VOL. XLII.

JANUARY.

NOS. 1 AND 2.

WHEN A SEAL IS NECESSARY FOR THE PURPOSE OF AUTHENTICATING A CONTRACT OF EMPLOYMENT MADE BY A CORPORATION.

1. English common law doctrine and its limitations.

2. Same subject discussed in relation to corporations created for special purposes. 3. Same principles applicable whether unsealed contract was executed

executory.

4. Common law rule modified by legislation.

5. American doctrine as to the use of the corporate seal.

or

1. English common law doctrine and its limitations.-The general rule is that a body corporate is not bound by any contract which is not under its corporate seal'. But this rule has from the earliest traceable periods been subject to certain exceptions; and various decisions in the older reports shew conclusively that one of these exceptions had relation to the hiring of inferior servants". "The principle to be collected from those decisions is, that an appointment under seal was not necessary in the case of officers or ser

1 Lindley, Companies, 5th ed. p. 220; Addison, Contr. 11th ed. p. 345. "The rule of the law is clear; that prima facie and for general purposes a corporation can only contract under seal, for the proper legal mode of authenticating the act of a corporation is by means of its seal." Austin v. Guardians of Bethnal Green (1874) L.R. 9 C.P. 91; per Coleridge, C.J.

For a general review of the authorities as to the rule requiring the affixing of the corporate seal to corporate contracts, see Story, Agency, 9th ed. § 53, last note.

Even a resolution of the members of the body corporate is not equivalent to an instrument under its seal. Lindley, Companies, p. 221.

A corporation may have ploughmen and servants of husbandry, butlers, cooks, and such like, without retainer by deed. 4 H. 7, 17, cited in Arnold v. Poole (1842) 4 Man. & G. 860, (p. 876).

A dean and chapter may retain a bailiff, receiver, or other servants without writing (i.e. writing under seal). 4 H. 7, 6 cited in Arnold v. Poole, ubi supra.

In Angell & Ames, Corp. § 281, the following authorities are cited as shewing that it was established at an early period that a corporation might appoint agents of little importance, as a cook, a butler, or a bailiff to

vants required to perform acts of trifling import or immediate necessity"".

The rationale of this as well as all the other recognized exceptions to the general rule has been declared to be "convenience amounting almost to necessity. Wherever to hold the rule applicable would occasion very great inconvenience, or tend to defeat

take a distress. 4 H. 6, 7, 13, 17; 7 H. 7, 9; 13 H. 8, 12; Plowd. 91b; 12 Ed. 4, 10a; 4 H. 7, 15, 26; 26 H. 8, 8b; Bro. Corp. 51; Bro. 182b.

In Com. Dig. "Franchises" (F. 13) it is said: "A corporation which has a head may give a personal command, and do small acts without deed; as it may retain a servant, a cook, butler, etc."

In one of the older cases it has been laid down generally that "one may justify in trespass as bailiff to a corporation without deed." Panel v. Moore (1553) Plowd. 91. So also it seems to have been laid down with any qualification in Manby v. Long (1684) 3 Lev. 107, 2 Saund. 305; Anón. (1702) 1 Salk. 191, (where a decision to the same effect by the Exchequer Chamber, Carey v. Mathews, is mentioned in a note of the reporter), that a corporation may appoint a bailiff to distrain without deed. But in East London Waterworks Co. v. Bailey (1827) 4 Bing. 283 (p. 288), the right of making a parol appointment for this purpose is instanced by Best, C.J. as being an exception to the general rule which was justifiable on the ground of the necessity of acting immediately, as the cattle might have escaped before the seal could be affixed; and he lays it down that "it is only in cases of necessity, occasioned by the hurry of the proceedings" that such an appointment may be made. În Arnold v. Poole (1842) 4 Man. & G. 860 (p. 877), the validity of such an appointment is based by Tindal, C.J., upon a similar consideration. These glosses upon the earlier decisions indicate the extent to which they are to be accepted as authorities. In Horne v. Ivy (1670) 1 Ventr. 47, 2 Keb. 567; 1 Mod. 18, the defendant justified a trespass for a seizure of a ship under the patent of the Canary Company, as servant of the company; and it was held, on demurrer, that he should have shewn in his plea that he was authorized by deed. this decision was said by Littledale, J., in Smith v. Birmingham Gas Co. (1834) 1 Ad. & El. 526, to have proceeded on the ground that the service was an extraordinary one.

But

In East London Waterworks Co. v. Bailey (1827) 4 Bing. 283, Best, C.J., observed that one exception to the general rule is admitted, "where the acts done are of daily necessity to the corporation, or too insignificant to be worth the trouble of affixing the common seal." This statement in which "necessity" is adverted to be merely as one of two considerations upon which the rule is based referred, and not as the fundamental and only one with reference to which all others are to be regarded as derivative and subsidiary, seems to be indicative of a logical standpoint somewhat different from that which is adopted in the cases just cited.

Tindal, C.J., in Arnold v. Poole (1842) 4 Man. & G. 860 (p. 877). In a subsequent sentence he designates the excepted contracts as those which "relate either to trivial matters of frequent occurrence, or such as from their nature do not admit of delay."

Other statements of a similar tenor have been made by various modern judges.

"By the ancient common law, a corporation was at liberty to do little matters without seal, namely, to appoint a servant and the like; but there is no case which goes the length of determining that they might contract

the very object for which the corporation was created, the exception has prevailed: hence the retainer by parol of an inferior servant, the doing the acts very frequently recurring, or too insignificant to be worth the trouble of affixing the common seal, are established exceptions"".

not under seal, unless for small matters, or by virtue of the terms of their act of Parliament." Parke, B., in Finlay v. Bristol, &c., R. Co. (1852) 7 Exch. 409.

"At an early period there were exceptions to the rule, for instance, in those matters in which, from their very nature, or necessary frequent occurrence, it would be difficult to execute the contract with the formality of a seal. Those were matters of trifling importance, such as the appointment of a servant by a corporation having a head,-for whether the exception applied to a corporation without a head has not yet been determined." Parke, B., in Cope Thames Haven, &c., Co. (1849) Exch. 841.

One of the exceptional cases enumerated by Best, C.J., in East London Waterworks Co. v. Bailey (1827) 4 Bing. 283, is "where a corporation has a head, as a mayor, or a dean, who may give commands which a party may obey without the sanction of a common seal, Randel v. Deane (1692) 2 Lut. 1497, or may bind the corporation by record, Vin, Arb. Corpor. K. 7, 21."

The exceptions to the general rule which were gradually introduced had for a long time reference only to "matters of trifling importance and frequent occurrence, such as the hiring of servants, and the like." Bovill, J., in South of Ireland Colliery Co. v. Waddle (1868) L.R. 3 C.P. 463 (p. 469), aff'd in Exch. Ch. L.R. 4 C.P. 617. See also opinion of Montague Smith, J. (p. 474).

Lord Denman, C.J., in Church v. Imperial Gaslight & Coke Co. (1837) 6 Ad. & E. 846 (p. 861). This statement of the law was cited with approval by Coleridge, C.J., in Austin v. Guardians of Bethnal Green (1874) L.R. 9 C.P. 91 (p. 94), and by the same judge in Wells v. Kingston-upon-Hull (1875) L.R. 10 C.P. 402 (p. 409), (holding that, as "the admission of a ship into the dock was a matter of frequent ordinary occurrence, and in some cases it might be a matter of urgency admitting of no delay," a contract by a municipal corporation which owns a graving dock to let a ship use it need not be under the corporate seal).

Referring to the exceptions which as the exigencies of the case have required, have, from time to time, been admitted to the rule, Patteson, J. drew attention to the fact, that they "are not such as the rule might be supposed to have provided for, but are in truth inconsistent with its principle and justified only by necessity." Beverley v. Lincoln Gaslight & C. Co. (1837) 6 Ad. & El. 829, where it was held that, for a matter of such constant requirement to a gas company as gas meters, and to so small an amount as £15, the company, whether with or without a head, might contract without affixing the common seal.

In Diggle v. London & B. R. Co. (1850) 5 Ex. 442, 451, 19 L.J. (Ex.) 308, Rolfe, B., after referring to several earlier cases said: "Whether in all these cases I should have come to the same conclusion-that the acts there done were acts of necessity-it is immaterial to consider, as in all of them the court proceeded on the ground already stated, and adopted the general rule that those were cases of urgent necessity within the exception, which is a rule as much as the rule itself, and has been established by several authorities, viz., that corporations cannot be sued on simple contract,