Case ID: ad_159/html/0485-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Hotchkiss, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The Traitel Marble Company, Appellant, v. Brown Brothers, Incorporated, Respondent.
    First Department,
    December 5, 1913.
    Building contract — provision for alterations upon “written order” of architect—waiver — corporations — authority of secretary-treasurer —notice of authority of officer—evidence.
    A provision in a building contract that “no alteration shall be made in the work, except upon the written order of the architect,” who is also secretary-treasurer of the owner, a corporation, is sufficient notice that any general authority of the architect as an officer of the corporation is withdrawn, and he has no authority to vary the terms of the contract by an oral agreement, unless the provision quoted is waived.
    Mere proof of the number of shares of stock held by the architect raises no presumption of his general authority as an officer of the corporation. Latjghlin, J., dissented.
    Appeal by the plaintiff, The Traitel Marble Company, from an order and determination of the Appellate Term of the Supreme Court, entered in the office of the clerk of the county of New York on the 24th day of June, 1913, affirming a judgment of the City Court of the City of New York dismissing the complaint.
    
      Norbert Heinsheimer, for the appellant.
    
      Royal E. T. Riggs, for the respondent.
   Hotchkiss, J.:

The action is for a balance due under a building contract. The complaint alleges that the specifications provided for hydraulic tile, but that by subsequent agreement quarry tile was substituted, and that the contract as thus modified was performed. The contract named one Brown as architect, and contained the usual provision that “no alterations shall be made in the work except upon written order of the architect.” Plaintiff offered testimony tending to show a verbal arrangement with Brown for the substitution of the quarry tile, and also showed that at the time of such arrangement Brown was secretary and treasurer of the defendant company. The complaint was dismissed on the ground that plaintiff had not shown that the substituted tile was furnished upon the “written order ” of the architect.

I think the judgment should be affirmed. Unless compliance therewith was waived by the defendant, the provision that there should be no change in the work as fixed by the specifications, except upon the written order of the architect, was controlling. (Langley v. Rouss, 185 N. Y. 201.) Such waiver might have been by writing or by conduct. (Carlin Const. Co. v. N. Y. & B. B. Co., 149 App. Div. 919; Kelly v. St. Michael’s R. C. Church, 148 id. 767, 773.) The appellant insists that the fact that Brown was secretary-treasurer of the company as well as the architect named in the contract is available as evidence of waiver. I think not. Broadly stated, the rule is that the general officers of a business corporation are impliedly held out to the public as having authority to act in accordance with the general usage and practice of such corporations and of the business in which the particular corporation is engaged, and that their acts within the scope of an authority to be presumed from such conditions will bind the corporation in favor of persons possessing no knowledge of a lesser authority, or who are not in possession of facts sufficient to put a prudent man upon inquiry. These rules are, of course, as against the corporation, subject to such further limitations as may arise in circumstances which justify the application of the doctrine of estoppel, waiver or of ratification, in which cases, although the authority of the agent is not extended, the right of the corporation to deny responsibility is taken away. It is also the general rule that an officer of a corporation is prima facie presumed to have only such authority as is usually incident to his particular office; the treasurer to act with respect of the finances, the secretary to keep the records, etc. In 10 Cyc. 940, these rules are well stated and ample authority cited in them support. In this State the Court of Appeals has apparently placed the secretary within the category of general officers whose authority is presumed to be as broad as that of the president himself, and has ascribed to each of these officers prima facie authority to do any act which the board of directors could authorize or ratify. (Hastings v. Brooklyn Life Ins. Co., 138 N. Y. 473, 479.) Whatever the law on this subject may ultimately be declared to be, nevertheless, the general proposition holds true that persons dealing with the officers and agents of a corporation are bound to take notice that their powers are derived from statutes, by-laws or usages which more or less define the extent of their authority, and in doubtful cases one must at his peril acquaint himself with the exact extent of that authority. As illustrations of this rule see First Nat. Bank v. Ocean Nat. Bank (60 N. Y. 278, 291); Alexander v. Cauldwell (83 id. 480); Wilson v. Kings County Elev. R. R. Co. (114 id. 487, 491, 492); Jemison v. Citizens' Savings Bank (122 id. 135, 141).

It must be clear, therefore, that conceding the general power of Brown as secretary-treasurer, under ordinary circumstances, to bind defendant in the matter of the alleged alteration of the contract and to orally authorize the substitution of one class of tile for another, since, by the written agreement of the parties, Brown was nominated as architect of the work in question and his authority to change the contract expressly limited to changes authorized by him in writing, I think this was sufficient notice to plaintiff that, for the purposes of this contract Brown’s general authority to act. in his capacity as an officer of defendant was withdrawn and that he was nominated to act only in his special capacity as architect and under the limitations imposed by the contract. In short, plaintiff was bound to take notice, when Brown orally authorized the substitution of one kind of tile for another, that he was representing defendant as architect and not as secretary-treasurer, and that under the contract he had no authority so to act. In such circumstances, for plaintiff to rely on a presumption of authority in Brown arising from his position as an officer of the company, would wholly ignore his special agency as architect and the express limitations attached by the agreement to his acts in that capacity. It is also urged, as ground for reversal, that the court erroneously excluded questions tending to show the number of shares of defendant’s stock held by Brown. Ho error can be predicated of this ruling. Had the evidence been directed to a state of facts tending to show that Brown and the corporation were practically identical or that he had full personal charge of the business of the company, and that his general powers were unlimited, the evidence might have been competent (Oakes v. Cattaraugus Water Co., 143 N. Y. 430; Phillips v. Campbell, 43 id. 271), but the evidence offered, standing alone, was not proof of any such fact, for no presumption of any such extended authority could be drawn by proof merely of the number of shares of stock held by him.

The judgment should be affirmed, with costs.

Ingraham, P. J., McLaughlin and Dowling, JJ., concurred; Laughlin, J., dissented.

Determination affirmed, with costs.