Case Name: Isaac B. Potter and George F. Alexander, Resp'ts, v. The New York Infant Asylum, App'lt
Court: New York Supreme Court, General Term
Jurisdiction: New York
Decision Date: 1887-05-09
Citations: 8 N.Y. St. Rep. 837
Docket Number: 
Parties: Isaac B. Potter and George F. Alexander, Resp’ts, v. The New York Infant Asylum, App’lt.
Judges: 
Reporter: New York State Reporter
Volume: 8
Pages: 837–840

Head Matter:
Isaac B. Potter and George F. Alexander, Resp’ts, v. The New York Infant Asylum, App’lt.
(Supreme Court, General Term, Second Department,
Filed May 9, 1887.)
1. Corporations—President can employ counsel where corporation INTERESTED.
In an action for the value of certain legal services rendered by the plaintiffs to the defendant, the defense was that they were not employed by resolution of the board of managers, nor by any person possessing authority under such resolution to bind the defendant corporation pursuant to the charter thereof. It was shown that plaintiffs were employed by the president of the corporation, who in fact controlled the litigations of defendant. Held, that the president of a corporation has a general authority to employ counsel to assist in legal proceedings where the corporation is interested.
2. Same—When corporation liable for unauthorzed acts of agents ULTRA VIRES.
The work oí the plaintiffs was highly meritorious. Its performance required many months; various officers of defendant's had actual notice that plaintiffs were engaged in legal work for the corporation under supervision of their president, and did not concern themselves as to the conditions of the employment. Held, that when, upon the request of an agent of a corporation, money has been loaned, goods supplied, or services performed, and the corporation has received the benefit, to hold it absolved from liability because the agent went beyond the letter of his power would be to encourage fraud. In such a case the plea of ultra vires will not be allowed to prevail.
Appeal from a judgment entered upon the report of a referee in favor of plaintiffs.
Clark Bell, for app’lt; C. F. Potter, for resp’ts.

Opinion:
Pratt, J.
The plaintiffs recovered, before the referee, $516 for legal services performed by them in certain proceedings instituted m behalf of defendants to restrain the board of supervisors of Westchester county from leying a tax upon property of the infant asylum.
The performance of the service was abundantly proved, and the value as found by referee is expressly conceded not i to be against the weight of evidence or excessive.
I The ground upon which the defendants' liability is congested, is that plaintiffs were not employed by resolution of the board of managers, nor by any person possessing authority under any such resolution to bind the defendant corporation; special reference being had to a clause in the charter which recites that five managers shall constitute a quorum of the board for the transaction of ordinary business, but that no contract shall be made involving an expenditure of more than $500 without the presence of a majority of the managers.
The services were performed upon the request of the president of the corporation. He was an attorney at law, and although it is not proved that any express authority therefor was given him by the board of managers, he in fact controlled the litigations of defendants.
These were shown to be numerous. As they occupied the time of the president "night and day" he found occasion to obtain the aid of many lawyers. In no case does it appear that the board of managers were consulted in advance of employment It would appear that in most cases the action of the president was ratified by paying for the services; in one instance, not until legal proceedings were begun for collection.
In the present case the services continued several months under the general supervision of the president.
Plaintiff prepared the complaint in the action whiph the president signed as attorney for the asylum. One of the plaintiffs prepared the brief for the argument at special term, and opened the discussion there.
Upon the hearing an affidavit was used in defendant's behalf, which recited that one of the plaintiffs was counsel for the asylum.
The printed argument at general term; prepared by one of the plaintiffs, was followed by the reversal of the adverse ruling at special term, and the property of the asylum was exempted from taxation.
The annual tax had been about $900 a year, and the exemption is still enjoyed.
That the president of a corporation has a general authority to employ counsel to assist in legal proceedings where the corporation is interested, is well established. Insurance Co. v. Oakley, 9 Paige Ch., 496.
So as to a cashier. Bank v. Bank, 10 Wall., 604.
In Root v. Olcott, the court say the power is indispensable for the protection of corporations, and that its abuse can be easily remedied by the removal of the indiscreet officer.
Irrespective of the power of the president to employ counsel, .the recovery below may be sustained upon other grounds.
The work of the plaintiffs was highly meritorious. Its performance required many months; various officers of defendants had actual notice that plaintiffs were engaged in legal work for the corporation, under the supervision of their president. It does not appear that they concerned themselves as to any of the conditions of the employment.
The conduct of defendants can be explained in two ways. Either they had confidence in the discretion and good judgment of their president, and were willing to abide by his acts, or they confided in their supposed inability to contract liabilities without a formal resolution of the board, and were willing plaintiff's services should continue to the benefit of defendants, without any corresponding liability.
In either case, good morals require that the laborer should receive his hire.
Nor do we find any difficulty from the restriction in the charter, of defendants' power to contract.
An infant is not bound by his contracts, yet if he purchase necessaries he is bound to respond, not for the price he has agreed to pay, but for the price the goods are reasonably worth; the price he ought to pay irrespective of any agreement. In other words, the infant, not liable upon contracts made by himself, is Hable upon contracts made for him by the law.
So a corporation which has enjoyed the benefit of a con tract cannot escape such responsibility as the law implies: from acceptance and enjoyment of its benefits by pleading irregularity in the making.
_ Even when the contract is one the corporation had no right to make, after it is executed and the benefits received, it is held that to hold the plea of ultra vires to, prevail would be to encourage fraud. Co. v. Roach, 97 N. Y., 381; Co. v. Barlow, 63 id., 70.
When, upon the request of an agent of a corporation, money has been loaned, goods supplied, or services performed, and the corporation has received the benefit, to-hold it absolved from liability because the agent went beyond the letter of his power, would be, in the language of the cases, to encourage fraud.
As well remarked by Brady, J, in Root v. Olcott, an abuse of the agent's power can be speedily remedied by removal of the indiscreet officer. And if the liability is restricted to a quantum meruit, no injustice can be done to the corporation.
It follows that the judgment appealed from should be affirmed with costs.
Barnard, P. J., and Dykman, J., concur.