East Cleveland Railroad v. Everett

19 Ohio C.C. 205
CourtOhio Circuit Courts
DecidedJanuary 15, 1900
StatusPublished

This text of 19 Ohio C.C. 205 (East Cleveland Railroad v. Everett) is published on Counsel Stack Legal Research, covering Ohio Circuit Courts primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
East Cleveland Railroad v. Everett, 19 Ohio C.C. 205 (Ohio Super. Ct. 1900).

Opinion

Burrows, J.

The questions presented in this case relate solely to the issues made upon the cross-petition of the defendant below who is the defendant in error in this court, and the reply of the plaintiff thereto.

By his cross-petition the defendant alleges, in substance, that the East Cleveland Railroad Company is indebted to him in the sum of $25,000 for services rendered the company in and about the business of marketing and selling its mortgage bonds; and that said services were performed at the request of the company and under a contract duly authorized by it.

While the plaintiff by its reply denies all facts stated in the cross-petition, the real defense, as developed on the trial, was, that whatever services the defendant rendered, were rendered gratuitously as stockholder of the company; or, if not so rendered, that his employment was not authorized by the company, and that therefore it was under no legal obligation to pay for said services. The trial resulted in a judgment for the defendant, which the plaintiff now seeks by these proceedings to reverse.

The questions most strenuously contested in the case, were, whether the president of the company had, in any manner, been authorized by its Board of Directors to employ the defendant; and if not, whether the president, without such authorization, could bind the company. The plaintiff reqested the court to charge in this behalf the following propositions:

“No. 1. The Board of Directors is the governing body of the company, and if the defendant rendered services in [207]*207and to the sale of such bonds unauthorized by the Board he is not entitled to any compensation therefor, unless he shows that such services were made known to the Board and by it ratified.
“No. 11. To entitle the defendant to any compensation for any services rendered by him in procuring the sale of any portion of said bonds, he must show that his employment was by direction of the Board of Directors, or that it was made known to or was sanctioned by it.
“No. 39. The Board of Directors are the governing body of the company, and in the absence of any action conferring the power upon another or others, was solely authorized to market the $1,000,000 issue of bonds; and if the jury find that such Board never employed the defendant to negotiate the bonds, and never authorized his employment, he can not recover for any services rendered in connection therewith, unless such employment was brought to the knowledge of the Board and was by it ratified.’’

The court refused to give these propositions of law or any of them and charged the jury as follows:

'“I say to you, gentlemen, that Dr. Everett, as presiden of the company, exercising the functions of the chief executive of the company in the ordinary course of its business, was authorized, without express authority from the Board of Directors, to employ an agency, such as the defendant claims he subsequently served in this case, to obtain the information which he claims that he did obtain with reference to these bonds, and the services which he claims he rendered in and about the sale of the same.”

This ruling and direction of the 'ourt rendered immaterial a large part of the evidence submitted to the jury, and left to them substantially only the question of the value of the defendant’s services.

By reason of its importance we have given this question as careful consideration as possible and. are unanimous in the opinion that the charge of the court was erroneous; and that the proposition of law presented in the requests should have been given.

These three requests embodied substantially the same proposition, but the 39th request is a clear, accurate, and properly guarded statement of the law,

Counsel for defendant contend that by this charge the [208]*208court does not declare that such power is possessed by the president by virtue of his office but only “as president exercising the functions of chief executive of the company in the ordinary course of its business.

We are unable to put that construction upon the charge, but if we were, we should still be compelled to hold that it was erroneous. Had the president been authorized to act as superintendent oí general manager of the company in the conduct of its ordinary and routine business, his powers would not thereby have been enlarged, so that he eouid legally, of his own motion, inaugurate and carry forward an enterprise for bonding the property of the company.

It is also urged that the judgment should not be reversed, for the reason that the charge was not prejudicial; that it is an admitted fact in the case, that the defendant performed the services in question under employment by the president, and that this fact was known to two other members of the board of directors; and that, in law, notice to these officers was notice to the company; and that by reason of the notice to the company, it was bound to pay for the services.

A large number of authorities are cited, which hold that notice to an officer or agent in respect to a matter within the scope of his duties while in the discharge of the same, :is notice to the corporation. We are not disposed to question the correctness of this law, but are unable to concede ■its applicability to this case.

The decision of the question under consideration hinges -■upon the power of the president of this corporation to make ■>the contract in question. If he did not possess that power ■by virtue of his office, it could only be conferred upon him >by the board of directors or a majority of them acting in 'their official capacity. Certainly, notice to less than a majority of the board could not be construed into a delegation •of power or a sanction or ratification of an unauthorized exercise of it by the president.

The doctrine contended for by counsel for defendant, ¡logically and practically carried out, would render all unauthorized acts of an officer of a corporation valid and binding, as in every such case the officer would necessarily have ■full notice of the fact that he was doing the unauthorized •act.

[209]*209The delegation of power to the president by notice, would seem to be in conflict with certain statutory enactments.

Section 3256 gives to the corporation, and to the corporation alone, the power to borrow money' and mortgage its property; while section 3248 provides that “the corporate powers, business, and property of corporations formed under this title must be exercised, conducted, and controlled by the board of directors.”

We are aware that the charge of the learned judge, which we are unable to approve, was made in deference to certain, intimations contained in the opinion of this court in the case reported in 15 Cir. Ct. Rep., 181.

It is not necessary for us to harmonize or explain the discrepancy between our present and former holding. It, is sufficient to say, that neither this court, nor any court for that matter, sets up a claim to infallibility. It is proper,, however, to mention the fact that this question was not then properly before this court for consideration or decision, and was not examined or authoritatively determined: by the court. It further appears that the intimations therein made as to the power of the president of a corporation^ did not receive the sanction of the entire court.

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Bluebook (online)
19 Ohio C.C. 205, Counsel Stack Legal Research, https://law.counselstack.com/opinion/east-cleveland-railroad-v-everett-ohiocirct-1900.