or in the discretion of the company's engineer, for delay * in the work, are to be regarded, commonly, in the nature of liquidated damages. To entitle the party to recover for work * done upon

2 Ranger v. Great Western Railw., 5 Ho. Lds. 72; s. c. 27 Eng. L. & Eq. 61. In regard to the penalties given by the contract, it is said here by the Lord Chancellor: "All the circumstances which have been relied on in the different reported cases, as distinguishing liquidated damages from penalty, are to be found here. The injury to be guarded against was one incapable of exact calculation. The sum to be paid is not the same for every default, for that which should occasion small as for that which should cause great inconvenience, but one increasing as the inconvenience would become more and more pressing; and, finally, the payments are themselves secured by the penalty of a bond; and this is hardly consistent with the notion that the payments secured were themselves only penal sums to secure something else. For these reasons, I think it clear that these payments, though called penalties, are in truth liquidated damages, agreed on by the parties, and which the company might set off against the demand of the appellant upon them under the contract. But then the appellant contends that the company never had a title to recover these penalties, because the delays in respect of which they claimed were produced by the harassing and vexatious conduct of the respondents themselves, or their agents. It is sufficient on this head to say, that the appellant, in my judgment, wholly fails to make out, in point of fact, the proposition for which he contends. The only penalties actually deducted are 2007. for five weeks' delay in completing the headings of tunnels 1 and 3 in contract 1 B, and 201. for delay in the works of the Avon bridge. There is no doubt but that these sums were due, unless the appellant could relieve himself by showing that the delay had been forced on him by the company itself. The evidence altogether fails to satisfy me of this."

Where, in a contract between the original contractors for building a railway and the sub-contractors, it was provided, that the work should be subject to the supervision and control of the engineer of the company, and that he should make monthly estimates, four-fifths of which "value" should be paid to the subcontractors; and when the work was completed, a final estimate; the monthly and final estimates as to the quantity, character, and value of the work done, should be conclusive between the parties; and that if the contractor should not truly comply with his part of the agreement, or in case it should appear to the engineer that the work did not progress with sufficient speed, the other party was to have power to annul the contract; and the unpaid portion of the work was to be forfeited by the sub-contractor and become the property of the other party;

Held, that the award of the engineer declaring the work forfeited, was conclusive, and binding on the sub-contractor; that the action of the sub-contractor upon the contract was in affirmance of the contract, and that he could not therefore impeach its stipulations.

66

That the term value," as used in the contract, was to be distinguished from the term "price," fixed for the different classes of work, and that the engineer, in making monthly estimates, had a right to deduct from the amount of work done sufficient to bring it to the average of all the work to be done, and is not

construction contracts, he must show, either that he has performed the labor according to the contract, or that the other party has waived strict performance, or hindered it."

4. But the party may excuse full performance by showing that he was prevented by an injunction out of Chancery at the suit of a third party. Or, that the parties had entered into a new contract for the same work, upon different terms.5

5. Where the work was suspended at the request of the company, with the view to a new location, the company agreeing to pay the plaintiff $750 by way of damages, if the work should not be resumed within two years, and, if it was, the plaintiff to proceed with the work at the prices stipulated, upon those sections not altered; the route being altered as to some of the sections, upon which the defendants resumed within the two years, employing others to do the work, without giving notice to plaintiff; held that the plaintiff could not recover the damages agreed, as the work was resumed within the two years, but that the plaintiff was entitled to damages for not being employed to do the work.

6. Where, by the terms of the contract, a proportion of the sum

bound to allow the sub-contractor the price stipulated in the contract, for work of this description.

If the company withheld unjustly funds due the sub-contractor, they could not fairly take advantage of the forfeiture declared for want of prosecution of the work. But the retention of the 20 per cent in case of forfeiture, is intended as the measure of reparation for the failure to perform the work according to the contract, and not as a mere penalty.

The payment after the forfeiture, by one of the original contractors, of the hands who had been employed on the works by the sub-contractor, and furnishing money to carry on the work, is not a waiver of the forfeiture, especially if he was then ignorant that the work had been forfeited. Faunce v. Burke, 16 Penn. St. 469. In English contracts for constructing railways, it is common to provide for the use of the contractor's plant, in case of the company putting an end to the contract, and for the sale of the same, and crediting the money to the contractor. But this construction will not be adopted unless loss or expenses have been occasioned, for which the contractor is responsible. Garrett v. Salisbury & Dorset J. Railw., Law Rep. 2 Eq. 358.

3 Andrews v. The City of Portland, 35 Me. 475. And it was held here, that part payment, under the contract, after the contractor had failed in strict performance, was no waiver, unless the failure was known to the employer at the time of payment.

4 Whitfield v. Zellnor, 24 Miss. 663.

5 Howard v. The Wilmington & Susquehannah Railw., 1 Gill, 311. Fowler v. Kennebec & Portland Railw., 31 Me. 197.

earned is to be paid monthly, and the remainder reserved, *as security for the fulfilment of the contract, it was held, that nothing was due till the day of payment, which could be attached by trustee process.7

7. And where, in such case, the company have the power to determine the contract, and the reserved fund is thereby to be forfeited, and the company do so, after the contractor has worked one month and part of another, and has received the proportion of payment for the first month, it was held nothing was due to the contractor.8

8. Where a railway company, after making a contract for the construction of its road, became embarrassed and was unable to make payments to the contractor, and the president, who was a stockholder, and extensively interested in the success of the enterprise, made an additional agreement with the contractor that he would give him his notes to the amount of $10,000, if the work were completed by a day named, it was held, that he was not liable upon the agreement unless the contractor performed his part of the agreement by the day named. The notes were, by the terms of the agreement, to go in part payment of what was due from the company, and the new agreement was not to affect the subsisting contract with the company.9

SECTION IX.

Form of Execution. - Extra Work. Deviations.

1. No particular form of contract requisite

generally.

2. But the express requirements of the charter must be complied with.

3. Extra work cannot be recovered of the com

pany, unless done upon the terms specified in contract.

4. If the company have the benefit of work are liable.

* And

§ 113. 1. No particular form of contract is requisite to bind the company, unless where the charter expressly requires it.1 although there seems still to be a failing effort in the English

7 Williams v. Androscoggin & Kennebec Railw., 36 Me. 201. Hennessey v. Farrell, 4 Cush. 267.

9 Slater v. Emerson, 19 How. (U. S.) 224.

1 Post, §§ 130, 143, 164. Corporations cannot enter into partnerships, but two or more corporations may become jointly bound by the same contract. Marine Bank of Chicago v. Ogden, 29 Ill. 248.

courts to maintain the necessity of the contracts of corporations being under seal,2 it is certain that the important business transactions of daily occurrence, in both that country and here, where no such formality is resorted to by business corporations, in matters of contract, and where to look for any such solemnity would be little less than absurd, almost of necessity drive the courts of England to disregard the old rule of requiring the contracts of corporations to be made under the corporate seal.3

2. But when the charter of the corporation requires any particular form of authenticating their contracts, it cannot be dispensed with. And where, by the charter of a railway company, the directors were authorized to use the common seal, and all contracts in writing, relating to the affairs of the company, and signed by any three of the directors, were to be binding on the company; and the company entered into a contract, not under seal, by their secretary, to complete certain works, and, after part performance, the contractor was dismissed by the company, it was held he could not recover the value of the work done.3

2

Mayor of Ludlow v. Charlton, 6 M. & W. 815. But see Beverly v. Lincoln Gas Light & Coke Co., 6 Adol. & Ellis, 829; Dunston v. The Imperial Gas Co., 3 B. & Ad. 125. Tindal, Ch. J., in Gibson v. East India Co., 5 Bing. (N. C.) 262, by which it seems that the English courts except from the operation of the rule only such transactions of business corporations as could not reasonably be expected to be done under seal. But see Bank of Columbia v. Patterson, 7 Cranch, 299, and 2 Kent, Comm. 289, 291, and notes, where it is said the old rule is condemned, and English and American cases cited and commented upon. Post, § 143; United States Bank v. Dandridge, 12 Wheat. 64; Bank of the Metropolis v. Guttschlick, 14 Pet. 19; Norwich & Worcester Railw. v. Cahill, 18 Conn. 484; San Antonio v. Lewis, 9 Texas, 69. See, also, Weston v. Bennett, 12 Barbour, 196; Rathbone v. Tioga Navigation Co., 2 Watts & Serg. 74.

3

Diggle v. The London & Blackwall Railw., 5 Exch. 442; s. c. 6 Railw. C. 590. It is said here that a contract, to be binding on a corporation when not under seal, must be one of necessity, or of too frequent occurrence, or too trivial, to be made under seal. In a recent case in the Court of Exchequer, Williams v. Chester & Holyhead Railw., 15 Jur. 828; s. c. 5 Eng. L. & Eq. 497, Martin, B., thus comments upon the rule of evidence in regard to implied contracts of corporations. "Persons dealing with these companies should always bear in mind, that such companies are a corporation, a body essentially different from an ordinary partnership or firm, for all purposes of contracts, and especially in respect of evidence against them on legal trials; and should insist upon these contracts being by deed under the seal of the company, or signed by directors in the manner prescribed by the act of parliament. There is no safety or security for any one dealing with such a body, on any other footing. The same observation also applies in respect of any variation or alteration in a contract which has been made."

*3. But where the contract contains express provisions that no allowance shall be made against the company for extra work, unless directed in writing under the hand of the engineer or some other person designated, or unless some other requisite formality be complied with, the party who performs extra work, upon the assurance of any agent of the company that it will be allowed by the company, without the requisite formality, must look to the agent for compensation, and cannot recover of the company, either at law or in equity. So, under the English General Company Acts, where the directors are authorized to contract on the part of the company, although not in writing, when such contracts would, if entered into by private persons, be binding in that form, three directors being a quorum for that purpose, it was held, that the mere fact that extra work was done with the approbation of the company's engineer, the special * contract requiring written directions for all the work, had no tendency to prove a contract binding the company.5

But see post, § 143, and cases cited. And where the assistant engineer upon a railway, having charge of the construction of a section of the road, becoming dissatisfied with the contractor, dismissed him, and assumed the work himself, agreeing with the workmen to see them paid, it was held his subsequent declarations could not be admitted, to charge the company for supplies furnished the contractors, on the ground that they were not made in the course of the performance of his duty as agent of the company. Stiles v. The Western Railw., 8 Met. 44; s. c. 1 Am. Railw. C. 397. See also Underwood v. Hart, 23 Vt. 120, where the subject of the admissions of agents is discussed, and the cases revised.

If a contract under seal be enlarged by parol and subsequently performed, or if the terms of the contract under seal be varied by parol, the proper remedy is by an action of assumpsit. Sherman v. Vermont Central Railw., 24 Vt. 347; Barker v. Troy & Rutland Railw., 27 Vt. 774. In Childs v. The Somerset and Kennebec Railw. in the Circuit Court of the United States, before Mr. Justice Curtis, 20 Law Rep. 561, it was held, where the plaintiff, by special contract, agreed to build certain bridges and depots for the defendant corporation, for which he was to be paid partly in cash and partly in shares of their capital stock, and in the progress of the enterprise it became necessary to do much extra work, and furnish materials not provided for in the special contract; that the plaintiff was entitled to recover the whole value of the extra work and materials thus furnished in money, upon an implied assumpsit, and that the agreement to take pay in shares did not extend to this part of the work.

Kirk v. The Guardians of the Bromley Union, 2 Phil. 640; Thayer v. The Vermont Central Railw., 24 Vt. 440; Herrick v. Same, 27 Vt. 673; Vanderwerker v. Same, 27 Vt. 125, 130.

Homersham v. Wolverhampton Waterworks Co., 6 Exch. 137; s. c. 6 Railw.