Stone-Ordean-Wells Co. v. New England Pie Co.

201 Mich. 407 | Mich. | 1918

Ostrander, C. J.

(after stating the facts). Whatever may have been the interest of certain officers of the defendant, who were also shareholders in the All-made Bakeries, Inc., in the success of the last-named company, the case must be considered and decided with regard to the powers and the legal rights of the defendant. The record furnishes no evidence of any corporate action of defendant in the premises. None Was required if its undertaking, relied upon here, was one which its. agents, acting for it, could engage it to make.

“In the absence of any provision to the contrary contained in the charter of a corporation, it will be presumed that its president, secretary, and treasurer have the authority to make all necessary contracts in transacting the ordinary business of the corporation within the legitimate scope, object, and purposes of its organization.” Eureka Iron & Steel Works v. Bresnahan, 60 Mich. 332, 339.

See Galvin v. Windshield Co., 176 Mich. 569; Timm v. Brewing Co., 160 Mich. 371; Harrison Wire Co. v. Moore, 55 Mich. 610.

This elementary rule is not denied but is relied upon by counsel for appellee, who assert that what defendant undertook was a purchase — upon conditions, -it is true — of a commodity which it could use in its business, as the business is defined and delimited in its articles of association. It could purchase, they say, flour in quantities, therefore prepared flour, and although the prepared flour could not be used to make pies, and it had theretofore made only pies, it could' be used to make cake, and it was organized with power to make cake.

It cannot' be doubted that the undertaking of the defendant, promised'in the order for the goods, confirmed and made formally definite in the letter of July 2d, was the inducement which brought about the original sale from Allmade Bakeries to plaintiff. The undertaking of defendant, expressed in the letter, with the recitals, while not in form strictly an undertaking to answer for the debt, default, or miscarriage of another, does not guarantee the performance of anything which any one else had promised or undertaken, is nevertheless, plainly, evidence of something more than a mere agreement to purchase goods for the use, the business, of defendant. It refers to the order for the goods, reciting that it was made subject to the agreement sought now to be enforced. It imports that it is given pursuant to an arrangement according to which the order for the goods was given. To make this more conclusive, it is recited that the defendant is interested in the sale of Ovengold and that the undertaking is “in consideration of that sale.” Any idea of a purchase or an offer to purchase the goods — to repurchase them — in the course of the business of defendant is distinctly negatived. There is no uncertainty of meaning. The writing, especially when it is read with the order for the goods, is conclusive evidence that the credit of the defendant was intended to be pledged to plaintiff, to promote the business of the Allmade Bakeries Company. No other reasonable construction can be given it. Beyond this, no consideration moved to the defendant for the undertaking, and it does not appear that it would have gained for itself anything of considerable value if it had performed the undertaking. It is not a case where the corporation urging the defense of ultra vires has profited by the action it repudiates, or a case where it appears that all stockholders had knowledge of and acquiesced in, or did not complain about, unlawful, because unauthorized, acts of officers. The rule is well stated in 10 Cyc. p. 1156, as follows:

“Except in cases where the rights of the public are involved the plea of ultra vires, whether interposed for or against a corporation, will not be allowed to prevail when it will not advance-justice, but will accomplish a legal wrong. * * * The great mass of judicial authority seems to be to the effect that where a private corporation has entered into a contract in excess of its granted powers, and has received the fruits or be'nefits of the contract, and an action is brought against it to enforce the obligation on its part, it is estopped from setting up the defense that it had no power to make it.”

If the court could weigh one resulting injustice against another, it could not enforce this demand except by doing injustice to some, although a minority, of the unoffending shareholders of defendant.

It must be held that the undertaking is not that of defendant and that it is not estopped to so assert. This disposes of the case. The judgment is reversed, with costs of both courts to appellant.

Bird, Moore, Steere, Brooke, Fellows, and Stone, JJ., concurred. Kuhn, J., did not sit.