216 A.D. 439 | N.Y. App. Div. | 1926
The action Was brought by the plaintiff to recover the sum of SI 1,500 alleged by the plaintiff to be his due as brokerage
Winters testified that only upon the defendant’s procuring for the purchasers the certified balance sheet of the defendant corporation corresponding with the balance sheet which he had prepared, were the purchasers ready, willing and able to go through with the transaction. In the original contract which the plaintiff claimed was entered into between him and Perkins, the assistant secretary of the defendant, no condition was mentioned as to the furnishing of such certified balance sheet by the defendant corporation. That condition appears to have been imposed by the would-be purchasers before they would enter into any contract. No one on behalf of the defendant ever agreed to furnish such certified balance sheet and none was ever furnished.
The plaintiff bases his entire claim upon authority which he says he received from the assistant secretary of the defendant corporation to procure a purchaser of the entire assets of the corporation for $230,000, and which employment he testified was later confirmed by Rautenstrauch, the nominal president of the defendant corporation. It appears very clearly from the evidence that there never was any meeting of the minds of those representing the defendant corporation, and authorized to speak, and the would-be purchasers. The testimony shows that there never was any acceptance of the offer made by-the plaintiff, except upon the condition that the certified balance sheet be furnished by the defendant. It, therefore, appears that there never Was any meeting of the minds of the parties, and that the plaintiff did not procure a customer for the defendant’s property ready, able and willing to purchase the property for $230,000. The plaintiff at the trial did not call either Perkins. or Rautenstrauch. He made no attempt to prove the adoption of any resolution by the board of directors of the defendant corporation confirming the contract. No attempt Was made to show that the contract was with the consent of the holders of two-thirds of the stock of the defendant corporation. It appeared from the evidence without dispute that the board of directors had
At the close of the evidence in the case the court submitted to the jury the broad proposition as to whether or not the plaintiff made the trade through the president of the defendant corporation, and instructed the jury that if they believed that in pursuance of plaintiff’s employment he procured a purchaser ready, able and willing to buy the property and who Was ready to go ahead with the trade, their verdict should be for the plaintiff; otherwise, they should find for the defendant. The jury returned a verdict in plaintiff’s favor for $13,540. Upon the rendition of the verdict counsel for the defendant moved to set aside the same as contrary to law and upon all the grounds mentioned in section 549 of the Civil Practice Act, excepting inadequacy of damages. Defendant’s motion to set aside the verdict was denied, and the order appealed from was entered thereon.
I am of the opinion that the verdict of the jury was unsupported by the evidence and was contrary to law, and that under the evidence the plaintiff should not have recovered a verdict. In the first place, as before suggested, there was no meeting of the minds of the parties. Assuming the plaintiff acted with authority, he did not produce a purchaser for the defendant’s property ready, able and willing to purchase the same at the price stated. The evidence on the part of the plaintiff conclusively shows that the Would-be purchasers never were ready or willing to take the property, except upon the written certificate of the defendant corporation that the balance sheet prepared by the accountant Winters correctly reflected the actual condition of the affairs of the defendant corporation. This certificate was never furnished and, therefore, the condition imposed by the would-be purchasers was never met. In the second place, the alleged employment of the plaintiff by the assistant secretary of the defendant corporation Was without any authority in law. Under well-settled principles of the common
“ The appellant claims that the sale of the calendar department is in the line of its ordinary business; that it is a lawful corporate act, regardless of section sixteen and that it did not give to the dissenting stockholder the rights created by section seventeen.
“ The substance of the sections in question Was first enacted by chapter 638 of the Laws of 1893,† probably to meet the situation as it was left by a line of judicial decisions ending in 1892. The valuable opinion of Judge Allen in Abbot v. American Hard Rubber*447 Co. (33 Barb. 578), after standing the test of time and criticism for thirty years, was followed by People v. Ballard (134 N. Y. 269). These cases and those which intervened established the law that a corporation cannot sell all its property, or even a part thereof so integral as to be essential for the transaction of its ordinary business, because such a sale is wholly or partly an act of self-destruction and a practical dissolution without compliance with law. * * *
“ The sale before us was not made in the ordinary course of the business of the corporation, for it was not organized to sell calendar departments, or any department that would involve going out of business pro tanto. It Was not a sale of calendars over the counter or on the road, but of the ‘ business assets and property/ including the good will, of an independent and important branch of its business, and the large price agreed upon indicates the actual value of what was sold. The parent company lacked capital to carry on the department, and, as the learned counsel for the appellant states, ‘ the sale was a business necessity/ which implies that it was not in the ordinary course. By the sale of the good will the corporation would be prevented from ever engaging in .that kind of business again, and while not in form a sale of its franchise to that extent, it would be in effect, because it could no longer exercise its franchise to make and sell calendars. One of the powers conferred by the charter Would thus be parted with, and the right to carry on a line of business authorized by the law of its being would be permanently gone. It could not do a kind of business duly authorized by its charter as it had before. As an arm of a living man may become paralyzed and useless, so an arm of the appellant Would become paralyzed and useless by a sale such as the one described. As the living arm could no longer lift, or touch, 'or exercise its cunning, so the arm of the artificial being could no longer make calendars, or sell them, or enter into contracts relating thereto. Its own action would result in complete paralysis of every power required to conduct a calendar department and to this extent it would go out of business. Such a sale would, therefore, be corporate suicide to a certain extent, and to that extent a sale or abandonment of the charter. While a. natural person may do anything within the limits of his physical and mental capacity not forbidden by law, an artificial person can do nothing except as authorized by law. The sale in question would not be valid without resorting to section sixteen, * *
In the case at bar the plaintiff is seeking to recover commissions upon the ground that he was employed to procure a purchaser of the entire assets of the defendant corporation. It is far more violative of section 16 than was the attempted sale in the Timmis case,
I am, furthermore, of the opinion that Perkins and Rautenstrauch, temporarily officers of the defendant corporation, Were without power to sell all the corporate assets of the defendant, including its good will and bills receivable, and, if so, they were without power to bind the corporation to pay a commission to the plaintiff, as broker, for procuring a purchaser. The court decisions in this State clearly hold that the only justification by a broker in charging commissions is upon the assumption that a sale of the property will result. In Rosenthal v. No. 1450 Broadway Corp. (162 N. Y. Supp. 344) the Appellate Term, First Department, held that in an action brought to recover commissions claimed to have been earned by the plaintiff for the leasing of certain- stores belonging to the defendant corporation for a term of four years and over with a right • of renewal, where it appeared that the president of the defendant corporation Was not authorized to enter into the lease and bind the defendant corporation, the plaintiff was not entitled to commissions in procuring the lease. The determination of the Appellate Term, upon appeal, .was affirmed by this court (179 App. Div. 885). In McCorry v. Wiarda & Company (149 App. Div. 863) the Appellate Division, Second Department, held that the president of the defendant corporation had no implied power to sell the defendant’s plant and machinery, and the plaintiffs were denied a recovery for commissions on the sale. The court in that case held that if there was any contract to pay commissions, it was made by the president of the corporation personally; that it was not within the apparent' authority of a manufacturing corporation to sell its plant and machinery, and that its president could not bind it upon.an agreement made in behalf of the corporation with brokers, and that it can never be presumed that the agent of the corporation has authority to transact business not authorized by the charter of the corporation. The court further held that persons dealing with corporations were bound to take notice of the limitations upon the powers of agents of. such corporations. The action of Berwin & Co., Inc., v. Hewitt Realty Co. (199 App. Div. 453; affd., without opinion, 235 N. Y. 608) was to recover on the part of the plaintiff a broker’s commission for the sale of one-fourth of thé real estate of the defendant corporation under a contract made with its president and treasurer. This court held, under the authority of Matter of Timmis (200 N. Y. 177); Abbot v. American Hard Rubber Co. (33 Barb. 578) and People v. Ballard (134 N. Y. 269) that a corporation could not sell all its prop
At the close of the entire case the defendant moved for a dismissal of the complaint. Such motion was made upon the denial on the part of the defendant's officers that they had any authority to make the contract upon which the plaintiff seeks to recover. While by the plaintiff's testimony there may have been some presumption as to the authority of the defendant’s assistant secretary and president to bind the corporation, yet any presumption that existed was thoroughly rebutted by the testimony of both Perkins and Rautenstrauch that they had no authority to enter into such an agreement. There was no attempt on the part of $ie plaintiff to prove any authority in the persons with whom he claims to have dealt. I think the trial court erred in denying defendant’s said motion to dismiss.
I am further of the opinion that the verdict of the jury in the case at bar was contrary to the law as charged by the court. Counsel for the defendant asked the court to charge the jury that the alleged contract entered into between the officers of the defendant company and the plaintiff was unusual and not in the regular course of business. In response to such request the court charged that the contract was unusual. In Lyon v. West Side Transfer Co.
At the request of counsel for the defendant the trial court further charged the jury that, as matter of law, the burden' was upon the plaintiff to establish direct authority in the officers to make the contract sued upon. Such instructions became the law of the case, and the jury were bound to follow the same. The record is entirely barren of any evidence showing that the plaintiff had discharged the burden put upon him by the charge of the court, or made any attempt to establish direct authority in the defendant’s officers to make the contract upon which the plaintiff seeks to recover.
I am further of the opinion that the trial court failed to properly or adequately instruct the jury as to the principles of law which governed their consideration of the proven facts. The charge of the court occupies but little better than a page and a half of the printed record. It is merely a statement as to certain elementary principles governing the conduct of the jury, concerning the preponderance of evidence, and the weighing of the testimony of witnesses. The court instructed the jury that the plaintiff was suing for a five per cent commission on an alleged sale which he claimed he was authorized by the defendant to make, of its property, for the sum of $230,000, and that such commission amounted to $11,500, and that the interest thereon amounted to $2,040; that the plaintiff had the burden of proof to establish that he was employed b^ the president of the company to make the sale, and that he prbduced a purchaser ready, able and willing to buy the property and pay therefor, and that he had not been paid. The jury were then instructed as to the form of their verdict, in case they found for the plaintiff or defendant. The court then instructed the jury: “ If you find the plaintiff did make the trade through the president of the defendant company, and that he was to get five per cent commission as agent in selling this property for $230,000; and if you believe that in pursuance of that agreement he procured a purchaser ready, able and willing to buy the property and who was ready to go ahead with the trade, and if you believe that the money has not been paid, your verdict will be for the plaintiff. If you do not believe that, or any part of that, your
Counsel for the defendant asked the court to charge the jury that the plaintiff was bound to know the nature and extent of the authority of Rautenstrauch, the president, and Perkins, the assistant secretary, of the defendant company, when dealing with them. The court declined to charge as thus requested, and stated that it had charged the jury that if they believed that Rautenstrauch was the president of the company and Was acting in the business of the company, the company would be bound by what he did. Due exception was taken to this charge, and I think thereby reversible error is presented.
Counsel for the defendant further asked the court to charge the jury that the plaintiff was bound to know that any authority that the officers of the defendant had was derived from the statute law of the State of New York, the certificate of incorporation of the defendant and its by-laws. This the court declined to charge, because there Was no evidence- in regard to by-laws. To such refusal an exception was taken by counsel for the defendant.
Counsel for the defendant further requested the court to charge the jury that under the laws of the State of New York, before the officers of a corporation can employ a broker to sell all the assets of the corporation, the consent of the holders of two-thirds of the stock of the corporation must be obtained. The court declined to charge as requested, to which counsel duly excepted. I think the defendant was entitled to the charge requested, and that its refusal constituted error.
Counsel for the defendant further requested the court to charge the jury upon the evidence adduced in the case that there was no proof that the acts of the officers had been ratified or consented to by the holders of two-thirds of the stock of the defendant company. To this request the court stated: “ I so charge, but I charge you that it is not necessary.” To such ruling counsel for the defendant duly excepted.
Counsel for the defendant further asked the court to charge the jury that as a matter of law the officers of the defendant company had no implied authority'to emplo~y the plaintiff to sell the good will and all the assets of the defendant company. Such request
Counsel for the defendant further asked the court to charge the jury that the defendant company could not sell its good will and all its assets to an individual or a corporation without the consent of the holders of two-thirds of the stock of the defendant company. The court declined to charge as requested, to which counsel for the defendant duly excepted. I think the request was proper and should have been charged, and that refusal to charge as so requested further constituted error.
Counsel for the defendant further requested the court to charge the jury that if they found the plaintiff was engaged by the officers of the defendant company to perform the agreement upon which he has brought action, then he was engaged to bring about an agreement between the defendant company and another party which the defendant company could not enter into or perform without the consent of the holders of two-thirds of the stock of the defendant company. To such request the court stated: “ I so charge, but I also charge you that there is nothing showing that the defendant attempted to carry out that agreement.” I think the charge made-by the court was correct, and that under such charge the plaintiff was not entitled to recover a verdict, for the reason that, as charged by the court, the plaintiff was engaged to bring about an agreement between the defendant company and another party which the defendant company could not enter into or perform without the consent of the holders of two-thirds of the stock of the entire company, and that under such instructions there could be no recovery in the action.
Again, the court was asked by counsel for the defendant to charge the jury that, as matter of law, the burden was upon the plaintiff to establish direct authority in the officers to make the contract sued upon. The court charged as thus requested. In the absence of any proof by the plaintiff of direct authority in the officers to make the contract upon which he sought to recover, the jury were not justified in returning a verdict for the plaintiff.
I think the court’s main charge to the jury was entirely inadequate. (Matter of Taylor, 197 App. Div. 865; People v. Odell, 230 N. Y. 481.) In the case last cited the Court of Appeals said (at p. 488): “ The trial judge should not as a rule limit himself to stating good set terms of law culled from the codes and the reports. Jurors need not legal definitions merely. They require proper instructions as to the method of applying such definitions after reaching their conclusions on the facts.” Judge Andrews in his dissenting opinion therein also said (at p. 494): “ The charge is intended to aid
In the case at bar the jury received no instructions concerning the facts presented by the evidence or the rules of law governing the same. The instructions to the jury in response to requests by counsel for the defendant were contradictory and confusing and frequently erroneous. The charge, as a whole, must have left the jury in a confused state of mind as to the questions of fact to be decided and as to the principles of law controlling their action. However, I am of the opinion that under the evidence in the case and under the undisputed facts, the plaintiff was not entitled to recover a verdict, and that the trial court should have dismissed the complaint at the end of the whole case.
The judgment and order appealed from should be reversed, with costs, and plaintiff’s complaint dismissed, with costs.
Dowling, Finch, McAvoy and Martin, JJ., concur.
Judgment and order reversed, with costs, and complaint dismissed, with costs.
Now Stock Corp. Law of 1923, § 20; Id. § 45, as amd. by Laws of 1924, chap. 441.— [Rep.
Adding to Stock Corp. Law of 1892, § 33, as amd. by Laws of 1901, chap-130.— [Rep.