Brightman v. Bates

• Decision Date: 03 January 1900
• Parties: BRIGHTMAN SAME v. BATES. SAME v. DWIGHT.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

175 Mass. 105

55 N.E. 809

BRIGHTMAN SAME v. BATES. SAME v. DWIGHT.

Supreme Judicial Court of Massachusetts, Bristol.

January 3, 1900

COUNSEL

H. M. Knowlton and M. G. B. Swift, for plaintiff.

L. Le B. Holmes and A. B. Collins, for defendants.

OPINION

HOLMES C.J.

These are actions upon a covenant executed by the defendants. The covenant recites that 1,360 shares of the stock of the Union Street-Railway Company in New Bedford have been, or are about to be, purchased by a syndicate, under an agreement of September 4, 1894; that the plaintiff has been largely instrumental in organizing the syndicate; and that 'he considers that for his services therein, in case the syndicate is formed, and the aforesaid shares purchased, he should receive for his compensation' a certain amount of stock. These recitals are followed by several covenants on the part of the defendants, and one other to give the plaintiff, in stock of the company, at $169 a share, a commission of $4 a share 'upon the number of shares we sell to said syndicate, less the number of shares we have severally subscribed as members of said syndicate,' and certain other deductions in case the compensation was not got from the syndicate. The judge before whom the case was tried found for the plaintiff, and the case is here upon a report of requests for rulings, which in various forms raise the question whether such a finding can be justified in law.

Before going further, we will dispose of one or two objections which were not the main ground of defense, and were not much pressed. The covenant was delivered to the plaintiff, and properly might be found, if not ruled, to be made to him. Beyond acceptance of the delivery to him, no other acceptance or notice of acceptance was necessary. The contract is intelligible. We cannot say that the judge was not warranted in finding that whatever efforts to get the compensation from the syndicate were necessary before coming on the defendants had been made. The 1,360 shares were subscribed for, and although some of the subscriptions were upon stipulations, that does not affect the case, because all the stock was taken and paid for before the action was brought. We pass to the principal defense.

The syndicate referred to was formed under another written agreement, whereby the subscribers recite their desire to become members of it, to the end that control of the railway company and advantage to them may be gained, agree to take the shares set against their names at $169 a share, and further agree after the purchase to enter into a pooling contract, whereby all the syndicate stock 'shall be voted at each annual meeting for a period of not less than three years for such board of directors as shall be named' by a committee of five of the subscribers, with power to a majority of them to fill any vacancy in the committee. It is said that this agreement was illegal, and that the covenant sued upon was so directly aimed at helping to bring the unlawful arrangement about that it must fall with the other. Barnes v. Smith, 159 Mass. 344, 347, 34 N.E. 403; Gibbs v. Gas Co., 130 U.S. 396, 9 S.Ct. 553, 32 L.Ed. 979.

With regard to this contention it is to be observed, in the first place, that the syndicate agreement is dated September 4th and the covenant is dated September 22d, and, as we have said, recites that the shares 'have been or are about to be purchased'; that is, the sale is treated as already certain. Although one or two subscriptions seem to have been signed a day or two later, we do not perceive why the judge may not have found that the services all had been rendered at the date of the coverant, and, in view of the defendants' testimony that they never heard of those services before September 22d, why he may not have found that the covenant was a voluntary one, the legality of which would not be affected by the nature of the executed transaction which happened to furnish a motive for making it. Gray v. Mathias, 5 Ves. 286.

Without deciding whether, if the covenant was dependent upon the rendering of further services, it was so closely connected with the syndicate agreement as to fall if the latter cannot be sustained, we pass to the question whether the latter agreement is unlawful on its face, bearing in mind that unless it is unlawful on its face, it has the advantage of a finding in favor of the plaintiff. In dealing with this question it does not need to be said that combination of common interests is necessary, and constantly is taking place. It is as legitimate for a majority of stockholders to combine as for other people. The fact that they expect 'gain and advantage' (in the words of the syndicate agreement) to accrue to them does not make the combination unlawful. That expectation and intent would have that effect only if the gain was to be at the expense of the corporation, or in some way was intended to work a wrong to the other...