Court Opinion

ID: 5169646
Source: CourtListenerOpinion
Date Created: 2022-01-02 04:52:42.809902+00
Date Added: 2024-06-11T08:26:01.392992
License: Public Domain

ON REHEARING.
SULLIVAN, C. J.
A rehearing was granted in this ease, and it is contended by counsel for the petitioner that the court erred, as a matter of law, in holding that “The vice-president of a corporation, acting as president and general manager of a corporation, has authority to sell the stock in trade of a corporation in the ordinary course of business of such corporation, and to receive and accept in payment therefor cash or accounts against any other person,” and in holding that “Where there is no limitation upon the power of a vice-president of a corporation, acting as president and general manager, in the by-laws or articles of incorporation of said company, the court will presume that such officer has authority to dispose of the articles manufactured by said corporation in the ordinary course of trade, and accept in payment therefor cash or an account against an officer of said corporation held by the purchaser. ’ ’
The above quotations are from the syllabus of the original decision in this case, and as abstract propositions of law, state the rule of law correctly, where there is no limitation upon the power of a general manager of a manufacturing corporation to sell and dispose of its manufactured articles. Such manager may accept in part payment therefor claims against an officer of the corporation or accounts against other persons. Of course, this rule proceeds upon the theory that such claims are accepted in good faith, and that there is no collusion or fraud perpetrated by either of the parties to such transaction.
*365The former decision of this court was based entirely upon the facts of this case. The judgment appealed from was based upon the verdict of the jury. The appellant brought this action to recover from the defendants the sum of $757.80 alleged to be due on open account. The answer denied the indebtedness and averred under a contract that the corporation-had accepted in part payment of said account a claim against the president of the corporation for $757.80. The facts in regard to said transaction are quite fully stated in the original opinion in this ease.
It appears that the defendants desired to purchase some furniture and fixtures for their establishment in the city of Lewiston, and that they had been negotiating for the same with the Troy Lumber Co. and perhaps with other parties, and also with the plaintiff corporation. The Troy Lumber Co. had offered to furnish them for about $220 less than the plaintiff corporation had offered to furnish the same. It appears that the Troy Lumber Co.’s offer had been given, or stated, to the vice-president and general manager of the appellant and some negotiations occurred between the parties in regard thereto. It also appears that the defendants had a claim against the president of the corporation for $757.80, and a contract was entered into by and between the vice-president and general manager of said corporation for the corporation and the defendants, whereby the contract was let to the plaintiff corporation in consideration that it would receive as part payment on said contract said claim against the president of the corporation. After said furniture and fixtures had been delivered, and on September 5, 1906, the defendants rendered a statement of account between the parties showing that they owed the appellant corporation $1,114.51 less the C. F. Allen account of $757.80, which in said written statement was deducted from the amount due, leaving a balance of $356.71 due the appellant corporation, and in said statement was inclosed the check of defendants for said balance. That statement was received Iby the appellant corporation without objection and the check for $356.71 collected by them. Thereafter the appellant *366corporation rendered an account to the defendants on December 7, 1906, showing a balance due said corporation from defendants of $1.65, and again on January 19, 1907, said corporation mailed another statement of account to the defendants showing a balance due of $4.00, which accounts were paid by the defendants.
It appears from the record that said Allen was president of said corporation; that a Mr. Prugger, who made the contract above referred to on behalf of appellant, was vice-president and general manager, and that a Mr. Hollister was secretary of said corporation, and all of said parties were directors thereof. It appears that the said Allen account was assigned to the appellant corporation and that such assignment was never returned to the defendants. About January 1, 1907, Allen disposed of everything he had, both in Idaho and Washington, and moved to New York City. During that month, the respondents took an inventory of their stock and fixtures and were unable to find the invoice.of said furniture and fixtures purchased under said contract. Thereupon one of the respondents requested Vice-President Prugger to give him a copy of the same, and he suggested that the respondent call upon Mr. Hollister, the secretary of the said corporation, as he had charge of the books. Upon furnishing said statement, it seems that Hollister then for the first time demanded that the respondents pay said.sum of $757.80.
It thus appears that the appellant had not demanded the payment of said sum from the 5th of September, the time that the statement inclosing said check for $356.71 was sent them by the respondents, until about the 1st of February following, after respondents had asked for a copy of the invoice of said furniture and fixtures and after the president of said corporation had resigned and sold all of his stock in said corporation and-other property that he owned in Idaho and Washington and left the state.
Upon that state of facts, this court is asked to hold that the vice-president and general manager of said corporation had no authority to enter into a contract for the sale of the *367manufactured goods of said corporation, and take in part payment therefor a claim against the president of the corporation. The facts show that the respondents entered into said contract with the appellant and agreed to pay them about $200 more for said furniture and fixtures than any other manufacturing establishment had offered to furnish them, on the sole condition that the corporation would accept in part payment therefor said claim against its president. The corporation seeks to hold on to the benefits and the higher price it was to receive for said fixtures, and repudiate that part of the contract requiring them to accept said claim against its president.
As before stated, the president, vice-president and general manager and the secretary, who were all members of the board of directors of the corporation, had full knowledge of this transaction. That being true, there were two courses open to it to pursue; it could either ratify the contract or repudiate it. The record shows that appellant did ratify it by remaining silent about the matter for several months after it had full knowledge of all the facts. It was then too late to repudiate it. Appellant seeks now to ratify the contract so far as it favors them and repudiate it so far as it does not accord with its interests. This appellant will not be permitted to do. Honesty and fair dealing require the corporation to stand by the contract as made by its vice-president and general manager, or repudiate it in toto.
In Wisconsin Lumber Co. v. Greene & Western Tel. Co., 127 la. 350, 109 Am. St. 387, 101 N. W. 742, 69 L. R. A. 968, the court had under consideration a contract somewhat similar to the one under consideration here. The corporation sought to ratify the contract in so far as it was beneficial to it, and repudiate it in so far as it imposed any liability on its part. The court said:
“The corporation cannot accept and ratify the contracts in so far as they are beneficial to it, and repudiate them in so far as they imposed any liability on its part. It accepted plaintiffs’ money on the strength of these contracts and cannot, while retaining the same, be heard to say that its offi*368cers had no authority to make the contracts under which it was received. This is hornbook law.”
See, also, Nichols & Sheppard Co. v. Hackney, 78 Minn. 461, 81 N. W. 322.
No objection was raised to said contract between September 5th and the following February by the appellant corporation, and by this long acquiescence it has ratified said contract. During that time Allen had resigned as president of the corporation, and also of the First National Bank of Clarkston, and had disposed of all of his property in Idaho. After all this had occurred the appellant evidently determined to turn the account against Allen back to defendants and thus compel the defendants to go to New York or elsewhere and collect said account from Allen. To permit it to do so now would uphold it in perpetrating a fraud upon the defendants and that this court will not do.
The judgment of the district court must therefore be affirmed as directed in the original opinion in this -ease.
Stewart, J., concurs.