Court Opinion

ID: 8186236
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:08:43.50408+00
Date Added: 2024-06-11T16:40:25.534386
License: Public Domain

Marshall, J.
If Stemper, the secretary and business manager of the St. Erancis Art Institute, had no authority to trade its property for capital stock in the corporation, then, under the circumstances disclosed by the evidence, plaintiff was entitled to recover unless the ruling of the trial court was wrong as to the- sufficiency of the matter pleaded in abatement.
It stands admitted that appellant, Mueller, purchased the property mentioned in the complaint at the price alleged, and that he disabled himself from returning the same. Therefore, obviously, he was liable on an implied promise to.pay *528for the property at plaintiff’s election to proceed that way, if there was no agreement binding on plaintiff’s assignor to receive corporate stock in payment for the property.
The matter in abatement was manifestly insufficient, as it did not show the pendency of a former suit to recover the same indebtednsss of appellant, but of a third party, the St. Mary’s Congregation of Random Lake. A plea of the pend-ency of a former action is fatally defective unless it shows an identity of parties or privies in the two actions. Wood v. Lake, 13 Wis. 84.
The question of whether a corporation, unless precluded by its charter, may, acting- in good faith, purchase and take title to its own capital stock, which is discussed at considerable length in the briefs of counsel, was decided in the affirmative by this court in Shoemaker v. Washburn L. Co. 97 Wis. 585, and an examination of the opinion in that case, written by the present chief justice, will show that the decision is supported by abundance of authority, including that of the federal supreme. court. Rut because it is within the power of a corporation to purchase its own stock, it does not follow, by any means, that an executive officer of such corporation may, by virtue of his office, exercise that power. It cannot be claimed here that Stemper had any power other than such as was incident to- his office, because there is no evidence of any special delegation of power by action of the board of directors, or any implied authority by reason of the manner in which the business of the corporation was conducted. Ford v. Hill, 92 Wis. 188, and similar cases relied upon by appellant, have no application to the facts before us. In each of the cases referred to the officer of the corporation whose conduct was in question had been permitted, uniformly, to exercise the whole power of the corporation, and in- such circumstances it was held that the corporation was estopped from changing its position to the prejudice of those who had in good faith dealt with such officer, relying *529■on tbe appearance of power for which such corporation, through its governing board, was responsible. Did the authority incident to Stamper’s official position include that of purchasing capital stock in the corporation for the purpose of effecting a sale of its manufactured product ? That is the question.
It would seem that a discussion of the subject presented and citation of authorities is unnecessary to show that a mere business manager of a corporate organization does not, by virtue of his office, ordinarily possess any such extraordinary authority as that of buying in its capital stock. The power of the corporation to do that is doubted in some jurisdictions and denied in others. No court that concedes it goes so far as to hold that the power can be exercised by an officer of the corporation having no special authorization by the governing body so to do. There are many things which a corporation may do, of much less importance than that of buying its capital stock, which cannot be done by a business manager without special authority, express or implied. He cannot make a judgment note. Ford v. Hill, 92 Wis. 188. He cannot contract with an employee for services for an unreasonable length of time. Comacho v. Hamilton B. N. & E. Co. 2 App. Div. 369; Carney v. N. Y. L. Ins. Co. 19 App. Div. 160. He may enter into such contracts and do such acts as pertain to the regular course of corporate business under his direction, and no more. When he goes outside of that without special authority, express or implied, his acts will not be binding upon the corporation.
Applying the foregoing to the question of whether Stem-per had authority to buy the capital stock of the Art Institute, it must be unhesitatingly decided in the negati ve. That was no part of the general business of the corporation, nor incident to such general business in any way. That business consisted in .manufacturing articles of merchandise of a particular character and selling them in the ordinary course *530of trade. The power to purchase capital stock in the corporation was entirely outside its ordinary business, hence was exercisable only by such corporation acting through its governing body, the board of directors. The decision of the trial court in plaintiff’s favor was proper and must be affirmed. The fact that there was no formal verdict is immaterial. The case turned on a question of law, therefore a verdict, though it would have been proper, was not necessary. Gammon v. Abrams, 53 Wis. 323.
By the Gourt.— The judgment of the circuit court is affirmed.