Case ID: ad_149/html/0863-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Woodward, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Alfred E. F. McCorry and John Welden, Respondents, v. John C. Wiarda & Company, Appellant.
    Second Department,
    March 29, 1912.
    Principal and agent—broker’s action for commissions — corporation— powers—authority of agents—notice.
    The plaintiffs in an action against defendant, a corporation, alleged that they had entered into an agreement whereby the defendant agreed to pay them a commission of ten per cent on the transaction, provided they produced a purchaser for defendant’s mill and quarry and the personal property connected therewith; that the plaintiffs had performed all of the conditions on their part, and that the defendant had refused to pay the commission. It was not alleged that the defendant was the owner of the property. It appeared upon the trial that the property in question belonged to the president of the corporation personally at the time of the making of the alleged contract, that this was known to the plaintiffs, and that the corporation was not organized to deal in real ' estate.
    
      Held, that the plaintiffs failed to establish the cause of action alleged, and that, if they made any contract for commissions, they made it with the president of the corporation personally.
    It is not within the apparent authority of a manufacturing corporation to sell its plant and machinery.
    Thus, the president of such a corporation cannot bind it by an agreement made in behalf of a corporation with brokers to sell his individual property.
    It can never be presumed that the agent of a corporation has authority to transact business not authorized by the charter of the corporation.
    Persons dealing with corporations are bound to take notice of the limitations upon the powers of the agents of such corporations.
    Appeal by the defendant, John 0. Wiarda & Company, from a judgment of the Supreme Court in favor of the plaintiffs, entered in the office of the clerk of the county of Queens on the 15th day of April, 1911, upon the verdict of a jury, and also from an order entered in said clerk’s office on the 19th day of April, 1911, denying the defendant’s motion for a new trial made upon the minutes.
    
      Frederick N. Van Zandt [Joseph A. Burdeau and Edgar H. Hazelwood with him on the brief], for the appellant.
    
      George A. Gregg [Morris L. Strauss with him on the brief], for the respondents.
   Woodward, J.:

The complaint in this action alleges that the defendant is a corporation organized and doing business under the laws of the State of New York, and that the plaintiffs are copartners, and that “on or about the 13th day of August, 1909, these plaintiffs and the defendant entered into an agreement whereby the defendant agreed to pay a commission of ten per cent to these plaintiffs on the gross sum of the transaction, provided these plaintiffs produced a purchaser for the mill and quarry at South Glastonbury, Connecticut, consisting of two pieces of real estate known as the Glastonbury Feld-Spar Mills, and the personal property connected with said business;” that the said commission of ten per cent was to be paid as a brokerage, and that “ in accordance with said agreement plaintiffs produced a purchaser ready, willing and able to purchase said property at the sum of Twelve thousand ($12,000) Dollars, which the defendant herein duly accepted, and said purchaser thereafter and on or about the 1st day of October, 1909, by the procurement ■ of the plaintiffs, was ready, willing and able to enter into an agreement to purchase said property at said price, and duly entered into an agreement to purchase said property and did in fact purchase the same in the manner aforesaid at said price, and the defendant herein accepted said services so rendered by the plaintiffs; ” that the plaintiffs performed, all of the conditions on their part, and that the plaintiffs demanded ten per cent on $12,000, and that the defendant has refused to pay any part thereof.

The answer, so far as any questions here involved are concerned, is a general denial of the material allegations of the complaint. The burden was, therefore, upon the plaintiffs to show that they had made a contract with the defendant corporation, which appears from the evidence to have been organized for the purpose of manufacturing, importing and exporting chemicals, minerals, clays, colors, electroplaters’ materials, etc., for commissions as brokers in the sale of real estate in the State of Connecticut. It will be observed that the complaint does not allege that the defendant was the owner of this real estate; it merely alleges an employment on the part of this corporation engaged in the manufacture and sale of chemicals, etc., to sell the “mill and quarry at South Glastonbury, Connecticut,” and while one of the plaintiffs testifies that John 0. Wiarda, the president and treasurer of the corporation, told him that the corporation owned the property, it was conceded by plaintiffs’ counsel upon the trial that the property belonged to Mr. Wiarda personally at the time of the alleged contract, and this fact appears to have been known to the plaintiffs, for on the 10th day of August, 1909, three days before the making of the contract alleged in the complaint, McCorry went to look at the mill, and he testifies: “I made inquiries up there as to how long he had been in possession of that property; I asked Mr. Andress. He said Mr. Wiarda had had a partner there at one time, and the partner didn’t do the right thing, and a foreclosure had followed, and Mr. Wiarda became the owner.” - With Mr. Wiarda concededly owning the property in question at the time of the alleged contract, and with this fact known to one of the plaintiffs, what reason could there be for the defendant corporation to be making a contract for brokerage ?. Mr. Wiarda, so far as the pleadings and proofs go, was a responsible business man, owning property in the State of Connecticut; he had no reason, so far as appears, for turning over his private business affairs to the corporation of which he was the president and treasurer, and the evidence ought to be very conclusive which would charge the corporation with his individual obligations. The corporation was not organized to deal in real estate, much less to become the agent of its own president in the hiring of brokers for the sale of his individual property. If Mr. Wiarda wanted to hire a broker he was certainly as competent to do this individually as he was to do so through the instrumentality of his corporation, acting through himself as the president thereof, and the cause of action pleaded is so improbable that nothing short of direct and convincing proof should be permitted to prevail. The alleged contract was made with Mr. Wiarda, and, as the contract related to a transaction entirely outside of the scope and purposes of the corporation, he could not bind the corporation simply because he was its executive officer. His authority to act for the corporation was limited by the legitimate scope of its business as defined by its charter. It can never be presumed that the agent of such a corporation as is here shown to exist has authority to transact business which the corporation itself is not authorized by its charter to transact (Leary v. Albany Brewing Company, 77 App. Div. 6, 10, and authorities there cited), and persons dealing with a corporation are bound to take notice of the limitations upon the powers of their agents. (Lord v. United States Transportation Co., 143 App. Div. 437, 451, and authorities there cited.) If Mr. Wiarda assumed to make a contract in hehalf of his corporation to hire brokers to sell his individual property, he could not bind the corporation by such action, for it was not within the apparent scope of his authority as president of a company organized for the purpose of manufacturing and dealing in chemicals, etc. If Mr. Wiarda stated to the plaintiffs that the property belonged to the corporation (and this he denies), there would still be no ground for the plaintiffs to stand upon, for it is not within the apparent authority of a president of a manufacturing corporation to sell its plant and machinery, and it does not appear that the corporatioh or Mr. Wiarda had any other plant used in manufacturing any of the products in which it was authorized to deal. (Lord v. United States Transportation Co., supra.) If the plant was a part of the manufacturing equipment of the defendant, it was not within the. apparent scope of the authority of the president to sell the same, and if it was not then there could be no presumption that Mr. Wiarda was acting for the corporation in hiring a broker to sell the same.

It seems Very clear to us that the plaintiffs, if they made any contract whatever, made it with Mr. Wiarda individually. Clearly the evidence in this case does not support the cause of action alleged in the complaint.

The judgment and order appealed from should be reversed.

Jerks, P. J., Burr, Thomas and Carr, JJ., concurred.

Judgment and order reversed and new trial granted, costs to abide the event.