Hix v. Edison Electric Light Co.

PATTERSON, J.

This is an appeal from a judgment in favor of the plaintiff, entered upon the verdict of a jury, and from an order denying the defendant’s motion for a new trial. The case was twice tried. On the first trial, the complaint was dismissed, but, on appeal to this court, the judgment was reversed, and a new trial ordered. 41 N. Y. Supp. 680.

The action was brought on a contract of employment. The issues joined by the pleadings are few and plain. The plaintiff alleges that he was employed by the defendant to promote and organize, for the benefit of the defendant, a company to be known as the Edison Electric Light Company of Philadelphia, upon an agreement of the defendant to pay him, as compensation for his services in that matter, 15 per cent, of the capital stock of the Philadelphia corporation, which stock was then fixed at the sum of $1,000,000, and, in addition thereto, 5 per cent, of the stock upon any future increase of the capital of that Philadelphia company. He also alleges that he performed the service for which he was employed, and received from the defendant the 15 per cent, of the stock on the capitalization of $1,000,000, and that subsequently the capital stock of the Philadelphia corporation was increased by three separate issues of shares; that he became entitled to one-fifth of that increase; that he demanded the same from the defendant, who refused and neglected to deliver any part thereof (and certain dividends declared thereon), and he demanded, as damages, judgment in a certain amount. The answer of the defendant puts in issue the employment of the plaintiff, the performance of services by him, and the increase of the capital stock of the Philadelphia Company, to the amount of such increase, as claimed in the complaint, but admits that an increase had taken place. The answer also denies the plaintiff’s being entitled, by reason of any of the facts mentioned in the complaint, to recover anything from the defendant; and it denies that the defendant has neglected or refused to comply with any demand, and denies that any demand had been made for any shares of stock or the value'thereof, and then, as a separate defense, sets up that the plaintiff, for a good and valuable consideration, executed and delivered to the defendant a release, under seal, of all and every claim held by him against it, of every kind and nature whatsoever, and of all and every sum or sums of money due or to grow due thereon. These are the only issues presented by the pleadings.

The plaintiff’s claim was based upon a written memorandum, signed by one Johnson, the president of the defendant. Johnson’s authority to execute it on behalf of the defendant was clearly proven by himself, and it was also shown that the memorandum was made after authority received from the executive committee of the board of directors of the defendant. On the former appeal we held that that written memorandum, thus signed by Johnson, the president, on the 23d of February, 1886, a duplicate of which was delivered to the plaintiff at the time it was signed, constituted the contract entered into between the parties to this action, and contained all the terms agreed upon, and that the plaintiff’s right to recover the 5 per cent, on the increase of capital of the Philadelphia Company depended, in the first place, upon his establishing that he was the person referred to and meant by the words “present promoter,” in the second branch of the contract, as it was then designated. We also held that, there being ambiguity in those words, as relating to the person intended to be pointed out by them, evidence might be given of surrounding circumstances, as well preceding as attending the execution and delivery of that paper, and also of the acts of the parties under it, to aid in its construction. Upon the last trial, evidence presenting the respective claims of the parties as to who was the “present promoter,” within the meaning of the contract, was given; and the jury, by their verdict, in effect found, upon a very serious conflict of evidence, that the weight of that evidence established the plaintiff’s claim that he was the person entitled to the 5 per cent, on increased capital, sued for. All of the evidence referred to was upon the direct issue as to the compensation of the plaintiff; the contention on the part of the defendant being that the words “present promoter” referred to a Mr. Jamison of Philadelphia, and not to the plaintiff, and that, although a contract of employment was shown, yet the provision as to 5 per cent, related to remuneration to be paid to another than Mr. Hix.

In deciding the former appeal, we had occasion to call attention to the fact that the contract entered into between the plaintiff and the defendant was divisible into two parts, so far as compensation was concerned. It stated that the Edison Company was to receive 35 per cent, of the Philadelphia Company’s capital of $1,000,000,-30 per cent, in stock and 5 per cent, in cash; promoters, 10 per cent., stock, rebate from Edison Company’s 35 per cent; Hix, 5 per cent., from Edison Company’s 25 per cent. That provision related to the then fixed capital of the Philadelphia Company. The second branch of the contract was as follows: “Future increase of capital: 35 per cent., stock, to Edison Company; rebate of 5 per cent, to present promoter.” There is no controversy as to the subject-matter of these two provisions. They relate to compensation to be paid to somebody for services in the organization of the Philadelphia corporation. There is no dispute that Hix was employed by the defendant to organize that company, but it does appear that, in the performance of the work in Philadelphia which resulted in the establishment of the Philadelphia Company, Mr. Hix enlisted the services of a Mr. Jamison, through whose agency and participation, and by reason of whose financial relations in that city, the company was established. The issue was, therefore, raised as to whether the 5 per cent, was to go tó Jamison or to Hix, as “present promoter.” Upon that issue, testimony was given on both sides as to the conversations preceding the making of the memorandum, and one significant fact is admitted, namely, that, although the defendant’s officers were informed that Jamison was interested in the organization of the company, and was to receive some compensation for service rendered in that connection, he was not to be known in the matter as having any interest in any compensation that was to be paid to anybody for services performed for the defendant in the formation of that Philadelphia Company. It was clearly shown that no privity of contract whatever was to exist between Jamison and the defendant.

But, apart from that consideration, Hix testified, at the last trial, that in the conversations he had with Johnson, leading up to the making of the memorandum, he stated that he wanted 15 per cent, on the first capitalization and 5 per cent, upon the increase; that Johnson remarked, “This is a large percentage;” and Hix then said that he (Hix) would have to give away at least 10 per cent, of the first 15 for parties who would assist in placing the stock, and that then, as he had to pay all his own expenses, and the expenses of forming the company, the 5 per cent, left on the first capitalization would be very little for him, and that is why he wanted 5 per cent, on the increase. He testified that then Johnson sat down and wrote the memorandum,— the evidence of the contract. This witness also testified, on cross-examination, as to what his relations with Jamison concerning the matter were, namely, that Jamison was to receive 10 per cent, of the first allowance of 15 per cent, and that for that 10 per cent. Jamison was to place the stock in Philadelphia, or help Hix to do it. Jamison was the principal party, according to this witness, who was to render that service; but he was to receive his compensation through and from Hix, and not from the defendant. Mr. Johnson contradicts Hix with reference to this conversation, and Mr. Hastings gives testimony, also, contradictory of the plaintiff. Mr. Johnson swears that Hix stated to him, before the memorandum was made, that he had found a man to form the Philadelphia Company; that that man wanted 10 per cent.; and that he (Hix) wanted 5 per cent, of the total capitalization of the local company. Mr. Johnson testifies that Hix said distinctly that Jamison was the promoter, and that he certainly did not state that he (Hix) was himself the “present promoter.” There was, therefore, a dear conflict between these parties upon this subject.

But, further, the acts of the officers of the defendant are invoked by the plaintiff to indicate the practical construction they gave to the agreement. The 15 per cent, on the first capitalization was given to Hix. He received and distributed it. He paid the 10 per cent, of stock, or caused it to be paid, to Jamison. Again, Hastings, the secretary and treasurer of the defendant, corresponding with a partner of Jamison with relation to the 10 per cent, of the first compensation of 15 per cent., under date of June 18,1888, says:

“Consulting with our attorney, this seemed to he the only practical way of arranging the matter, as the board knows only Mr. Hix as the agent. This memorandum, while it recites the entire arrangement, in the first and second recitals, binds ourselves to deliver $100,000 to Mr. Hix. Mr. Hix will then execute a formal assignment of this memorandum in such manner as your attorneys may prescribe.”

That letter was written, evidently, with reference to some demand of Jamison, or his firm, concerning the $100,000, and indicates that the corporation knew only Hix as the person entitled to receive that money, and that it must go through his hands, or by his appointment, to Jamison.

But, in addition to that, there was evidence given by Jamison, who was examined as a witness, at the last trial, and his testimony is clear to the effect that he had no interest whatever in the matter, even by agreement with 'Hix, beyond the amount to be received from the 15 per cent, in the first branch of the contract. He swears that he had no contract, written' or oral, of any ldnd, with the defendant, entitling him to claim or receive from the defendant any stock or any commission for services in promoting the organization of the Philadelphia Company. He did demand, and did receive, the 10 per cent, of the 15 per cent., and there his interest in the matter ended.

There was evidence,- consisting of letters and statements of Hix, which undoubtedly, standing alone, would tend to show that the words “present promoter” meant either somebody other than himself, or somebody in association with himself. But, upon all the conflicting evidence, it was for the jury to find what were the facts in connection with which the words “present promoter” were used; and, on that conflicting evidence, having found those facts to be such as the plaintiff claimed them to be, the interpretation of those words would necessarily follow, that it was the plaintiff who was entitled to the 5 per cent, on the increased capital of the Philadelphia Company. The justice presiding at the last trial gave proper instructions to the jury respecting this issue, and to the matter of credibility of Jamison, by reason of his having some possible interest in the result of the action; and in none of the rulings upon this subject do we find that there was any error requiring a reversal of the judgment, and we do not find that the verdict was against evidence, or the weight of evidence, or that we should interfere with it on that ground.

There was another issue before the jury, however,—that concerning the relations of the defendant to the Philadelphia Company, and the increase of the capital of that corporation. It was claimed by the defendant that it was not shown that it had received the 35 per cent, of such increase. On the former appeal, we held that the plaintiff would not be entitled to recover anything on the first increase of capital, for reasons not now necessary to repeat. We also held that, upon the facts as they then appeared, it was not necessary for the plaintiff to show that the 35 per cent, of the second and third increases was actually received or came into the possession of -the defendant. That was so held because the record contained proof that the defendant had disabled itself from receiving its share of such increases, or had bargained away its right to receive that share. That matter is again before the court on this appeal in a somewhat different form. On the former appeal the point was raised that the plaintiff was not relieved from the necessity of showing that the defendant had received the percentages of increased capital. It appeared on the first trial, as on the last, that all that was done respecting those increases was between the Philadelphia Company and the General Electric Company, an independent corporation, which, the plaintiff claimed, was the successor of the defendant, and took over its contracts, carried on its business, was authorized to bind it, and acted for it in every respect, in the particular matters out of which the plaintiff’s claim for the additional 5 per cent, arises. On the former appeal, we treated the General Electric Company as the defendant’s successor, because, on the first trial, it had been assumed by both parties that such was the case. No point had been made that it was not so until the appeal was heard by us, and we remarked that what was deemed sufficient proof was furnished, and, if the plaintiff inopportunely stopped, it was undoubtedly because the facts as to the relations of the predecessor and successor company were assumed by both sides. The defendant insisted, on the last trial, that the relations between the two companies were not established, and also that the burden of proof was on the plaintiff to show those relations. It neither denied nor admitted them, but stood upon its undoubted right to demand that the plaintiff prove all his case, in every element necessary to fasten liability upon it. At no stage of the trial did the defendant offer any evidence upon this subject. The claim made by the plaintiff in this connection is that the General Electric Company, succeeding to the business of the defendant, stood in its place in contract relations with the Philadelphia Company, and thus, having abundant power to do so, modified "the contract between the defendant and the Philadelphia Company, by reducing the percentage on increases of capital from 85 to 10 per cent., in consideration of which the Philadelphia Company surrendered to the General Electric Company all the right it had to carry on the isolated lighting business in the city of Philadelphia,—a feature of its corporate industry the right to prosecute which it had originally derived from still another corporation, while the business of central station lighting it acquired from the defendant. The legal effect of this claim of the plaintiff, if it be established, is that the General Electric Company became the agent of the defendant in all the transactions connected with the increases of the capital of the Philadelphia Company, that by its acts the defendant is bound, and that the acts were of such character as to render the defendant liable for the value of the 5 per cent, of increases sued for.

In the effort to make the proof required to connect the General Electric Company with the defendant, documentary evidence was offered, containing declarations and narrating acts of the General Electric Company tending to show its authority and power to bind the defendant. That documentary evidence consisted of a letter written by the officers of the General Electric Company to the committee of the Stock Exchange of New York, the purpose of which was to have the stock of the General Electric Company listed among the securities dealt in on the Stock Exchange. After making exhibition of its affairs and business, it was stated in that letter that the General Electric Company practically owned all the stock of the defendant. Hiere was another piece of evidence, consisting of a circular issued by the Philadelphia Company to its stockholders, in which it was stated that the General Electric Company was the then present owner of the defendant, the Edison Electric Light Company of New York, and that circular was issued in connection with the proposition to increase the capital of the Philadelphia Company beyond $1,000,000,—the very increase out of which the plaintiff’s demand arises. There was also further documentary evidence of a waiver by the General Electric Company of some part of the royalty secured to the defendant by the original contract of the Philadelphia Company, and also agreements between the General Electric Company and the Philadelphia Company with reference to the affairs between the latter company and the defendant. All this documentary evidence was objected to by the defendant, on the ground that it was “res inter alios acta.” After its admission in evidence, motions were made to withdraw from consideration those parts of the documents which referred to the relations of the General Electric Company with the defendant, or to limit the consideration of the jury to such parts of that evidence as did not affect the subject of such relation. It is quite true that neither of these documents, considered independently, was admissible in evidence as proof against the defendant at the particular time in the course of the trial at which each was offered; but it is also true that, if there were other competent proof from which the inference of agency could be drawn as matter of law or of fact, that" being established, all these documents were admissible to show acts of the defendant binding upon the principal. So that, if independent proof is in the record at all, the matter of the admission of the documents objected to only presents a question of the order of proof, which was within the control of the court.

It is not to be controverted that agency may be established, either by direct or indirect proof. There is no direct proof in this case to show any devolution of authority immediately conferred by the defendant upon the General Electric Company to act for it in the transactions embraced in the contract with the Philadelphia Company; but it was not necessary that such direct proof should be given. The mere statements of the officers of the General Electric Company that that company owned all the stock of the defendant, and that it had succeeded to its business, or that it controlled it, would not be sufficient to establish agency. But if we find in the record evidence of acts done, apparently with the acquiescence of the defendant, affecting its interests, dealing with its property and securities under the very contracts in question,—acts of such a character as to imply, in their nature, knowledge and acquiescence of the defendant,-—we find enough to at least throw upon the defendant the obligation of showing that such acts, and the possession of the property of the defendant, and its control and management, was not with its consent or knowledge. Such evidence is found there. A communication was made by the Philadelphia Company to the defendant with reference to the increase of stock of the Philadelphia Company. Before the first dividend was declared, Mr. Marks, the president of' the Philadelphia Company, wrote to the defendant that the board of directors of the - Philadelphia Company had resolved to issue a stock dividend of 20 per cent, on its capital to the then present holders of the stock in that company, payable October 1, 1892, provided the General Electric Company of New York will allow the issue of $200,000 free of the 10 per cent, royalty provided by the contract of July 15th. That contract of July 15th recites that the General Electric Company, acting for the Edison Electric Light Company of New York (the defendant),' and for all other companies of which it now has the control, agrees, etc. Here, then, is a communication directly between the Philadelphia Company and the defendant, referring to an increase of capital stock, stating to the defendant that that increase is dependent upon the allowance of a certain thing by the General Electric Company. That letter was answered by the General Electric Company as follows:

“Referring to your letter of September 20th, addressed to the Edison Electric Light Company, would say that we will consent to waiving our royalty of 10 per cent, to your increase of stock created for the purpose of paying stock dividends.”'

It is not an answer to this to say that no presumption is created of the acquiescence on the part of the defendant in the General Electric Company representing it and acting for it in the matters of the increase of stock of the Philadelphia Company. The defendant, in its answer to the complaint herein, admits the increase of the capital of the Philadelphia Company. In the communication made to the defendant by the Philadelphia Company is a direct reference to the contract of July 15th. The Philadelphia Company’s communication is not replied to by the defendant, but is answered by the General Electric Company; and that thing is done by the General Electric Company which "the defendant is notified is to be the basis of the whole increase contemplated at that time of the capital of the Philadelphia Company. Here is as complete an acquiescence by inaction of the defendant and action by the General Electric Company as could be shown, and amounts to much more than a moral conviction that the General Electric Company stood in the place of the defendant. It is as strong proof as could be furnished, indirectly, of the relations of the General Electric Company with the defendant. But, in addition to that, we find the General Electric Company actually in possession of an obligation of the Philadelphia Company for the sum of $30,000, which it surrendered to the Philadelphia Company at the time the second increase of capital stock was made by that company; thus showing the relation of the General Electric Company to that second increase, in acting for or in the interest of, or as the successor to, the defendant, in surrendering that which it had received in part performance of the contract between the Philadelphia Company and it.

Under this state of the proof respecting the successor ship of the General Electric Company, and its right and power to act for the defendant, all of the acts of the General Electric Company in the business directly connected with the increases of the capital stock became admissible to show what was done, and wherein liability would accrue to the defendant by reason of those acts of the General Electric Company; and the instructions that were given to the jury by the learned justice at the last trial upon that subject were correct, viz. that under the state of the evidence and in contemplation of law, as to the particular subject of the action, the General Electric Company became the successor in interest of the defendant, and had the right to bind it, and that, if the jury believed that the defendant knew that the General Electric Company was acting or claiming to act as its successor in interest in the matters involved in this action, and stood by” and acquiesced in its so acting, it could be estopped from now claiming that the General Electric Company had no authority so to act.

But the further defense was made that the plaintiff had released all his claim against the defendant. The release pleaded was not proven. We held, on the former appeal, that a release could not be inferred from the acts of the plaintiff with reference to the change in the contract between the defendant and the Philadelphia Company by which the royalties on increases of capital were reduced from 35 per cent, to 10 per cent. We do not consider that subject-open for further discussion. It is claimed, however, by the defendant, that although these transactions have been adjudged not to amount to a release, yet the conduct of the plaintiff establishes an election on his part; that he accepted a benefit accruing out of the modification or partial rescission of the contract; and that to allow Mm now to claim upon the original basis of 35 per cent, would permit him to maintain inconsistent positions. The abstraction urged by the learned counsel for the appellant may be incontestible, but the fact appears in this case that the change in the contract between the Philadelphia Company and the defendant and the General Electric Company was for a consideration passing to the defendant or the General Electric Company, namely, the relinqmshment by the Philadelphia Company of the important business of isolated lighting, which may well have been regarded as an equivalent to the defendant or the General Electric Company for the surrender of 25 per cent, of the 35 per cent, of royalties on increased capital. We have no way, in this case, of adjusting the advantages or disadvantages to either corporation involved in that surrender by the Philadelphia Company; and, before the plaintiff could be held to be bound by an election, we would require more elements of proof than are furnished upon this record.

We find no other exception in the record that requires specific consideration. The evidence, we think, justified the verdict of the jury. It is not shown that the plaintiff agreed to be deprived of his reward by the defendant—Ms principal—bargaining away its right to receive the fund. For all that appears, that principal may have received a full equivalent; and we have nothing to add on tMs subject to what was stated in our former opinion.

The judgment appealed from should be affirmed, with costs.

VAN BRUNT, P. J., and O’BRIEN and McLAUGHLIN, JJ., concur.