# Skinner v. Dayton

> New York Supreme Court · February 15, 1822 · 19 Johns. 513

URL: https://www.frixlaw.com/law-library/cases/5474496

## Case

- **Full name:** Reuben Skinner, against Abraham Dayton, Reuben Wheeler, William Raymond, Jun., Nathan H. Raymond, and the Executors of Abner P. Hitchcock, the Executors of Ira Hall, and Nathan Doane, John White, Randolph Taylor, and Marvin White
- **Court:** New York Supreme Court
- **Decided:** February 15, 1822
- **Citations:** 19 Johns. 513
- **Precedential status:** Published
- **Opinion:** Opinion of the court by Platt
- **Judges:** Platt, Spencer, Yates
- **Cited by:** 30 later opinions in the Frix Law Library

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## Opinion text

Platt, J.
The bill filed by Skinner against .the respondents embraced two objects : 1st. A liquidation of damages, upon principles of equity, arising out of the contract made by. the appellant with White, Taylor and White : and 2d, To compel the other respondents to contribute, for the damages to be assessed in favor of While, Taylor and While.
That the appellant is personally liable upon the covenant which he executed, so as to give to White, Taylor and While, a remedy against him alone, has been decided by ■the Supreme Ccurt, as well as the court of Chancery. The .wholesubject, however, has never before been presented in all its parts and relations; and in reviewing the decisions at law, and in equity, upon the particular points that have been adjudged in relation to this controversy, I am clearly of opinion, that the doctrine óf res judicata has no just application on,this appeal.
The decision of the Supreme Court (13 Johns. Rep. 307) pronounced^ that Reuben Skinner was personally and individually liable upon the covenant executed by him to White, Taylor and White. But it turned merely upon a question of special pleading. It was there decided, on demurrer, that to avoid individual responsibility, it was necessary for Skinner to aver and prove, not only that he sealed the contract for the directors, &c. but that he had authority from them for that purpose. It turned upon the technical effect of a seal. For if the associates are considered as partners, one of them could not bind his co-partners by.aseal, without special authority: and admitting that, as a partner, the appellant might in this instance have made a contv&ctwilhout seal, which would have bound all the associates, yet, as he used a seal, the simple contract, as partner, was merged in the covenant | and thereby it became, in judgment of law, his own individual contract, unless he could prove that bis associates specially authorized him to seal for them. The respondent, (iSkinner) in that case, was allowed to plead de novo ; and ■ before final judgment was rendered, he resorted to the court of chancery, where the whole subject has been developed ; and we now have the proofs as well as the pleadings before The former appeal to this court was upon a decretal or* us. ■der, which dissolved the injunction for staying the proceed *532 ings at law. In reversing that decretal order, this court was confined to the allegations in the bill and answer: and the decision on that 'appeal did not involve the questions now presented. We are at liberty, therefore, to disregard the obiter dicta of the learned members'of this court, who assigned the reasons for that reversal : “ judex non redditplus quam quod petens ipse requirit.” We were not then required to decide as to the rule of damages ; nor the right on the part of Skinner to contribution from his associates ;.nor could we then determine definitively as to the er'.ntual liability of Skinner', because, all the defensive allegations in the answer of White, Taylor and White - were denied by the replication of Skinner, and the proofs were not then before us. The order of this court for continuing the injunction was a preliminary step for arresting the proceedings at law, until the whole merits should be ascertained from the proofs, as well as the pleadings. The'condition annexed to that order, that judgment should be confessed and perfected át law, was' intended as a provisional security merely; to be used or modified as the equity of the case should eventually- demand ; and we have a rightful control; over that judgment,.by perpetual injunction, for the whole or for part, as equity shall require.
As to the validity and binding force of the covenant entered into by Reuben Skinner, so as to render him personally and individually responsible, Iísee no reason to entertain a doubt. Whatever relation he may have stood in, with regard'to his associates in the manufacturing company whether, as co-partner, or as agent, he had a right to volunteer his own individual credit and responsibility ; but he certainly had no right to contract, in that form, either for the company, or for his co-directors. They had given him no authority to seal for them : and yet he voluntarily undertook to perform that office on their behalf; stating, on the face of the instrument, that he so executed it, for himself and Wm. Raymond, jun. and Abner C. Hitchcock, as directors of the&ranvillel.Cotton'Manufacturing Company. He thereby virtually represented and affirmed, that he had authority from his co-directors to make such a contract for them. No bad faith is imputable to White, Taylor and White *533 in any part of the whole transaction. They fairly and ho-, nestly "acquired that security :and when obtained, it was obligatory on Reuben Skinner, and on no other person. He did not bind his principals, because he exceeded the authority which they had given him ; and neither law nor equity would tolerate the idea, that the covenant, thus executed, - was to be treated as a nullity, if Skinner did not bind his principals by sealing that contract, it must follow that he bound himself individually. White, Taylor and While were no doubt induced to believe, that they had the covenant of all the three directors of the manufacturing company : and when their mistake is discovered, shall it be allowed, that Skinner, who led them into that error, shall take advantage of his own wrong, and be held irresponsible ? By executing that contract, Skinner neither created any obligation, nor gave any right of action against any person but himself. The Grannville Manufacturing Company had a right to adopt, or disavow the contract as they pleased; and Skinner had no right to cast upon White, Taylor and White, the burthen of proving a subsequent ratification by the company. White Taylor and White had a right, therefore, to elect to consider and treat it as the personal and individual covenant of Skinner ; and they have uniformly done so. Whether the co-directors, or the members of the association subsequently ratified and adopted the contract, so as to render them liable for contribution, is a distinct question, which I shall, hereafter examine. But I think it clear, that until such ratification, White, Taylor and White had no remedy against them, either in law or equity. And if, at any rimé, personal and individual responsibility attached to • Reuben Skinner upon the covenant, White, Taylor and While had a right to rely on his security alone, and to leave him to seek aid or contribution from his associates.
But it is insisted, by the counsel for the appellant, that White, Taylor and White have no equitable claim for damages, because they chose to stop in the progress of the work and have never delivered, nor tendered", any part of the machinery.
This was an excutory contract, which could not be altered nor rescinded, without the mutnal consent of the parties; and *534 I have no doubt, that White, Taylor and White might have proceeded, if they chose, to a completion of the whole contract on their part; and then they would have hada right to recover the whole price according to the contract. But I think the letters of the 20th of May, and the 24th of July, 1815, with all the concomitant circumstances of the case, were abundantly sufficient to excuse and dispense with any further performance of the contract on the part of White, Taylor and White. They were notified that the stockholders had refused to pay the assessments, and would “ of necessity have to abandon the business, unless some alteration could be made in the contract.” While, Taylor and White were under no obligation to alter the contract; and in my judgment they had a right to stopprogress of the work, and to have a liquidation of damages, upon equitable principles» as to what had been rightfully ¿¡¡one under the contract, be-, fore the 1st of August¿18-15, wheij^jt was mutually abandoned.
That White, Taylor and ¡fFAwfe'hatWubscribed for shares in that association cannot, I-, think, -$ary the construction of their agreement with -Skinnernpt; afiect their rights under it, except it]>e to render' tyjfi contributory, if the point of contribution^hall be.determined against the stockholders.
The next question in ..order i§* as to the rule of damages upon the liquidation pf the contract. There is great difficulty in prescribing the rule; and tijfere will probably be still greater difficulty in the application of it. According to my view of this question, 4'he master should be directed to ascertained report, 1st, Wfef&tsountof labour was performed, what amount of^niateriaW- was procured, and what amount of expenses v^ere actually, and bona Jinde incurred by White Taylor and JFAfie,"put'suant 'to the covenant, up to the 1st day of August, 1815 ; 2dlyi.What amount of profits (if any) would have.acferuéd lf0¥JkMe, Taylor and While, if the contract had been-mu-ytii?Iiy fulfilled by the parties in good faith, and in all its .pari & 3dly, What proportion did the profits (if any) upon the labour^matTíVials and expenditures so applied under the contract* upyto the 1st of August, 1815, bear to the estimated pjesñCs-fifa'ny) on the entire and mutual fulfilment of the contract: l^nd, 4lhly, What was the available *535 Amount in value to White, Taylor and White, in fair open market on the 1st day oí August, 1815, of all the actual la-hour, expenses and materials so appropriated and applied by them under the contract, up to that day ; to the end, that White, Taylor and White may be credited with the amount oí labour, materials and expenditures found to have been so applied on the 1st of August, 1815 ; and also credited for the proportion of profits (if any) so to be found under the 3d head of inquiry above stated; and that interest be added to both those items of credit, from the 1st day of August, 1815 5 and that they be debited with the available amount of labour, expenses, and materials so found to have been appropriated and supplied by them, under the 4th head of inquiry, together with interest.thereon from the 1st -day of August, 1815 : and the balance of such account will be the amount of damages to be recovered under the contract.
As Whitt, Taylor and While elected to abandon the further execution of the contract, when that option was tendered to them by the opposite party, 1 can perceive no equitable grounds for their claim of projits, beyond the pro rata allowance.
Suppose the fair calculation of profits on the entire and successful completion of the whole machinery, to be $3000, as estimated by some of the witnesses $ yet it is to be considered, that they must have devoted their time and services, and capital, and credit, for nearly a year longer; and during that time, they would have been subject to a great variety of risks and unfortunate casualties, from all which they were relieved by the mutual abandonment of the contract. To entitle them to profits on the whole machinery,they must have earned those profits, by completing the whole work, which they have not done.
It is contended, that in fact, White, Taylor and White had no option: that the default on the part of Skinner in not paying the two first instalments, deprived them of the means of prosecuting the work; and that this compulsory abandonment of the contract was the cause of their utter ruin in business and property. These are among the unfortunate consequences which daily occur, from the want of punctuality *536 in pecuniary engagementsbut neither courts of law nor equity can measure damages by such remote consequences, or contingencies. If the money had been punctually, paid according to contract, it might perhaps have been profitably used; but it might also have been lost or wasted. The lawful rate of interest is the only standard which we can recognize, for damages arising from the non-payment of money, upon such contracts.
Next, in order, is the important question, whether the stockholders or members of 44 The Granville cotton manufacturing company,” are liable to contribution for those damages ? And if liable, are they bound personally, to the whole extent of the damages, or only to the extent of the common property and funds of the company ?
This was a voluntary association for the joint.and personal benefit of its members, who by the agreement, styled 44 the constitution, ” dated the 19th day of April, 1815, declare their object to be “ for manufacturing cotton yarn and cloth.” By the 1st article they adopt a name, viz. “ The Granville Cotton Manufacturing company.” The 2d article provides for a proper selection of their members to transact the business of the company, to be called “ President and Directors ” and a Treasurer.
By the'Sd, 4th and 5th articles, particular powers and instructions, are given in regard to the employment of a sub-agent and clerk, and their duties. The 6th article declares that 44 each person shall at the time of subscribing for stock t£ in said company, pay in cash on every share by him or 44 her subscribed ten dollars; and shall from time to time, 44 and at all times hereafter, pay such assessments as shall be 44 made by the President and Directors, or forfeit such share “ or shares with all previous payments made thereon.”
The construction to be given to the 6th article will determine the character of the association. The exposition given by his Honor the Chancellor, is, that " the company " could not be bound beyond the capital paid in ; and the " president and directors had no power under the articles " of association, to bind the members individually. Whoe" ver dealt with the company as such, and without resort- ‘‘ ing to a personal covenant, was to be presumed to deal *537 with them, according to the terms of their constitution, and “ to give the credit to the funds of the company actually “ paid in, or to be paid in, underassessments duly made. " He had no right to look to the credit of the individual “ member's, unless these individual members entered into “ a personal covenant or contract.”
In considering the avowed object of this association, and examining all the provisions of their constitution, my mind has been led to a different conclusion. It was an inconsiderate and adventurous enterprise; and, in all probability, the question now agitated, of personal liability for contracts made on behalf of the company, in the event of a deficiency of the joint fund, never actually occurred to the minds of the associates. If they meant to guard against such individual responsibility, it is extraordinary that they did not, in their constitution, expressly stipulate against it, and give public notice accordingly, instead of leaving it to.silent inference. And the question also presents itself to my mind, with some force, why, if they intended to avoid personal liability, did they not avail themselves of the statute which authorized them to incorporate themselves as a manufacturing company, by filing a certificate in the Secretary’s Office ? (Act of 22d March, 1821.) The provisions of that statute exactly applied to their case, and it depended upon their own volition, whether they would avail themselves of that shield or not.
My first proposition is, that if the terms of their association do not, by fair and necessary construction, negate the intention of personal liability, in judgment of law and equity, the members of the company are individually responsible for all debts contracted, for the objects, and within the scope of the association. If they did not mean to be personally liable for deficiencies, good faith required that théy should speak unequivocally, and give notice ,that such were the terms on which they contracted. If they had accepted the franchise of an incorporation, offered to them by the Legislature, their rights and duties would have been distinctly marked and understood, and no person wmuld have confided in their personal responsibility.
In my judgment, the 6th article, (which is the only one *538 relied on for that purpose) contains no such negation of per» liability. A capital was necessarily to be provided J an'> It may justly be said, that the object of these associates was private gain : they acted voluntarily, and had a right to choose their own associates. Every partnership implies mutaual confidence, and involves great risks ; but it accords best with the principles of equity and public policy, that whoever speculates for gain, in that mode, should also incur the hazards which attend it. The members of such associations, or those who represent them as agents or directors, must be presumed to know the amount and condition of their funds and resources; while others who contract with them, have not the means of estimating their joint funds. It, therefore, seems to me that the wisest and most salutary “ check against extravagance and abuse, in the management of the company concerns,” is in holding the individual members responsible for deficiencies, to bona fide creditors.
If a contrary doctrine be established, it will tempt men to speculate, on the public credulity, by rash and ill advised schemes, which, if they happen to succeed, may enrich the adventurers; but where failure and consequent ruin are the result, the calamity must fall on other heads than their own. Bold enterprise and adventurous speculation, for pecuniary profit, form one of the characier *542 fsiic foibles of out countrymen, and instead of being encou* raged and lured on by personal indemnity, that spirit ought to be checked and restrained by the impressive consideration of individual risk and responsibility.
This brings me to the question, whether the contract made originally by Reuben Skinner alone, with White, Taylor and White, was subsequently ratified and adopted by the directors of this company ? The only directors were Reuben Skinner, Wm. Raymond, jun. and Abner P. Hitchcock. The answer of Wm. Raymond, jun. “ denies that he ever approved of the said contract in any shape, or that be has ever intentionally done any act or thing to ratify the proceedings of the appellant.” “ He denies that ever the appellant consulted him upon the expediency of making the contract upon the terms ultimately concluded ; and if he had done so, this appellant would have dissuaded and protested against the same.” And Abner P. Hitchcock, (the other director) in his answer, “ wholly denies that he ever directly or indirectly gave his assent to said contract, before or after its execution.”
[Here his honor detailed the testimony taken in the cause.]
In regard to Hitchcock, the other director, I perceive no evidence that he was consulted, or that he assented to the contract before it was made.
[Here his honor stated the testimony of the witnesses.]
On weighing the evidence on this point, I concur in the opinion of his Honor the Chancellor, “ that there is not the requisite evidence that the two directors, Raymond and “ Hitchcock, ever authorized the making of the contract. ”
But, in my judgment the Chancellor erred in his next conclusion, viz. “ that the contract was never submitted to “ the consideration of the board of directors; and that it « never received their united deliberation and assent.”
It is proved, without contradiction, that soon after the contract was made, Skinner, as president, convened the board. All the directors attended ; he laid before them the contract which he had made with White Skinner and White, whicl) on the face of it explained, that he had assumed to act as their agent; their names were recited in it as the parties to be bound by it; they made no objection. One of them *543 moved a resolution for an assessment of $60 on each share, with an explanation, that it was intended for the express purpose of meeting the first instalment on that contract; and the time of payment was made to correspond with the contract, allowing time to send it to White, Taylor and White at Troy. The other director seconded the motion, and the resolution for such assessment was unanimously agreed to. On the 20th of May, 1815,' the three directors wrote to White, Taylor and White a letter, in the following words: “ The bearer, Mr. Nathan H. Raymond is authorized by us to call on you respecting the contract niade for machinery for the intended factory : several shares have been forfeited, and consequently the remaining stockholders feel embarrassed, and will of necessity have to abandon the business, unless some, alteration is made in the contract conforming to the circumstances of the present stockholders. The bearer is authorized to make such alterations as the company feel able to meet.” This letter was signed by all the directors ; and to me, it seems pregnant, in every line, with the most satisfactory evidence, that the directors had ratified and adopted the contract, and meant to treat it as if it had been duly executed by them all.
These facts are undeniably proved; and although the two directors swear in their answers, that they “ did not consent to, nor ratify the contract,” we must intend that they did not mean to deny these facts, which they soon after published in the church, to a host of witnesses ; but that they swore to what they understood to be the legal inference from those facts. On reviewing the whole series of conduct on the part of the directors, after the contract was presented for their ratification, my mind is irresistibly led to the conclusion, that it was adopted by them in their official character. They determined to carry it into effect ; and laid an assessment for that purpose: and thereby they made their election, and are concluded by it.
When Skinner told them “.he had fun the company in debt $15,000, and did not know how they would like it,” and presented to them the contract which he had sealed, good faith required, that they should thenh&ve taken theirstand, and have apprised him of their intention, if they meant to disavow *544 the contract, and throw the burthen on him alone. If they had done so, he might have found other associates, and provided other-means of carrying the contract into effect ; and secured himself against a ruinous loss, which now would be inevitable. “Ratihabitio retrotrahitur, e
It follows, therefore, that it would be inequitable to allow While, Taylor and White to sue out execution,until the measure of contribution is settled, . and a reasonable time has-been allowed to enforce it»
For these reasons, my conclusion is, that the decretal orders appealed from ought to be reversed.
Yates, J.
This appeal is from two decretal orders of tbeCourt of Chancery: the one is a reference to a master, as between the appellant and the respondents, White, Taylor and White, to ascertain and report the damages sustained by them, by reason of the non-execution and abandonment, on the part of the appellant, of the agreement between them of the 25th of April, 1815, requiring the master to report the amount due-to those three respondents, for the work done and the material's furnished, and for all other expenses by them bona fide and actually incurred, pursuant to the said agreement, prior to the 1st of August, 1815, when the further execution of *545 the agreement was abandonded, by reason of notice of the inability or refusal of the appellant to fulfil it; and also to ascertain and report, in addition thereto, the amount of the actual loss and injury, if any, which W. T. and W. may have sustained, by reason -of such abandonment of the contract, reserving the question of the costs and all further questions, until the coming in of the master’s report.
The other decretal order complained of, is, that the respondents were not bound to contribute to the damages which might be assessed and levied by and on behalf of the respondents, White, Taylor and White, against the appellant, upon the above mentioned contract, and ordering a statement of accounts by the master, in furtherance of such decision.
A suit at law having been brought on this contract against the appellant, for these instalments, amounting to $1900, it is insisted, that the judgment on the demurrer to the plea pleaded in that cause, has settled the question as to the individual responsibility of the appellant. In my view of the subject, this decision cannot be considered as conclusive. The fact is, that the suit in Chancery had been instituted, and all proceedings at law enjoined, before such judgment had been rendered. Besides, the ground of that decision against the defendant in the Supreme Court, was an emission in his plea in bar, of an averment that the appellant had authority to execute the agreement for the directors; and the bill and evidence clearly show facts and circumstances not available-in the defence at law ; and that the appellant, in order to secure the benefit of this evidence, has been obliged to resort to a court of equitable jurisdiction for relief. The judgment of the Supreme Court cannot, therefore, be deemed res judi~ cata, so as to preclude an equitable remedy.; nor does the decree of this Court, reversing the order of his honour the Chancellor for dissolving the injunction, establish the individual responsibility of the appellant, so as to prevent him from claiming his right to contribution from the members of the association, or some of them. That decree was made on the bill and answer of White, Taylor and White, which answer was then properly taken to be true, leaving to the appellant the right, afterwards, of disproving it, and bowing facts from which he might still be entitled to th® *546 contribution sought by the bill, and, as stated by the counsel, on the part of the appellant. The condition annexed, upon which the injunction was to be continued, of confessing a judgment in the suit at law, was an exercise of discretion by this Court, with a view to the security of White, Taylor and White, for any loss by suspension of the proceedings, without conclusively deciding with regard to damages. The question, therefore, whether the alleged authority in Skinner-to execute the contract for the other directors and the other stockholders, has been made out by the pleadings and evidence, subsequently taken in the cause to entitle him to contribution, still remained open, and, of course, was a proper subject of investigation for the court below, notwithstanding the judgment at law and,the decree of this Court.
In the decision of this Court alluded to, it is stated in the opinion delivered by me, that the respondents, White, Taylor and White were entitled to the damages sustained by them in consequence of the rescinding of the contract; and that from the circumstances disclosed, such rescinding must be d eemed to Jiave been by mutual assent, which placed the rights of the parties under it, on grounds different from what would have been the case, if White, Taylor and White had continued their operations. The profits, therefore, which might have been made, if the contract had been complied with on their part, I am inclined to think, ought not to be taken into account. It certainly was not intended by me, that -it should be considered a subject of inquiry, in ascertaining those damages. They had performed the contract in part; and as far as that had been done, they were entitled to just compensation in damages, for their actual losses and expenditures ; that is, as far as they had proceeded in complying with the contract.
It is undoubtedly settled law, that one person cannot seal for another, without express authority; and that by assuming to act.without it, a personal obligation is created. That au-thority may, however, in some instances, be by parol; as in the case of Ball v. Dunsterville, (4 Term Rep. 313.) where • a bill of sale was made by two partners, sealed with the seal of one of them, for and in behalf of himself and the other, and by the authority of the .other,., and in his presence ;—the *547 Court decided, that it was a good execution though sealed with the seal of one only.
The authority set up by the appellant, with regard to the execution of this agreement, has not been recognized, or assented to by White, Taylor and White, so as to confine them, in seeking compensation, to the directors, or the members of the association. There certainly appears to have been no previous resolution of the directors' or the company, entered in their minutes, expressly authorizing the appellant to execute it, or Skinner never could have expressed himself as he did, u That he had run ¡he company in debt, that day, to $ ¡ 5.000, “ and he did not know how they would like it.” Although this shows, that no resolution stating the terms of the contract specially, had been entered in the books of the company, still it is by no means conclusive that the appellant acted altogether without authority. The terms of the contract could not be known to the company until made, and he might in this conversation have alluded to the terms only. Under those circumstances, no doubt remains of the individual liability' of the appellant to White, Taylor and White, for the amount of the damages on the contract, as before stated, if they elected to resort to him exclusively. But this individual responsibility, under the control of White, Taylor and White, does not release the other stockholders from contribution. The conditional signature for the shares subscribed, so far implicated White, Taylor and White, as to subject their recovery to the equitable qualifications and restrictions necessarily arising out of the facts disclosed in the vase. The form of the contract, and signing, as for^the directors, must be deemed the exclusive act of the appellant, as it regards White, Taylor and White ; and cannot affect their remedy against him, except by subjecting it to the restrictions mentioned. If the assumption to seal for the directors, had been without their knowledge, or subsequent assent, and whollyunaccompanied by acts of recognition or ratifica'ion on their part, there must have been an unqualified recovery for the damages against the appellant, not subject to any restrictions by the Court of Chancery ; and he, of course, would have been without remedy against the other members of the company.
*548 It cannot, however, be denied, that the source from whence the payments were lo have been derived was known to both Parl*es ’ and having failed, the disappointment must have been equally unexpected to both; because the respondents, While, Taylor and White, subscribed the articles of the association, on an express condition or stipulation against assessments on themselves, until the factory should be in operation. They, therefore, knew that the payments were to be drawn from those assessments ; and the refusal of the stockholders to pay, when called upon, being an incident not to be avoided, and beyond the control of the appellant and While, Taylor and White, I can see no sound objection to its affording grounds for the interposition of a court of equity, in postponing the collection of the amount of damages which might be found against the appellant, until the question of contribution shall be settled between him and those of the company who may be adjudged liable to bear the burthen with him, and a reasonable opportunity afforded to enforce such contribution. It will readily he perceived, that by adopting this measure, recourse will be had, in the first instance, to the legitimate source from whence the parties to the agreement originally expected the fundsshould be derived. It is, therefore, no matter of surprize on White, Taylor and White. And this course, it would seem to me, is dictated by the soundest principles of equity; for it cannot be controverted, but that the present situation of the appellant has arisen from the default of others, without fraud or collusion on .his part; a result, as has been before stated, equally unexpected to both' parties to the ^agreement, and inevitable, as it regards the appellant.
This leads me to the question of contribution before alluded to ; and, on that subject, I am inclined to think, that the evidence fully authorizes the appellant’s claim, on some of the respondents, to contribute rateably to the payment of the amount of damages which may be recovered against him, according to their respective shares in the company.
That the appellant was about entering into a contract for machinery, was known to some of the company, is a fact which cannot be denied. And that the assent to the making of such contract by him had been obtained of some of the mem *549 Bers individually, also appears by the testimony of several witnesses. It must, however, be admitted, that according to She térms of the contract, such knowledge and individual assent alone, would not be sufficient to entitle the appellant to claim contribution from the other stockholders. If the contribution sought for, therefore, rested merely on what took place previous to the making of the agreement with White Taylor and White, I should entertain doubts on the subject. But connecting those facts and circumstances with the subsequent acts of the directors, it seems to me that sufficient appears to implicate all the stockholders, (except Nathan Doan, who bad forfeited his share before the contract had been entered into,) so as to render them liable to contribution.. For if the directors had the power, by the articles of association, to authorize an agent to make the contract, it would be extraordinary, indeed, if they, as principals, elected to> conduct the business themselves,-they should not be at liberty io do it.
The assessment of the 27th of April, only two days subsequent to the consummation of the contract, was unquestionably m.ade by them with a view to meet the payment of the first instalments; and the letter of the 20th of May, 1815, under the signature of the appellant, William Ray~ mond,jun. and Abner P. Hitchcock conclusively proves, that they, as directors, had recognized and adopted the contract made with While, Taylor and White. In that letter they state, that Nathan H. Raymond, the bearer, ivas authorized to make such alterations as the company felt able to tpeet 'Raymond was Treasurer to the association ; and it is evident that Ira Hall, Abraham Dayton and Reuben Wheeler, by their acts and declarations, recognized and adopted it. It cannot be pretended, that they did this without information as to the true situation of the company. It is, therefore, clear, that the subsequent acts of the directors evinced their views and intentions in relation to this agreement.. This ratification of the contract by the directors, in my view of the subject, establishes the appellant’s claim for contribution from all the stockholders. But admitting that the ■ assent of all was necessary to make them liable, the testimony ig conclusive, as to the interference of those who wye *550 stockholders at the time, and immediately after the contract had been entered into. Henru Buckley, a subscribing wit-V t>ng a conveyance with such covenants, he had produced his power to the purchaser, or that it was recorded, or that the grantee, in any way, knew as much of the power, or was chargeable with as much knowledge, of it, as, the attorney, and that there was no fraud, practice, or concealment by the attorney, would it not be a case of mutual error, in which the attorney would not be liable ? A gain ; to test the doctrine by the roles of pleading : the action is brought directly against the agent or attorney, alleging that he covenanted, 8zc. The deed, in the usual form, would be expressed to be made “ between A. B. of the first part, by C. J). his attorney, and E. F of the second part; and the covenant would be by the said party of the first part. How, then, could a declaration be drawn so as to charge the attorney ? If drawn in the usual form, the plaintiffmust fail, on the general issue. And I know of no precedent of a special declaration on the covenant in such a case, nor has any been shown.
Vide Ante, p. 60.
The case of Randall v. Van Vechten,* decided in May term last, shows, that even if the defendant puts his own hand and seal, and with express words of personal engagement, the covenant does not necessarily bind him. The court, in that case, resting on extrinsic circumstances, determined that the instrument was no deed, but merely evidence against the corporation of the city of Albany. That is a much stronger case than the present, in favour of the defendant. The court, however, put it on the ground, that an action was furnished against the corporation. It is not my duty to examine that ground ; and I cite the case merely to show that sealing and delivery, and express words of personal engagement by the agent, do not, of necessity, import personal obligation.
It comes, then, to this, that if the agent has been guilty of fraud, the common principles of law and equity, and the remedies founded on them, will reach him. If he specially engaged that bis principal should ratify his act, as in the ease in Vernon, the same remark will apply : an action or *569 bill adapted to the case, will be the proper course of proceeding.
Neither fraud nor contract can be presumed; they must be specially alleged and put in issue. They consutuie the gist of the action, and no conclusion against the agent can follow, until one or the other is affirmatively established. It would seem to me, that any other construction would lend to confound innocence with guilt, fraud with candour, and to break down the distinction between right and wrong. The analogy of the whole law is opposed to the principle of making a man answerable for an innocent mistake, whether of law or fact, or of presuming a fraud, unless it be charged against him, and proved. In no part of the proceedings, in the present case, before the court, do fV. T Sc W. charge the appellant S. with deceiving them; and it is perfectly manifest that they could not maintain such a charge, for they were equally parties to, and had equal knowledge of, the “ constitution ” of the company. All the parties signed at the same time, and are all alike chargeable with notice of who were the officers, and what were their powers. All were equally negligent of that salutary caution and accuracy in the form of such an instrument, which, had they been observed, would have saved them from great trouble and expense, and some of them from ruin. The relation of W. T. W. as members of the company, and their privity to its constitution, render it unnecessary to inquire what would be the effect of a contract between the company and strangers.
It has been argued, that if Skinner is not personally liable, some one must be so; that if the directors or stockholders are not personally liable, the contract wholly fails of effect, which would be absurd, and contrary to the plain equity and intent; and that, therefore, the appellant must be liable. I deny, first, all the premises in this argument; and, secondly, admitting the premises, I deny the conclusion.
IF the members of the company are not personally bound, W. T. W. may have a defective or void security. That is a misfortune which daily happens to other men. If the contract is not what the parties intended it should be, it does not, therefore, follow, that it is some other and different thing which they did not intend. B.ut, in my opinion,, the *570 contract, though very inartificially drawn, is a good and valid contract for all the purposes actually intended by the Part’es ; and ought to be carried into execution, as far as it may be, according to that intent. It conferred mutual rights, though it was not, perhaps, precise or equal in its terms. By the « constitution ” of the company, it is made the duty of the president and directors, “ to appoint a general agent, whose duty it shall be to purchase,” &tc. ‘‘ and, under the particular direction of the president and directors, to transact all such business as they shall deem best,” &z,c. They, therefore, are to judge what business is to he done, and it is to be done under their particular directions. Now, if R. S. entered into this contract, with the approbation and consent of the directors, that is a sufficient appointment of him as agent for the time. No form, election, or writing is necessary for that purpose; and as the agent was to do this business under the particular direction of the president and directors, I am inclined to the opinion, that they had an implied authority to do it themselves. The intervention of an agent was only for their own ease and relief.
On the 20th of May, the president and both the directors wrote a letter to W. T. fy W., which more fully recognises the contract as their own. They speak of the forfeiture of shares, and solicit an alteration of the contract. Their own shares were not then forfeited : at least, the thirty days were not then expired. The whole conduct of W. T. &/• W., in relation to this letter, shows that they recognised its principles ; otherwise, they would, at once, have replied, that they had no concern with the company ; that the forfeiture of shares did not affect them, and that they had no dealing with any one but Skinner, the appellant. The conduct of all parties, at this period, shows that they acted upon this as a valid contract with the company. A more complete ratification cannot well be imagined. The ratification is equally well proved by the fact attending the first asses>ment, which was made on eighteen shares, only, the other two shares being subscribed by W, T. & W. on the special condition, connected with their contract, that they should be exempt from assessment, for a certain time. It is difficult to suppose a more decisive recognition of the contract itself, than this act of the presi *571 dent and directors, in making this assessment two days after the contract. This subsequent recognition amounts to a catón—It does more: It is a fact from which assent and, participation at the time, may be, and ought to be inferred : and when so inferred, all difficulty is removed, for no writing, nor any particular form is necessary to give the contract validity.
The contract, then, was made or ratified by the proper agents of the company, and is binding, not upon the individuals, as such, but upon the company, in its collective capacity, that is upon its fund. If that fund proves too small; if it was liable to be withheld by a forfeiture of shares, it is the misfortune of W. T. 'ty5 on any of the proceedings previous to this de-
Barstow, Bouck, Bowne, Gurnee, Ha^brouck, Huntington, Judson, Lynde, Miles, Miller, Mooers, More, Paine, Rosencrantz, Seymour, and Townsend, Senator were of opinion that the decree of the Chancellor ought to be reversed.
Adams, Austin, Frothingham and Viele Senators, concurred in the opinion of Mr. Justice Van Ness, that the decree of the Court of Chancery ought to be affirmed.
A majority of the Court, * being of opinion that the decree of the Court of Chancery ought to be reversed; it was thereupon, “ Ordered, adjduged, and decreed, That the decretal orders of the Court of Chancery, appealed from, be reversed : And it is further ordered, adjudged, and decreed, that it be referred to a master of the Court of Chancery, to ascertain and report the actual damages, if any, sustained by White, Taylor and White, on the first day of August, 1815, under the covenant and agreement of the 25th of April, 1815, set forth in the pleadings; and that the master, with a view the more precisely to estimate such damages, ascertain and report the actual and bona fide expenditures, in materials and labour, incurred under and in fulfilment of the said covenant, on the first day of August, 1815 ; the profits which White, Taylor and White, would have made on such expenditures only, and the value of White Taylor and White, in market, or. that day, of the work so done, which value to be deducted from the amount of such expenditures and profits, together with interest, on the balance from the 1st of August, 1815, shall constitute the damages recoverable on the said contract. That it be referred to a master, to take and state an account between the appellant and all the respondents, except Nathan Doane, who were subscribing partners in the Granville Cotton Manufacturing Company, and the respondents, the representatives of Abner P. Hitchcock and Ira Hall deceased, who were, also, subscribing partners in the said company respecting the es« *573 late and the concerns of the said company : And, also, to ascertain the sum which such paitners, respectively, ought rateably to contribute to the damages,, if any, that shall be found due to White, Taylor and White. That the injunction against the judgment at law- be continued, until such contributions shall have been ascertained, and until it shall be found that payment thereof, except the contribution of While, Taylor and White, cannot be enforced out of what may remain of the clear estate of the said company, or by process of execution ; in "which case, the deficiency, and no more, may be diiectcd to be levied under such judgment. That the appellant’s bill, as to the respondent, Nathan Doane, be dismissed with costs, as to him, in the Court of Chancery, to be taxed. That neither of the parties have costs, as against each other, in this Court: And that the record be remitted to the Court of Chancery, to the end tha this decree may be executed.”
END OF THE CASES IN ERROR.
For reversing, 21 For affirming, 5.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/5474496. Public record. Not legal advice.