Court Opinion

ID: 3951007
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:13:02.16975+00
Date Added: 2024-06-11T14:17:14.713163
License: Public Domain

In order to give the controversy a practical turn, as seemingly the parties did, it can be conceded as an undisputed fact that the directors, being also the shareholders, of the Self-Hoover Corporation, at an annual corporate meeting in January, set apart one-third of the clear gains or net profits of the corporation for the year 1924, less income tax, amounting to $3,089.25, to become the property of the shareholders distributively or E. V. Self, claiming as a creditor of the corporation. It was specially agreed in writing to leave it to "a court of competent jurisdiction to determine to whom and in what proportion said escrowed money shall be distributed and paid over." Therefore, if E. V. Self had a valid and enforceable written contract of the corporation to pay him an amount of salary equal to one-third of the net gains of the corporation, he should recover; otherwise the appellant should recover, He does not make any claim in his pleadings in virtue of an oral agreement or upon quantum meruit. Appellant urges that the evidence speaks unequivocally on the lack of authority of the president of the company to make the alleged written contract.
The fact that S. M. Gose was elected president of the company was not sufficient to show that he had authority to bind the company by the contract set up in the petition. The question of his authority was in issue; and the burden of proving it was on the appellee, under the plea of non est factum filed by the appellant. There is an absence of proof of any express authority *Page 576 
granted to him to act for the company. The board of directors merely elected Mr. Gose president, and, in so doing, contemplated and intended that he should have very little authority to act for the company in the course of the company's business. He was to continue to live in another town, distant from the place, and was not to take any active part in the management or conduct of the store. As he testified:
"I drew no salary; I had no interest in it [the business management] except what I had put in it [referring to his capital stock]."
The entire management of the store business was in fact expressly committed jointly to Mr. Self and Mr. Hoover. And the appellee appears to have recognized that the authority of the president was specially limited, for he alleges, and undertakes to prove, that the board of directors orally authorized and directed the contract of employment, and that the president thereafter, in pursuance of such authority, executed it. The proof, though, in that respect, cannot reasonably be regarded as showing the authority of the president, acting alone, to formally execute the written contract in suit. Mr. Self testified that at the first meeting of the parties after the charter was signed, and before the formal opening of the business on March 26 —
"there was an agreement reached as to the compensation to be paid the general manager. * * * We all agreed to it verbally. * * * There was nothing said at that time about having a written contract to that effect."
Consequently there would not appear in this evidence any authority for the president to execute a writen contract, as done by him. The testimony of Mr. Gose is to the extent that, at the first meeting of the parties after the charter was signed, and before the formal opening of the business, it was orally agreed that Mr. Self should receive as compensation for services as general manager "one-third of the net profits for the balance of the year 1924." Continuing, he said:
"That was agreed to first by Mr. Hoover and then by myself. Then I made the statement that we should have some kind of contract to that effect, and that I thought that I could write it. * * * Mr. Self and Mr. Hoover said that would be all right, to write it and return it for their signatures."
Evidently the intention and purpose of the agreement was to have the prior oral agreement reduced to writing and become effective only as a written contract when signed by both the president and the secretary, Mr. Gose and Mr. Hoover; for, as stated, "We should have some kind of contract to that effect," and "Mr. Hoover said to write it and return it for their signatures." Consequently Mr. Gose and Mr. Hoover, as president and secretary of the company, acting together, were to be the proper officers for the formal execution of the written contract. The act of the president alone would not be sufficient. The contract did not become complete and legally enforceable, in view of the agreement, until it was formally executed as a written instrument. At any time before it was reduced to writing and formally executed, Mr. Hoover could withdraw his consent, which he did, according to the undisputed evidence. And the evidence is undisputed that Mr. Hoover never did consent to or ratify the written contract after it was signed by Mr. Gose alone. Mr. Self and Mr. Gose both testify that Mr. Hoover did not agree to it or sign it, but refused. He repeatedly refused to sign it. There is no ground in the evidence upon which to predicate estoppel.
We conclude that the judgment should be reversed for insufficiency of evidence, and that the cause be remanded, rather than finally disposed of here.