Custar v. Titusville Gas and Water Co.

• Decision Date: 03 January 1870
• Citation: 63 Pa. 381
• Parties: Custar <I>versus</I> The Titusville Gas and Water Company.
• Court: Pennsylvania Supreme Court

Page 381

63 Pa. 381

Custar versus The Titusville Gas and Water Company.

Supreme Court of Pennsylvania.

November 22, 1869.

January 3, 1870.

November 22d 1869.

Before THOMPSON, C. J., READ, AGNEW, SHARSWOOD and WILLIAMS, JJ.

Error to the Court of Common Pleas of Crawford county: No. 145, to October and November Term 1869.

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F. B. Guthrie & W. R. Bole, for plaintiff in error.—The subscription of the defendant was obtained by fraudulent representations, and therefore void: Crossman v. Penrose Ferry Bridge Co., 2 Casey 69; Crawford Co. v. Pittsburg and Erie Railroad, 8 Id. 141; Mercer Co. v. same, 3 Id. 389; Kishacoquillas & C. Turnpike v. McConaby, 16 S. & R. 140; McConahy v. K. & C. Turnpike, 1 Penna. 426; McCully v. Pittsburg & Conn. Railroad, 8 Casey 25; Pittsb'g & Conn. Railroad v. Graham, 2 Grant 259; Stainbank v. Fernley, 9 Simons 556; Central P. Railroad Co. v. Clemens, 10 Mo. 359; Troy Railroad Co. v. Newton, 8 Gray 569; Smith v. The Red River Silver M. Co., 12 Jur., N. S. 616; Clark v. Dickson, 5 Jur., N. S. 1029. The 5 per cent. for delay of payment was a penalty which the legislature might repeal, and the repealing act would relieve from the penalty: Maryland v. Balt. & O. Railroad, 3 Howard 534; Stoever v. Immell, 1 Watts 258; Hatfield Road, 4 Yeates 392; Abbott v. Commonwealth, 8 Watts 517; Norris v. Crocker, 13 Howard 429; Yeaton v. United States, 5 Cranch 281; United States v. Morris, 10 Wheat. 246; Lewis v. Foster, 1 N. H. 61; Pope v. Lewis, 4 Alabama R. 489; Thompson v. Bussitt, 5 Ind. 535; Eaton v. Graham, 11 Ill. 619; People v. Livingston, 6 Wendell 527. The legislature had power to pass the repealing act: Grim v. Weisenberg District, 7 P. F. Smith 433.

J. B. Brawley and D. Derrickson (with whom was W. S. Morris), for defendants in error.—No notice for payment of instalments was necessary: L. Ontario Railroad v. Mason, 16 New York 451; Shedd v. Brett, 1 Pick. 401; Smith v. Bank of Washington, 5 S. & R. 322. The law repealing the 5 per cent. was invalid as impairing a contract: Dartmouth College v. Woodward, 4 Wheat. 518; Brown v. Hummel, 6 Barr 86; Commonwealth v. Cullen, 1 Harris 138; Menges v. Dentler, 9 Casey 495. The 5 per cent. was not a penalty: 2 Bouvier's L. Dict. 324; Bavington v. Pitts'g & S. Railroad, 10 Casey 358.

The opinion of the court was delivered, January 3d 1870, by AGNEW, J.

In Crossman v. Penrose Ferry Bridge Co., 2 Casey 69, it was said by Justice Knox that a subscription to capital stock, induced by the fraudulent representations or statements of an agent appointed to obtain subscriptions, may be avoided by the subscriber. And in Coil v. Pittsburg Female College, 4 Wright 439, it was held that representations by agents of the college, that enough had been and would be subscribed, before the subscriptions for scholarships would be collected, to pay off the entire indebtedness of the college, and make the scholarships worth the notes given for them, are to be treated as expressions of opinion only, no fraud being alleged; from which it might be inferred that fraud being alleged, the falsehood of the representations would invalidate the subscription. On the other hand, it was held in Bank of U. S. v. Dunn, 6 Peters 51; Bank of Metropolis v. Jones, 8 Peters 12, and Stewart v. Huntingdon Bank, 11 S. & R. 267, that the declarations and assurances of the officers of a bank, that an endorser or other party would incur no responsibility by his endorsement or signature, are unauthorized and not binding on the bank without authority from the directors. In Hackney v. Allegheny County Mutual Ins. Co., 4 Barr 185, it was decided that the false and unauthorized representations of an agent to receive applications for insurance and the premium for a mutual insurance company, whereby the assured became a member of the company, are not admissible as a defence to an action on the premium note; nor are the similar representations of the president to the agent at the time of his appointment. The representations there were that the company was not taking risks in Pittsburg or other large cities. As it turned out, the company was broken up by its numerous risks taken in Pittsburg before the great fire of 1845.

The law as to the acts of an agent of a corporation is thus stated in Angell & Ames on Corporations, p. 249. "The representations, declarations and admissions of the agent of a corporation stand on the same footing with those of an individual. To bind the principal they must be within the scope of the authority confided to the agent, and must accompany the act or contract which he is authorized to make." The principle of the cases would seem to be this, that where representations made by an agent to obtain subscriptions, are a part of a scheme of fraud participated in by the officers authorized to manage its affairs; or where they are such as the agent may reasonably be presumed, by the subscriber, to have the authority of the corporation to make them, his representations may be given in evidence to show the fraud by means of which the subscription was procured. But when there is no reasonable presumption of authority, and no actual authority to make them, the corporation should not be prejudiced by the unauthorized acts of the agent. Hence, when the representation of the agent is contrary to the interests and duty of the corporation, as that he will release or has authority to release the subscription he is taking, it is not a reasonable presumption that he has such authority, and a...