233 A.D. 493 | N.Y. App. Div. | 1931
Lead Opinion
An assignee of the Quigley Publishing Company brings this action to recover for advertising. The defendant, “ Lowell Film Productions, Inc.,” was organized to make and produce a moving picture. The advertising was of this picture and its object to sell territory within which to present the picture. Russell, one time president of defendant, executed a contract with defendant which authorized him as agent to sell territory on a commission basis. Russell executed the advertising contract with plaintiff. The question is whether or not Russell had authority to execute that advertising contract on behalf of defendant. In using the word “ plaintiff ” we refer to the Quigley Publishing Company and its assignees. Both parties moved for the direction of a verdict; the court thereupon directed a verdict for the defendant of no cause of action.
The question whether a certain act is within the scope of the servant’s employment is ordinarily one for the jury to determine.
The general powers of a president of a corporation “ may be limited or restricted by the charter or by-laws of the corporation.” (Oakes v. C. W. Co., 143 N. Y. 430, 436.) Under the by-laws of defendant the powers of Russell as president were restricted; he had not authority to make this contract; such a contract could only be made by the signature of two officers of the company. Also Russell had been removed from his office six days before he executed this contract.
The directors had full authority to remove Russell as president “ at pleasure.” (Stock Corp. Law, § 60.) Officers of corporations are usually elected annually. If there is any presumption that one once an officer continues to be, that presumption disappears when direct substantial proof to the contrary is presented and the question would remain whether the presumed officer had authority to act for the corporation.
It is true that, if the corporation has openly allowed one to act for it and represent it in a particular line of action within the authorized business of the corporation, to the knowledge of a third party who contracts with him, the corporation may be bound. But there is no proof in this case that the plaintiff knew, at the time the contract was made, of any transaction by any one with
The time of making the contract casts suspicion on the good faith of the plaintiff. The publications were completed in May, 1924. Demands were made immediately upon Russell for payment and for a settlement of the account. In a few months Russell went to California and thereafter no further demands were made upon him and at no time was any demand made upon the defendant until December, 1929. There was never demand made
The publishing company did not sue in its own name, but assigned the claim first to an employee and then to another party. The plaintiff did not produce Russell as a witness to establish what his authority was. Negotiations concerning an advertising contract had been going on, according to the testimony of Beecroft, for a considerable time, but the contract was made six days after Russell had been removed as president, and after Russell had been charged with failing to turn over to defendant moneys due it from him. One might easily infer that the parties then may have decided that a contract would be necessary in order that Russell might avoid his own indebtedness and that the publishers might collect from the corporation.
That Russell continued to sell territory after he was removed as president has no great significance. He had the sole contract to sell territory; this contract was not revoked and what he did thereafter he did solely under this contract.
There is no claim that the company ever in any manner ratified the contract sued upon and, under the evidence in the case and under the authorities above cited, the defendant was not estopped from disputing Russell’s authority to execute the contract and bind the corporation.
The defendant having no knowledge of any dealings by this plaintiff with Russell could not give notice that Russell had been removed. But in any event, in the light of the evidence here presented, this failure to give notice could not affect the question of Russell’s authority to contract for the defendant.
We conclude that the question of fact was presented and that the evidence justified the trial court in finding that Russell had not authority to execute this contract on behalf of the defendant.
The judgment should be affirmed.
All concur, except Hill, J., who dissents with an opinion, in which Whitmyer, J., concurs.
Dissenting Opinion
(dissenting). This action is brought by the assignee of the Exhibitors’ Herald, a trade paper circulated among moving
Defendant was organized to produce a picture film, with the scene near Amsterdam, N. Y. The promoters and directors, other than Russell, were residents of that vicinity and without previous experience in the production or sale of films. The picture had been made, and at the date of the contract sued upon the only business of the defendant was to sell or lease rights to exhibit. This work was being done by Russell, who had had experience in producing and selling films.
A representative of the Exhibitors’ Herald sought to obtain advertising contracts with the defendant early in 1924, called at its office in Gloversville and there found Russell in charge. Concededly he was then president. The representative also called at the New York city office of defendant and found Russell in charge. One page advertising defendant’s film was published in the March, 1924, issue. The record is not clear as to the identity of the drawer of the check given in payment. The contract sued upon, dated April 14, 1924, was for thirty-two pages of advertising during ten weeks. Sales or leases had already been made in eighteen per cent of the territory in the United States and Canada. The following excerpts from the contract sufficiently disclose its terms: “ To make this agreement clear, the following illustrations are used. If the remaining 82% of the territory was sold for cash, the publisher would immediately be entitled to $4,000 cash from the adver
Defendant’s directors denied knowledge of the existence of an office in the city of New York. One had visited this office, but did not see the name of the defendant on the door. Several contracts leasing or selling rights to exhibit the film described the defendant as being “ a New York corporation having its principal office at 729 Seventh Ave., New York, N. Y.” These contracts, which provided for rentals of nearly $20,000, were produced upon the trial by one of defendant’s directors and identified by its accountant. The lack of knowledge is assumed to be true, in light of the decision of the trial court, but it is immaterial. The location of an office is within a president’s power. If it were not, such extreme inattention to the obvious would not reheve the defendant in its dealings with a third party.
Evidence of the claimed removal of Russell is given by the directors and defendant’s minute book was received in evidence. It shows a meeting of four directors on April 8, 1924 whereat a resolution was adopted removing Russell as president but not as a director. The minutes indicate Russell’s absence. It does not appear that he was in Gloversville where the meeting was held. The only evidence as to notice to him, either of the meeting or his claimed removal, is given by the secretary, who was one of the four directors: “ I had sent out the notice of the meeting to Mr. Russell preliminary to the meeting.” There is no other description of the notice or the way it was sent. There is no proof
We are not concerned in the amount of compensation which the defendant was to pay Russell, either as president or for distributing the picture film, or with any contract between them in reference thereto, except in. so far as these facts limited the plaintiff’s assignor in making a contract with defendant, through Russell. There is no proof that before this contract was made any publicity had been given to defendant’s present assertion that Russell acted individually and not as its president in selling the product. Restrictions upon the powers of an officer or agent of a corporation do not exempt it from responsibility for bis acts within the usual powers of such an officer or agent unless the restrictions are known to the party dealing with him, or have been given reasonable publicity. (Marine Bank v. Butler Colliery Co., 5 N. Y. Supp. 291; affd., 125 N. Y. 695.) “ A general agent may bind his principals by an act within the scope of his authority, although it may be contrary to his special instructions. (Story’s Agency, § 733; Walsh v. Hartford F. Ins. Co., 73 N. Y. 5; Lightbody v. North Am. Ins. Co., 23 Wend. 18; Angell v. Hartford F. Ins. Co., 59 N. Y. 171.) ” (Ruggles v. American Cent. Ins. Co. of St. Louis, 114 N. Y. 415, 421.) “ The powers of the agent of a corporation are such as he is allowed by the directors or managers of the corporation to exercise within the limits of the charter; and the silent acquiescence of the directors or managers may be as effectual to clothe the agent with power as an express letter of attorney.” (Olcott v. Tioga R. R. Co., 27 N. Y. 546, 558, 559.) Russell openly exercised all the powers of a president and general manager. The defendant accepted the benefits accruing to it from contracts made by him as president. “ If officers of the corporation openly exercise a power which presupposes a delegated authority for the purpose, and other corporate acts show that the corporation must have contemplated the legal existence of such authority, the acts of such officers will be deemed rightful and the delegated authority will be presumed.”
The general law of agency governs the relations between a corporation and its officers and applies to the dealings between such officers and third parties. The directors had elected Russell president, thus accrediting him, as an agent of defendant, with all the powers usually exercised by presidents of like corporations. “ There is no difference in principle or precedent between the powers, duties and liabilities of the agents of corporations and those of natural persons * * (New York, P. & B. R. R. Co. v. Dixon, 114 N. Y. 80, 85.) A principal is bound by the acts of his agent within the limits of his apparent authority until notice of the revocation of the agency and authority has been made reasonably public. (McNeilly v. Continental Life Ins. Co., 66 N. Y. 23.) “It is a familiar principle of law that when one has constituted and accredited another his agent to carry on a business, the authority of the agent to bind his principal continues, even after an actual revocation, until notice of the revocation is given; and, as to persons who have been accustomed to deal with such agent, until notice of the revocation is brought home to them.” (Claflin v. Lenheim, 66 N. Y. 301, 305.) This statement of the law by Judge Rapallo applies to persons who have not dealt with the agent as such, and to those who have. As to the first class, the agent’s authority is presumed “ until notice of the revocation is given; ” as to the second, “ until notice of the revocation is brought home to them.” Defendant gave no notice of Russell’s removal and the resultant revocation; thus his authority as president could be assumed by third persons “ who have no knowledge, grounds for knowledge or notice of the terminating event.” (Restatement of the Law of Agency, American Law Institute, § 221.)
Defendant’s only business in 1924 was to sell or lease the rights to exhibit its. picture film in the United States and Canada. Advertising necessarily would be incident to an effort to sell an article over so wide a territory. The directors could authorize or ratify such contracts. “ ‘ The president, having full personal charge of the business which the defendant was organized to transact, represented the corporation and prima facie he had power to do any act which the directors could authorize or ratify.’ (Hastings v. B. L. Ins. Co., 138 N. Y. 473, 479; Oakes v. C. W. Co., 143 N. Y. 430, 436.) ” (Hardin v. Morgan Lithograph Co., 247 N. Y. 332, 338.)
There is no claim that the price or the terms of the advertising contract were unfair, and as notice of the revocation of Russell’s
The judgment should be reversed on the law, with costs, and the motion of plaintiff for a directed verdict should be granted, and he should have judgment for the sum of $4,067.69, with interest from January 31, 1925, with costs.
Whitmyer, J., concurs.
Judgment and order affirmed, with costs.