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and in the absence of fraud or collusion on the part of the directors, they are binding on the corporation. If the contractee be a municipal corporation, then the governing body is a board, council, or mayor elected by the people, whose powers and duties are defined in the charter, subject to such restrictions and modifications as the legislature may have made since the city's incorporation. The powers of the general government and its officers must be ascertained in the same manner from the constitution, the laws enacted, and the rules and customs of departments.
38. Authority cannot be Inferred from Business or Family Relations.From the simple fact that a person is an officer of a corporation one cannot infer authority to contract on its behalf.' The president of a company has no power by virtue of his office simply to enter into a contract on behalf of his company as for the construction of its works.' Nor can the president and secretary of the company together. The assents of a director, the company's land committee, its civil engineer and a stockholder altogether do not establish the president's authority or make the contract valid. It has been held that an engineer charged with the duty of engrossing the contract and procuring the signature of the contractors, for which no particular time was fixed and no limitation was imposed upon his power, may consent to a delay of a month in the execution of a written contract, and the company cannot repudiate the contract on account of such delay, even if unreasonable.
If it appeared that the president was the officer with whom alone all the negotiations were had which resulted in the execution of both contracts; that he was its managing and controlling man; that he was present as its manager at the time of the arbitration, when the mistake in the latter contract was discovered, and that attention being called to it, he acknowl. edged it, and consented to the change, so that the truth might be set forth, it was held that such officer had power to bind his company by consenting to a change.' If the president and secretary have executed and sealed a contract in the name of a corporation, though not with the express consent of the directors, it is binding on a corporation which has received the benefits of the contract, and has conducted its business in compliance therewith and in such a manner that the directors must have had knowledge of it. If the president or the executive officer of a corporation cannot, by virtue of his position, contract on behalf of the company, it
1 Beveridge 0. N. Y. El. R. Co , 112 * Mott o. Danville Seminary (I11.), 21 N. N. Y. 1 (1889);
E. Rep. 927 (1889). * Bisley « J. B. & W. Ry. Co., 1 Hun 5 Stanley v. Sheffield & Co. (Ala.), 4 So. 2012 (1874): Ry. E. & P. Co. 0. Bank (Sup.), Rep. 34 (1888). 31 X. Y. Supp. 44.
6 Pratt v. Hudsou R. R. Co., 21 N. Y. * Templine 0. Chicago, B. & P. R. Co. 305. (la ). 35 N. W. Rep_634 (1837): Griffith c. 'Nichols . Scranton Steel Co. (N. Y. C., B. & P. R. Co. (IX.), 36 N. W. Rep. 901 App.), 33 N. E. Rep. 561; semble Loeb (1898): Bi-Spool S. M. Co. v. Acme Mfg. Fdy. Co v. Stout, 61 Ill. App. 166. Co. Mnes 1, 26 N. E. Rep. 991 (1891): but 8 Jourdan 0. Long Island R. Co., 115 sce Loeb Fdy.Co.o. Stoui, 61 Ill. App. 166, New York 380 (1889). and Siste o. Heckart, 62 Mo. App. 427.
would not be expected that any of the subordinate officers would have such powers. Such acts may be ratified by the board of directors, or such powers may be presumed and established by proof of previous adoption of similar acts.
If contractor enters into a contract with an agent he should have proof of that agent's authority or he does so at his peril.'* In general, an agent may do such business only as is ordinarily within the scope of his business, but the making of contracts does not in general belong to anybody but the parties themselves, unless express authority is shown, and then only to the extent of the authority conferred.” So it has been held that presidents (see ante), general managers, secretaries, attorneys,' engineers,' and officials in general cannot contract.
The mere proof of family relationship does not establish agency between the parties. A son has no authority to act for his parents merely because of the relation existing between them. To establish agency other evidence is required.' The same is true of husband and wife, father and son, or brother and brother.
No power exists, either in the commissioner of public works or in the mayor, or in both acting together, to enter into a contract on behalf of the city for the erection of water-pumping machinery, without previous authority of the city council, or an appropriation therefor.' Authority to borrow money for a public work is not authority to undertake the work.'
39. Boards, Committees, and Councils in Their Representative Capacity. À very common and most unfortunate circumstance for contractors is to work under a committee or board whose members attempt to act individ. ually. Members of boards or committees visit the works, give directions, order changes, and authorize new works which only the body or board as a whole have authority to direct. If a contractor obeys such individual instructions he runs the risk of losing the price of the work, for such work ordered by individual members of a committee, board, or council are unauthorized, and generally no recovery can be had against the corporation or its officials.t Good business men would not undertake such methods, but circumstances
Cases, 29 Amer. & Eng. Ency. Law, 861 note 2.
? State o. Michigan City (Ind.), 37 N. E. Rep. 1041; Clica ro GeuỎ Ry. Co. 2. Chicago City Ry. Co., 62 Ill. App502.
3 Chicago Gen'l Ry. Co. v. Chicago City Ry. Co supra.
+Jackson v The N. W. R. Co., 1 Hall & Twerle Rep 75 (1848), En inoer. Ashue. lot Mfg. Co. Marsh, 1 Cush. (Miss.) 507. Lyndon M Co o. Lyndon Lit. Inst., 63 Vt. 581.
5 Dobson v. More 62 III App. 435
J.). 44 N. J. 263 (1888]: but see Ry. E. & P. Co. o. Bank, 31 N. Y. Supp. 44; Lo. cust Mt. W. Co. v. Yorgey (Pr.), 13 Atl. Rep. 956 (1888). by an engineer; Dwen. ger v. C. & G. T. Ry. Co., 98 Iod. 153 (1884); The L., E. & St. L. Ry. 0. Mc. Vay. 98 Ind. 391 (1884), general manager.
* Walsh v. Curley (Com. Pl.), 16 N. Y. Supp. 871; Gibson v. Hardware Co.(Ala ), 10 So. Rep. 304.
: City of Chicago o. Fraser, 60 III. App. 404.
'Goddard o. Harpswell. 88 Me, 228; but sec Damoa v. Granby, 2 Pick. (Mass.) 345.
6 See 4 Amer. & Evg. Ency. Law 359; 13 S. W. Rep. 1188; Little 0. Kerr (N.
* See Sec. 35, supra.
| Sie Secs 29-39, supra.
arise which make such acts very common. Such orders or instructions may be adopted, ratified, and authorized by the body when they become binding, and recovery for work done under them may be had.' A committee appointed by a town to take charge of the erection of a building are agents of the town, and can act by agreement of the members separately obtained, and need not be in session as an organized body.' So when a contractor furnished a different stone in the place of stone called for in the contract it was held that testimony of one of the committee appointed to take charge of the building was competent to show that a majority of the committee had agreed to the change, and that the architect, a member of the committee, had so stated to the contractor in presence of the witress.' * A board of public works may exceed its power and its acts or contracts be ultra vires and void. For that reason a request by such a board that the contractor suspend work on a street pending an injunction suit by an abutting owner will not make the city liable for delay.'t The object and authority of a board of improvement or commissioners being limited to construction and the paying for sewers, the commissioners after completion of the sewers cannot bind the district or themselves as a board by a contract for water for flushing.'
40. Public Officers are presumed to Do Their Duty. In the absence of proof to the contrary there is a presumption that the public officers do their duty. This may be an advantage to the contractor if the legality of his claims be contested on account of any dereliction of duty or excess of power on the part of the officers.' Where the record shows the letting of a contract for building a bridge in a city at a price greatly exceeding ten thousand dollars, but does not show whether a tax was imposed or bonds issued in excess of that sum in any one year, it will be presumed that the council did its duty in that respect. The council having acted upon plaintiff's account for the whole of the work embraced in said contract, and having ordered it to be paid, except as to a single item of work which the parties agreed to defer, it will be presumed, in the absence of anything in the record upon the subject matter, that said account was verified in the manner required by the charter. In the absence of proof showing that work was not completed according to contract it will be well presumed that the city engi. neer in reporting a final estimate and the completion of the work, and the city couscil in approving the report and ordering the payments, did their duty.' The one who attempts to show irregularities must prove that the
· Albany Ci y Natl. Bk. 0. Albany, 92 N. Y. 363 [188:3};
• Shea o. Town of Milford (Mass.), 14 N. E. Rep. 764 (1888].
• Matthewson o. Grand Rapids (Mich.), 50 N. W. Rep. 651.
* Pipe Blutf Water & Light Co. o. Sewer District No. 1 (Ark.), 19 S. W. Rep. 576.
* See Secs, 48 and 555–557, infra.
5,Valley Tp. v. King Iron Bdge. Co. (Kan. App.), 45 Pac. Rep. 660.
Howard o. Oshkosh, 33 Wis. 309 [1873). ? Bohall v. Neiwall (la.), 39 N. W. Rp. 217 (1888); also Jenkins o. Stetler (Ind.), 2 N. E. Rep. 7 (1889); N. Chicago St. R. Co. v. Cheetham, 58 Il. App. 318.
+ See Secs. 326 and 689, infra
public officers did not do their duty.' Contracts of public corporations, made through their officers without authority of law, are void, and the corporation may successfully interpose the plea of ultra vires, setting up as a defense its own want of power, under its charter or constituent statute, to enter into the contract.' Where one has contracted with an alleged corporation, and is sued for failure to perform the contract, he cannot be heard to say that the corporation had no existence, and for that reason no contract was made.'
41. Means of Obtaining Information.—Cautious contractors will ascertain the powers of individuals, boards, and committees in as quiet a manner as possible. The self-esteem of some officials, and the indignant spirit in which they resent any doubts expressed as to their authority to undertake and carry out projects, are enough to convince a shrewd man of the impropriety of seeking information directly from office-holders. Usually the documents of incorporation are public property, and access may be had to them at the government offices. The commercial standing of a corporation may be had at the commercial agencies, and a well informed local attorney may be employed to give a reasonably safe opinion as to the legality of the act, or the liability of the company, or the extent of the duties and powers of its officers. A successful contractor will not sacrifice any honest means to obtain and keep the favor of officials of large corporations, nor will he stupidly demand information of them which may offend when he can indirectly and discreetly inform himself through other channels, whether outside or inside. To secure such information is the legitimate business of attorneys and counselors at law, and they need not divulge the name of their client nor in whose interest they are at work. An engineer should appreciate that the contractors require such information, and he should provide copies of the act or charter under which the work is undertaken, so that bidders and contractors may make such inquiries as seem pertinent to their interests and acquire information of the work to be done
Complicated questions come up, and many a contractor has performed work only to find when too late that his labor has been for nothing. An instance of the authority of a public officer is given in the following case: Where the legislature or congress directed a public officer, the secretary of the navy, to contract for the construction of public works according to a plan submitted previously and on file, and the officer directed changes in the plan and contract, it was held that the act of congress directing the officer to enter into the contract was not the contract itself, but that the officer who made the contract might vary the details, and that the rule regarding the effect to be given a contract with the United States was the same as in a contract between man and man."
"Hillman 0. Shoulters (Cal.), 44 Pac. R'p. 915.
3 Fresno Canal & Irrigation Co. 0. Warner (Cal.), 14 P:1c. Rep. 37.
Miller o. Goodwin. 70 Ill. 659 (1873] ; accord Ryan v. Lyuch, 69 Ill. 160: Byrne 0. E. Carroll (La.), 12 So. R p. 521,
* Gilbert v. United States, 1 Ct. of Claims 28 (1863); Lord v. Thomus, 64 N. Y. 107.
42. An Agent or Fiduciary Can have No Interest in the Contract. A director, public officer, trustee, executor, receiver, engineer, or other agent or fiduciary can have no personal interest in the contract of the company, city, principal, or cestui which he represents. A director cannot become a contractor with his company, nor become a member of a company with whom the board of directors has made a contract for the erection of works, nor share in the profits of such a contract. If such contracts are made they will be held to have been made for the benefit of the company which the director represents, and a court of equity may compel him to account for the profits realized under such an agreement.' Such a contract may be ratified by the stockholders and they may insist upon the advantages, or they may disaffirmi it entirely. A president of a corporation who takes an assignment of a contract for the construction of its works acts as a trustee and for the benefit of the corporation, and not as an assignee of the contractor. A contract made by a city council in which one of its members is interesteà may be avoided by the city, and if the contract has not been performed any taxpayer may restrain its enforcement.' It does not matter that the members who are interested in the contract voted against awarding the contract to themselves or their company. The mayor should not act as attorney or solicitor for the city of which he is an officer when the city's charter forbids any interest, directly or indirectly, in any contract, office, or appointment." The city cannot accept a conveyance of real estate subject to a mortgage held by the city solicitor when the statutes prohibit any public officer from becoming interested in any contract for the purchase of property by the state, county, or municipal corporation. An allowance to a public officer by a contractor or employee out of the profits of a contract with the city or government, however small it may be, is such evidence of fraud as will invalidate the contract.'* A contract by a freight agent to allow a contractor a low freight rate in consideration of a share of the profits of his contract,
Port r. Russel, 36 Ind. 60: Covington, 6 West v. Berry (Ga.), 25 S. E. Rep. 508; etc., R. Co v. Bowler, 9 Bush 468; Euro- but see Spearman v. Texarkana (Ark.), 24 pein Rv. Co. o. Poor, 59 Me. 377; Paine v. S. W. Rep. 883, where a member of a board L E. & L. R. Co., 1 Am. Corp. Cas. 386, of health was allowed to recover on a 31 Ind. 283 (18691; Guild v. Parker, 43 N. quantum meruit for services as a physician. J. Law 430; G. C. & S. R. Co. v. Kelly, It seems the father, brother, or wife of a 77 1 426 (1875).
mayor may have an interest in a contract • Risley 0. I. B. & W. Ry. Co., 1 Hun with the city. Devlin v. New York (Com. 202 (1874): and see 19 Am. & Eng. Ency. Pl.), 23 N. Y. Supp. 888. Law 873, 874.
6 Marsh v. Hartwell, 2 Obio N. P. 389. % McElhinney o. City of S. (Neb.), 49 N. ? Lindsey v The City, 2 Phila. 212 (1858); W. Rep 705 (1891); Gas Co. o. West, 28 Robinson v. Patterson (Mich.), 39 N. W. Neb. 852, folloid
Rep. 21 (1888). * Keonet Elec. Lt. Co. v. Kennet Sq., 4 * Barclay v. Williams, 26 ll. App. 213 Pa. Dist. Rep. 707 ; Foster v. Cape May (1887). (N. J.), 36 Ail. Rep. 1089 (1897).
* For cases where engineer was interested see Secs. 512-518, infra; as to executors, administrators, etc., see ante Secs. 7–16.