Case ID: ad_168/html/0639-01.html
Source: Caselaw Access Project
Author: {"author": "Dowling, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

George P. Hill, Respondent, v. Troegerlith Tile Company, Appellant.
    First Department,
    July 9, 1915.
    Principal and agent — action for commissions for procuring purchaser of stock — evidence — corporations — authority of treasurer to bind corporation.
    In an action for an alleged breach of contract, the plaintiff claimed that he had been employed by the defendant to procure a purchaser for its capital stock, and for such service he was to receive 200 shares of the stock at a par value of $100. Evidence examined, and held, insufficient to establish that the plaintiff procured a purchaser, and that the complaint should be dismissed.
    There is no implied authority upon the part of a treasurer of a corporation to make an agreement to pay a commission in the form of treasury stock to a party who will produce a purchaser for such stock. Such an agreement, it seems, must be authorized by a vote of the board of directors.
    Appeal by the defendant, Troegerlith Tile Company, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 3d day of February, 1915, upon the verdict of a jury, and also from an order entered in said clerk’s office on the 9th day of February, 1915, denying the defendant’s motion for a new trial made upon the minutes.
    
      Arnold L. Davis, for the appellant.
    
      Robert H. Charlton, for the respondent.
   Dowling, J.:

The plaintiff claims to have been employed originally by John K. Kellogg, treasurer of the John F. Troeger Sons Company (now known as the Troegerlith Tile Company), to obtain from $5,000 to $10,000 cash capital to enable said company to continue its business, it then being in desperate straits for money. He alleges that Kellogg said that he would see that plaintiff was compensated by a commission, which he later fixed at 200 shares of the company’s stock. Plaintiff testified that he brought various persons to see Kellogg, including Benjamin T. B. Hyde, whom he claims to have first met at the latter’s office, in November, 1911, and whom he induced to accompany him to the office of the defendant company, where they met John F. Troeger, the president thereof, and Kellogg, its treasurer. A conversation followed between all four, after which they went' over to Brooklyn to the company’s plant to see how the material which they were manufacturing was made, and thereafter visited some places in Brooklyn where its tiling was in use. Plaintiff claimed that a meeting was held later in the office of the company when arrangements were discussed under which Hyde was to become the company’s general manager, and was to contribute $10,000 in cash for stock at $50 a share, the par value being $100. Plaintiff claims that he had another conversation with Troeger in a saloon when the latter expressed his appreciation of plaintiff’s instrumentality in bringing Hyde into the business, and said that he would see that Hill was paid a commission for having done it. In corroboration of his claim, plaintiff produced a letter dated October 27, 1911, directed to him and signed by “ The Troeger Sons Co., John Kensett Kellogg, Treasurer,” setting forth the company’s financial difficulties and continuing: “Under the existing circumstances I can say that the Company will gladly pay you 200 shares of stock for introducing any party who will invest $10,000 or more in the Company, the investor to buy his stock in the Company at the rate of not less than $50 per share.” It does not appear that at this time the company had any stock whatever left in its treasury, nor is it shown whose stock was to be turned over to plaintiff in payment for his services under this alleged agreement. As a matter of fact Kellogg had hut 20 shares of stock at this time, although plaintiff claims that he had a certificate of 400 shares, or thereabouts, on which he was endeavoring to raise money. There was no evidence offered of any authority given the treasurer to make this agreement on behalf of the company. Plaintiff was sought to be corroborated by one MacG-owan, who testified to his presence at repeated interviews between Kellogg, Troeger and Hill when they were trying to get from $5,000 to $10,000 for the company, and he heard Kellogg promise plaintiff 200 shares of stock if he got some one to invest the money. He also undertook to corroborate the plaintiff’s version of the interview, when it was alleged that Troeger had promised Hill that he would see that the latter would be paid, as Hyde had agreed to put in $10,000 on the basis of $50 a share for his stock. Benjamin T. B. Hyde testified that he had bought the 200 shares of stock of the company at $50 a share, the purchase price being used for the benefit of the company. Upon cross-examination it appeared that the stock which he had bought was the individual stock of John F. Troeger, and that his introduction to Mr. Troeger had been brought about by one Isaac H. Townsend. Ho effort was made to show by this witness that plaintiff had been the party who had brought about his connection with the transaction.

For the defendant, Isaac H. Townsend (at the time of the trial the vice-president and treasurer of the company) testified that plaintiff had spoken to him about the defendant and introduced him to Kellogg and MacGowan, showing him some samples and saying that they needed capital. Townsend testified that he was the party who had interviewed Hyde, and that after he found that Hyde was willing to consider the proposition, he arranged a meeting in Kellogg’s office, when Hill was to meet Hyde and take him to Troeger’s office and introduce him to the latter. Hill did not keep the appointment, and after waiting a half hour or more Townsend went direct to Troeger, telling him that he represented Hyde. The witness accompanied Troeger to Hyde’s office, the three alone being present, and the same three visited defendant’s factory in Brooklyn. At none of these interviews was Hill present. Called for the defense, Hyde testified that he had met Hill but once, and that his introduction to Troeger came through Townsend and not through Hill; also that he had never purchased any stock from the corporation but from Troeger individually. He was emphatic in his denial of plaintiff’s testimony that he had been introduced to him by Townsend at Hyde’s office. John F. Troeger, formerly president of defendant, testified that Kellogg was trying to buy out half of the witness’ interest in the company for $10,000, but denied that he knew anything about Hill’s alleged activities in trying to procure capital until he was about to visit Hyde’s office. He denied positively ever having promised to pay the plaintiff any commission whatever, or having in any way referred to his alleged efforts to secure capital for the company. On November 20, 1911, although plaintiff claimed that he had a binding contract made with Kellogg on October twenty-seventh preceding by which he was to receive 200 shares of stock, he wrote a letter to the company advising them that he would take legal steps to protect his interests “in stock and cash commissions.”

We deem it unnecessary to discuss at further length the evidence in the case, which is so contradictory as to be irreconcilable. No effort is made to show any authority upon the part of the treasurer for the making of this very unusual agreement which, if it contemplated issuing treasury stock as a commission on a purchase by any third party of the company’s treasury stock, clearly required a vote of the board of directors to warrant it. There is no proof that the company ever authorized the sale of its treasury stock (if it had any left) at less than par. There is no implied authority upon the part of a treasurer of a corporation to make any such unusual agreement as the one in question. The proof shows that the company had no treasury stock for sale, the entire capital having been issued. "Viewing the contract as one for the sale of part of Troeger’s stock to secure $10,000 for the needs of the company, we believe the finding that Troeger ever made, assented to or ratified any agreement by which either he or the company was to pay 200 shares of stock in return for an investment of cash in the company’s affairs or a purchase of its stock, is against the weight of evidence. We also believe that the finding that Hyde’s investment in the defendant company and the purchase of Troeger’s stock by him for $10,000 were brought about by the plaintiff’s efforts is against the weight of evidence, and that plaintiff has failed to sustain the burden upon him of showing that he procured Hyde as such purchaser. Furthermore, the verdict in the sum of $2,000 is clearly a compromise one and is without any evidence to support it. If the plaintiff had such an agreement as he claims, then the value of the 200 shares of stock which he was to receive, based on Hyde’s testimony as to the price then paid by him, was $10,000. The only other testimony as to the value of this stock (which, of course, has no market price) would indicate that the stock was valueless. Plaintiff offered no proof as to the value of his services, so that there is no basis in the record for this recovery.

The judgment and order appealed from will he reversed and complaint dismissed, with costs to the appellant.

Ingraham, P. J., McLaughlin, Laughlin and Hotchkiss, JJ., concurred.

Judgment and order reversed, with costs, and complaint dismissed, with costs. Order to he settled on notice.