Court Opinion

ID: 5318675
Source: CourtListenerOpinion
Date Created: 2022-01-08 04:22:03.936804+00
Date Added: 2024-06-11T08:29:18.461381
License: Public Domain

Hill, J.
(dissenting). This action is brought by the assignee of the Exhibitors’ Herald, a trade paper circulated among moving *497pictures theatres in United States and Canada, to recover on a contract for advertising a moving picture film. Performance by the plaintiff is not questioned. The defendant asserts that it is not bound by the contract, because its president, John L. Russell, who executed the contract, had been removed at a meeting of the board of directors six days before the date of the contract, and, further, that it had contracted with Russell to pay bim a commission of the receipts from the sale or lease of the rights to exhibit the film, and he personally should pay the expense of advertising. The plaintiff’s position is that the contract was made in the name of the defendant by Russell who had been accredited as its agent by his election as president, and that third persons could assume that the agency continued until some notice of revocation was given, and that they were protected in acting upon the belief that he had the usual powers possessed by officials of a like character. At the close of all the evidence the attorneys for both parties moved for a directed verdict. The court granted the defendant’s motion. The plaintiff appeals from the judgment and from the order denying a motion for a new trial. All questions of fact must be regarded as having been decided in defendant’s favor.
Defendant was organized to produce a picture film, with the scene near Amsterdam, N. Y. The promoters and directors, other than Russell, were residents of that vicinity and without previous experience in the production or sale of films. The picture had been made, and at the date of the contract sued upon the only business of the defendant was to sell or lease rights to exhibit. This work was being done by Russell, who had had experience in producing and selling films.
A representative of the Exhibitors’ Herald sought to obtain advertising contracts with the defendant early in 1924, called at its office in Gloversville and there found Russell in charge. Concededly he was then president. The representative also called at the New York city office of defendant and found Russell in charge. One page advertising defendant’s film was published in the March, 1924, issue. The record is not clear as to the identity of the drawer of the check given in payment. The contract sued upon, dated April 14, 1924, was for thirty-two pages of advertising during ten weeks. Sales or leases had already been made in eighteen per cent of the territory in the United States and Canada. The following excerpts from the contract sufficiently disclose its terms: “ To make this agreement clear, the following illustrations are used. If the remaining 82% of the territory was sold for cash, the publisher would immediately be entitled to $4,000 cash from the adver*498tiser. If a 41% territory was sold for cash, the publisher would immediately be entitled to $2,000 cash, etc. * * * The advertiser agrees to notify the publisher promptly upon the sale of territorial rights to ' Floodgates ’ and to pay the proportionate amount due promptly or to issue notes (in case the sale is not for cash) promptly. * * * And it is agreed that in case the advertiser does not live up to the terms of the agreement as stated above on cash payments or the issuing of notes, or refuses to permit the publisher reasonable access to bis books, the full amount of $4,000 will become due and payable immediately.” Much or all of the remaining territory has been sold. Defendant has refused to permit access to its books to ascertain the facts in relation to the sales. Nothing has been paid on the contract. This action was commenced in February, 1929. If there is any force in defendant’s argument that the delay of four or five years in bringing the action sustains its legal contention, it would be answered by the terms of the contract which made the compensation payable as and when rights were placed, and by the efforts made in the interim to collect from Russell, the only official with whom dealings were had.
Defendant’s directors denied knowledge of the existence of an office in the city of New York. One had visited this office, but did not see the name of the defendant on the door. Several contracts leasing or selling rights to exhibit the film described the defendant as being “ a New York corporation having its principal office at 729 Seventh Ave., New York, N. Y.” These contracts, which provided for rentals of nearly $20,000, were produced upon the trial by one of defendant’s directors and identified by its accountant. The lack of knowledge is assumed to be true, in light of the decision of the trial court, but it is immaterial. The location of an office is within a president’s power. If it were not, such extreme inattention to the obvious would not reheve the defendant in its dealings with a third party.
Evidence of the claimed removal of Russell is given by the directors and defendant’s minute book was received in evidence. It shows a meeting of four directors on April 8, 1924 whereat a resolution was adopted removing Russell as president but not as a director. The minutes indicate Russell’s absence. It does not appear that he was in Gloversville where the meeting was held. The only evidence as to notice to him, either of the meeting or his claimed removal, is given by the secretary, who was one of the four directors: “ I had sent out the notice of the meeting to Mr. Russell preliminary to the meeting.” There is no other description of the notice or the way it was sent. There is no proof *499that Russell or any person, other than the four directors, knew of the meeting of the board, or of the resolution. So confidentially was the matter held by the four directors that the witness LuS, who had been the accountant of the corporation from its organization, and at the time of the trial was an officer, -understood that Russell was president on the date when the contract was signed. There was no change in Russell’s duties after the meeting. Defendant accepted the benefits under at least six leasing contracts made and signed by Russell as its president after that date. There was silent acquiescence by these directors in the assumption by Russell of all .the duties and powers of president, at least -until the date of the last leasing contract, August 22, 1924.
We are not concerned in the amount of compensation which the defendant was to pay Russell, either as president or for distributing the picture film, or with any contract between them in reference thereto, except in. so far as these facts limited the plaintiff’s assignor in making a contract with defendant, through Russell. There is no proof that before this contract was made any publicity had been given to defendant’s present assertion that Russell acted individually and not as its president in selling the product. Restrictions upon the powers of an officer or agent of a corporation do not exempt it from responsibility for bis acts within the usual powers of such an officer or agent unless the restrictions are known to the party dealing with him, or have been given reasonable publicity. (Marine Bank v. Butler Colliery Co., 5 N. Y. Supp. 291; affd., 125 N. Y. 695.) “ A general agent may bind his principals by an act within the scope of his authority, although it may be contrary to his special instructions. (Story’s Agency, § 733; Walsh v. Hartford F. Ins. Co., 73 N. Y. 5; Lightbody v. North Am. Ins. Co., 23 Wend. 18; Angell v. Hartford F. Ins. Co., 59 N. Y. 171.) ” (Ruggles v. American Cent. Ins. Co. of St. Louis, 114 N. Y. 415, 421.) “ The powers of the agent of a corporation are such as he is allowed by the directors or managers of the corporation to exercise within the limits of the charter; and the silent acquiescence of the directors or managers may be as effectual to clothe the agent with power as an express letter of attorney.” (Olcott v. Tioga R. R. Co., 27 N. Y. 546, 558, 559.) Russell openly exercised all the powers of a president and general manager. The defendant accepted the benefits accruing to it from contracts made by him as president. “ If officers of the corporation openly exercise a power which presupposes a delegated authority for the purpose, and other corporate acts show that the corporation must have contemplated the legal existence of such authority, the acts of such officers will be deemed rightful and the delegated authority will be presumed.” *500(Mr. Justice Story in Bank of the United States v. Dandridge, 12 Wheat. 64, 70.)
The general law of agency governs the relations between a corporation and its officers and applies to the dealings between such officers and third parties. The directors had elected Russell president, thus accrediting him, as an agent of defendant, with all the powers usually exercised by presidents of like corporations. “ There is no difference in principle or precedent between the powers, duties and liabilities of the agents of corporations and those of natural persons * * (New York, P. & B. R. R. Co. v. Dixon, 114 N. Y. 80, 85.) A principal is bound by the acts of his agent within the limits of his apparent authority until notice of the revocation of the agency and authority has been made reasonably public. (McNeilly v. Continental Life Ins. Co., 66 N. Y. 23.) “It is a familiar principle of law that when one has constituted and accredited another his agent to carry on a business, the authority of the agent to bind his principal continues, even after an actual revocation, until notice of the revocation is given; and, as to persons who have been accustomed to deal with such agent, until notice of the revocation is brought home to them.” (Claflin v. Lenheim, 66 N. Y. 301, 305.) This statement of the law by Judge Rapallo applies to persons who have not dealt with the agent as such, and to those who have. As to the first class, the agent’s authority is presumed “ until notice of the revocation is given; ” as to the second, “ until notice of the revocation is brought home to them.” Defendant gave no notice of Russell’s removal and the resultant revocation; thus his authority as president could be assumed by third persons “ who have no knowledge, grounds for knowledge or notice of the terminating event.” (Restatement of the Law of Agency, American Law Institute, § 221.)
Defendant’s only business in 1924 was to sell or lease the rights to exhibit its. picture film in the United States and Canada. Advertising necessarily would be incident to an effort to sell an article over so wide a territory. The directors could authorize or ratify such contracts. “ ‘ The president, having full personal charge of the business which the defendant was organized to transact, represented the corporation and prima facie he had power to do any act which the directors could authorize or ratify.’ (Hastings v. B. L. Ins. Co., 138 N. Y. 473, 479; Oakes v. C. W. Co., 143 N. Y. 430, 436.) ” (Hardin v. Morgan Lithograph Co., 247 N. Y. 332, 338.)
There is no claim that the price or the terms of the advertising contract were unfair, and as notice of the revocation of Russell’s *501authority to make the contract was not shown, there was no question of fact for court or jury to determine.
The judgment should be reversed on the law, with costs, and the motion of plaintiff for a directed verdict should be granted, and he should have judgment for the sum of $4,067.69, with interest from January 31, 1925, with costs.
Whitmyer, J., concurs.
Judgment and order affirmed, with costs.