224 A.D. 401 | N.Y. App. Div. | 1928
The action was brought to recover damages which the plaintiff alleges he sustained as the result of a breach of contract entered into by the defendant with the plaintiff whereby the defendant assumed to act in behalf of a domestic corporation
In plaintiff’s affidavit, filed in answer to the defendant’s motion to dismiss, the plaintiff amplifies the allegations of his complaint, and therein the plaintiff sets forth a copy of a letter addressed to plaintiff at Philadelphia, Penn., under date of February 17, 1922, written upon the stationery of the Continental Guaranty Corporation, bankers, Madison avenue at Thirty-eighth street, New York city, and signed by the defendant, as president, as follows:
“ Continental Guaranty Corporation
“ Bankers
“ Madison Avenue at 38th Street, New York
“February 17, 1922.
“ J. J. Moore, Esq.,
“ Philadelphia.
“ My dear Mr. Moore.—We have made up our minds to drop the International Equipment Corporation as a separate enterprise and if we use that Corporation at all, it will be merely to clear merchandise transactions beyond our charter powers.
“ I appreciate the hard work you have put in on the promotion of this company but as that work will no longer be required and as our policy is to cut off all expense in connection with the solicitation of motor car business in the field, it seems necessary to dispense with your services.
*405 “ I have instructed Mr. Franklin to continue your salary to March 31, which is more than the usual notice, in recognition of the earnest work you have done upon International and you may consider your time entirely your own to seek another connection from now on, although you will be right in saying that you are in the employ of the corporation up to March 31. If I can help you with any recommendations, I shall be happy to respond to any inquiries.
“ Please leave to me the advising of the interested manufacturers concerning the International as I wish to tell them of our new plans at the same time.
“ Very truly yours,
“ (sgd.) E. S. HADDOCK
“ESM:FS President.”
This was the first intimation which the plaintiff received of any repudiation of the contract which the defendant had entered into with the plaintiff in behalf of the Continental Guaranty Corporation. This letter, written less than six months after the making of the contract in suit, very coolly advises the plaintiff that “ we have made up our minds to drop the International Equipment Corporation as a separate enterprise.” The letter is a very cold-blooded document, and while it expresses appreciation of the hard work which the plaintiff had performed in promoting the proposed company under the contract in question, very coolly advises him that from thenceforward his services will be dispensed with, but that in recognition of his earnest work performed in furtherance of the contract, his salary would be continued until March thirty-first following, and that the writer would be happy to respond to any inquiries from those with whom the plaintiff might seek future business connections. Nowhere in the letter is there any suggestion that in the making of the contract for the formation of the new corporation, the defendant, president of the Continental Guaranty Corporation, had exceeded his authority. This letter was received by the plaintiff at Philadelphia on either the 18th or 19th of February, 1922. The plaintiff then brought action against the Continental Guaranty Corporation for breach of contract. The corporation answered in the action on March 16, 1923, and for the first time the plaintiff was informed that the defendant Haddock, in making the contract, had acted without any authority from the corporation. It will be borne in mind that the letter repudiating the contract and discharging the plaintiff was written upon the stationery of the Continental Guaranty Corporation on February 17, 1922, and was signed by defendant as president of said corporation,
The complaint fully sets forth the facts, from which it sufficiently appears that the defendant fraudulently concealed from the plaintiff his lack of authority to represent his corporation, pretending at all times that he had full authority to bind said corporation. The defendant even persisted in concealing his want of authority from the plaintiff in his letter of February 17, 1922, above quoted, making no claim therein but what he was authorized to represent his corporation, writing the letter upon the stationery of the Continental Guaranty Corporation and signing it as president of his corporation. It seems to me the complaint sufficiently sets forth the fraudulent concealment by the defendant of his want of authority. I think the complaint is susceptible of no other interpretation.
By section 11 of the Civil Practice Act it is provided: “ Mode of computing .periods of limitation. The periods of limitation prescribed by this article, except as otherwise specially prescribed therein, must be computed from the time of the accruing of the right to relief by action, special proceeding, defense or otherwise, as the case requires, to the time when the claim to that relief is actually interposed by the party as a plaintiff or a defendant in the particular action or special proceeding.” The question, therefore, is, when did the plaintiff’s cause of action accrue? It is the contention of the defendant, appellant, that plaintiff’s cause of action is for damages for breach of warranty of authority to make the contract in behálf of the corporation, and that the defendant, being without authority to represent the corporation and to make the contract in its behalf, became hable immediately upon the making of the contract, namely, on August 24, 1921. Plaintiff contends that this is not strictly an action for damages for breach of warranty as to the defendant’s authority, but that the action is, in fact, upon the contract itself, and the contract not having been repudiated until February 18 or 19, 1922, the action brought thereon by the service of the summons and complaint herein on February 17, 1928, was not barred by the Statute of Limitations, and that service of process was, therefore, within the six-year period. While the earlier authorities in this State seem to hold that the liability of an agent was upon the contract itself, and that where an agent makes a contract assuming to represent his principal when he has no right or athority from the principal, the contract is
It is the contention of the appellant upon this appeal that the cause of action arose immediately when the contract was made and when the defendant exceeded his authority in entering into it in behalf of his corporation. Such claim, it seems to me, is absurd under the circumstances. The plaintiff certainly could have maintained no action successfully at any time prior to the repudiation of the contract by the defendant. Up to that time the plaintiff had a right to believe that everything would be carried out by the defendant’s corporation in accordance with the contract which he had made. Surely no action could have been successfully maintained, either against the principal or its agent, until a breach occurred in February, 1922. Even though the defendant might not have had authority to represent his corporation, the cor
I am, furthermore, of the opinion that a cause of action did not accrue against the agent for breach of warranty of his authority until advised by the answer of the corporation in the plaintiff’s action against it on March 16, 1923, when, for the first time, the plaintiff was advised that the Continental Guaranty Corporation claimed that the defendant had acted without authority to bind it. While the notice of the defendant’s president to the plaintiff, under date of February 17, 1922, definitely asserted that neither the defendant nor his principal would perform the contract, there was no intimation therein of any claim that the agent had exceeded his authority. However, the learned justice at Special Term took the view that a cause of action for breach of warranty did not accrue until the plaintiff learned of the repudiation or breach of the contract on February 18 or 19, 1922.
The case of Titus v. Wallick (222 App. Div. 17) presents a very analogous situation to that involved upon this appeal. That action was brought to determine the ownership of certain corporate stock. Plaintiff claimed to own the stock, although certificates of stock had been in the possession cf the defendant in excess of six years prior to the bringing of the action. The question arose as to when the Statute of Limitations began to run, as to whether it was from the time when the stock was delivered into possession of the defendant or from the time when the defendant refused to transfer it to the plaintiff. The court held that the cause of action accrued only when the plaintiff for the first time learned that the defendant repudiated his agreement to retransfer the stock to plaintiff. The court said in that connection: “We are further of the opinion that no Statute of Limitations stands in the way of a recovery by the plaintiff herein. The evidence was ample to justify a finding of fact that plaintiff first learned of defendant’s repudiation of his agreement to a retransfer the Secor stock to the plaintiff on September 12, 1923. In our opinion the Statute of Limitations did not begin to run until such knowledge came to the plaintiff. (Treadwell v. Clark, 190 N. Y. 51; Stephens v. Crawford, 209 App. Div. 142; affd., 239 N. Y. 535.) ”
Again the situation is quite analogous to that in relation to a warranty of title on the sale of personal property. At the present
It may also be suggested that the warranty in question may be regarded as a future and continuing warranty and that no cause of action accrued to the plaintiff until he was actually damaged. The courts have held that where the warranty was a future one, a cause of action did not accrue until plaintiff actually sustained damage. It seems to me that the liability of the defendant to the plaintiff depended entirely upon a ratification or disavowal by his principal of the contract which he made. This being a future warranty it was not broken until plaintiff sustained damages by reason of its non-performance. Until the time for the performance of the contract arrived no action could have been maintained by plaintiff, even for nominal damages. I think no cause of action accrued to the plaintiff until the corporation repudiated its president’s action and certainly not until he learned that the contract would not be performed.
Under all the circumstances, therefore, we think the order appealed from should be affirmed, with ten dollars costs and disbursements, with leave to the defendant to answer within twenty days on payment of said costs.
Dowling, P. J., Finch, McAvoy and O’Malley, JJ., concur.
Order affirmed, with ten dollars costs and disbursements, with leave to the defendant to answer within twenty days from service of order upon payment of said costs.