contract. And...