Case Name: SADOWSKI v. GENERAL DISCOUNT CORP.
Court: Michigan Supreme Court
Jurisdiction: Michigan
Decision Date: 1940-11-13
Citations: 295 Mich. 340
Docket Number: Docket No. 42, Calendar No. 40,992
Parties: SADOWSKI v. GENERAL DISCOUNT CORP.
Judges: Bushnell, C. J., and Sharpe, Chandler, and North, JJ., concurred with Wiest, J.
Reporter: Michigan Reports
Volume: 295
Pages: 340–348

Head Matter:
SADOWSKI v. GENERAL DISCOUNT CORP.
1. Contracts — Duration — Unambiguous Provisions — Servicing Mortgages.
Rights of parties under portion of contract pertaining to services to be rendered by plaintiff to defendant in the servicing of mortgages insured by the Federal housing administration, which, when read in connection with the rest of the contract, is not ambiguous, are controlled as to duration by definite contract period of two year's.
2. Same — Written Contracts — Ambiguity—Parol Evidence.
In the absence of fraud or mistake, the rights of parties under an unambiguous provision of a written contract relative to servicing of mortgages on real estate are controlled thereby and prior, contemporaneous or subsequent talk as to its scope and purport is inadmissible.
3. Corporations — Language and Scope Not Subject to Subsequent Enlargement by Officers of Corporate Party.
The language and scope of a contract which was effected through corporate action of one of the parties thereto and which contains an unambiguous provision as to subject matter of controversy cannot be enlarged by subsequent expression of corporate officers.
4. Same — Officers—Interpretation of Contracts.
Corporate officers, who merely as such have no power to make a contract thereafter questioned, have no power to change or interpret it and their understanding of it is not binding on the corporation.
McAllister and Butzel, JJ\, dissenting.
Appeal from Wayne; Miller (Guy A.), J.
Submitted April 17, 1940.
(Docket No. 42, Calendar No. 40,992.)
Decided November 13, 1940.
Assumpsit by Felix P. Sadowski against General Discount Corporation, a Michigan corporation, to recover claimed compensation for services. Judgment for defendant. Plaintiff appeals.
Parol evidence and interpretation of integrated contract, se® 1 Restatement, Contracts, §§ 230, 231, 237, 238,
Affirmed.
Bchmalzriedt, Frye, Granse & Frye (Louis H. Fead, of counsel), for plaintiff.
Bratton é Bratton (Fred G. Dewey, of counsel), for defendant.

Opinion:
Wiest, J.
This action at law was brought to recover compensation claimed under contract relative to the creation, processing and sale of Federal housing administration mortgages by plaintiff for defendant.
Upon trial before the court without a jury, judgment was entered in favor of defendant. Plaintiff reviews by appeal.
The contract between the parties was a lengthy document, executed October 16, 1936, and ran for a period of two years. Defendant was duly licensed to become a mortgagee under Federal housing administration insured mortgages and was engaged in such business.
Under the contract plaintiff was granted:
"First: the exclusive right for a period of two years from the date hereof, unless terminated prior thereto in the manner provided herein, to sell and dispose of mortgages owned by it (defendant), and certificates representing the beneficial interest therein or created hereafter, and to complete and close at his own expense all of its mortgage applications now on hand, and not sold, or hereafter obtained, to the extent that said mortgages fully comply with the provisions of the national housing act and the administrative rules and regulations under title II of said act, and to the extent that such mortgages shall be eligible for insurance under said act and administrative rules and to the extent that such mortgages shall be accepted by the Federal housing administration for insurance under said act and the administrative rules, and to the extent that said mortgages are sold and bankable orders for the purchase of same are delivered to the first party, and to that end first party agrees to deliver and turn over to second party all applications, finished and unfinished, for such mortgage loans.
"Second: All mortgage applications in process of closing and which have heretofore been sold by first party, shall be completed by first party at its own expense. ' '
The contract at some length detailed the work to be done by plaintiff and the compensation to be received by him and the method of computation, inclusive of paragraph 7, which reads:
"In the event of sale of mortgages in which the allowance for servicing charges is in excess of one-half of one per cent., the first party shall pay such excess to second party monthly."
Plaintiff has received his full compensation for the contract period of two years but, in this action, seeks to recover all excess service fees collected and to be collected by defendant on all mortgages created, processed, and sold, during the two-year term, by plaintiff. This would extend the operation of the contract beyond the two-year period.
The trial judge held the contract period controlled and barred the recovery sought.
Plaintiff contends the contract compensation for excess service fees continued as a matter of law under section 7, and if it be held otherwise then that section is ambiguous and parol testimony of the understanding of plaintiff and expressions to like effect by officers of defendant company commanded a holding that it be so construed.
Section 7, read in connection with the rest of the contract, is not ambiguous and the definite contract period of two years controls the rights of the parties and, in the absence of fraud or mistake, excludes prior, contemporaneous and subsequent talks as to its scope and purport.
The contract on the part of defendant was by corporate action and, where it speaks, its language and scope cannot he enlarged by subsequent expression of its officers.
Corporate officers, merely as such, having no power to make the contract in question, have no power to change or interpret it and their understanding of the contract is not binding on the corporation. Peek v. Detroit Novelty Works, 29 Mich. 313; Humphrey v. Onaway-Alpena Telephone Co., 204 Mich. 97; Lawrence v. Washington-Detroit Theatre Co., 190 Mich. 44; Mayhew v. Edward G. Budd Manfg. Co., 258 Mich. 381.
Judgment is affirmed, with costs to defendant.
Bushnell, C. J., and Sharpe, Chandler, and North, JJ., concurred with Wiest, J.