Pierce v. First National Fire Insurance

D.C. Circuit

Pierce v. First National Fire Insurance

46 App. D.C. 239, 1917 U.S. App. LEXIS 2535

CourtCourt of Appeals for the D.C. Circuit

DecidedApril 2, 1917

DocketNos. 2982, 2983, 2984, and 2985

StatusPublished

This text of 46 App. D.C. 239 (Pierce v. First National Fire Insurance) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Pierce v. First National Fire Insurance, 46 App. D.C. 239, 1917 U.S. App. LEXIS 2535 (D.C. Cir. 1917).

Pincite

Opinion

Mr. Justice Robb

delivered the opinion of the Court:

At the outset of the negotiations leading up to the employment of appellant he was informed that Mr. Tuttle had no authority to make the contract suggested by appellant without the express approval of the governing boards of the tw'o corporations to be affected thereby, and no attempt has been made to prove that Mr. Tuttle’s authority as president of one corporation and acting president of the other was broader than he represented it to be. Indeed, the record is silent as to his actual powers. There is no evidence that either corporation knew or had any reason to know until after January 1st, 1914, what had taken place between appellant and Mr. Tuttle. The action of the governing hoard of the First National under date of September 24th, 1913, authorizing the employment of appellant until January 1st, following, at $4,200 per year, strongly indicates to the contrary. It is significant that appellant did not enter upon the actual performance of his duties until the day following this action. It is still more significant that the record fails to show that any change thereafter was made in appellant’s status until his communication of February 12th, which resulted in the action of the board of directors of the First National on February 24th, 1914, authorizing his employment “at [245]*245the rate of $-410.66 per month from January 1st, 1914, until the July meeting of this board.” Indeed, in that communication appellant directed attention to the fact that nothing had been done toward carrying out the promises made to him by Mr. Tuttle, which statement and the action of the board thereon warrant the assumption that until this action of the board his salary had not been changed. By this action of the board his employment was not authorized beyond its July meeting, and 1he record fails to show any protest by him until after his services wore dispensed with. This is not a case, therefore, where a by-law of a corporation is relied upon to avoid an act within the apparent powers of an agent of that corporation, for here the lack of authority to bind the corporation was fully disclosed at the outset of the negotiations. And, knowing of such lack of authority, it was incumbent upon appellant to ascertain for himself that the tentative agreement either had been expressly ratified by the corporations affected or that its terms had been made known to and acquiesced in by them. There is no evidence Avarranting a conclusion that either of these conditions existed. The evidence is quite to the contrary.

Russell v. Washington Sav. Banin, 23 App. D. C. 398, is not in point. That was a suit by a firm of attorneys to recover for professional services rendered a bank, and the defense was that the vice president Avho employed the plaintiffs had no right to act for the bank. The court ruled that if the president of the bank, under the scope of his general authority, had the right to employ counsel to represent the bank in pending or prospectivo litigation, any other officer acting for or in the place of the president had the same authority “in cases of emergency arising during his incumbency of the office and demanding-prompt action by Mm.” In other words, that decision merely recognizes the general rule that while the duties of officers and agents of a corporation may be prescribed or limited by its charter or by-laws and regulations, yet in the absence of specific limitations brought to the ImoAvledge of those who deal with them, or of which those Avho deal with them are bound to take notice, the officers of a corporation as its agents are authorized [246]*246to bind tbc corporation to third parties so long as they act within the ordinary scope of their duties. The employment of counsel in an emergency clearly comes within the ordinary scope of the duties of the president of such a corporation. The contract made in the Bussell Case related to matters that normally fell within the scope of the authority of the officer representing the corporation. Here, on the contrary, not only was appellant informed of the agent’s lack of authority to bind his principals, but the very nature of the contract which appellant sought was such as to put him upon inquiry concerning the actual authority of the agent. Philip Carey Co. v. Thyson, 39 App. D. C. 233. There is a vital difference between employing an attorney to represent a. bank in an emergency and the employment for a term of years of a business manager of an insurance company, one of its most important officers. The former is a contract of an ordinary character, the latter one of extraordinary character.

It follows that the action of the court in directing a verdict was right and that the judgment must be affirmed, with costs.

Affirmed.

Free access — add to your briefcase to read the full text and ask questions with AI

Mr. Justice Robb

delivered the opinion of the Court:

At the outset of the negotiations leading up to the employment of appellant he was informed that Mr. Tuttle had no authority to make the contract suggested by appellant without the express approval of the governing boards of the tw'o corporations to be affected thereby, and no attempt has been made to prove that Mr. Tuttle’s authority as president of one corporation and acting president of the other was broader than he represented it to be. Indeed, the record is silent as to his actual powers. There is no evidence that either corporation knew or had any reason to know until after January 1st, 1914, what had taken place between appellant and Mr. Tuttle. The action of the governing hoard of the First National under date of September 24th, 1913, authorizing the employment of appellant until January 1st, following, at $4,200 per year, strongly indicates to the contrary. It is significant that appellant did not enter upon the actual performance of his duties until the day following this action. It is still more significant that the record fails to show that any change thereafter was made in appellant’s status until his communication of February 12th, which resulted in the action of the board of directors of the First National on February 24th, 1914, authorizing his employment “at [245]*245the rate of $-410.66 per month from January 1st, 1914, until the July meeting of this board.” Indeed, in that communication appellant directed attention to the fact that nothing had been done toward carrying out the promises made to him by Mr. Tuttle, which statement and the action of the board thereon warrant the assumption that until this action of the board his salary had not been changed. By this action of the board his employment was not authorized beyond its July meeting, and 1he record fails to show any protest by him until after his services wore dispensed with. This is not a case, therefore, where a by-law of a corporation is relied upon to avoid an act within the apparent powers of an agent of that corporation, for here the lack of authority to bind the corporation was fully disclosed at the outset of the negotiations. And, knowing of such lack of authority, it was incumbent upon appellant to ascertain for himself that the tentative agreement either had been expressly ratified by the corporations affected or that its terms had been made known to and acquiesced in by them. There is no evidence Avarranting a conclusion that either of these conditions existed. The evidence is quite to the contrary.

Russell v. Washington Sav. Banin, 23 App. D. C. 398, is not in point. That was a suit by a firm of attorneys to recover for professional services rendered a bank, and the defense was that the vice president Avho employed the plaintiffs had no right to act for the bank. The court ruled that if the president of the bank, under the scope of his general authority, had the right to employ counsel to represent the bank in pending or prospectivo litigation, any other officer acting for or in the place of the president had the same authority “in cases of emergency arising during his incumbency of the office and demanding-prompt action by Mm.” In other words, that decision merely recognizes the general rule that while the duties of officers and agents of a corporation may be prescribed or limited by its charter or by-laws and regulations, yet in the absence of specific limitations brought to the ImoAvledge of those who deal with them, or of which those Avho deal with them are bound to take notice, the officers of a corporation as its agents are authorized [246]*246to bind tbc corporation to third parties so long as they act within the ordinary scope of their duties. The employment of counsel in an emergency clearly comes within the ordinary scope of the duties of the president of such a corporation. The contract made in the Bussell Case related to matters that normally fell within the scope of the authority of the officer representing the corporation. Here, on the contrary, not only was appellant informed of the agent’s lack of authority to bind his principals, but the very nature of the contract which appellant sought was such as to put him upon inquiry concerning the actual authority of the agent. Philip Carey Co. v. Thyson, 39 App. D. C. 233. There is a vital difference between employing an attorney to represent a. bank in an emergency and the employment for a term of years of a business manager of an insurance company, one of its most important officers. The former is a contract of an ordinary character, the latter one of extraordinary character.

It follows that the action of the court in directing a verdict was right and that the judgment must be affirmed, with costs.

Affirmed.

Cite This Page — Counsel Stack

Bluebook (online)

46 App. D.C. 239, 1917 U.S. App. LEXIS 2535, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pierce-v-first-national-fire-insurance-cadc-1917.