Belkin v. Thermo Dynamics, Inc.

158 N.W.2d 881, 381 Mich. 37, 1968 Mich. LEXIS 91

• Court: Michigan Supreme Court
• Decided: June 10, 1968
• Docket: Calendar No. 1, Docket No. 51,651
• Status: Published

Opinions

T, E. Brennan, J.

This action by a machinery broker plaintiff was brought to recover a commission on the sale of used machinery to the defendant corporation.

Defendant concededly entered into a written contract which provided that its obligation to purchase the machine was “subject to financing.” The trial court found that the -parties intended by this phrase to mean that the purchase of the machine would be accomplished with the aid of the personal indorsement of the directors of the defendant corporation, if necessary.

The Court of Appeals reversed (5 Mich App 53), holding that:

“There was no written or oral promise given to plaintiff by the directors or their agents that they would personally indorse the papers necessary to finance the purchase of the furnace. When a person selling machinery to a corporation concludes his contract with the corporation rather than with the representatives of the corporation, the seller is bound to look to the corporation for performance on the contract. Whitney v. Wyman (1879), 101 US 392 (25 L Ed 1050).”

The principles of law thus noted by the Court of Appeals are correct, but they are inapplicable. This action is not against the directors; there is no attempt to hold them personally liable for the broker’s commission. The trial court found that the corporation promised to buy the machine, and that the words “subject to financing” were intended by the parties to mean “our usual method of financing, including indorsement by the directors, if necessary.”

A can promise 33 that C will do something. If A is not C’s agent, C will not be bound to do it. But nonperformance by C will be a breach of contract by A. This is the typical situation of an agent’s liability upon implied warranty of authority.

So, it was possible for defendant corporation to promise plaintiff that its directors would indorse notes for the furnace, if that step was necessary to secure financing for the purchase of it.

The trial court found that the contract was ambiguous on this point, but that this was the true intention of the parties.

This factual determination by the trial judge, who observed the demeanor of the witnesses, should not have been disturbed by the Court of Appeals.

The Court of Appeals is reversed, and the judgment of the circuit court is affirmed. Costs to appellant.

Souris, J., concurred with T. E. Brennan, J. Kelly, Black, T. M. Kavanagh, and Adams, JJ., concurred in result.