146 F. 95 | U.S. Circuit Court for the District of Western Pennsylvania | 1906
The plaintiff, a Pittsburg broker, sues to recover commissions on the sale of certain stock of the defendant company. There was a verdict in his favor, which was taken subject to the point reserved whether there was any evidence on which he was entitled to recover, and the defendants now move for judgment non obstante veredicto upon it. The action is based on an agreement in writing, which was executed in the name and on behalf of the defendant company by W. H. Chambers, its secretary, by whom the arrangement with the plaintiff was made. That Dr. Chambers had no authority to enter into the agreement is practically conceded, he himself so testifying, as well as the other directors, and the by-laws also standing in the way. It is claimed, however, that the agreement was subsequently ratified, the company acting upon and accepting benefits under it, and it is on this that the right of the plaintiff to recover depends.
The Extreme Gold Mining & Milling Company is a South Dakota corporation, but its affairs at the time of this transaction were in the hands of parties residing in the vicinity of Pittsburg; Dr. J. Y. Scott being president, W. J. Andrews, treasurer, Dr. Chambers, secretary,
This brings us to the resolution of February 10, 1905, on which both parties in a measure rely. By the minutes of a meeting of the directors of the defendant company of that day, it appears that Dr. Chambers made two alternative propositions, based upon the transactions detailed above, in substance as follows: Reciting that, having undertaken the sale of treasury stock, he had expended large sums in advertising the property, in taking parties to investigate it, and in securing prospective purchasers, and for the purpose of effecting sales had contracted with the plaintiff in the name of the company; being compelled, however, by reason of the latter’s' unfaithfulness, to advance various sums, and $1,000 having been received and kept by the plaintiff out of the proceeds of a sale’, of which a settlement and compromise had been effected by the delivery of 14,000 shares of his own individual stock, he thereupon proposed: (1) That the company reimburse him for-all expenses incurred in the premises, assuming the attendant obligations, and holding him. harmless as agent
This resolution was prepared by counsel, and was evidently intended to get the benefit of the sales which had been made to Whitaker and Dietrich, without being responsible for them; but in the face of the facts, at least as to the Whitaker sale, it was not competent to do so. ’ By due action taken August 11, 1904, the application of Mr. Whitaker for 25,000 shares had been accepted, and the sale which the plaintiff had solicited was thereby adopted and confirmed. It may be that this was done without direct knowledge of the existence of the writing on which the plaintiff relies, and so without knowledge as to the amount of commissions which he was to get, or the provision with regard to paying for the printing of prospectuses, letterheads, etc. But it certainly was known by the directors that, in seeking to effect this and other sales, he was acting for the company on authority which proceeded from somewhere, and, in accepting the benefit of his services, tliey necessarily committed themselves to the means by which these services were secured. This is not to impute or presume knowledge; it is not that they might or ought to have known, and are therefore to be held as though they did. Murray v. Nelson Lumber Co., 143 Mass. 250, 9 N. E. 634. But, having taken advan
‘•Thus, where a parly adopts a contract which was entered into without authority, he must adopt it altogether. He cannot ratify the part which is beneficial to himself, and reject the remainder; he must take the benefit to be derived from the transaction cum onere.”
Or, as declared in Scott v. Middletown Railroad, 86 N. Y. 200:
“Where property bought by the president oí a railroad without authority was appropriated and used for corporate purposes, it amounted to an adoption and ratification; the directors so using the material being bound to inquire and presumed to know whether it was paid for or not. It was not essential that they should have actual knowledge of the terms of the contract of purchase; that, for instance, it was made upon the credit of the corporation.”
While, tlien, in the case in hand, Dr. Chambers may have had no authority to bind the company by a written agreement with the plaintiff, as he undertook to do, yet when the hoard of directors, accepted the benefit of the plaintiff’s services, which were so secured, as they did when they adopted the sale which he had negotiated with Whitaker, they took upon themselves the obligation ,to compensate him according to the terms of the agreement under which he acted, whether they knew of its existence or not. It is not as though he was acting for the purchaser in the transaction, nor as though he were a mere volunteer, and it is idle to suggest that it was supposed Dr. Chambers’ stock was being sold. lie acted for the company, and the directors knew it, and the shares which they agreed to sell were those of the company, as the resolution accepting the application conclusively proves. It was therefore the duty of the directors to inquire and know upon what terms he was acting, and to give timely notice if they did not propose to be bound thereby. They could not play fast and loose with the plaintiff, appropriating his services, and refusing the compensation stipulated for b.y which those services were obtained.
It is claimed, however, by the defendants that they got nothing out of the Whitaker sale, and that it was subsequently repudiated and annulled. But it is not true that they get no benefit from it, and it is not material that it was not carried out to the full extent that it had been made. Whether it was or not, the plaintiff’s services weye complete when he secured a responsible purchaser upon terms which were agreeable to the company; and, having once ratified the agreement with him by accepting the benefit of what he had done, they could not throw off the obligation, whether they went on with the sale which he had negotiated or not. The fact is, however, that by the resolution which was finally adopted, however it may be disguised, and whatever may seem to be its terms, advantage was taken of both the Dietrich and the Whitaker sales, thus unquestionably bind
In one respect,' however, the verdict is not to my satisfaction. It allows the plaintiff commissions, as though the sale to Whitaker was carried through for the whole 25,000 shares. No doubt,'in a measure, these commissions were earned when Mr. Whitaker was secured as a purchaser for that amount upon terms which were acceptable to the company. But difficulty was experienced in enforcing the sale, as we have seen, to which the plaintiff himself contributed when he delivered the stock without getting the down payment which was to have been made. At all events, in the negotiations which followed looking to a settlement, the plaintiff directly participated, and while he now says that he did not consent to the compromise by which the sale was reduced to 13,333¾ shares, he made no protest at the time when he was called upon to speak, which is much more significant. It is true that he telephoned to Dr. Scott to see whether Dr. Chambers had authority to settle for less than the whole, which may seem to lend some countenance to his present contention, but he made no objections in the end, and his only complaint in the transactions which immediately followed was that Dr. Chambers did not turn over to the company the draft which Whitaker had given, so that he could get his commissions out of it. Actions speak louder than words, and I am therefore constrained to hold that the evidence of his assent to the settlement with. Whitaker is too positive and convincing to be disregarded, and that the jury ought not, in the face of it, to have allowed him commissions to the extent they did.
The .rule for judgment in favor of the defendants non obstanfe veredicto is discuarged. The rule for a new trial will also be discharged, upon condition that the plaintiff, within 20 days by paper filed agrees to remit from the verdict all over and above the sum of $1,710.31; or otherwise will be made absolute, and a new trial awarded.
Specially assigned.