The Scofield Rolling Mill Co. v. The State Of Ga.

• Citation: 54 Ga. 635
• Parties: The Scofield Rolling Mill Company et al, plaintiffs in error。. v. The State of Georgia, defendant in error.
• Decision Date: 31 July 1875
• Court: Supreme Court of Georgia

54 Ga. 635

The Scofield Rolling Mill Company et al, plaintiffs in error。. v. The State of Georgia, defendant in error.

Supreme Court of the State of Georgia

(Atlanta, July Term, 1875.)

[Bleckley, Judge, having been of counsel, did not preside in this case.]

Corporations. Principal and agent. Torts. State. Frauds. Estoppel. New trial. Newly discovered evidence. Mistake. Before Judge Hopkins. Fulton Superior Court. October Term, 1874.

When this case was called, it was announced to the court that the property of the Scofield Rolling Mill Company had been placed in the hands of a receiver at the instance of its creditors, on a bill filed against it; that these creditors were largely interested in this litigation; that they were represented by Lochrane & Milledge, counselors at law, and asked to be heard through said counsel upon the argument. This the court permitted.

The case is sufficiently reported in the opinion.

D. F. & W. R. Hammond; B. H. Hill & Son; Lochrane & Milledge, for plaintiffs in error.

N. J. Hammond, attorney general; John T. Glenn, solicitor general; P. L. Mynatt; Peeples & Howell, for the state.

Jackson, Judge.

This suit was brought by the state, under an act of the general assembly, approved on the 15th of December, 1871. That act provides that "money or property stolen from the state or the Western and Atlantic Railroad, or fraudulently or unlawfully detained from the same, and any money or property of which the said road or the state may have been in any manner de-frauded, or which is unlawfully detained from the same, or that may hereafter be in any manner unlawfully detained, may be recovered from the person perpetrating the fraud or guilty of the conversion, or from any person or persons or corporation into whose possession the same or the fund may be traced by competent proof (except persons taking bona fide for value, withoutnotice of the fraud,) by a proceeding upon petition filed by the solicitor general, upon the information of *any citizen, in the superior court of the county where the defendant resides, if a resident of this state, and the person prosecuting said suit shall receive such compensation for himself and his counsel, and no more, as the court may think equitable and just, and to be paid out of the recovery, and not otherwise, under order of the court."

Under this statute the solicitor general of the Atlanta circuit filed an information against the Scofield Rolling Mill Company, and Lewis Scofield, William D. Cook and Asa L. Harris, and alleged that "the defendants defrauded the state of Georgia, and unlawfully and fraudulently detain from the same the sum of $57,156 00, besides interest, in this, that heretofore, to-wit: on the 15th day of January, in the year 1870, and at divers times from that day till the first day of February, 1871, the said Scofield Rolling Mill Company unlawfully and fraudulently collected from the treasury of the Western and Atlantic Railroad, (said road being then and there the property of the state of Georgia,) and from the treasury of said state, the sum of $47,600 00 for five hundred and sixty-two tons of railroad iron rails, pretended to have been furnished by the said company to the Western and Atlantic Railroad, but not furnished in point of fact, but being in excess over and above rails which were actually furnished to the said road, and the said defendants, Scofield, Cook and Harris, assisted in the perpetration of said fraud." Then follow similar charges for spikes and fish-bar iron, amounting in all to the sum first mentioned. It will be seen that the statute authorizes a recovery: first, for money or property stolen from the road; secondly, for money or property fraudulently or unlawfully detained from the same; thirdly, for any money or property of which the road may have been in any manner defrauded; and that this recovery may be had from the person perpetrating the fraud, or guilty of the conversion, or from any person or persons, or corporation, into whose possession the same or the fund may be traced by competent proof. Then follows an exception in favorof "persons taking bona fide for value, without notice of the fraud." It will be seen, also, *that the statute is very broad and comprehensive, designed to embrace all concerned in any manner in defrauding the railroad and the state. The information charges that the Rolling Mill Company did defraud the state, and does fraudulently and unlawfully detain a large amount of money from the state, and that the other defendants assisted in the fraud.

1. Some criticism was made in the argument upon the actand the manner in which the suit is brought, and it was urged that the word "person" does not embrace corporations in its purview, except where the fund is traced into the possession of the corporation. Stress was laid upon the fact that the act only mentions corporations in connection with the possession of the funds of the road; but the Code expressly declares that the word "person" in a statute does embrace corporations. Therefore, we think the suit is properly brought against the corporation, and that the allegation that this corporation, the Rolling Mill Company, defrauded the road and fraudulently and unlawfully collected from it, and unlawfully and fraudulently detains from the state to which it belonged, the sum of money averred, amply sufficient, under the statute, to sustain a suit against this corporation. It was argued, in order to support the view of the statute taken by counsel for the plaintiff in error, that a corporation cannot commit a fraud; that its agents are never authorized to commit frauds; that when they do they act without the scope of authority conferred upon them, and hence do not bind the corporation. We think this position wholly untenable. An aggregate corporation is an artificial person which can act, and does act, alone through agents. It deals with other corporations and with natural persons by its agents; it can deal with the world in no other way. It lives, breathes, moves only through its agents. It thinks, plans, feels through these agents. It is a trite remark that a corporation has no soul; however that may be, it certainly has motives which govern its conduct. These motives are expressed—manifested by the words and the actions of its agents. It talks, and deals, and trades through them. It makes honest contracts or unconscientious *bargains through them. It cannot live a moment without them. They are its brains, its heart and its hands. All its functions are performed by them, and all the objects of its creation by the state would fail without them.

2, 3. Can a corporation, thus alone acting through agents commit fraud? Surely it can. It does commit fraud just as natural persons do. The books are full of such frauds. How does it commit them? Only through and by agents, because it trades and deals only through them. Is it responsible for its frauds? Surely it is. It cannot be that this artificial person is the only being in the state wholly irresponsible for fraud! It cannot be that it can send out agents to trade and traffic with mankind for it, and if the agent thus sent out by it cheats and defrauds men, that it can repudiate the conduct of the agent, and tell the world that the act was unauthorized, you must look to my agent, when the agent is, perhaps, a man of straw, wholly irresponsible, unable to respond to the person wronged and cheated! We must, therefore, hold, upon principle, that a corporation is bound by the fraudulent conduct of its agents, engaged in its business, and in that line of business upon which it puts its agent to deal with the world. All deceit, misrepresentation, falsehood, fraud, in the course of that business, whereby any other corporation or any natural person is cheated by the agent, is the act of the principal, the corporation, and the corporation is responsible therefor. Authority abundantly sustains principle in the conclusion to which this irresistible logic leads: Code, sections 2199, 2200, 2201; 18 Georgia, 412; 6Ibid., 44; 36 Ibid., 669. Indeed, in the common transactions of life, in the ordinary relations of principal and agent, the same rule exists—the principal is bound for the fraud of the agent within the scope of his authority and on the line of his business. Much more ought the principal to be bound by the agent, if that agent be the agent of a corporation, for the simple reason that any other principal may act for himself—a corporation can never act except through its agent.

If I am in the habit of sending my servant to a store *to trade for me, and he buy goods for...