Court Opinion

ID: 6740311
Source: CourtListenerOpinion
Date Created: 2022-07-20 23:21:23.512596+00
Date Added: 2024-06-11T16:01:56.345689
License: Public Domain

Christianson, J.
The defendant corporation is engaged in the printing business. One, I. H. Ulsaker, was the manager and president of the corporation and the principal stockholder therein. On or about January 5th, 1921, certain arrangements were made between said I. II. Ilsaker and the plaintiff and one E. II. Dummer, whereby the said plaintiff and said Dummer agreed to enter into the employ of said Ulsaker Printing Company and work for it during the year 1921. The original arrangement was verbal. Eater the following written instrument was executed:
A. A. ICrumpehnann,
Fargo, N. Dak.
Dear Sir:
This is to confirm the verbal agreement between the Ulsaker Printing Company Inc., and yourself, that the net profits of the business for the year Nineteen Hundred and Twenty-one be equally divided between, I. H. Ulsaker, O. II. Ulsaker, E. II. Dummer and A. A. Xrumpelmann.
Signed and witnessed this fifth day of January 1922.
Ulsaker Printing Co.
By I. II. Ulsaker,
Manager.
A. A. Krumpelmann.
Dummer assigned to the plaintiff "all right, title and interest in and to all sums and monies due or owing to him and all claim, demands and cause or causes of action of any kind,” which he had against the defendant under said agreement. The plaintiff brought this action to recover the sum which he claims is due him, personally, and as assignee of Dummer. The case was tried to a jury and resulted in a verdict in ■favor of the plaintiff for the sum of $1,166, with interest from January 5th, 1922, at 6 per cent per annum. The defendant moved for judg*628ment notwithstanding the verdict or for a new trial. The motion was denied and defendant has appealed from the judgment and from the order denying its motion for judgment notwithstanding the verdict.
The first and principal contention advanced by the appellant is that the contract under which plaintiff seeks to recover in this action is void for the reason that I. H. Ulsaker, the president and manager of the defendant corporation, represented both the defendant corporation and himself as an individual in making such contract, and that he, as an individual, receives a direct benefit thereunder. Tn other words, it is contended that the agreement under which recovery is sought here falls within the rule which prohibits a corporate officer from representing both himself and the corporation in a transaction in which his and the corporation’s interests are adverse. The rule alluded to is a salutary one and should doubtless be applied in all cases which fall within it. The rule is in fact merely an application of the general principle of agency which prohibits an agent from representing both himself and his principal in a transaction in which their interests are adverse and ■antagonistic. The object of the rule is to obtain fidelity on the part of the agent “and, as a means of securing it, the law will not permit the agent to place himself in a situation in which he may be tempted by-his own private interest to disregard that of his principal.” 7 R. C. L. p. 480. In our opinion the rule sought to be invoked has no application in this case. This is not an action to enforce a contract between a corporation and one of its officers. Neither Krumpelmann nor Dummer were officers of the defendant corporation. It is true the written memorandum states that a certain portion of the profit is to be delivered to I. TI. Ulsaker, but that statement is not a part of the contract between the defendant corporation and Krumpelmann and Dummer. The rights and obligations of these persons are not dependent upon the rights and obligations of I. H. Ulsaker. The rights and obligations of each of the four persons named in the written memorandum were separate and independent. The right of each to be compensated depended upon his performance of the duties assumed under the contract. If O. IT. Ulsaker and E. H. Dummer had died shortly after the arrangement was made or had refused to perform the duties assumed under the contract, manifestly this would not have, affected the right of the plaintiff Krumpelmann to recover if he had proceeded *629with, and performed his duties under the contract. We see no distinction between the situation presented here and that which would have existed if I. IT. Ulsaker, as an officer and on behalf of the defendant corporation had made four separate and distinct contracts, L c., a separan and distinct contract with each of the four persons named in the •written memorandum, and each of such contracts had stipulated that the person named therein should receive for his services, in addition to other compensation, one-fourth of all the net profits of the defendant corporation during 1921. In that case each contract would stand by itself, and the contract of Dunimer, Krunipelmann or O. IT. Ulsaker would not be affected by any detect which might inhere in the contract between I. IT. Ulsaker and the defendant corporation. If the arrangement between the parties and the corporation be deemed as one contract, the result is not changed, for tlie contract is clearly divisible. And even though it be conceded that the contract insofar as it relates to the defendant corporation and I. IT. Ulsaker is invalid, this does not render it-invalid as to the other persons. It is well settled that “where an officer enters into a contract in behalf of the corporation, part of which is within and part without his authority, the contract, if divisible, may be enforced against tlie corporation to tlie extent of tlie part which was within the agent’s authority.” 7 R. C. L. 627.
It is further contended that the contract is invalid for the reason that- it is not shown that I. II. Ulsaker was authorized by the board of directors to malee such contract on behalf of the corporation, and that in the absence of such showing it must bo assumed that I. IT. Ulsaker was not so authorized. In our opinion the contention so advanced presents merely an academic question and one not decisive of, or controlling in, this case. The undisputed evidence here shows that I. IT. Ulsaker was tho principal stockholder, a member of the board of directors, president and general manager of tlie defendant corporation. The undisputed evidence further shows that for more than three years no meetings of stockholders had been beld at all and that during all of this time the corporation acted solely through I. II. Ulsaker as its representative. In other words, the undisputed evidence shows that I. II. Ulsaker in fact handled the corporation and its affairs as though the business were his own and that for all actual and practical purposes in the conduct of such business I. IT. Ulsaker was the Ulsaker Printing Company. In *630these circumstances there can, we think, be no question but that a contract made by I. H. Ulsaker in behalf of the corporation, which the corporation itself might legally have made; through its board of directors, must be deemed the contract of the corporation. As was said by this court in Tourtlelot v. Whithed, 9 N. D. 467, 474, 84 N. W. 8:
“It is undisputed that when that contract was made, and for months prior thereto', the members of the board of directors of said bank had ceased to exercise the functions of their offices, or to take part in the management of the affairs of the bank. The whole control and management of its affairs was then, and for months had been, in the hands of the; president. It was by and through him that this stock contract was made. AARiere the entire control of the affairs of the corporation has been thus abandoned to one of its officers, it will be presumed that he is authorized by the corporation to do any act that the corporation might lawfully do, and the acts of such officer in transacting the. business of the corporation need no authorization or ratification from a nominal board of directors. Cox v. Robinson, 27 C. C. A. 120, 48 U. S. App. 388, 82 Fed. 277; Washington Sav. Bank v. Butchers & D. Bank, 107 Mo. 134, 28 Am. St. Rep. 405, 17 S. W. 644; Kraniger v. People's Bldg. Soc. 60 Minn. 94, 61 N. W. 904; Martin v. Webb, 110 U. S. 7, 28 L. ed. 49, 3 Sup. Ct. Rep. 428; Calvert v. Idaho Stage Co. 25 Or. 412, 36 Pac. 24; Ceeder v. H. M. Loud & Sons Lumber Co. 86 Mich. 541, 24 Am. St. Rep. 134, 49 N. W. 575; Thomp. Corp. § 4883.”
It is next contended that the evidence; does not establish that the defendant corporation made any net profits during the year 1921, and that consequently the verdict is contrary to the evidence. As we view the evidence there was a conflict therein on the question of the amount of net profits. According to the contention of the plaintiff and evidence adduced in support thereof the net profits were larger than the jury found them to be; and according to the contention of, and evidence adduced by, the defendant there; were a number of uncollectible accounts incurred during the year which ought not to be considered at all, and there were in fact no profits at all resulting from tin business of the defendant in 1921. This feature of the case was submitted to the jury under instructions eminently fair to both sides, and the jury found that the plaintiff was entitled to recover $1,166. In other words, *631the jury found that the total net profits during the year 1921 amounted to $2,332. The trial court, when asked to order judgment notwithstanding the verdict or award a new trial, ruled that the evidence was sufficient to sustain the verdict. And in our opinion under the evidence in this case that ruling must be sustained. Malmstad v. McHenry Teleph. Co. 29 N. D. 21, 149 N. W. 690. In other words, we do not believe that it can be said, as a matter of law, that the evidence failed to show that the net profits of the business of the defendant corporation for the year 1921 amounted to at least $2,332.
The judgment- and order appealed from are affirmed.
Bronson, Cli. J., and Nuesslje, Johnson, and Bibbzell, JJ., concur.