Sullivan v. Detroit, Y. & A. A. Ry. Co.

• Decision Date: 08 March 1904
• Citation: 98 N.W. 756,135 Mich. 661
• Parties: SULLIVAN v. DETROIT, Y. & A. A. RY. CO.
• Court: Michigan Supreme Court

98 N.W. 756

135 Mich. 661

SULLIVAN v. DETROIT, Y. & A. A. RY. CO.

Supreme Court of Michigan

March 8, 1904

Error to Circuit Court, Wayne County; William L. Carpenter, Judge.

Action by J. Emmet Sullivan against the Detroit, Ypsilanti & Ann Arbor Railway Company. Judgment in favor of plaintiff, and defendant brings error. Reversed.

Some time in the summer or fall of 1897, three men, Messrs Russell, Angus, and Liggett, entered into a scheme for the organization of an electric railway to run from Detroit to Ann Arbor. There already existed a street railway in Ypsilanti, another in Ann Arbor, and a third between those two cities. The scheme was to unite those three, and extend the road to Detroit. Plaintiff was an attorney at law in the city of Detroit, and had been engaged in practice for about 11 years, the first 3 1/2 years of which he was a clerk in the law office of Hon. Don M. Dickinson, and after that engaged in practice by himself or in partnership with others. He was known to Mr. Russell, one of the promoters. It was deemed necessary to have legal advice and the services of an attorney in preparing and drawing papers. Plaintiff claims that the three original promoters agreed to employ him. The agreement rested in parol, and, as stated by plaintiff, is as follows: 'Mr. John A. Russell came to me first, and told me of the enterprise they had on hand, which was to build a road between Detroit and Ann Arbor; and told me that Mr Angus and Mr. Liggett were in with him, and wanted to know whether I could handle the law business--what kind of an arrangement they could make. They said that they would have no bonds or stock for me, but wanted to know if I would take it on consideration of being made permanent attorney. After some consideration I said that I would provided the expenses would be paid. Then I was introduced to Mr. Angus and Mr Liggett by Mr. Russell, and I made an arrangement with them to the same effect--that I was to go ahead and do all the legal business connected with the enterprise, help them to secure franchises, do anything on that line they called upon me to do until the enterprise would be a success, or in such condition it was sure of success. In the meantime I would be paid my expenses, and if it was not a success I was not to get any compensation; but if it was a success I was to be made permanent attorney of the road. * * * There was no different arrangement under which I performed these services.' Mr. Angus was introduced as a witness for the plaintiff, and testified that he did not recollect that there was any condition to the appointment of Mr. Sullivan. He further testified: 'Q. What compensation was he to receive if the project was successful? A. My connection with it was, would I consent to his becoming attorney for the company? Q. Permanent attorney, after the organization of the company? A. I do not recollect any permanent. Q. That he should be appointed attorney, you did not mean to terminate in a year? A. No, I had not anything special in mind as to the length of time. It did not occur to me at that time. Q. He was to be the regular employed attorney; that was your understanding? A. Yes, I think that I will put it that way. I think I will say it was. * * * The substance of what was said to him, to the best of my recollection, is that I would be favorable to his appointment as attorney for the company.' Mr. Liggett was produced by the defendant, and denied any such contract as is claimed by the plaintiff, but testified that his understanding from the talk with Mr Russell was that plaintiff was doing the work for Mr. Russell. Mr. Russell was not produced as a witness. Plaintiff had no other talk with any stockholder or officer of the company in regard to his employment or this alleged contract. Under his own testimony the contract was made with these three promoters, and was never divulged to any other stockholder or officer of the corporation until after his employment under the resolution hereinafter referred to had terminated. In his conversation with Hawks at that time he only claimed that he had made the arrangement with Angus and Russell. Mr. Russell told Mr. Hawks that he had employed Mr. Sullivan, and that his (Sullivan's) services were a part of what he (Russell) was putting into the company--'a part of his contribution to the enterprise.' Mr. Hawks received no information of any different arrangement until he received the letter of March 15, 1898, when Mr. Russell sold his stock in the company--980 shares--to Mr. Hawks. In the letter offering to sell he said: 'Inasmuch as I have been active in securing the franchises and doing preliminary work for this company which has necessitated the making of promises of various natures in return for assistance rendered, I desire, as a further consideration that these promises made by me, which I will no longer be able to carry out, be composed along the following lines: (1) Mr. J. E. Sullivan, who did all the preliminary law work for the company gratuitously in consideration of permanent employment as attorney of the company for and after March 1st, to be guaranteed such employment for the period of one year at the rate of $1,500 per year, payable monthly.'

On March 15, 1898, the board of directors, six in number, passed a resolution, reading as follows: 'That J. Emmet Sullivan be employed as the attorney for the period of one year from and after March 1, 1898, at an annual salary of $1,500, payable in monthly installments; this payment to be in full settlement of services to date and for the coming year.' At the organization of the company, November 2, 1897, four other men became stockholders of the corporation, and signed the articles of incorporation, among whom was Mr. Hawks, who afterwards became president of the company. Mr. Russell became its secretary. There were at the time of the adoption of the above resolution six directors, three of whom were Hawks, Russell, and Angus. Of these six directors only two--Russell and Angus--had any knowledge of the arrangement made with the plaintiff. Mr. Sullivan was paid $125 per month during the year. He afterwards attended to some suits, and did some other business, for which he received $600. After the expiration of the year for which he was employed he made claim to Mr. Hawks for $15,000 for services rendered to the company from November 2, 1897, to March 1, 1898. The company denied liability, and thereupon plaintiff brought this suit upon the common counts in assumpsit. He rendered no bill of items to the defendant, and his bill of particulars filed in the suit recited the services in drawing the articles of association, bond and mortgage, and other papers, giving advice, attending meetings of the directors, and negotiating the purchase from the three companies, etc., for which he claimed the lump sum of $15,000. He recovered a verdict and judgment for $9,028.12.

Corliss, Andrus, Leete & Joslyn (Otto Kirchner, of counsel), for appellant.

Sullivan, Bland, Cook & Van Syckle (Elliott G. Stevenson and Leo M. Butzel, of counsel), for appellee.

GRANT J. (after stating the facts).

The theory of the declaration and of the right of recovery in this case is that plaintiff had no express contract with the defendant, but that he rendered services for it under such circumstances that the law implies a contract, and presumes a promise by the defendant to pay for the services so rendered, and of which it has had the benefit. Plaintiff's own evidence conclusively establishes the fact that he had no contract, either express or implied, with the defendant, until the contract of employment of March 15th, but that he made an express contract with the three original promoters of the scheme to perform the services for which he now seeks to recover, upon their agreement that they should make him the permanent attorney of the company. He had no other agreement, and at no time until more than a year after the services were rendered did he make any claim to any of its officers of the contract which he now asserts was made. These promoters could make no contract for the defendant, which was not then organized. That contract could not bind the corporation until it was known to and approved by it. The knowledge of Messrs. Russell and Angus, after they became directors, was not the knowledge of the corporation. The only knowledge possessed by Mr Hawks, its president, was that plaintiff was the personal employ� of Mr. Russell. This statement did not, of course, bind the plaintiff, but shows that Hawks had no knowledge of plaintiff's alleged contract. When, under plaintiff's version of the contract, did he begin to render services for the defendant? Certainly not until the corporation was organized. But his contract with these three promoters was that the scheme should be a success, not that the company should be organized. If the promoters had secured options for the purchase of the three companies then in existence and franchises from the townships along the proposed line before the organization of the company, and it had not been organized until all his services in carrying out his contract has been performed, would the corporation with new stockholders and new directors have been liable, either under the express contract or under an implied contract for his services, performed under the special contract? The promoters evidently thought it wise to organize the company early as one of the means to assist in carrying out the scheme. But plaintiff performed services no more for the corporation in one case than in the other. He made his contract with the promoters. He knew he could not enforce it against the corporation. If he chose to make a contract which he could not enforce against the promoters, under Durgin v. Smith ...