258 Mass. 453 | Mass. | 1927
The plaintiff, a corporation engaged in writing surety bonds, credit and other insurance, executed a bond as surety, pursuant to an application therefor signed by Thomas Berry and Edward F. Wallace, copartners doing business as the Hanover Sales Company (hereinafter called the Sales Company), Ernest W. Norton, Commonwealth Pipe and Supply Company and the defendant, all of whom were also named in the bond as principals. This bond was given to the A. F. Cochrane Company (hereinafter called the Cochrane Company), and was conditioned upon the performance by the Sales Company of all the terms of an agreement between the two companies, and also upon the payment of certain notes given as part payment for materials purchased by the Sales Company from the Cochrane Company. In accordance with its obligation under the bond, the plaintiff paid the Cochrane Company the amount due upon the notes, for which it has been reimbursed in part, leaving a balance of $1,198.14; this amount, together with the premium on the bond provided for in the application, it now seeks to recover. The defendant is a Massachusetts corporation organized to "buy, sell, manufacture, repair and deal in steam and other boilers, engines, dynamos, tanks, machinery and other merchandise and manufactures of iron, steel and other metals.” The order appointing the auditor states that his findings of fact are to be final.
He found that the defendant had no financial interest in the transaction; that Bussell, its treasurer, signed the bond for the accommodation of Berry, one of the partners; and that of this fact the plaintiff had no knowledge. He further found that Bussell had authority to bind the defendant by signing its name to the application and bond without the
The scope of the authority, powers and liability of a corporation is limited by the act creating it, and everyone dealing with it is presumed to know their extent. Monument National Bank v. Globe Works, 101 Mass. 57, 58. These powers include transactions “fairly incidental or auxiliary to the main business of the corporation and necessary or expedient in the protection, care and management of its property.” Teele v. Rockport Granite Co. 224 Mass. 20, 25.
It is provided by G. L. c. 158, § 10, that a “corporation . . . shall not direct its operations or appropriate its funds to any other purpose than that specified in its agreement of association or its charter, as the case may be.” In Massachusetts an ordinary business corporation cannot become surety for another corporation or an individual in a matter not connected with the purposes for which it was created, and for which the corporation has received nothing in money or property; and a guaranty in such a matter is held to be the exercise of a power not conferred, even though certain benefits to the corporation were expected to result from the transaction and the other party has incurred expenses on the faith of the guaranty. Davis v. Old Colony Railroad, 131 Mass. 258, 275, 276. Nowell v. Equitable Trust Co. 249 Mass. 585, 599, 600. See also Wm. Filene’s Sons Co. v. Gilchrist Co. 284 Fed. Rep. 664; certiorari denied, 260 U. S. 750. In Monument National Bank v. Globe Works, supra, a manufacturing company was held to be liable on its ac
Judgment for defendant.