DeForest v. Northwest Townsite Co. , 241 Pa. 78 ( 1913 )

Opinion by

Mr. Justice Moschzisker,

The plaintiff claimed for the breach of a written contract of employment for one year executed by the defendant corporation through its president, in which he was guaranteed $5,000 compensation. He averred an unlawful discharge before the expiration of the year and that a large part of the compensation remained unpaid, for which he brought suit.

The trial judge gave binding instructions for the defendant, saying: “Mr. DeForest (the plaintiff) made a contract with Mr. Bailey, who was president of the ......(defendant) company. An examination of the by-laws shows that the president liad no right to make any such contract. Such a contract required the approval of the board of directors; he did not have it...... Therefore the contract was a void contract unless the directors by some action of theirs, ratified the contract. I see no ratification of the contract at all. On the contrary their action was a disavowal of it. Under the circumstances, Mr. DeForest, having been paid for what he did, cannot recover the main sum in the contract, to wit, the guaranty that he would get $5,000 for the year.” A verdict was rendered accordingly and the plaintiff has appealed from the judgment entered thereon. The details of the contract, the by-laws of the defendant company, and other enlightening facts are contained in a former report of this case in 236 Pa. 125.

An examination of the record and testimony satisfies ns that the learned court below took a correct view of this case. When the matter was here before, in reversing a judgment entered for want of a sufficient affidavit of defense, speaking by our Brother Elkin, we said, “The president may have exceeded his authority, and no doubt he did so, but the question still remains whether the board of directors accepted the services of appellee (the plaintiff) under the terms of the contract,......and acquiesced in the arrangement to such an extent as to operate as a ratification. In some cases this question is for the court and in others for the jury; it depends upon the facts in each particular case....... The affidavit of defense was sufficient to prevent judgment and to make it necessary for a trial upon the merits.” On the facts before us at that time we were of opinion that the question of ratification would take the case to the jury, but we particularly said, “The burden will be upon 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.” The present record shows that when the case came to trial the plaintiff was given ample opportunity to prove ratification, but failed to do so. The evidence now before us makes it manifest that the president had no power to enter into the contract sued upon; that the board of directors never approved it; that when the terms of the plaintiff’s employment were first brought to their attention they promptly expressed their disapproval; and that, after securing the advice of counsel, they at once repudiated the contract. Counsel for the plaintiff, in his printed argument, correctly states that the material facts were “not disputed in a manner calculated to test veracity and kindred elements.” Hence, under the circumstances, no error was committed in directing a verdict for the defendant.

We are not impressed with the contention of the appellant that the action of the trial court in giving force and effect to the defendant’s duly proved and undisputed by-laws constituted an interference in the.internal affairs of a foreign corporation; the question simply concerned the reasonable limitations placed by the by-laws of a corporation upon the authority of its agents, and the fact that it was a foreign corporation did not enter into the determination below and can have no weight here. It remains but to say that this was not an every-day business transaction, but a contract of a special character that would naturally call for the exercise of the judgment of the board of directors; there ;was no evidence of a continued course of dealing between the plaintiff and the president of the defendant company, or of an abandonment of the affairs of the corporation to the management of that agent, or of a holding out to the world of the latter as vested with general authority to bind his principal, or of other exceptional facts which would raise an implication of authority in the president to enter into agreements of this nature and take the case out of the ordinary rules applicable to and controlling contracts made by agents, as defined in Twelfth St. Market Co. v. Jackson, 102 Pa. 269; Millward-Cliff Cracker Co.’s Est., 161 Pa. 157, and other like authorities.

The assignments of error are all overruled and the judgment is affirmed.