Williams v. McNally
| Decision Date | 25 September 1928 |
| Docket Number | 1456 |
| Citation | 270 P. 411,39 Wyo. 130 |
| Parties | WILLIAMS v. McNALLY, ET AL. [*] |
| Court | Wyoming Supreme Court |
APPEAL from District Court, Johnson County; HARRY P. ILSLEY, Judge.
Action by W. G. Williams against R. E. McNally, as receiver of and for the Wyoming North & South Railroad Company and another. From a judgment for defendant, plaintiff appeals.
Judgment affirmed.
H Glenn Kinsley, for appellant.
The action is for the recovery of expenses incurred in the promotion of the defendant railroad prior to its incorporation; the items making up the claim are grouped in three divisions, viz: first, items incurred by plaintiff from October 1, 1921 to November 27, 1922; second, items incurred between November 27, 1922 and February 1, 1923; and third items incurred between February 1, and December 1, 1923. Payments are shown to have been made and applied generally on the account, the debtor not having directed the application of said payments otherwise, 21 R. C. L. 90, 103; Stores Co. v. Wilson, (Fla.) 90 So. 461; defendant railroad corporations assumed, or agreed to pay this expense after incorporation; their respective boards of directors waived the provisions of their by-laws and permitted Haskell to manage the company, Bank v. Haun, 30 Wyo. 322; these boards knew that Haskell was dealing with plaintiff and securing a rate contract with the Chicago, Milwaukee & St. Paul Railroad Company, and their companies are chargeable with the expenses necessarily incurred in connection therewith, Hardware Co. v. Packing Co., 33 Wyo. 77; Bankers Const. Co. v. Bank, 30 Wyo. 449; 14 C. J 257; 17 A. L. R. 454. Expenses of the second period were incurred under instructions and directions of Mr. Haskell and were obligations of the corporation, Kridel Baugh v. Aldrehn, (Iowa) 191 N.W. 803; Ramsey v. Assn., (Va.) 135 S.E. 249; Co. v. Frank & Sons, 196 N.Y.S. 289; Hinkley v. Sagemiller, (Wis.) 210 N.W. 839; Products Co. v. Lucas, 5 Fed. (2nd) 723; Hackbarth v. Co., (Idaho) 212 P. 969; Chilcott v. Co., (Wash.) 88 P. 113; Stilwell v. Co., (Wash.) 120 P. 85; Wall v. Co., (Utah) 59 P. 399. The expenses incurred during the third period, or division herein stated, were so incurred while plaintiff was acting under the direction of one or the other of said corporations, one company, the Wyoming North & South Railroad Company, being the holder of the physical properties and the other, The North & South Railway Company being an operating company; plaintiff acted under the directions of the accredited agents and representatives of the corporations; this fact was sufficient to bind the corporations, 14-a C. J. 359-361; 7 R. C. L. 450; Watson v. Co., (N. C.) 61 S.E. 273.
C. A. Kutcher, for respondents.
Plaintiff's claim was originally for $ 65,599.94 but $ 40,000.00 thereof, which was claimed for compensation, was stricken out by plaintiff at the trial, leaving his claim of $ 25,599.94 for expenses only, from November 1, 1921 to December 1, 1923; while the evidence tended to establish the fact that plaintiff had some sort of a contract with Haskell for compensation and expenses incurred in the promotion of the defendant railroad corporations, said defendant corporations never ratified the Haskell contract nor did they assume the obligations thereof; plaintiff's claim also includes items of expense for other promotion work not connected with defendants, and the allegations and proof offered by plaintiff are too indefinite and uncertain to justify a recovery against anybody; the scheme outlined in the alleged agreement made between plaintiff and the promoters, if fully consummated, would have been fraudulent and void, 27 R. C. L. 75; it is upon this contract that plaintiff bases his claim; moreover, it was proven at the trial that plaintiff and his associates in the Haskell contract had, in certain litigation at Casper against the Reliable Securities Corporation, et al., shown that this claim had been assumed by the Reliable Securities Corporation; payment of the claim by the railroad corporations would have been ultra vires and void, Art. X, Const. Sec. 6; 17 A. L. R. 463; Bankers Co. v. Bank, 30 Wyo. 449; the general rule is that a corporation is not liable for mere promotion services and expenses of its promoters, unless by express agreement, 14 C. J. 282; Gardiner v. Corp., 273 F. 441; Wright v. Co., (Mich.) 109 N.W. 1062; Erd v. Co., 206 Ill. 351; Railroad Co. v. Sage, 65 Ill. 328; Jones v. Smith, (Tex.) 87 S.W. 210; Kirkup v. Co., (Mont.) 197 P. 1005; while the authorities recognize the rule, that if a corporation accepts benefits of a contract made for, or on its behalf, before or after its incorporation, it is bound by the obligations of such contract, there is a distinction between acceptance of benefits of a contract itself, and the services of promoters in procuring the execution of such contract, Weatherford etc. Co. v. Granger, (Tex.) 24 S.W. 795; Jones v. Smith, (Tex.) 87 S.W. 210; but they are inseparably connected with plaintiff's claim, items of expense incurred in promoting other enterprises under plaintiff's contract with Haskell. As before stated, even if plaintiff's claim was valid as against defendants, which it is not, the proof thereof is so uncertain and incredible as to preclude recovery as against anybody; no books of account, receipts or vouchers were presented; the credibility of witnesses examined and testimony introduced in support of the claim was passed upon by the trial court and will not be disturbed unless the record shows a manifest error in that respect, Wyman v. Quayle, 9 Wyo. 326.
W. G. Williams, the plaintiff and appellant, describes himself as a mechanical and petroleum engineer and an expert in the transportation and refining of oil. The Wyoming North and South Railroad Company, incorporated January 29, 1923, and the North and South Railway Company, incorporated April 20, 1923, are Wyoming corporations which, on July 31, 1924, passed into the hands of receivers. The receivers first appointed were succeeded by R. E. McNally, the present receiver of both corporations, and defendant and respondent in this action. The action was brought by the plaintiff against the receiver to recover some $ 65,600, of which $ 40,000 was claimed as compensation for services rendered as engineer and promoter of the two named corporations, and $ 25,600 for expenses incurred in performing those services. The claim for "services," or reasonable compensation, was abandoned at the beginning of the trial, and the question tried was plaintiff's right to reimbursement for the claimed expenses. Of the amount which in the petition was claimed on account of expenses, the plaintiff at the trial admitted the payment of about $ 7500, leaving a claimed balance of about $ 18,100. The District Court, after a trial without a jury, found against the plaintiff who appeals, contending that the judgment is not sustained by sufficient evidence and is contrary to law.
From the plaintiff's testimony it appears that, for about a year beginning in November, 1921, he and two associates, Staley and W. A. Williams, for themselves and on their own initiative occupied themselves in an investigation of the oil production and the facilities for the transportation of oil from the Salt Creek Oil field near Casper in this state. They had in view a plan for the purchase of oil produced from that field, and the transportation thereof by a pipe line to connect with the Chicago, Milwaukee & St. Paul Railroad Company at some point in Montana. The principal specific matters they sought to accomplish were to induce the government to sell at public auction its royalty oil, to obtain authority to construct an interstate pipe line, to procure capital for the construction of the pipe line, and to induce the Chicago, Milwaukee & St. Paul Railroad Company to enter into a contract for a favorable division of freight rates on oil transported through the pipe line to the railroad, and by the railroad to market. During this period, the plan of the plaintiff and his associates did not include the construction of a railroad from Salt Creek. Indeed, plaintiff says that he then saw no chance of any one putting up money for a railroad. He did think, however, that his investigations and preliminary work showed the feasibility of, and cleared the way for, the procuring of oil and the construction of the pipe line.
In November, 1922, plaintiff met C. N. Haskell, who it seems was then in control of the Middle States Oil Corporation and its subsidiary companies. The plan of plaintiff and his associates being explained to Haskell, the latter became interested, and it was he that then first suggested a railroad instead of a pipe line. November 27, 1922, a writing was signed by plaintiff, his associates and Haskell, which reads as follows:
W. A. Williams and
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