Court Opinion

ID: 7278861
Source: CourtListenerOpinion
Date Created: 2022-07-25 20:03:37.358189+00
Date Added: 2024-06-11T16:18:58.520314
License: Public Domain

Mr. Justice Van Orsdel
delivered the opinion of the Court:
This is a case for accounting and recovery on a contract of employment,- — -not a contract of partnership as urged by counsel for defendant. It is therefore cognizable in- equity. On all these points we are in accord with the holding of the court below. We think, however, that the court erred upon the single question of .the power of the officers to enter into the contract. Confronted by an agreement, executed, as the present one, in the name of the corporation, it was incumbent upon the defendant to overcome the presumption that it was properly executed by negativing the authority of its officers to make it. The only showing made was to the effect that the board of directors had not authorized it. Not even the by-laws were introduced in this behalf. On the contrary, it appeared that Brennan, the president of the company, had organized the corporation; that he was its chief stockholder; that it had been the custom to make contracts on behalf of the corporation as the present one was made; and that Brennan looked after and controlled individually to a large extent the affairs of the corporation. In other words, it was in many respects a one-man corporation, with a board of directors merely to comply with the requirements of the law.
The contract in question was not o-nly incidental to the carrying on of the business of the corporation, but it was in harmony with the general management and control of the company and with other contracts similarly executed and carried out by the company. It pertained solely to the conduct of the business, and was not of that extraordinary nature which amounts to the conveying away of an important' interest in the corporate property.
_ •We think, therefore, that, in the circumstances, the contract should be held to have been executed by Brennan, acting within the general scope of the authority conferred upon him by the *95corporation. Tbe case of Sun Printing & Pub. Asso. v. Moore, 183 U. S. 642, 46 L. ed. 366, 22 Sup. Ct. Rep. 240, is directly in point, and seems to control tbe principles of law governing this ease. The question there involved was the power of the managing editor of the New York Sun to contract for the hire of a yacht for the purpose of collecting news, and to bind the company for the rental, and the value of the yacht in case of its loss. Holding the company liable, the court said: “It being then within the scope of the general authority possessed by Lord to hire the yacht, the contention that in its exercise he must be assumed to have been without right to incur an absolute liability for the return of the vessel or become responsible for the value thereof, and to stipulate as to such value, is without merit. As Lord was charged with the full control of the business of collecting news, and impliedly vested with the power to enter into contracts in respect thereto, he was, in effect, a general officer of the corporation as to such matters; and it is well settled that the president or other general officer of a corporation has power prima facie to do any act which the directors or trustees of the corporation could authorize or ratify. Oakes v. Cattaraugus Water Co. 143 N. Y. 430, 436, 26 L.R.A. 544, 38 N. E. 461, and cases cited. The burden was on the Sun Association to establish that Lord did not possess the authority he assumed to exercise in executing the contracts. Patterson v. Robinson, 116 N. Y. 393, 200, 22 N. E. 372, and cases cited. As the trustees of the Sun Association were unrestrained by the charter, and might have authorized Lord to execute the writings in question, and the association failed to rebut the prima facie presumption, he must be held to have been vested with such power.” So here, it was incumbent upon the corporation to show that Brennan did not possess the power which he assumed to exercise in executing the present contract. This it has failed to do.
The decree is reversed, wdtk costs, and the cause remanded for further proceedings consistent with this opinion.

Reversed and remanded.

A petition for a rehearing or for a modification of the mandate was denied July 25, 1918.