DeForest v. Northwest Townsite Co. , 236 Pa. 125 ( 1912 )

Opinion by

Mr. Justice Elkin,

Judgment was entered in the court below for want of a sufficient affidavit of defense, and the question here is whether this was error. Suit was brought to recover an alleged balance claimed to be due on a guaranteed annual salary. The contract sued on was made by the president of the corporation without the authority of the board of directors. It is contended for the corporation that no liability attaches to it because the contract was made without authority; while, on the other hand, the appellee here, who was a party to the contract, urges that even if the contract was made without authority in the first instance, the board of directors assented to its terms by acquiescence and thus bound the corporation by ratification. There is no doubt that the board of directors had the power to make the contract relied on to sustain this action, and although that power may not have been exercised in a manner to make it binding on the corporation in the first instance, subsequent ratification may give it binding effect: Kelsey v. National Bank, 69 Pa. 426; Manhattan Hardware Co. v. Phalen, 128 Pa. 110; Wayne Title & Trust Co. v. Railway Company, 191 Pa. 90; Greensboro Gas Co. v. Oil & Gas Co., 222 Pa. 4. We cannot agree with the argument of the learned counsel for appellant, that upon the facts disclosed by this record, the court should say as a matter of law that no liability attached to the defendant corporation under the contract upon which suit was brought. The president may have exceeded his authority, and no doubt did so, but the question still remains whether the board of directors accepted the services of appellee under the terms of that contract, and by failing to disavow it within a reasonable time, acquiesced in the arrangement to such an extent as to operate as a ratification. Then, again, who shall determine whether there was a ratification? Shall the court say as a matter of law that there was a ratification, or shall this question be submitted to the jury under proper instructions? In some cases this question is for the court and in others for the jury. It depends upon the facts in each particular case. In the case at bar, we have concluded, upon the facts presented by the pleadings, the court was not warranted in holding as a matter of law that there was a ratification. The affidavit of defense was sufficient to prevent judgment and to make it necessary for a trial upon the merits. We agree that ratification may be made by formal action, or by passive acquiescence, but in either event, such facts must be established as will warrant the proper finding. In the present case the ratification relied on by appellee depends upon certain facts and as we view the record these facts are for the jury. The burden will be on the plaintiff to show such acquiescence in, knowledge of, and adoption of his services by the corporation, as will warrant the jury under instructions as to the law, in finding a ratification.

Judgment reversed and record remitted in order that the case may be tried on its merits.