Bay View Homestead Ass'n v. Williams

By the Court, Crockett, J.: On the 1st day of March, 1869-, the plaintiff was a homestead corporation, owning lands in the suburbs of the city of San Francisco, and the Potrero and Bay View Bailroad Company was a corporation then owning and operating a line of street cars from the more populous parts of the city to or in the direction of the plaintiff’s lands. At that time the defendant Williams was the treasurer of the corporation plaintiff, and on that day the defendant Graves made a proposition in writing to the plaintiff, representing that he had made arrangements and intended to purchase a controlling interest in the stock of the railroad company, and proposed to extend and improve the road and to reduce the fares thereon in certain specified particulars, provided satisfactory arrangements could be made with the plaintiff and several other corporations, “for pecuniary aid and moral support in the undertaking.” Thereupon the trustees of the corporation plaintiff adopted a resolution reciting that the association had by resolution authorized them to agree upon such terms as they should deem advisable with the railroad company to aid in the improvement of the road, and that the railroad company had proposed to the plaintiff to make certain improvements, and thereupon the trustees “Resolved, That this company or association does hereby hold itself firmly and truly bound unto the said Potrero and [355]Bay View Bailroad Company in the sum of $10,000, payable in gold coin of the United States, subject to the following conditions.” The improvements to be made are then specified, and one of the conditions is that the railroad company shall agree, after the improvements are made and the fares reduced, to maintain the same for the period of ten years. It was further resolved that a certified copy of the resolution be furnished to the railroad company “for its security as to the promises and agreements of this company, contained therein, provided said railroad company shall, by due authority, first filed with the secretary of this association, express its assent and acceptance of the terms of this contract.” It appears in the case that, about this time, the defendants became the equitable owners of nearly all the outstanding stock of the railroad company, leaving the legal title, however, in the vendors from whom it was purchased, as security for the unpaid purchase-money. Thereupon the defendants immediately proceeded to make the improvements in the road specified in the resolution of the plaintiffs’ board of trustees, and within the specified time had performed all the requisite conditions in respect to the said improvement, the running of cars, rates of fare, etc., and in performing the work had expended a large sum of money. In the meantime the plaintiff, for the purpose of providing a fund for the payment of the $10,000 when it should become due, if at all, had collected that amount through an assessment of its stockholders; and when collected it was received by the defendant Williams, then the plaintiff’s treasurer, and the proper custodian of the fund. It appears from the evidence (and without contradiction, so far as I can discover from the record) that the $10,000 was expended by Williams in the performance of the work on the road, with the knowledge, and with at least the implied consent of the plaintiff’s board of trustees. It is distinctly shown that the president and trustees were fully aware that the money was being so expended, and there is no proof that they, in any manner, expressed or intimated their dissatisfaction therewith. But on the completion of the work, the plaintiff demanded that the railroad company execute a bond to the effect