Singer v. St. Louis

Decision Date14 January 1879
Citation6 Mo.App. 427
PartiesALBERT SINGER, Respondent, v. ST. LOUIS, KANSAS CITY, AND NORTHERN RAILROAD COMPANY, Appellant.
CourtMissouri Court of Appeals

1. Mortgage-bonds, with coupons attached representing semi-annual interest, were executed by a corporation, payable to bearer; the bonds stating upon their face that the payment of interest thereon was secured by a lease of the railroad of the maker to the defendant, at a rental equal to the interest, the defendant to pay the interest by paying the coupons; this statement being repeated on the back of the bond, with the additional statement, all under defendant's signature, that the rent will be applied by defendant directly to the payment of the interest. It was shown, in an action against defendant on one of the coupons, that some of these coupons had been paid by defendant. Held, that the coupons were a part of the bonds; that the statement on the back of the bonds imports a promise to pay the coupons to bearer; that the lease having been treated as valid, the question of its validity was immaterial; that defendant adopted the acts of its agents by acquiescence, and is estopped to urge as a defence to these coupons that the lease and indorsement were ultra vires.

2. A business corporation cannot put its name on bonds, allow them to go into the market thus indorsed, and then deny its liability to innocent purchasers, under the plea that the act of the corporation in effecting the lease for which the bonds were given was ultra vires, and not ratified by the stockholders.

APPEAL from St. Louis Circuit Court.

Affirmed.

WELLS H. BLODGETT, for appellant: The courts will not enforce contracts made by corporations in violation of their charters or the statute under which they are created.-- Railroad Co. v. Seely, 45 Mo. 212; Railroad Co. v. Hoagland, 30 Mo. 459; Blair v. Insurance Co., 10 Mo. 560; Pierce v. Railroad Co., 21 How. 442; Insurance Co. v. Ely, 5 Conn. 572; Creed v. Bank, 11 Ohio, 492; Hood v. Railroad Co., 22 Conn. 502; Railroad Co. v. Railroad Co., 5 Am. L. Reg. (N. S.) 739, 740, and cases cited. A contract of lease, to be binding on the corporation, must be authorized or assented to by a majority of the stockholders.--Wag. Stats. 315, sect. 57; St. Louis v. Alexander, 23 Mo. 513. Ratification.--Brice's Ultra Vires. 878, note; Marsh v. Fulton County, 10 Wall. 684. Distinction between officer and agent.-- Bank v. Bank, 71 Mass. 28.

NOBLE & ORRICK, for appellant: The statement on back of bond was not a promise.-- Edwards v. Massey, 2 Allen, 486. The officers signing it were not authorized to do so, so as to bind defendant to any obligation thereby.-- Green's Brice's Ultra Vires, 426, note. The lease was not shown to have been ratified by stockholders, but in fact to have been rejected; and was therefore not only ultra vires, but absolutely illegal, and, as such, void.-- Downing v. Ringer, 7 Mo. 532; Hanauer v. Doane, 12 Wall. 342; Peltz v. Long, 40 Mo. 532; Carson v. Hunter, 46 Mo. 467.

GEORGE W. TAUSSIG, for respondent: Where one person makes a promise to another for the benefit of a third person, the third person may maintain an action upon it.-- Fitzgerald v. Barker, 4 Mo. App. 104; Rogers v. Gosnell, 58 Mo. 589; Shuster v. Railroad Co., 60 Mo. 290; Blodgett v. Cress, 64 Mo. 449; Lawrence v. Fox, 20 N. Y. 268. Although the promise was not in writing.-- Thorp v. Canal, 48 N. Y. 253. A railroad corporation may, upon a sufficient consideration, make a valid contract guaranteeing the payment of the bonds of another corporation.-- Low v. Railroad Co., 4 Cent. L. J. 487; Opdyke v. Railroad Co., 3 Dill. 55; Arnot v. Railroad Co., 67 N. Y.--; Eaken v. Railroad Co., 3 Cent. L. J. 655.

HAYDEN, J., delivered the opinion of the court.

This is an action brought before a justice of the peace, upon an alleged promise of the defendant to pay five interest-coupons of certain mortgage-bonds issued by the St. Louis, Council Bluffs, and Omaha Railroad Company. By the bonds, five of which were put in evidence on the trial in the court below, the company just named promises to pay Solon Humphreys, or bearer, thirty years after date, at the National Bank of Commerce, New York, $1,000, with interest at the rate of seven per cent per annum payable semi-annually on presentation and surrender of the proper annexed coupons, etc. In the body of the bond is the following statement: “The payment of interest on this bond is further secured by a lease of the road to the St. Louis, Kansas City, and Northern Railway Company, at a rental equal to the interest on the whole series of bonds, and which rental said latter company will pay by paying the coupons attached to the bond.” On the back of the bonds was the following: “This bond is secured by a mortgage upon a railroad which is leased to the St. Louis, Kansas City, and Northern Railway Company for a fixed rent equal to the amount of interest upon the whole series of bonds; and by the terms of the lease, the rent to be applied by the lessee directly to the payment of that interest.

T. B. BLACKSTONE, President,

JAMES F. HOW, Secretary,

St. Louis, Kansas City, Northern Railway Co.

The coupons were promises of the St. Louis, Council Bluffs, and Omaha Railroad Company to pay bearer $35 at the office of the defendant in New York, being for six months' interest due March 14, 1876, etc.

Upon the trial in the court below, the secretary and vice-president of the defendant testified that some of these coupons had been paid by the defendant to their holders in New York; that the only authority he had to sign the indorsement on the bonds was the direction of the defendant; that at the time the bonds were issued, the defendant was operating the Brunswick and Chillicothe Railroad as a branch; that the road of the St. Louis, Council Bluffs, and Omaha Railroad did not connect with the road of the defendant, the two being thirty-six miles distant at the nearest point, but that the Brunswick and Chillicothe Railroad, being of the same gauge, united the two so that cars could pass from defendant's road to the St. Louis, Council Bluffs, and Omaha Road. This witness, being recalled for the defendant, testified that the lease mentioned in the bonds was submitted to defendant's stockholders for ratification or rejection on March 2, 1875, was rejected by a large majority, and was never ratified; that the defendant ceased to operate the St. Louis, Council Bluffs, and Omaha Railroad in May, 1874. There was a finding for the plaintiff by the court, and judgment accordingly.

It is contended that the demurrer to evidence should have been sustained, because the plaintiff made out no case; that the coupons were coupons of the St. Louis, Council Bluffs, and Omaha Railroad Company, and not of the defendant, and no promise in writing of the defendant to pay the same was shown. But, in the present case, if a promise by the defendant to the St. Louis, Council Bluffs, and Omaha Railroad Company for the benefit of the bearers of the bonds is shown, this would be sufficient to enable the plaintiff to maintain the action; and, as this court has decided, it is not necessary that the third person should know of the promise when it is made. Fitzgerald v. Barker, 4 Mo. App. 105. It is not, however, necessary to put this case upon the ground that the promise sued on is one made by the defendant to the St. Louis, Council Bluffs, and Omaha Railroad for the benefit of a third person. Waiving now the question of authority,...

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2 cases
  • Eubank v. City of Edina
    • United States
    • Missouri Supreme Court
    • 30 Abril 1886
    ...Mo. 523; Smith v. Railroad, 55 Mo. 526; Sappington v. Railroad, 14 Mo. App. 86; Dillon on Mun. Corp. [2 Ed.] secs. 50 and 51; Singer v. Railroad, 6 Mo. App. 427; Union Depot Co. v. St. Louis, 8 Mo. App. 412; Bigelow on Estoppel [3 Ed.] 461 et seq., and cases cited; Ins. Co. v. Salt Co., 31 ......
  • Tyrell v. Cairo & St. Louis R.R. Co.
    • United States
    • Missouri Court of Appeals
    • 3 Junio 1879
    ...to such holders, as against a corporation raising the defence of ultra vires, are not to be here applied in his favor. See Singer v. Railroad Co., 6 Mo. App. 427. It is said, first, that the words “for value received” are not in the coupons, and that consequently they are not negotiable und......

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