*

*

It becomes necessary to look into the legis- the corporation to be exercised under certain lation leading to this statute, and, since the penalties in case any of the restraining conprovision as to gas companies in the statute ditions were violated. is closely connected with similar provisions In this state of the law the Legislature of as to certain other public service corpora- 1893 appointed a joint special committee to tions, the examination should be correspond- sit during the recess and to consider among ingly extensive, so far at least as the provi- other things the expediency of such amendsions as to these other corporations tend to ments of our general laws relating to all throw light upon the interpretation to be corporations except municipal "as will better given to that applicable only to the gas com- protect the interests of the public as afpanies.

fected by corporations, and of stockholders In the early statutes authorizing the in- and bondholders therein," and to report in crease of stock not much was said about the print to the then next Legislature. The commanner of the issue. It could be issued by mittee reported in 1894 (Sen. Doc. No. 67), a vote of the corporation provided the issue recommending after careful consideration was for the purposes of the charter and the passage of certain bills, 12 in all, appenddid not exceed the amount of the capital au- ed to the report; and in accordance therethorized by law. St. 1830, c. 53, § 3; Rev. with 3 bills relating to the issue of stock · St. 1836, c. 38, § 11. Then came a provision by service corporations were passed, namely, that no share should be issued for a less St. 1894, cc. 450, 452, and 462. The first prosum, actually paid in cash, than the par val- vides that a gas company or electric light ue of shares first issued. St. 1851, c. 133, 88 company

"shall

issue only such 8, 16; St. 1858, c. 167; St. 1859, c. 104; Gen. amounts of stock and bonds, as may from St. 1860, c. 61, $$ 6, 9. Gas companies could time to time, upon investigation by the board increase their stock at will for the purposes of gas and electric light commissioners be of the business for which they were charter- deemed and be voted by them to be reasoned, subject only to the conditions that the ably requisite for the purposes for which stock should not exceed the amount fixed by such issue of stock or bonds has been authorthe charter or by a general statute, as the ized." The board are to file a certificate speccase might be, and that the payment for the ifying the amount to be issued and the same should be made in cash to the amount purposes for which it is issued, and the of the par value. St. 1851, c. 133, $$ 8, 16; proceeds shall not be applied to any other St. 1855, c. 146; Gen. St. 1860, c. 61, $$ 6, purpose. Penalties for violation of the act 15, 18.

are imposed, and jurisdiction in equity is Afterwards from time to time the provi- given to enforce the orders of the board. sions as to the issue, distribution and dis- The second statute applies to corporations posal, by sale or otherwise, of the addition- engaged in transmitting intelligence by elecal stock were modified. See as to aqueduct tricity and to aqueduct and water comcompanies, St. 1875, c. 161; Pub. St. c. 110, 8 panies and, mutatis mutandis, is the same 7; as to railroad corporations, St. 1871, c. as the first except that the question of neces392; St. 1874, c. 372, § 46; St. 1878, c. 84; sity is to be settled by the commissioner of Pub. St. c. 112, SS 58, 59; St. 1893, c. 315; as corporations. And so of the third statute to street railway corporations, Pub. St. c. (applicable only to railway and street rail113, § 16; St. 1893, c. 315; as to gas com- way companies), except that the board of panies, St. 1873, c. 39; Pub. St. C. 106, ss railroad commissioners is to judge of the 36, 39, 40, 41; and as to corporations where necessity. Of these 3 bills thus adopted by there is no other special provision made, St. the Legislature, being those numbered 5, 6, 1870, c. 179; Pub. St. c. 105, $ 20, and chap- and 7 in the report, the committee say that ter 106, § 34. There long has been also a they “are designed to accomplish the intelliprovision that no railroad corporation, tele- gent supervision, by competent officials, of graph or gas light company should declare the issue of stock and bonds by the class of any stock dividend or divide the proceeds corporations named in such bills, in order of sale of stock among its stockholders. St. that the stock and bonds so by them issued 1868, c. 310, $ 1; St. 1871, c. 389; St. 1874, c. may be confined to the amount reasonably 372, § 177 ; Pub. St. c. 105, $ 18, and chapter necessary for the accomplishment of the pur112, § 61; St. 1894, c. 450; R. L. C. 109, s poses authorized by the Legislature.” As to 20; St. 1903, c. 437.

the general reasons for proposing the legislaAlthough by these and other statutes con- tion recommended in the report, the commitsiderable restraint was imposed upon the is- tee speak as follows: sue of additional stock by public service cor

"To the end that reasonable dividends, in.porations, to the end that there should be no terest and profits should be paid only upon stock watering and that the public should a sufficient capital to properly conduct the not be correspondingly burdened, still, up to business of quasi public corporations, the 1894, there does not seem to have been any committee recommends the passage of the provision for any general supervision by a bills heretofore referred to. public board over the propriety or necessity

"The Legislature has many times enacted of the issue. That question was left to the laws providing for the supervision of the

1

good results. The committee is of the opin-, was the amount that might be issued only ion that such supervision, more freely exer- under the authority of the commissioners; cised, while it may not wholly prevent over without their authority no amount could be capitalization by forms not now anticipated, issued.” will tend to bring the corporations to which [3] Before St. 1894, c. 450, if a gas compa-, the bills apply into a compliance with the ny desired to issue additional stock to an spirit and intention of our laws; and while amount not in excess of the capital stock authe Legislature may at any time provide by thorized by law, it determined the question law for an increase of capital stock and whether the money to be raised was needed bonds for any purpose it sees fit, the commit- for purposes for which stock should issue, tee feels that in order to secure a more care- and also how much should be needed, and ful and thorough investigation of the appli- having so determined, it sold at auction cation of such increase, any such increase stock enough to raise that amount; and there should be subject to examination by some ex- was no supervision over these matters by a pert authority of the commonwealth, and public board. such the various boards or commissions are [4] In view of the legislation leading up to intended by our laws to be.”

St. 1894, c. 450, and of the obvious reasons, R. L. c. 109, $ 24, the statute under which so far as respects the public served by these the board acted in this case, is in substance corporations, and reasons somewhat different a consolidation of these three statutes of but equally obvious so far as respects the 1894, the words “reasonably necessary” being bondholders and stockholders, for a change substituted for the word "requisite."

which should result in an authoritative and [1] What are the powers of the board un- more efficient enforcement of the law as to der this section? It is to be premised that the issue of stock, we are of opinion that it this statute has nothing to do with changing was the manifest purpose and legal effect of the limit of stock as fixed by law either in this statute, re-enacted in R. L. C. 109, $ 24, a special charter or by a general law. It to change the whole method of the issue of deals only with the issue of stock within that stock by the public service corporations limit. It cannot go beyond that limit, al- therein named, and to take away from such though it may reach it. If for instance, any corporations and to invest in public officers one of the corporations named in this section the right to determine the general question desires to increase the limit already fixed of the reasonable necessity of the issue. by its charter or a general law, it can find And the decision of the board is final, unless no relief under this statute. (See in this con-based upon some error of law. nection St. 1874, c. 29, § 15, re-enacted in But in acting upon an application the Pub. St. c. 113, § 15, as an example of a stat- | board is engaged in the performance of a ute providing for such an increase beyond the quasi judicial function, and should be moved limit theretofore authorized in the case of a only by considerations logical to the issue railroad corporation.)

and not inconsistent with the rights of par[2] It is also to be noted that within its ties. It is not to be assumed that in vesting sphere of action the statute applies to every the board with the decision of the general issue of stock, whether it be the first or any question the Legislature intended that the subsequent issue, and is absolute. Of St. usual principles upon which stock could be 1894, C. 450 (re-enacted in this statute), properly issued were to be changed. The Knowlton, J., in Attorney General v. Mas- general question as to the necessity of the sachusetts Pipe Line Gas Co., 179 Mass. 15, issue for the purposes for which it was law20, 21, 60 N. E. 389, 390, says: "The act is fully authorized was the same and should be not directory, merely, but is, so to speak, ju- decided upon the same considerations, whethrisdictional. It prescribes the terms on er decided in the first case by the corporation which, and the method by which [a gas corpo- itself and, if need be, by the court after

( ration] can issue capital stock divided into wards), or by the board. There is no change shares. As to the right of a corporation to in the question nor of the principles upon fix the amount of its stock and to issue which it is to be decided. The only change stock it prescribes a prerequisite on which is in the party deciding it. the right to act depends. We think that the By what principles is the board to be elaborate requirements of section 1 of this guided in performing this function? It is statute were intended to be fundamental, un- not compelled to take for granted that the derlying the entire statutory authority of facts stated in the application are true. It such corporations to issue stock. Scovill v. may investigate and find the facts for itself. Thayer, 105 U. S. 143 [26 L. Ed. 968]. The [5] It is the duty of a public service corpofact that the special charter of the defend- ration to have its plant large enough to perant corporation fixes the capital stock at $1,- form the service for which it was establish000,000, with authority to increase it, does ed, and it has a corresponding right to have not give the corporation authority to issue such plant fairly capitalized. It is its duty any stock without a vote of the commission to keep up the plant, whether by repairs or ers . under the section just referred to otherwise, out of its earnings, and this duty

The amount fixed by the charter is superior to its right to distribute its earn

ings in dividends. If the time comes when and with that demand the corporation must the plant of the corporation is insufficient for comply. The company may demand fair the performance of its corporate duties to compensation for this service and with that the public, then it is subject to the same demand the public should comply. The corduty, and is invested with the same right poration can have no share in the benefit with reference to the additional plant as into the public, nor can the public have any the case of the original plant—the duty to share in the net profits available for diviincrease the plant and the right to capitalize dends. fairly the value of that increase.

[6] Upon the question whether there shall When the corporation has performed all be an issue of additional stock to meet liaits duties, and by its fortunate situation, bilities incurred in increasing the efficiency good management, or any lawful conduct has or value of the plant, the amount of undividremaining a surplus of earnings, it has the ed profits on hand at the time the liabilities right to distribute this surplus among its

were incurred or the expenditures made stockholders in dividends. As between the which thereafterwards and before the applipublic and the corporation the earnings be-cation to the board have been lawfully dislong to the corporation. In performing its tributed as dividends is entirely immaterial. full duty to the public and others it has we see nothing to take this case out of the done what it was chartered to do, and is

general rule. entitled to the profits of the business for which it was chartered. If there be any re

[7] Nor is this proposed increase a violaserved power in the charter whereby the tion of the statutory provision against the profits can be reduced or the charter revok issue of a stock dividend. It certainly is not ed, of course that power may be invoked if in form such an issue. Nor is it in substance. it appear that the charter is too favorable to The sum raised goes to increase the value of the corporation. And in the case of a gas the plant, for the purposes of the business company the profits may be reduced by an for which the petitioner was incorporated; order lowering the price of gas, if such order and that is none the less true even if these seems just and reasonable. R. L. C. 121, 8 34. expenses could have been paid by the funds The relations between a public service cor- since lawfully distributed as dividends. poration and the public to serve whom it is chartered are not that of a partnership, but the petition upon the grounds stated in the rather that of independent contracting par record there was error in law. ties. The public may demand proper service Writ to issue.

is. It follows that in the decision to dismiss

(2015 Mass. 303)

6. PRINCIPAL AND AGENT (89*)-COMPENSAWIER et al. V. AMERICAN LOCOMOTIVE

TION-RECOVERY-LACHES.
CO. et al.

Where a manufacturer gave an agent the

exclusive right to sell its automobiles for a (Supreme Judicial Court of Massachusetts. commission, and the agent contemplated that Suffolk. June 18, 1913.)

taxicabs were included in the word “automo1. APPEAL AND ERROR ($ 1056*)—QUESTIONS view of the cordial relations existing, that he

biles," but the manufacturer did not believe, in REVIEWABLE-EVIDENCE-IMMATERIALITY. Where the rule of damages for breach of while the agent never waived his right thereto,

would be called on to pay the commissions, contract adopted by the trial court was correct, but frequently demanded payment thereof, the exclusion of evidence affecting only the though he made no attempt to collect the same question of damages was immaterial.

prior to the bringing of suit therefor in Janu[Ed. Note. For other cases, see Appeal and ary, 1912, and the agency terminated in 1908, Error, Cent. Dig. $$ 4187-4193, 4207; Dec. the agent was not guilty of laches, barring reDig. § 1056.*]

lief. 2. APPEAL AND ERROR (§ 1010*)-FINDINGS- [Ed. Note. For other cases, see Principal and CONCLUSIVENESS.

Agent, Cent. Dig. 88 216, 229-239; Dec. Dig. 8 The findings of the trial judge, who saw 89.*] and heard the witnesses, must stand, unless 7. PRINCIPAL AND AGENT ($ 82*)—BREACH OF plainly wrong.

CONTRACT-MEASURE OF DAMAGES. [Ed. Note.-For other cases, see Appeal and Where a manufacturer of automobiles, who Error, Cent. Dig. $$ 3979–3982, 4024; Dec. gave to an agent the exclusive right to sell auDig. § 1010.*]

tomobiles in specified territory for a commission 3. PRINCIPAL AND AGENT ($ 81*)—RIGHT TO of 20 per cent. of the list price, sold automo

COMMISSIONS-CONSTRUCTION OF CONTRACT biles in the territory below the list price, the -“AUTOMOBILES."

agent was entitled to recover the specified comWhere defendant, a manufacturer of au- mission on the list price on automobiles sold, tomobiles, who had made experiments with a less the expense which he would have incurred view of manufacturing taxicabs, gave the ex- in making the sales. clusive right to sell its automobiles to plaintiff [Ed. Note.-For other cases, see Principal and for a commission, and during the life of the Agent, Cent. Dig. $$ 216–219; Dec. Dig. § 82.*] agreement defendant manufactured taxicabs, and plaintiff negotiated for their sale, and the

Report from Superior Court, Suffolk Counmachines were actually delivered by defendant ty; John C. Crosby, Judge. to the purchasers, and plaintiff, after making Bill in equity by Charles J. Wier against such sales, repeatedly requested payment of the the American Locomotive Company and ancommission thereon, but defendant never promised to pay commissions, or admitted that they other, in which the Park Square Automobile were due, and while the contract was in force Station, a Maine corporation, was admitted sent out notices to agents who had similar con las a party plaintiff. The court made varitracts, stating that no commissions would be allowed on the sale of taxicabs. but no notice ous findings and rulings, embodied in a memwas received by plaintiff, and he had no knowl-orandum of rulings, findings of fact, and oredge thereof, a finding that the term "automo- der for decree, and reported the case to the biles" included taxicabs was justified; the word “automobiles" ordinarily including "taxicabs." Supreme Judicial Court for determination.

[Ed. Note.-For other cases, see Principal and Decree for plaintiff ordered. Agent, Cent. Dig. $8 194-214, 219, 223; Dec. The suit was begun in January, 1912. The Dig. § 81.*]

contract referred to was made January 2, 4. CONTRACTS ($ 155*)-CONSTRUCTION-MEAN-1908, and should continue until October 31, ING OF WORDS.

The words of a contract, if doubtful, must 1908, unless sooner terminated by either parbe construed most strongly against the party ty on notice. preparing the contract under the direction of

Sawyer, Hardy & Stone, of Boston (Edits general counsel.

[Ed. Note.-For other cases, see Contracts, ward C. Stone, of Boston, of counsel), for Cent. Dig. § 736; Dec. Dig. § 155.*]

plaintiff. R. G. Dodge and F. W. Johnson, 5. ACCOUNT STATED ($ 4*)--PRINCIPAL AND both of Boston, for defendant.

AGENT (S 81*)-ACTS CONSTITUTING-CON-
TRACTS-COMPENSATION.

DE COURCY, J. It is not now in dispute Where the manager of a corporation, given that the real parties in this case are the the exclusive right to sell a manufacturer's automobiles, frequently demanded payment of Park Square Automobile Station, a Maine commissions on taxicabs sold, and the manu- corporation herein referred to as the plaintiff, facturer had no reason to believe that the right and the American Locomotive Company, a to the commissions was waived or abandoned, a subsequent agreement between the manufac- New York corporation hereinafter referred turer and the owner of all the stock of the cor- to as the defendant. The question involved poration, which fixed the amount of the claim in the trial was whether the plaintiff is enof the manufacturer against the corporation, titled to damages, and if so, how much, on while the assets of the corporation included no claim against the manufacturer, did not amount account of an alleged breach of a certain to an account stated, so as to preclude the cor- contract, whereby the plaintiff was given the poration from recovering commissions, nor op-exclusive right of sale of the defendant's auerate as an estoppel against the corporation; it not appearing that the owner of the stock tomobiles in certain counties of Massachuhad any knowledge of the taxicab transactions setts for a given period, and the defendant which might bind the corporation.

agreed not to sell such automobiles within [Ed. Note. For other cases, see Account Stat- that territory except to the plaintiff. The ed, Cent. Dig. SS 14, 15; Dec. Dig. $ 4;* Principal and Agent, Cent.' Dig. $$ 191-214, 219, contract was executed January 1, 1908, be223; Dec. Dig. $ 81.*]

tween the plaintiff and the American Locomotive Automobile Company, which later was "5. The evidence shows that the American merged in the defendant company, and the Locomotive Automobile Company had not defendant recognizes the contract as binding manufactured or sold taxicabs prior to the upon it. The breach complained of is the date of its contract with the plaintiff comalleged sale in Boston by the defendant itself pany, but that about the time said contract of 50 taxicabs to the Taxi Service Company, was entered into plans were under considerand 10 to the Armstrong Transfer Company, ation and experiments made with a view to during the term of the contract.

such manufacture and sale. During the year The trial judge filed a memorandum of 1908, while said contract was in force, six facts found by him, declined to make certain taxicabs were sold to one Cummings about findings and rulings requested by the defend- which a special arrangement was made and ant, and in view of his findings and on all under which arrangement the plaintiff comthe evidence ruled that the plaintiff is en-pany was paid a commission of $100 on each titled to a decree ordering the defendant to taxicab so sold. I further find that while pay the sum of $39,600 with interest thereon said agreement of January 1, 1908, was in from the date of the filing of the bill. The force the American Locomotive Automobile report of the case to this court states: “The Company sold and delivered in Boston 50 defendant desires to have the full court pass taxicabs to the Taxi Service Company for upon its exceptions to my rulings on points $2,600 each, and 10 taxicabs to the Armstrong of evidence, and also desires to have the full Transfer Company for $2,600 each. I find court pass upon all the evidence in the case that the list price of sale taxicabs according with a view to determining as to the correct to the price list furnished and promulgated ness of my findings and rulings. In order by the American Locomotive Automobile that all these matters may be submitted to Coinpany was $3,350 each. the court at one time, I now at the request “6. I find that it was within the contemof the defendant American Locomotive Com- plation of the parties when the agreement of pany, and with the consent of the parties, re- January 1, 1908, was entered into that taxiport the case and the questions of fact and cabs were included in the word "automolaw arising therein, it being intended hereby biles," although at the date of said contract to present to the court all the questions that no taxicabs had been manufactured by the would be raised by a bill of exceptions and American Locomotive Automobile Company. by an appeal after decree.”

I find that Whitney, the manager of the Park [1] The only exceptions as to evidence now Square Auto Station, began the negotiations insisted upon by the defendant relate to the with the representative of the Taxi Service exclusion of a question to the witness Best, Company for the sale of taxicabs and took and the offer of proof made in connection him to the defendants' factory in Providence, therewith. These affect only the question of R. I., and there conferred with the repredamages and admittedly are immaterial if sentatives and officers of the defendant comthe rule of damages adopted by the court is pany; that afterwards and during the term correct. In view of our decision on that issue of the agreement of January 1, 1908, and later, the exceptions as such need not be fur- while it was in force, said 50 taxicabs were ther considered.

sold by the American Locomotive Automobile [2-4] On the merits of the case, the first Company to the Taxi Service Company. I contention of the defendant is that it was not further find that Whitney, as manager of the intended by the parties that the word “au- plaintiff company, since said sales of said tomobiles" in said agreement should include taxicabs to the Taxi Service Company and to taxicabs. There is strong support of this the Armstrong Transfer Company has review in the evidence. Neither the defendant peatedly made requests to Manager Joyce of nor the American Locomotive Automobile the defendant company for payment of the Company had manufactured taxicabs com-commissions upon said sales, but that said mercially before the time when this contract Joyce never promised Whitney to pay the was made. The conduct of the plaintiff's same or admitted to Whitney that such commanager, Christopher F. Whitney, at the time missions were due or payable, and none of of these sales, and his failure to assert a said commissions have ever been paid. I claim at an earlier date than he did, especial further find that after January 1, 1908, and ly in view of the financial difficulties of the while the contract of that date was in force, plaintiff and its indebtedness to the defend the defendant company sent out notices to ant, tend to show that he construed the con- agents who had contracts with it similar to tract as not covering the sales of taxicabs. that which it had with the plaintiff company, On all the evidence the trial judge regarded stating in substance that no commissions this question as a close one and so stated. would be allowed in the sale of taxicabs. I

The judge found as a fact, however, that find, however, that no such notice was re"the word 'automobiles' as used in the agree-ceived by the plaintiff company, and that its ment of January 1, 1908, includes taxicabs officers or agents did not have knowledge of and was so understood and intended by the said notice." parties thereto." And his memorandum pro- By the long-established rule these findings

.