Case Name: Mesick v. United Collieries Company
Court: Superior Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1900-11-19
Citations: 15 Pa. Super. 316
Docket Number: Appeal, No. 72
Parties: Mesick v. United Collieries Company.
Judges: Before Rice, P. J., Beaver, Orladv, W. W. Porter and W. D.. Porter, JJ.
Reporter: Pennsylvania Superior Court Reports
Volume: 15
Pages: 316–326

Head Matter:
Mesick v. United Collieries Company.
Affidavit of defense — Corporation—Power of president.
Where the question raised by an affidavit of defense is simply the authority of the president of defendant corporation to increase the plaintiff’s salary without authority of the board of directors and without any notice to them, the case is for the jury when the above question is distinctly raised.
Argued Oct. 9, 1900.
Appeal, No. 72, Oct. T., 1900, by defendant, in suit of Edward K. Mesick against the United Collieries Company, from judgment of C. P. No. 1, Phila. Co., Dec. T., 1899, No. 158, in favor of plaintiff, for want of a sufficient affidavit of defense.
Before Rice, P. J., Beaver, Orladv, W. W. Porter and W. D.. Porter, JJ.
Reversed.
Opinion by Beaver, J. Rice, P. J., and W. W. Porter, J., dissent.
Rule for judgment for want of a sufficient affidavit of defense. Before the court in banc.
It appears from the record that the action was assumpsit by which the plaintiff sought to recover the sum of $1,200, together with interest thereon, for salary for the term of one year from April 1, 1899, at a monthly salary of $150, there being credits thereon of $650.
Plaintiff filed the following affidavit of defense and supplemental affidavit of defense:
1. The board of directors have not ratified the appointment of the plaintiff as the agent of the defendant, and the agreement of Henry Levis to pay the plaintiff the sum of $150 for each month for one year from the first day of April now last past.
2. Deponent is advised and knows that the defendant has been advised by counsel that Henry Levis, as president of the defendant, had no power to make an appointment of the plaintiff and bind the defendant to pay a salary for the period of one year; that there is no by-law of the company or authority from the board of directors giving the president of the defendant any such power; and that it is unnecessary to add to this affidavit copies of the by-laws and minutes of the company to prove a negative. Deponent as secretary, and familiar with the affairs of the company, knows of no such authority.
3. Before this suit was begun, the defendant was willing to allow the plaintiff for any services he may have rendered under the appointment averred in his statement or otherwise, but without ratifying that appointment, the sum of $100 a month from the 1st day of April to the 1st day of October now last past; which amounts to $600, and would leave the plaintiff indebted to the defendant in the sum of $50.00. But since the commencement of this action, the defendant has learned that the plaintiff did not act faithfully and has caused the following losses to the defendant which should also be set off against the demands of the plaintiff; that is to say:
4. The defendant is informed, believes and expects to be able to prove that the plaintiff, in the month of November now last past, allowed one Frank W. Williams, a relative of the plaintiff by marriage, to make a claim on the plaintiff as the agent of the defendant, for demurrage alleged to be due for the detention of the canal boat Owen McCaffrey, during the months of June and July now last past. The plaintiff not paying such claim, gaid Williams caused certain office furniture belonging to the defendant in the city of New York to be seized by process issued out of the United States district court for the southern district of New York. This furniture will cost to replace the sum of at least $307.28. The defendant, on demand upon the said Williams and the plaintiff respectively, has been able to learn nothing further than is here set forth, and no defense being thereby disclosed, the said furniture is about being sold under the said seizure and the proceeds of the sale applied to the costs of the proceeding and the aforesaid alleged claim of Williams.
5. The defendant is informed, believes and expects to be able to prove that after the seizure of the office furniture as above mentioned, the plaintiff communicated the fact of the seizure to Moller & Company, then indebted to the defendant in the sum of $524.28 on a promissory note; this fact was communicated by the plaintiff to Moller & Company to show the insolvency of the defendant, when in fact, this defendant was not and is not insolvent. Whereupon Moller & Company allowed their note to go to protest on the 7th day of December now last past, and now claim a set-off because the supposed insolvency of the defendant had caused Moller & Company to buy coal elsewhere at a loss of $390 or thereabouts, being the additional price paid by Moller & Company above that alleged by them to have been fixed with the plaintiff as the agent of the defendant for coal to be supplied heretofore, as well as further sums from future breaches of the supposed contract. Defendant was not informed by plaintiff of such contract and that there would be any such liability in delivering coal.
6. The defendants therefore claim to recover from the plaintiff the said sums of $50.00, $307.28 and $390, in the aggregate, the sum of $747.28.
SUPPLEMENTARY AFFIDAVIT OF DEFENSE.
1. The deponent has been informed, since the making of the above mentioned affidavit of defense, by Mr. Steen, the secretary and treasurer of the defendant from April 1, 1899, to July 28, 1899, and who is no longer in the employ of the company, that the president, Henry Levis, never notified him or the board of directors that he had employed the plaintiff for the period of one year, at the monthly salary of $150; the plaintiff was employed before April, 1899, at the sum of $100 a, month. Deponent believes these statements and expects to be able to prove them on trial of this cause.
2. That it is not true, as set forth in the statement of the plaintiff’s claim, that the management of the company changed on August 4,1899, when Henry Levis, president of the company, who was supposed to have made the yearly contract with the plaintiff, died. That the change did occur to the deponent’s knowledge at the time of the annual election, on June 28,1899, when the president was elected to take charge.
3. That the deponent succeeded Mr. Steen as secretary on July 28, 1899 ; that he was informed by the president on September 20, 1899, that the president had discharged the plaintiff under the authority of the by-laws of the company, which provide amongst other things that the president shall have power to remove any officer, the authority being contained in article 2, section 5, and being in the following words: “ He shall have power to remove any officer or employee and substitute another in his place, and shall fill all vacancies as well in office of directors as in office of secretary and treasurer.” Of this discharge, the plaintiff was notified, and the letter written on that day as set forth in statement of plaintiff’s claim, shows that the plaintiff was addressed merely as an individual, and not as an agent of the defendant company.
4. The defendant company is willing to pay the plaintiff for his services to the day of his discharge at the rate of $100 a month, which sum amounts to $600, without deducting the few days in the latter part of September after his discharge. The defendant admits that the plaintiff is entitled to this sum of money, but claims that the plaintiff is in its debt in the sum of $50.00, as the payments on account have amounted to $650. The overpayment occurred through the irregularity of the payment on account and the expectation of an agreement with the plaintiff to continue in the defendant’s employ at the rate of $100 a month, subject to discharge by the president, as provided in the by-laws.
5. That payments on account of plaintiff’s salary were made generally on account, as shown by the plaintiff’s statement of claim, and not in payment of any particular month’s salary, and the payments of $150 on three different occasions prior to the change in the management of the company were not made in recognition of the plaintiff’s claim for a salary at the rate of $150 a month.
6. The by-laws provide in article 2, section 1, as follows: “ The business and property of the company shall be managed (except as herein provided) by six directors, who shall be stockholders and shall be elected,” etc.
That under this provision of the by-laws the matter of contract with the plaintiff has not come before the board at any time since the deponent's election as secretary, and deponent is informed by Mr. Steen, the former secretary, that no mention or report of any such arrangement with the plaintiff was made to the board of directors between April 1 and July 28, 1899. Deponent believes and expects to be able to prove this statement on the trial of the cause.
7. Deponent is informed, believes and expects to be able to prove that the directors did not know of this contract, either individually or as a board, and have not acted or refrained from acting upon this contract.
8. That the set-off mentioned in the fifth paragraph of the affidavit of defense cannot be made more specific as this deponent is informed, believes and expects to be able to prove that a suit to test the claim of Müller & Company to the damages mentioned in the affidavit is pending on behalf of the defendant corporation in this suit and is still undetermined.
9. That the claim in the fourth paragraph of the affidavit of defense of a set-off of the value of the office furniture therein mentioned, cannot be made more specific because the proceedings in admiralty therein mentioned are still pending and undetermined.
The court below made absolute the rule for judgment for want of a sufficient affidavit of defense and damages were assessed at $562.69. Defendant appealed.
Error assigned was in entering judgment for plaintiff, thereby affirming the validity of the alleged contract of employment.
John B. TThle, for appellant. —
Corporations formed under general laws have merely skeleton charters, and most of their powers and liabilities must be found in the by-laws adopted within the limits prescribed by the general corporation law of the state. So held, with regard to corporations formed under the Act of April 29, 1874, P. L. 73, in Millward-Cliff Cracker Company’s Estate, 161 Pa. 157.
There, the board had the general control of the management of the company’s business and the president could not do what was to be done by a committee of the board of directors. Here, the by-laws are even more express in providing, as stated in the supplemental affidavit of defense, first, as to the board of directors:
“ The business and property of the company shall be managed (except as herein provided) by six directors, who shall be stockholders . . . .” (By-laws of Appellant, article 2, section 1.)
And second, in the course of the article on the president’s powers and duties, the following occurs:
“ He shall have power to remove any officer or employee and substituid another in his place . . . .” (By-laws of Appellant, article 2, section 5.)
Consequently, there was no power in Levis, as president, to make a year’s contract with the plaintiff, and thus fasten on the company by the imprudence of one person, an employee whose services might not be desired.
Henry N. iSmaltz, with him Charles C. Lister, for appellee.—
It is now well settled that where the president of a corporation, without previous authority, makes a contract or employs a person on its behalf, and it receives the benefit of the contract or the.services of the person employed, it must pay. Citations of authority are unnecessary, it is submitted, to sustain this principle.
The remedy of the person injured has been concisely and clearly pointed out in the very latest ease upon the subject: Allen v. Colliery Engineers’ Company, 196 Pa. 512.
There is no merit in the items of set-off.
• Excerpts from by-laws have been referred to, but they, as well as the authority cited by the plaintiff, are not material in view of the principle of law above referred to. The by-laws should be set out in full. If the president has the power to remove and substitute, as stated, the latter includes the power to appoint, and the complete by-laws would show all the powers with which the president is clothed, and the restrictions upon him.
November 19, 1900:
The cases cited by the appellant all relate to unexecuted contracts, and the corporations did not receive the benefit of them. It is submitted that under the affidavits plaintiff was entitled to recover and the judgment of the court below should be affirmed.

Opinion:
Opinion by
Beaver, J.,
The plaintiff alleges in his statement " that on or about the first day of April, 1899, the said plaintiff was employed by the said defendant, through its president, Henry Levis, as agent of the said company defendant, in the city of New York, for the term of one year from the first day of April, 1899, at a monthly salary of $150." If there were no denial of this alleged contract, the fact that the plaintiff entered upon the discharge of his duties thereunder would of itself have been such notice as to put the defendant company upon inquiry as to the terms under which the plaintiff was employed. There is a distinct allegation in the affidavit of defense, however, that this was not an original employment; that the defendant was originally employed at a salary of $100 per month. His continuing to discharge the duties of his original employment, therefore, would be no notice whatever to the defendant company of any increase of salary. The power of the president to make such an increase is specifically denied. This raises a question of fact sufficiently specific to warrant its submission to a jury. If the salary originally paid is all that the defendant is bound to pay, the plaintiff has been more than paid according to the admissions in his statement. There was nothing in the retention by the plaintiff of moneys on account of salary which would necessarily put the defendant upon inquiry until the time at which it is alleged the discharge took place.
The question raised by the affidavit, therefore, is simply the authority of the president to increase the plaintiff's salary, without authority of the board of directors and without any notice to them. This is distinctly raised and is sufficient to carry the case to a jury.
It is not necessary to consider the allegations of set-off contained in other paragraphs of the affidavit.
Judgment reversed and a procedendo awarded.