Burton v. Bay State Gas Co. of Delaware

• Decision Date: 22 June 1911
• Docket Number: 919.
• Parties: BURTON v. BAY STATE GAS CO. OF DELAWARE.
• Court: U.S. Court of Appeals — First Circuit

188 F. 161

BURTON v. BAY STATE GAS CO. OF DELAWARE.

No. 919.

United States Court of Appeals, First Circuit.

June 22, 1911

W. K Barton, for appellant.

Homer Albers (Orvil W. Smith, on the brief), for appellee.

Before COLT, Circuit Judge, and ALDRICH and BROWN, District Judges.

BROWN District Judge.

The appellant is executor of the will of the late Parker C Chandler, Esquire, formerly counsel for the appellee. The executor appeals from a decree of the Circuit Court to the effect that a contract between the Bay State Gas Company of Delaware and said Chandler, whereby said Chandler was employed as general counsel at $5,000 a year, with an allowance of $3,000 a year for expenses, was terminated by receivership proceedings, and was not in force after July 1 1903.

The executor contends that this contract was continuously in force during the period from April 15, 1903, to December 26 1907 (when it was terminated by notice of the election of a successor), and that for this entire period compensation is due at the rate agreed.

The Circuit Court allowed the claim for services and expenses to July 1, 1903, and disallowed the claim for the period thereafter.

The principal question upon this appeal is whether after July 1, 1903, there was still in force a contract for the services of Mr. Chandler as general counsel, at the above rate of compensation.

At a meeting of the board of directors of the appellee on November 18, 1902, Mr. Chandler was elected 'as general counsel for the company,' and he was paid at the above-named rate up to April 15, 1903. The term for which he was appointed was not specifically named.

The appellant contends:

'The employment of Mr. Chandler as general counsel specified no term of service and was for an indefinite period.'

For our present purposes this contention may be accepted. Whether the appointment was for an indefinite period, or, in view of former dealings, for the period of a year unless sooner terminated at the will of either party, or for the entire period of a year, we need not discuss.

The appellant has made no claim on quantum meruit or for breach of a contract for a year's services, but has deliberately chosen his ground.

Having established the existence of a contractual relation between the parties, which was recognized by the Gas Company in its payment of April 15, 1903, and in the decree of the Circuit Court by the allowance of the claim to July 1, 1903, the burden is upon the appellant to show that this relation continued after July 1, 1903. The Circuit Court found that it was terminated by the appointment of a receiver.

A receiver for the company was appointed May 26, 1903, in the district of Delaware. On June 8, 1903, an ancillary receiver was appointed in the district of Massachusetts, and on July 1, 1903, an ancillary receiver was appointed in the Southern district of New York.

It is conceded by the appellant that Mr. Chandler's contract with the company could be terminated at will either by himself or by the company. In other words, the termination of the contract by the voluntary act of the company would have impaired no obligation and destroyed no right vested in Mr. Chandler.

The decrees in this district and in the Southern district of New York were assented to by Mr. Chandler as counsel for the appellee, the Gas Company.

Furthermore, it is apparent that, if through proceedings in equity and through a receivership the corporation was involuntarily deprived of its powers to make further contracts or to deal further with its property, a decree to this effect would impair no right of Mr. Chandler. A contract at will could subsist only so long as each party was of ability to contract. If the intervention of third parties through proceedings in equity destroyed or impaired to a substantial degree the power of the Gas Company to continue the same relations with Mr. Chandler, this infringed none of his rights.

That the decrees whereby primary and ancillary receivers were appointed divested the corporation and its directors of all powers to institute suits, and conferred such power upon the receiver, is conceded by the appellant's brief. Here alone is such a limitation of the ability of the corporation to contract in respect to legal service as is inconsistent with the former relation between the corporation and its counsel.

Furthermore the decree appoints a receiver of all the property of the corporation to hold the said property and income under and...