Case Name: HALL v. HERTER BROS.
Court: New York Supreme Court, General Term
Jurisdiction: New York
Decision Date: 1895-11-15
Citations: 35 N.Y.S. 769
Docket Number: 
Parties: HALL v. HERTER BROS.
Judges: 
Reporter: West's New York Supplement
Volume: 35
Pages: 769–771

Head Matter:
HALL v. HERTER BROS.
(Supreme Court, General Term, First Department.
November 15, 1895.)
1. Corporations—Contracts Made before Incorporation.
A corporation which succeeds a partnership, without any change in the personnel of the business, acquires ail the assets, and retains an employe of the late firm under a statement that he is to continue under the old arrangement, with a contract then in hand, will be inferred to have assumed, as to such contract, the obligations of the firm to the employé.
2. Evidence—Admissions—Statement by Employe.
A letter written by one who is bookkeeper and confidential correspondence clerk of a corporation, in reply to a creditor’s application for a settlement, is competent evidence against the corporation.
Appeal from circuit court, New York county.
Action by Edward Spencer Hall against Herter Bros., a domestic corporation, to recover commissions under an oral contract. From a judgment on a verdict in favor of plaintiff, and from an order denying a motion for a new trial, defendant appeals. Affirmed.
Argued before VAN BRUNT, P. J., and FOLLETT and PARKER, JJ.
J. H. Seymour, for appellant.
C. N. Bouvee, Jr., for respondent.

Opinion:
VAN BRUNT, P. J.
William Baumgarten and William G-. Nichols were for a number of years prior to the month of January, 1891, partners doing business as manufacturers of furniture and decorators, under the firm name of Herter Bros. The plaintiff had been in their employ for a number of years, and in January, 1890, he entered into an oral contract with them, by which he was to receive 5 per cent, commission for obtaining and supervising the execution of contracts in the line of business in which the firm was engaged. The plaintiff was given a guaranty of $3,500 or $4,000 per year; any excess of commissions to be credited to him at the end of the year, but such commissions only to accrue when the work on the respective contracts was finished and completed. During the year 1890 the plaintiff entered into negotiations with one Elkins, of Philadelphia, for fitting and decorating his house. The plaintiff prepared estimates for doing the work, which called for $68,860, which estimates were subsequently reduced by Baumgarten to $63,860, and the contract finally taken in May, 1890, for that sum. There were subsequent contracts for additional work, making the aggregate due on the contract $127,225, which amount was in due course paid to the corporation. In January, 1891, the form of the business was changed from a copartnership into a corporation entitled Herter Bros., Baumgarten and Nichols being the principal stockholders and officers of the corporation. There was no change in the personnel of the business after the corporation was formed. To this corporation were transferred all the assets of the partnership, but the instrument which transferred these partnership assets did not promise to pay the partnership debts. The work upon the Elkins contract was superintended by the plaintiff, and commissions were paid upon this contract by the defendant corporation to the amount of 2-¡- per cent., and this action was brought to recover "the remaining 2Í¿ per cent.
There were two issues presented upon the trial,—one that the plaintiff was only entitled to 21- per cent., and the other that the defendant never promised to pay the firm's indebtedness to the plaintiff. It is sufficient to say in regard to the first proposition that there is a flat contradiction in the evidence, and, although admissions of the plaintiff to the effect that he had agreed to take 2% per cent, were offered in evidence, the jury found against the defendants upon this issue, and we see no reason for interfering with their conclusion.
In regard to the claim on the part of the defendant that it never promised to pay the firm's indebtedness to the plaintiff, there seems to be more ground for the defendant's contention. It is true that there is no direct evidence of the defendant's assumption of this liability, but the jury had the right to infer that it was the intention and understanding of the parties that the defendant would be answerable to the plaintiff for the commissions upon this contract which it was doing and completing, and which the plaintiff was supervising as its employé. There was evidence tending to prove that the plaintiff was continued by the new corporation under the' same agreement, and that it was stated that he should continue with the new corporation exactly as he did before, and that he was to continue under the old arrangement with the new corporation, and continue with the same contracts he had on hand, under the same conditions. The defendant had assumed the Elkins contract, carried it out, and completed it. The plaintiff supervised the execution of the contract, the same as he had done for the firm, and upon its completion he demanded of the defendant his commissions. We think, as was stated upon the previous appeal (31 N. Y. Supp. 692), that there was evidence from which the jury might and could properly infer that the defendant upon this contract assumed the obligations of the firm whose assets it bad acquired. It is not necessary to discuss at length these questions, because they are virtually the same as were before the court upon the'previous appeal, at which time the court held that there was a question sufficient to go to the jury.
Certain exceptions were taken to the admission of evidence, only one of which it is necessary to notice, and that is a letter written on the 11th of January, 1892, by one De Costa, who was the bookkeeper and confidential correspondence clerk of the corporation, which position he had filled in the firm for years. It appears that the plaintiff made an application to the corporation for settlement, and that the letter in question was sent to him in reply. This letter, coming from the source from which the correspondence of the corporation ordinarily emanated, undoubtedly made it competent evidence as against the corporation. In these trading corporations, whose business is necessarily conducted much the same as that of a firm, it certainly cannot be necessary for every person who has dealings with the corporation to show a resolution of the board of directors of the corporation for everything which is done in and about the business of the corporation, when it is attempted to bind the corporation by the action of its officials. In these days, when corpora tians may be formed for the transaction of any business, where a party is held out by the corporation as occupying a position to answer for the corporation, as it appears beyond question that this correspondent was, the corporation will be bound by any action of his coming within the ordinary executive duties pertaining to the transaction of the business of the corporation, and no resolution of the board of directors will be necessary to clothe with vitality every word that he utters or letter that he writes. If a contrary rule were to be adopted, then these corporations would be mere traps for the purpose of deceiving the unwary, and be the means of using the charters conferred by the state as instruments of fraud. The judgment and order appealed from should be affirmed, with costs. All concur.