CHAPTER XL.

OFFICERS AND AGENTS.

257. Company Bound by Acts of 258. President and Directors. Agents.

Company Bound by Acts of Agents.

257. A check drawn by the treasurer of a street railway company without a formal order of the directors, as required by the by-laws and endorsed by the president, is good in the hands of one without knowledge of the by-laws, where it appears that the president had deposited in the company's account a sum out of his own moneys sufficient to meet the check, and the company had appropriated this sum to other corporate purposes.1

The by-laws of a corporation, upon their adoption, become written into the charter and put parties who deal with the corporation upon notice, in trading with the officers of the corporation as to the extent and power of such officer, and this whether the specific by-law has been brought home to them or not.2

Where the common seal of a corporation is affixed to an instrument and the signatures of the proper officers are proved, the courts will presume that the officers did not exceed their authority, and the seal itself is prima facie evidence that it was affixed by proper authority.3

An agreement entered into by an officer of a railroad, on

I Wayne Title & Trust Co. v. Schuylkill Elec. Ry. Co., 191 Pa. 90 (1899.)

2 Wayne Title & Trust Co. v. Schuylkill Electric Ry. Co., 191 Pa. 90 (1899); Worthington v. Schuylkill Elec. Ry. Co., 195 Pa. 211 (1900.) 3 Little Saw Mill Valley Turnpike Co. v. Federal & Pleasant Valley Pass. Ry. Co., 194 Pa. 144 (1899.)

the faith of which a turnpike company acted, cannot be repudiated by the railroad company, upon the alleged lack of authority of the officer to make the agreement, after the company has reaped the benefits of the agreement.*

A street railway company is estopped from denying the validity of a contract made by its officers, where it was submitted at a stockholders meeting, approved by its attorneys and by a large number of its stockholders and no objection was made till six years after its execution."

President and Directors.

258. Where the president of a railroad company, or in his absence, the vice president has been authorized by the board of directors to execute a written contract, it is not within the province of a mere director to execute the contract.

The president of a railroad company, who was practically the owner of all its shares, procured an agreement from the president of a slate company to ship all of their product over their line. The agreement was not authorized by the directors or known to any of them, except the president of the railroad company, who was also a director of the slate company. Under the by-laws the president had no authority to make such a contract, and there was in addition, no evidence to show that the slate company ever ratified the contract. It was held that such a contract could not be specifically enforced by the railroad company."

An electric railway company cannot be held liable on an indorsement of a promissory note by its president where it appears that the president had no authority under the by-laws to make the indorsement, that the corporation received no benefit

4 Johnstown & Scalp Level Turnpike Co. v. Johnstown Pass. Ry., 4 Dist. 594 (1895.)

5 South Side Pass. Ry. v. Second Avenue Pass. Ry., 191 Pa. 492 (1899); 29 Pitts. 435 (1899.)

6 Gaynor v. Williamsport & North Branch R. R., 189 Pa. 5 (1899.) 7 Bangor & Portland Railway Company v. American Bangor Slate Company, 203 Pa. 6 (1902); affirming 8 North, 141 (1902.)

from it, and that there was no course of dealing between the parties which misled the plaintiff.8

The directors of a railroad company are not entitled to compensation for services, in the absence of any contract or bylaw authorizing such payment, made prior to the rendering of the services.9

8 Worthington v. Schuylkill Electric Ry. Co., 195 Pa. 211 (1900); affirming s. c. 10 Super. Ct. 117 (1899.)

9 Grafner v. Pittsburgh, Neville Island & Coraopolis Street Ry., 207 Pa. 217 (1903.)

259. Street railway companies have not the corporate power to lease advertising space in their cars, but a person who has leased such space cannot, after he has enjoyed the advantages of his contract, repudiate his contract on the ground of its being ultra vires.1

Construction Contracts.

260. A mortgage given by a railroad company after debts to contractors and others had been incurred, is only illegal and void under the joint resolution of January 21, 1843, P. L. 367, as against "such contractors, laborers and workmen." As between the parties to the mortgage and as against all other persons the mortgage is valid.1*

Where a construction contract between a railroad company and contractors, stipulates that fifteen per cent. of all estimates should be retained by the company, but were not so retained, and subsequently the company brought suit for abandonment of the work, the contractors' sureties can set off the amount of the said fifteen per cent. against any claim of the company on account of expenditures by reason of such

I Pittsburg & Birmingham Trac. Co. v. Seidel, 19 Pa. C. C. R. 463 (1896); 6 Dist. 414 (1896); 27 Pitts. 441 (1896.)

1* Fidelity Title & Trust Co. v. Schenley Park & Highlands Ry. Co., 189 Pa. 363 (1899); 29 Pitts. 371 (1899.)

abandonment, but not against the penalty of the bond, independent of expenditures.2

An arbitration clause in a contract for the construction of a railroad provided as follows: "The decision of the engineer shall be final and conclusive in any dispute which may arise between the parties to this agreement relative to or touching the same, and each and every of said parties do hereby waive any right of action, suit or suits, or any other remedy in law or otherwise by virtue of the covenants herein contained, so that the decision of the engineer shall in the nature of an award be final and conclusive on the rights and claims of said parties." It was held that this clause did not apply where no claim is made for work done under the contract and the contract itself has been rescinded and the contractor is suing to recover for the loss of the contract. Mr. Justice Potter in discussing the construction of this clause said: "This precise question was considered by Judge Elcock in McGovern v. Bockius, 10 Phila. 438. He was dealing with a similar state of facts, and the clause providing for submission to the engineer was almost identical in its form with that now before us. Speaking with careful discrimination he there says: 'We cannot conceive that the language of this agreement contemplates that the estimate of the engineer should be given on the rescission of the contract. It would not be a natural inter

pretation of it. The duties of the engineer render his decision valuable and conclusive upon disputes as to the quantity, quality, and kind of work, the change of route, and as to numerous questions relating to the construction of the road; and hence the stipulation in all railroad contracts making his decision final. This was to avoid litigation as to these very nice questions, which are best determined upon the ground, but it was never intended that the engineer should usurp the province of the jury, and upon the rescission of the contract, determine the contractor's damages for the loss of his bargain. It can hardly be supposed that a contractor would put this power in the hands of the company's engineer; at all events it should not be inferred from doubtful language in the agreement.'

2 Perry County R. R. v. Maginnis, 12 Lanc. 149 (1895.)