Illinois Fuel Co. v. M. & O. Railroad Co.

• Decision Date: 11 April 1928
• Docket Number: No. 25850.,25850.
• Citation: 8 S.W.2d 834
• Court: Missouri Supreme Court
• Parties: ILLINOIS FUEL COMPANY v. MOBILE & OHIO RAILROAD COMPANY, Appellant.

8 S.W.2d 834

ILLINOIS FUEL COMPANY v. MOBILE & OHIO RAILROAD COMPANY, Appellant.

No. 25850.

Supreme Court of Missouri, Division One.

April 11, 1928.

Appeal from Circuit Court of City of St. Louis. — Hon. J. Hugo Grimm, Judge.

AFFIRMED.

Carl Fox for appellant; R.C. Beckett and R.P. & C.B. Williams of counsel.

(1) The contract was several and not joint. (a) In determining whether a contract is joint or several, courts look not to its terms alone, but consider who and what the parties to the contract are, the purposes for which and the circumstances under which it was made and to the construction given it by the parties themselves in its actual performance. Davis & Rankin v. Hendrix, 59 Mo. App. 449; Combs v. Steele, 80 Ill. 101; Otis v. Pittsburgh Coal Co. (C.C.A.), 199 Fed. 86. (b) "If the whole contract discloses that as to any part of it, there is imposed upon the obligors distinct and several duties `words of plurality, such as we bind ourselves, will not make the contract joint' (1 Addison on Cont. 86)." Chicago Bldg. Co. v. Graham, 78 Fed. 83; Anderson v. Nichols, 107 Atl. 116; Virginia Coal Co. v. Virginia-Lee Coal Co., 113 Va. 395; Gaines v. Vandecar, 59 Ore. 187; Satler Lumber Co. v. Exler, 239 Penn. 135; Stanley v. Railroad Co., 18 Ohio St. 552; Cornish v. West, 82 Minn. 107. (c) The contract shows on its face that the parties did not intend that the coal should be delivered to or received by the two railroad companies jointly, but intentionally left it to the railroads, each needing coal for the operation of its own line, to direct that separate shipments be made to each at the several coal-chute points on its line, in accordance with its needs from time to time. (d) In the actual performance of every obligation of the contract, from the Fuel Company to the railroads, from the railroads to the Fuel Company, and in the correspondence with reference to the unfulfilled obligation of the Southern in Mississippi to pay its bills, the parties united in construing the contract as several with respect to the railroads, and not joint. (e) The construction of the contract as several and not joint by the parties in its actual performance was not contrary to but was in accord with its language stating the obligations of the railroads ("the Railroad Companies hereby purchase ... and agree to receive and pay for"), the form of which is in common use to express the aggregate of several actions, as well as joint action. Authorities supra. (f) The facts and circumstances relating to the Railroad Companies when the contract was made, as stated in the agreed statement of facts, conclusively establish the absence of any necessity, reason or motive for the assumption by either company of the asserted obligation to pay for the other's coal, and negative any such intent. (g) In the performance of the contract the parties had the same right to place their own construction on it as they had to choose the language of it when they made it, and its practical construction by the parties during its performance, before any controversy as to its meaning had arisen, is conclusive, such practical construction not being violative of its terms. Otis v. Pittsburg Coal Co., 199 Fed. 91. (h) Having united with defendant in construing the contract as several throughout, and especially in the correspondence between Stockton and Cooke regarding the Southern in Mississippi's unpaid bills, and having continued to ship coal to the Southern in Mississippi during that time, plaintiff is estopped now, after all the coal has been shipped to the Southern in Mississippi, from asserting a joint liability when it is too late for the Mobile & Ohio to protect itself, as it could have done if plaintiff had placed such construction on the contract at that time. Freet v. American Electrical Supply Co., 257 Ill. 248; Hein v. Westinghouse Air Brake Co., 172 Fed. 524. (2) It was beyond the power of the Mobile & Ohio Railroad Company, a corporation, to assume the asserted liability for coal under the contract, shipped to and used by the Southern in Mississippi. It was also beyond the power of the Southern in Mississippi to assume the correlative obligation for the Mobile & Ohio's coal. (a) The form that an ultra-vires obligation takes is immaterial, and the substance and effect alone are material. If the contract in suit should be construed as joint then the Mobile & Ohio is, in effect, a mere accommodation indorser of the Southern in Mississippi's obligation. Davis & Rankin v. Hendrix, 59 Mo. App. 444; Best Brewing Co. v. Klassen, 185 Ill. 37; North Side Ry. Co. v. Worthington, 30 S.W. 1055. (b) The Mobile & Ohio Railroad Company is an Alabama corporation, and it is the rule in Alabama, and every-where else held, to apply with special strictness to railroads and public service corporations, that in the absence of an express grant a corporation has no power to agree to pay the debt or divert its funds to the use of another person, even when the purpose and effect is to increase its business and profits; and the rule applies with stronger reason and greater force when, as in the case at bar, there is no need, reason or motive for the asserted assumption of such an obligation. Central Railroad Co. v. Smith, 76 Ala. 580; Gulf Lumber Co. v. Chapman & Co., 159 Ala. 444; Alabama Railroad Co. v. Loveman Compress Co., 196 Ala. 683; Steiner & Lobman v. Land & Lumber Co., 120 Ala. 128; Bailey Iron Works v. Railroad Co., 4 Ala. App. 660; Washington Ry. Co. v. M. & O. Railroad Co., 255 Fed. 121; Cooke on Corporations (6 Ed.) sec. 775; Best Brewing Co. v. Klessen, 185 Ill. 37; Rogers v. Jewell Belting Co., 184 Ill. 574; Pollitz v. Public U. Comm., 96 Ohio St. 49; North Side Ry. Co. v. Worthington, 88 Tex. 562; Louisville Ry. Co. v. Trust Co., 174 U.S. 567; Humboldt Mining Co. v. Milling Co., 62 Fed. 356; Savannah Ice Co. v. Bank & Trust Co. (Ga.), 79 S.E. 45; Wm. Filene's Sons Co. v. Gilchrist Co., 284 Fed. 664; Hunter v. Garanflo, 246 Mo. 131; Orpheum Theater Co. v. Brokerage Co., 235 Mo. App. 255; Wilson v. Torchon L. & M. Co., 167 Mo. App. 305; Elleft-Kendall Shoe Co. v. Western Stores Co., 132 Mo. App. 513. (c) No exception to the rule stated in the last preceding point arises by reason of the fact that the Mobile & Ohio and Southern in Mississippi had in part the same stockholders and officers. Central Railroad v. Smith, 76 Ala. 572; First Nat. Bank v. Winchester, 119 Ala. 172; Alabama Ry. Co. v. Compress Co., 196 Ala. 683; Rogers v. Jewell Belting Co., 184 Ill. 574; North Side Ry. Co. v. Worthington, 88 Tex. 562; Savannah Ice Co. v. C. Bank & Trust Co., 79 S.E. 45; Wm. Filene's Sons Co. v. Gilchrist Co., 284 Fed. 664; Haskell v. M'Clintic-Marshall Co., 289 Fed. 405; Thomas v. Railroad Co., 101 U.S. 71, 83. (3) Defendant is not estopped to plead ultra vires by reason of performance of the contract by plaintiff. (a) In Illinois and in Alabama ultra vires contracts of corporations are void, cannot be ratified in any manner, and the corporations cannot be estopped by performance by the other parties to such contracts or for any other reason from pleading ultra vires in defense of suits or such contracts. Smith v. Alabama Life Ins. Co., 4 Ala. 558; Wiley Fertilizer Co. v. Carroll, 202 Ala. 335; Alabama Red Cedar Co. v. Bank, 200 Ala. 622; Chewacle Lime Works v. Dismukes, 87 Ala. 344; Converse v. Emerson, Calcott & Co., 242 Ill. 619; United States Brew. Co. v. Dolese & Shepard Co., 259 Ill. 274; Steele v. Fraternal Tribunes, 215 Ill. 199; Mercantile Trust Co. v. Kastor, 273 Ill. 332. (b) The question of estoppel or non-estoppel of defendant to plead ultra vires is to be determined by the law of Illinois, the place of performance. Case Threshing Machine Co. v. Tomlin, 174 Mo. App. 512; Thompson v. Insurance Co., 169 Mo. 12; Johnson v. Noble Machine Co., 144 Mo. App. 436; Central Nat. Bank v. Cooper, 85 Mo. App. 383; Liebing v. Mutual Life Ins. Co., 276 Mo. App. 118; Peak v. International Harvester Co., 194 Mo. App. 128; Andrews v. Pond, 13 Pet. (U.S.) 77; Penney v. Nelson, 183 U.S. 144; Poole v. Perkins, 126 Va. 331; Roberson v. Queen, 87 Tenn. 445; New York Life Ins. Co. v. Dodge, 246 U.S. 357; New York Life Ins. Co. v. Head, 234 U.S. 149. (c) The contract was consummated and became binding on the railroads and the Illinois Fuel Company when it was signed at Sparta, Illinois, by Stockton on behalf of the Fuel Company on July 2, 1920, and deposited in the mail with a letter of that date addressed to W.J. Diehl at St. Louis, Missouri. Horton v. Insurance Co., 151 Mo. 619; Crohn v. Order, 170 Mo. App. 273; Allen v. Chouteau, 102 Mo. 322; Hudson v. Rodgers, 121 Mo. App. 168; Case Threshing Machine Co. v. Tomlin, 174 Mo. App. 512; Illinois Life Ins. Co. v. Beifeld, 184 Ill. App. 582; Miller v. McManus, 57 Ill. 126; Pratt v. Hudson River Railroad Co., 21 N.Y. 309; McKell v. Railroad Co., 175 Fed. 321; Vicksburg Water Works Co. v. Guffey Petroleum Co., 86 Miss. 60. (4) Diehl as purchasing agent of the Mobile & Ohio was without authority to bind the company to the asserted obligation to pay for the Southern in Mississippi's coal.

Nagel & Kirby for respondent.

(1) The liability of defendant on the contract in suit is joint and several. The contract in suit is in form a joint contract. The liability on such a contract is joint and several under the statutes of all of the States involved. Secs. 6520, 9543, Alabama Code 1923; Sec. 2155, R.S. Mo. 1919; Sec. 3, chap. 76, R.S. Illinois 1917. (2) Where a contract is entered into by several promisors, their obligations are presumed to be joint, unless express words of severance are used to create several liability on the part of each. 13 C.J. 577; 1 Parsons on Contracts, 11; 1 Williston on Contracts, p. 607; Eller v. Lacey, 137 Ind. 439; Nabors v. Producers' Oil Co., 140 La. 985; Hill v. Combs, 92 Mo. App. 252; Townsend v. Roof, 210 Mo. App. 299; A. Kron Livery Co. v. Weaver, 280 S.W. 56; Alpaugh v. Wood, 53 N.J.L. 644; Turley...