Court Opinion

ID: 5182558
Source: CourtListenerOpinion
Date Created: 2022-01-06 04:44:04.629342+00
Date Added: 2024-06-11T08:26:37.546461
License: Public Domain

Follett, J. (dissenting):
The plaintiff offered to show that, a few days before this contract was executed, the president of the defendant, in its office, and in the presence of certain of its employees, then and there promised this plaintiff that the capital stock should remain the same. This promise, if given, was not binding on the defendant, for it was beyond the power of its president and of its entire board of directors to make any such agreement. The power to increase the capital stock of a corporation lies, not with its president or board of directors, but with its stockholders acting pursuant to statute. It is an elementary rule that the officers or directors of a corporation cannot bind it, except when acting within the scope of their authority. There is no evidence in the case which shows that the president or any of the persons present at the interview were authorized to hire the plaintiff or enter into any contract with him in respect to compensation. The contract was executed by the treasurer of the corporation and by the secretary, neither of whom was present at the alleged interview.
Again, the litigants, by their dealings, have given construction to the contract. After the capital was increased to $3,000,000, in April, 1892, the plaintiff received his share of the profits for 1892 and 1893 and for part of 1894 on the basis of that capitalization. The plaintiff testified that he knew of the increase of the stock only *548from what he had- heard ; that he had no notice of it from the company. In another part of his evidence he describes an interview* which he says occurred in June, 1893, with the treasurer, in which the increase was talked about; but again, at' a later period of the1 trial, his courage and knowledge had increased, and he testified that he did not know that the capital stock had been increased until two-months after his discharge.
It appears that a notice of the intention to .increase was published in the Syracuse Journal for seven weeks, and it is hardly to be-: credited that this man, intelligent enough to receive this salary, worked for this corporation during these years and knew' nothing-about the increase of its capital stock. • This increase would naturally and inevitably have. been the subject of conversation among the-employees of the corporation. I am for affirmance of the judgment.
Judgment and order reversed and a new trial ordered, with costs, to abide the event.