101 P. 94 | Idaho | 1908
Lead Opinion
This canse was tried to a jury in the lower court and a verdict rendered for the defendants. This appeal is from the judgment and from an order overruling a motion for a new trial. The action is to recover the sum of $757.80 alleged to be due as a balance upon an account for merchandise claimed to have been sold by plaintiff to defendants in the sum of $1,114.51. The defendants denied the indebtedness and plead settlement and payment. The controversy arises out of the question whether an indebtedness due from C. F. Allen, president of the plaintiff company to the defendants, should be applied as part payment upon the account of the plaintiff against the defendants. The amount of this claim is $757.80, the amount for which this action is brought. It seems that C. F. Allen was the president of the Valley Lumber Company at the time the merchandise sued for was purchased; that at such time Allen was indebted to the defendants for merchandise claimed to have been purchased of defendants by Allen; the defendants contending that at the time the merchandise sued for was purchased, that bids were invited from different manufacturers of such goods, and that the plaintiff submitted a bid which was much higher than another bidder, and that defendants let the contract to plaintiff upon an agreement and understanding that the account defendants held against Allen should be taken by the plaintiff and credited as part payment upon the goods purchased by plaintiff from defendants. The defendants further contend that they sent a check to plaintiff for the sum of $356.71, which with the account of Allen, $757.80, paid the entire amount claimed to be due from them; that they accompanied the remittance with a statement of account showing the amount of such cheek, the amount of the Allen account, and that the two equaled and balanced the amount due from the defendants to plaintiff; that plaintiff accepted such check and retained
Thus it will be seen that the entire controversy arises out of the Allen account; whether it should be offset against the account of plaintiff against these defendants. There was some argument on appeal whether the account of these defendants against Allen was in fact an account of Allen or whether said account was against the Lewiston Navigation Company, the owner of a steamboat, which was leased to Allen and to equip which the indebtedness was incurred for which the defendants claim Allen is liable.
The appellant makes two general assignments of error, which include many subdivisions. First, appellant contends that the evidence was insufficient to justify the verdict. Second, errors of law occurring at the trial. We will deal with these questions in the order in which counsel has presented them in his brief. First, is the evidence sufficient to support the verdict ? Before taking up' the evidence in detail for discussion, we are reminded by sec. 4824, Rev. Stat., as amended by Laws of 1907, p. 484, as follows: “Upon an appeal from a judgment, the court may review the verdict or decision and any intermediate order or decision, if excepted to, which involves the merits or necessarily affects the judgment, except a decision or order from which an appeal might have been taken: Provided, that whenever there is substantial evidence to support a verdict the same shall not be set aside.” With this provision of the statute to limit and guide the examination by this court of the evidence, we will briefly consider the evidence submitted to the jury and trial court.
We think the question of indebtedness of Allen to the defendants may be dismissed from consideration in this opinion with the statement that the evidence seems to prove such indebtedness beyond any question, and counsel for appellant, by silence at least, concedes that the evidence was sufficient to establish such indebtedness, as there is no discussion'
“Lewiston, Idaho, Sep. 5, 1906. “Valley Lumber Co., Lewiston.
“We enclose herewith cheek in payment of your invoices as mentioned below:
Date of Invoice. Amount. Deduction. Amount of Cheek.
'July 16..............1106.21
Aug. 31 ............. 8.30
1114.51
Less C. Fi Allen account................ .757.80
356.71
“Remarks: The above is per arrangement with Mr. Allen.”
The check accompanying this statement paid the account in full of McGilvery and Givens and also an account of $8.30 of McGilvery and Seeley, successors, provided that the account of Allen is allowed to be offset and chargeable to plaintiff as contended for by respondents. Upon receipt
“STATEMENT.
“Clarkston, Wash., Dec. 7, 1906.
McGilvery & Seeley
In Account with VALLEY LUMBER AND MANUFACTURING CO.
To Mdse................................75
By Mdse, ret’d........................... 2.40
Due you................................ 1.65
“Endorsed: Important, do not destroy.”
On January 19, 1907, the plaintiff company mailed another statement to defendants as follows:
“McGilvery & Seeley,
Bought of VALLEY LUMBER COMPANY.
Aug. 29. To 1 ironing-board 15y2"x5'6"... .75
Sept. 19. By 4 Brackets for Show Case
ret’d at 60e.................• 2.40
1.65
To McGilvery Ae’t...........12.72
11.07
By check date 1-18-07........ 7.07
Balance due............. $4,00
“Important do not destroy.”
It will be observed that this latter statement also includes the statement of account made on December 7th, and included a charge of plaintiff company against McGilvery personally. It will also be observed that neither one of
There is a controversy as to whether this assignment of the account against Allen was made to the plaintiff company for the purpose of holding the same against Allen and applying the same as an offset upon the indebtedness of the defendants, or whether the assignment was made to the plaintiff company for the purpose of authorizing the plaintiff company to collect the same from the Lewiston Navigation Company, the owner of the boat to furnish which Allen had purchased the goods which resulted in the indebtedness claimed by the defendants against Allen. The evidence, however, is in conflict upon this question. There is mnch other detailed evidence in the record, which is very voluminous, directed to the proposition of the defendants’ making an assignment of the Allen account to the plaintiff,
The jury were the sole judges of the credibility of the evidence and the weight to be given to the testimony of the several witnesses. They heard the evidence in this ease and have concluded that the Allen account was taken by the plaintiff as an offset against the indebtedness due from defendants to plaintiff, and by applying the same as a credit upon said account, the same has been fully paid. Before this court would be warranted in reversing this case for the insufficiency of evidence, it must appear that there is no substantial evidence to support the verdict. If the statement of Mr. McGilvery be true, that he awarded the contract to the plaintiff for a greater sum than another bidder had submitted in order to have the account of Allen taken up,
“The following instruction is asked by the defendants, and is given to you as the law. The court instructs you that if you believe from the evidence at the time the defendant agreed to purchase the fixtures and other merchandise which the plaintiff sues for in this case, it was agreed between the plaintiff and the defendant that the plaintiff would take and apply as part payment of the purchase price of said fixtures an account which the defendants had against C. F. Allen, and that the defendants had an account against said C. F. Allen for merchandise and interest thereon, according to the agreement with him in the sum of $757.80, and that the defendants paid the plaintiff company the balance due them, over and above the amount of that account, the jury should return a verdict in favor of the defendants.”
The court also instructed the jury as follows:
“Some evidence has been introduced with reference to a cheek for $356.71 sent by the defendants to the plaintiff and which was accompanied by a statement of the account, which statement showed that defendants had charged the plaintiff with the amount of the account claimed to be owing*354 defendants by C. F. Allen, and that the $356.71 was the amount remaining due to plaintiff. I instruct you that if you find that such cheek was so sent plaintiff by defendant, and which was accompanied by such statement of account, and if you find that plaintiff received said matter and used said check, and made no objection to the defendants about the condition of said Allen account on the amount due from defendants and charging plaintiff with said Allen account for several months afterward, then said fact should be considered by you as evidence tending to show that an agreement had been made to so credit the same, but it is not conclusive, and you should consider such fact along with all of the other evidence bearing upon the question, and from the whole of the evidence and every fact and circumstance shown by the evidence determine whether such an agreement was made with reference to said Allen account at the time the defendant contracted with plaintiff for the purchase of the merchandise sued for by the plaintiff in this action.”
The objection urged to the first instruction is that it recognizes as legal and binding upon the plaintiff company a contract made, by which the plaintiff would “take and apply as part payment of the purchase price of said fixtures an account which the defendants had against C. F. Allen,” and thereby become responsible and agree to pay the debt of another, and that the board of directors and officers of the plaintiff company had no authority and power to make such alleged agreement as it would be against the interest of the stockholders.
The objection to the latter instruction is, that it does not correctly state the law of estoppel. The court, however, in giving such instruction was not dealing with the question of estoppel, but was advising the jury that the acts of the parties, with reference to the account stated and inelosure therewith, should be taken and considered by the jury and given such weight as they might determine, as tending to show that an agreement was made to credit the Allen account. To sustain the contention made by appellant
“Where a third party makes with the officers of a corporation an illegal contract beyond the powers of the corporation, as shown by its charter, such third party cannot recover, because he acts with knowledge that the officers have exceeded their power, and between him and the corporation or its stockholders no amount of ratification by those authorized to make the contract will make it valid.”
There the president and the manager of the corporation had no authority from the board of directors to enter into a contract of guaranty in behalf of the corporation, and in the absence of such authority he could not bind the corporation beyond the scope of the business in which the corporation was engaged.
This decision of the Iowa court clearly illustrates the contention made by the appellant in this case, but this rule does not apply to the facts of the case under consideration. In the case at bar the Valley Lumber Company was engaged in the making and manufacturing of certain store fixtures. The defendants invited bids. The plaintiff submitted a bid
Mr. Thompson discusses the powers of a president of a corporation when acting as general manager very fully in Thompson on Corporations, vol. 4, sec. 4627, and says:
“It is plain from what has just preceded that where the president of a corporation acts as the general manager of its business, either by express appointment from the board of directors or by their tacit consent, larger powers may be ascribed to him, even under the theory by which his powers are most limited, on the principle that he is thereby held out by the directors as possessing the ordinary powers incident to the office or agency of general manager, with which they have clothed him. If he has been so held out and has been permitted in that character to make contracts for the corporation, it will not be allowed to escape its liability upon a contract so made by him, on the ground that the same was made without its knowledge or concurrence. But the same conclusion is equally supportable on the theory of a direct delegation of authority; for by appointing him to the office of general superintendent or manager, the directors necessarily invest him with the powers incident to that office or agency. ’ ’
So, in the case at bar the record shows that Allen, Prugger and Hollister constituted the entire board of directors of the plaintiff corporation at the time the transaction was had between plaintiff and defendants, and that each and all of these directors and officers knew of the transaction between plaintiff and defendants, that is, knew that the plaintiff sold the defendants certain goods; knew that the defendants claimed that an indebtedness, existing from Allen to these defendants, was to be set off against the purchase price of said goods. The plaintiff furnished the goods sold and accepted payment by the defendants upon the indebtedness to plaintiff, under a claim that the same was the balance due plaintiff after deducting the indebtedness of Allen. In this case, therefore, we are not only of the opinion that Mr. Prugger, as general manager, had the authority to make a contract with the defendants by which the defendants purchased certain goods of the plaintiff, upon condition that the plaintiff would accept as a setoff against such indebtedness an account due the defendants from the president of the plaintiff company, but that the plaintiff, its officers, and board of directors, knew of the transaction and knew that
“The same principle prevents a corporation from repudiating the acts of its officers within the general scope of their powers, in the absence of fraud on the part of the person seeking to charge the corporation, or of collusion between him or his privies, and the officers of the corporation making the contract. When, therefore, the plaintiff at the request of the president and superintendent of a corporation, for the purpose of saving it from a threatened lawsuit, paid several of its notes, it was held that the corporation could not be heard to deny the authority of its president to make the request, it being within the apparent scope of his authority as its superintendent and general agent, and that the original consideration of the notes could not be inquired into.” (4 Thompson on Corporations, see. 5251.)
While upon the evidence of Prugger and McGilvery alone there might be a question as to whether there was an agreement made by which the plaintiff agreed to accept the Allen account as part payment for the goods sold by plaintiff to defendants, yet the transactions that passed.between the parties with reference to such indebtedness thereafter would seem to corroborate the claim of the defendants in this case, that there was such an agreement and understanding between the parties. The transmission of the check on September 5th, for $356.71, was accompanied with a statement showing the status of the account between the parties and that such check was for the exact balance after deducting the Allen account from the amount due.plaintiff from defendants. Appellant, however, contends that the sending of said check and the' statement of account was not notice of the original alleged agreement, but merely an offer on the part of the defendants or an assumption of their right to apply the Allen account as an offset. We do not so understand the language of the account or the effect that flows from the acceptance by the plaintiff of the remittance made
We think the evidence fully sustains the verdict of the jury. This discussion also answers the objection of counsel
The appellant assigns as error the overruling of the plaintiff’s demurrer to the defendants’ affirmative defense set forth in their answer. It is claimed that the affirmative defense was insufficient, for the reason that it plead an alleged agreement by which the agent for the plaintiff attempted to bind the plaintiff to answer for the debt of another, and because such defense contained no allegation taking the agreement out of the provisions of subd. 2, sec. 6009, Rev. Stat. The facts contained in the affirmative answer, to which this demurrer was addressed,' do not bring this case within the provisions of the statute. The affirmative defense did not plead facts which constituted an agreement to answer for the debt of another. There was no effort to plead in the affirmative defense a state of facts which showed that the plaintiff was attempting to answer for the debt of .another or in any way become responsible therefor. For this reason it was unnecessary to allege that an agreement was made by the plaintiff in writing. The plaintiff also moved to strike out certain portions of the defendants’ answer. This motion was overruled and the action of the trial court is assigned as error. In appellant’s brief no argument is made in support of .this alleged error and from an examination of the question we find no error. The allegations, to which the motion was addressed, relate to a history of the transactions between plaintiff and defendants and the change made in the firm of McGilvery and Givens and their succes
As to the question of interest, the court correctly instructed the jury that “when there is no express contract in writing fixing a different rate of interest, interest is allowed at the rate of seven cents on the hundred by the year on. (Subd. 7.) Money due upon open accounts after three months from the date of the last item.” (Rev. Stat., sec. 1263, amended by Laws of 1897, p. 95.) Whether or not the item of interest on the Allen account was correct, as stated in the account which the plaintiff agreed should be offset against the defendants’ account, is not presented to this court by the record'in such a way that we are able to consider or determine if the interest was correct or otherwise.
We have given a very careful examination to this ease and have entered into a fuller discussion perhaps than was necessary in view of the provisions of the statute with reference to the effect of a verdict of the jury. From this ex-
Rehearing
ON REHEARING.
A rehearing was granted in this ease, and it is contended by counsel for the petitioner that the court erred, as a matter of law, in holding that “The vice-president of a corporation, acting as president and general manager of a corporation, has authority to sell the stock in trade of a corporation in the ordinary course of business of such corporation, and to receive and accept in payment therefor cash or accounts against any other person,” and in holding that “Where there is no limitation upon the power of a vice-president of a corporation, acting as president and general manager, in the by-laws or articles of incorporation of said company, the court will presume that such officer has authority to dispose of the articles manufactured by said corporation in the ordinary course of trade, and accept in payment therefor cash or an account against an officer of said corporation held by the purchaser. ’ ’
The above quotations are from the syllabus of the original decision in this case, and as abstract propositions of law, state the rule of law correctly, where there is no limitation upon the power of a general manager of a manufacturing corporation to sell and dispose of its manufactured articles. Such manager may accept in part payment therefor claims against an officer of the corporation or accounts against other persons. Of course, this rule proceeds upon the theory that such claims are accepted in good faith, and that there is no collusion or fraud perpetrated by either of the parties to such transaction.
It appears that the defendants desired to purchase some furniture and fixtures for their establishment in the city of Lewiston, and that they had been negotiating for the same with the Troy Lumber Co. and perhaps with other parties, and also with the plaintiff corporation. The Troy Lumber Co. had offered to furnish them for about $220 less than the plaintiff corporation had offered to furnish the same. It appears that the Troy Lumber Co.’s offer had been given, or stated, to the vice-president and general manager of the appellant and some negotiations occurred between the parties in regard thereto. It also appears that the defendants had a claim against the president of the corporation for $757.80, and a contract was entered into by and between the vice-president and general manager of said corporation for the corporation and the defendants, whereby the contract was let to the plaintiff corporation in consideration that it would receive as part payment on said contract said claim against the president of the corporation. After said furniture and fixtures had been delivered, and on September 5, 1906, the defendants rendered a statement of account between the parties showing that they owed the appellant corporation $1,114.51 less the C. F. Allen account of $757.80, which in said written statement was deducted from the amount due, leaving a balance of $356.71 due the appellant corporation, and in said statement was inclosed the check of defendants for said balance. That statement was received Iby the appellant corporation without objection and the check for $356.71 collected by them. Thereafter the appellant
It appears from the record that said Allen was president of said corporation; that a Mr. Prugger, who made the contract above referred to on behalf of appellant, was vice-president and general manager, and that a Mr. Hollister was secretary of said corporation, and all of said parties were directors thereof. It appears that the said Allen account was assigned to the appellant corporation and that such assignment was never returned to the defendants. About January 1, 1907, Allen disposed of everything he had, both in Idaho and Washington, and moved to New York City. During that month, the respondents took an inventory of their stock and fixtures and were unable to find the invoice.of said furniture and fixtures purchased under said contract. Thereupon one of the respondents requested Vice-President Prugger to give him a copy of the same, and he suggested that the respondent call upon Mr. Hollister, the secretary of the said corporation, as he had charge of the books. Upon furnishing said statement, it seems that Hollister then for the first time demanded that the respondents pay said.sum of $757.80.
It thus appears that the appellant had not demanded the payment of said sum from the 5th of September, the time that the statement inclosing said check for $356.71 was sent them by the respondents, until about the 1st of February following, after respondents had asked for a copy of the invoice of said furniture and fixtures and after the president of said corporation had resigned and sold all of his stock in said corporation and-other property that he owned in Idaho and Washington and left the state.
Upon that state of facts, this court is asked to hold that the vice-president and general manager of said corporation had no authority to enter into a contract for the sale of the
As before stated, the president, vice-president and general manager and the secretary, who were all members of the board of directors of the corporation, had full knowledge of this transaction. That being true, there were two courses open to it to pursue; it could either ratify the contract or repudiate it. The record shows that appellant did ratify it by remaining silent about the matter for several months after it had full knowledge of all the facts. It was then too late to repudiate it. Appellant seeks now to ratify the contract so far as it favors them and repudiate it so far as it does not accord with its interests. This appellant will not be permitted to do. Honesty and fair dealing require the corporation to stand by the contract as made by its vice-president and general manager, or repudiate it in toto.
In Wisconsin Lumber Co. v. Greene & Western Tel. Co., 127 la. 350, 109 Am. St. 387, 101 N. W. 742, 69 L. R. A. 968, the court had under consideration a contract somewhat similar to the one under consideration here. The corporation sought to ratify the contract in so far as it was beneficial to it, and repudiate it in so far as it imposed any liability on its part. The court said:
“The corporation cannot accept and ratify the contracts in so far as they are beneficial to it, and repudiate them in so far as they imposed any liability on its part. It accepted plaintiffs’ money on the strength of these contracts and cannot, while retaining the same, be heard to say that its offi*368 cers had no authority to make the contracts under which it was received. This is hornbook law.”
See, also, Nichols & Sheppard Co. v. Hackney, 78 Minn. 461, 81 N. W. 322.
No objection was raised to said contract between September 5th and the following February by the appellant corporation, and by this long acquiescence it has ratified said contract. During that time Allen had resigned as president of the corporation, and also of the First National Bank of Clarkston, and had disposed of all of his property in Idaho. After all this had occurred the appellant evidently determined to turn the account against Allen back to defendants and thus compel the defendants to go to New York or elsewhere and collect said account from Allen. To permit it to do so now would uphold it in perpetrating a fraud upon the defendants and that this court will not do.
The judgment of the district court must therefore be affirmed as directed in the original opinion in this -ease.
Concurrence Opinion
Concurring. — I concur specially in affirming the judgment of the trial court on the ground that the conduct of appellant amounts to an implied ratification of the acts of the vice-president and managing agent of the corporation.