Court Opinion

ID: 5194206
Source: CourtListenerOpinion
Date Created: 2022-01-06 15:40:49.935383+00
Date Added: 2024-06-11T08:27:00.674779
License: Public Domain

Ingraham, J. (dissenting):
I do not agree to the affirmance of this judgment. The action was tried before the court without a jury, and the court found that, prior to the 1st of April, 1895, the Penn Anthracite Coal Company was operating certain mines in the State of Pennsylvania, and to-this corporation the plaintiffs had made advances to be repaid by coal to be subsequently shipped, of which there was due on the 1st of April, 1895, the sum of $17,853.02; that prior to that date the property of the company had been sold under the foreclosure of a. mortgage and acquired by the defendant; the officers of the new company were the same persons who had been officers of the old company, and they continued to operate the mines after they were acquired by the new company; that about the 6th of April, 1895,. one of the plaintiffs had a conversation with Nathaniel Taylor, president of the defendant company, “ wherein the said Taylor, on behalf' of the defendant company, promised the said Blaisdell that if plaintiffs would continue to handle their coal in the New York market, and to give the defendant company the same financial accommodations and other aid that they had given to the old company, the defendant company would deliver to plaintiffs sufficient coal to wipe out the old debt, by deliveries of coal or otherwise. And said Blaisdell, on behalf of' plaintiffs, promised that if the future deliveries of coal were satisfactory, plaintiffs would continue to handle the coal for the defendant company in the New York market, and would extend to the defendant company the same accommodations, financial and otherwise, that-they had extended to the old company; ” the defendant company,. *73before making any new requests to the plaintiffs for financial accommodations, delivered coal to plaintiffs on account of the old debt to the amount of $15,338.38; that, after this coal was delivered, “in further pursuance of said agreement, plaintiffs gave to the defendant company, on June 19th, 1895, their acceptance of a draft for Five thousand ($5,000) dollars, the proceeds of which defendant used in its business, and from thereafter and until the latter part of April, 1897, the parties continued their business dealings, the plaintiffs advancing cash and accepting defendant’s drafts, as against which the defendant company made- deliveries of coal to plaintiffs from time to time; ” that “ at the termination of the business dealings between the parties in the latter part of April, 1897, the amount of cash advanced by the plaintiffs to defendant, and the amount of said acceptances given as aforesaid, together with sundry items of the account in favor of plaintiffs, exceeded the amount of deliveries of coal by the sum of Seven thousand six hundred sixteen and 53/100 ($7,616.53) dollars;” that upon the trial the parties stipulated that “ if the court should hold that there was a lawful assumption of* the defendant company of the old company’s indebtedness to plaintiffs, then plaintiffs should have judgment for Five thousand four hundred seventy-two and 88/100 ($5,472.88) dollars, and that if such question were determined in favor of defendant company then that it should have judgment for Fifteen thousand three hundred and twenty-one ($15,321.00) dollars.” As a conclusion of law the court held that the agreement “ made by said Nathaniel Taylor and the said Blaisdell was a valid and lawful agreement, and was binding upon the defendant company.”
It thus appears that the plaintiffs made no advances to the new company; their payment to the new company never equaled the amount of coal that it had actually delivered to the plaintiffs prior to any advances that they made, and the defendant’s liability depends entirely upon the validity of this agreement, made by the president of the defendant corporation without authority from its directors or stockholders to assume an indebtedness to the old company for which the defendant was not liable. I do not think that the president of the defendant had any authority to make a contract by which the defendant assumed an indebtedness of the old *74company. It is undoubtedly true that executive officers of trading corporations have implied authority to make contracts in relation to the business that the corporation is carrying on ; and if the contract sued on had been one merely to obtain advances of money or credit to be used in the ordinary business transactions of the defendant, it may be that the president would have had authority under the general power vested in the executive officers of such corporation to make such a contract; but this defendant was in no sense responsible for the debts of the Penn Anthracite Company. Its assumption of the debts of that corporation could only be justified by a consideration moving to the new company. It was not a contract made in the ordinary business of the corporation which consisted of handling and selling coal. It asked and obtained from the plaintiffs no advances to enable it to transact its business, and the result of the plaintiffs’ transactions with the defendant was the receipt by them of over $15,000 more than they paid to the defendant. The making of this contract was not. communicated to the directors and it was not authorized or ratified by them. The by-laws of the corporation provide: “No debt or liability beyond that incurred in the ordinary, business transactions of the company shall be contracted by any officer of the company without the consent of a majority of all the directors ; ” such a consent was never obtained. Nor do the by-laws give to the president power to make such a contract as that sought to be enforced in this action. The minute hook of the corporation was put in evidence, and there is no statement of any' communication of. this agreement by the president to the directors, or ratification by the directors of his act in making such an agreement. The directors testified that they never consented to the assumption by defendant of any indebtedness, lien or obligation of the Penn Goal Company; nor did the corporation afterwards with their knowledge assume any debt or obligation of the Penn Coal Company. This item of indebtedness never appeared upon the books of the defendant, and there was no competent evidence to show that any director had knowledge that the president of the defendant had assumed to make such an agreement on its behalf, or that the coal consigned to the plaintiffs was consigned by virtue of such an agreement. I do not think that the defendant’s president had any authority to impose upon the defendant a liability for the debts of the Penn *75Company, nor do I think that there was a sufficient consideration to .sustain this contract if the president had power to make it. The contract as found by the court was that Taylor, on behalf of the defendant company, promised Blaisdell that if the plaintiffs would continue to handle their coal in the New York market and to give the defendant company the same financial accommodations and other aid that they had given to the old company the defendant company would deliver to the plaintiffs sufficient coal to wipe out the old debt by deliveries of coal or otherwise; the consideration for this obligation on behalf of the defendant was that the plaintiff promised that if future deliveries of coal were satisfactory the plaintiffs would continue to handle the coal for the defendant company and would extend to it the same .accommodations that they had extended to the old company. There was no absolute engagement on behalf of the plaintiffs to- do anything. It was all conditioned upon future deliveries of the coal being satisfactory to the plaintiffs; and the subsequent delivery of coal to the plaintiffs was not a performance of any obligation •assumed by them to sustain such a contract as that sought to be enforced. If the plaintiffs had refused to act for the defendants and receive their coal there would be.no cause of action against the plaintiffs for such a refusal based upon such a promise.
I think, therefore, that the president of the defendant had no authority to make such a contract as is here sought to be enforced; that the contract -was not ratified by the board of directors of the ■corporation; and that there was no sufficient consideration to support the contract.
I think the judgment appealed from should be reversed.
Van Bbttnt, P. J., concurred.
Judgment affirmed, with costs.

 Sic.