Case ID: ny-sup-ct_8/html/0562-01.html
Source: Caselaw Access Project
Author: {"author": "E. Darwin Smith, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

JAMES BELLINGER and MARCUS BELLINGER, Plaintiffs, v. EDWARD BENTLEY and NELSON C. DUNHAM, Defendants.
    
      Officers of corporation,—when personally bound by contract entered into in its behalf.
    
    The defendants, who were trustees of the Little Utica Cheese Manufacturing Company, and authorized to transact business in its behalf, entered into an agreement with the plaintiffs, whereby the latter agreed to manufacture cheese at the factory of the company, at a specified price, upon certain terms and conditions, in said agreement contained. The defendants were described in the body of the agreement as the trustees of the company, but it was signed by them individually. This action was brought by the plaintiffs to recover for a breach of the contract. Held, that they were not entitled to recover; that the contract was, in fact and in legal effect, the contract of the company, and that the defendants were not personally liable thereon.
    The cases of Bush v. Cole (28 N. Y., 269) and Pumpelly v. Phelps (40 id., 67) distinguished.
    Motion for a new trial, on exceptions ordered to be heard in the first instance at the General Term.
    This action was brought to recover a balance, alleged to be due from defendants, for cheese manufactured and accepted by them, under an agreement, of which the following is a copy:
    “An article of agreement made and entered into this 20th of April, 1870, between Edward Bentley, Horace Butler and N. 0. Dunham, trustees of the Little Utica Cheese Manufacturing Company, the parties of the first part, and James Bellinger and Marcus Bellinger, of Lysander, Onondaga county, N. Y., the parties of the second part, witnesseth: The parties of the first part agree with the parties of the second part to manufacture and make cheese at the aforesaid factory during the season of making cheese in 1870, and the parties of the second part agree to do all the work and furnish all the material for making cheese and boxes for $1.50 per hundred for the make in said factory, and to make good number one merchantable cheese; the parties of the first part agree that the patrons of said factory shall furnish the milk two or one time per day in good order, except those that wish to keep their milk home on Sunday. The parties of the first part agree to put said factory in good running order, and furnish sufficient amount of water and sufficient amount of ice in the ice-house for the season that is required for the season of running factory. The parties of the second part is to have the privilege of sending all milk that does not come to said factory in good order for making cheese home. The parties of the first part are to pay the parties of the second part, after each sale of said cheese, and get the returns; and the parties of the second part are to take care of said cheese until it is thirty days old, and take care of said cheese twenty days after said factory closes. Said factory to commence on the second day of May, and run the six months, or longer, if the parties of the first part wish to have it run. The parties of the second part are to' feed the hogs and help box the cheese in the agreement. Cheese to be made on an average of nine inches high. In witness whereof the parties have hereunto set their hands the day and year first above written.
    EDWARD BENTLEY.
    N. C. DUNHAM.
    JAMES BELLINGER.
    reMSfl M. R. BELLINGER.”
    The defendants and one Horace Butler, were, diming the year 1810, trustees of the Little Utica Cheese Manufacturing Company, an association, formed under the general laws of this State for the purpose of manufacturing cheese; and they had, as such trustees, authority to manage all the business pertaining to the company.
    It appeared upon the trial, that the plaintiff, James Bellinger, was a stockholder in the company in 1870, and that the premises upon which the factory of the company was situated, were leased to it by him.
    At the conclusion of the plaintiff’s evidence, the defendants moved for a nonsuit, on the ground that they had made the said agreement as trustees or agents of the company, having full authority to make the same, and that they were not personally liable thereon; and, on the same ground, at the close of the evidence, they requested the court to instruct the jury to find a verdict for them. The court denied the motion and refused to charge as requested, and the defendants duly excepted. The jury found a verdict for the plaintiffs, for the amount claimed. The exceptions were ordered to be heard in the first instance at the General Term.
    
      D. Pratt, for the plaintiffs.
    
      Sedgwicks, Kennedy da Tracy, for the defendants.
   E. Darwin Smith, J.:

The motion made at the Circuit for a nonsuit, should, I think, have prevailed.

The contract upon which the action was brought, was, in fact and in legal effect, the contract of the Little Utica Cheese Manufacturing Company. It purports to be made by the trustees of such "corporation, who, the proofs show, were clearly fully authorized to make it in behalf of the corporation. The defendants describe themselves as such trustees. The contract is for the benefit of the corporation upon its face. It stipulates for the use of the corporate property, the cheese factory, by the plaintiffs, in the manufacture of cheese—the particular business of said corporation—in the factory of said company. The plaintiff agreed to manufacture and make cheese at the said factory, during the season of making cheese in 1870. The proofs show that the affairs of said corporation were to be managed by three trustees, and that the trustees, named in the said agreement, were such trustees for the year 1870, and two of them were authorized by the by-laws to constitute a quorum for the transaction of business, and two of them, in fact, signed the agreement. This made it a valid contract of the corporation. The plaintiffs knew that the defendants were contracting for the corporation; one of them was a stockholder and the other his son. The factory was on the land of the elder Bellinger, one of the plaintiffs, and was leased to the corporation by him for the use of such factory, and he was a stockholder in said company. There is nothing in the contract or circumstances, indicating that the defendants had any private interest in said factory, or in the business of making cheese therein, or in said contract, any more than the other stockholders of said company, or that they intended to bind themselves individually,' They made a clear, plain, palpable contract in behalf of said company, and for its sole benefit, and they had full authority to make such contract; and the said corporation could clearly have been sued on such contract, as binding upon it. If the defendants had made and signed this contract without authority to do so, they would doubtless have been personally liable on the contract, within the-cases of Bush v. Cole, Pumpelly v. Phelps, and numerous other cases. But, when officers or other agents contract for a corporation, and have full authority to do so, and the work to be done, or the property purchased, is for the exclusive benefit of the corporation, and that is known at the time of the making of the contract, the ■ agent is not bound personally, unless he binds himself by some particular, personal contract, or fails to make a contract binding upon his principal.

In Randall v. Van Vechten, the principal was held liable in assumpsit, on the contract, made by persons acting as a committee of the city, who signed it with their private seals, as was the case in Haight v. Sohlar, where the persons, making the contract, sighed it with their seals, as a building committee. The same principle is asserted in Worrall v. Munn, and numerous cases there cited, in asserting the same rule, and the case of Randall v. Van Vechten approved, as it is, also, in Dubois v. Delaware Company.

In this case, it appears that • the corporation ratified their contract, and made payments to the plaintiff under it, to the amount of $1,071.80, leaving due the plaintiff, a balance of only $250, for the cheese manufactured by them at such factory during the season.

In Bush v. Cole, and Pumpelly v. Phelps, the principal was unknown to the parties contracted with. In Bush v. Cole, the opinion stated that the defendants signed the contract as the agents of an undisclosed principal, and, as they did so without authority, were personally liable as the contracting parties. In Pumpelly v. Phelps, the contract was signed by the defendant, simply as trustee, and the case states that there was nothing in the contract, to intimate, of whom he was trustee. But in this case, on the contrary, the defendants describe themselves as trustees, etc., in the body of the contract, and state expressly the name of the corporation of which they are trustees, and for which they are acting.

I think the defendants fully showed at the Circuit, that the contract they made, was binding on such corporation, and that they had full authority to make it, and that it was a valid contract of such corporation, and that they were therefore not individually liable thereon.

The verdict should, therefore, be set aside, and a new trial granted, with costs to abide the event.

Present—Mullin, P. J., Smith and Gilbert, JJ.

Mullin', J., not voting.

So ordered. 
      
       28 N. Y., 269.
     
      
       40 id., 67.
     
      
      
         19 Johnson, 60.
     
      
       1 Selden, 241.
     
      
       4 Wend., 288.
     
      
      
        Supra.