Commercial Wood & Cement Co. v. Northampton Portland Cement Co.

• Decision Date: 19 November 1907
• Citation: 190 N.Y. 1,82 N.E. 730
• Court: New York Court of Appeals Court of Appeals
• Parties: COMMERCIAL WOOD & CEMENT CO. v. NORTHAMPTON PORTLAND CEMENT CO.

190 N.Y. 1

82 N.E. 730

COMMERCIAL WOOD & CEMENT CO.

v.NORTHAMPTON PORTLAND CEMENT CO.

Court of Appeals of New York.

Nov. 19, 1907.

Appeal from Surpreme Court, Appellate Division, First Department.

Action by the Commercial Wood & Cement Company against the Northampton Portland Cement Company. From a judgment of the Appellate Division (100 N. Y. Supp. 960,115 App. Div. 388), affirming a judgment of dismissal, plaintiff appeals. Affirmed.

See 84 N. Y. Supp. 1121,87 App. Div. 633.

L. Laflin Kellogg, for appellant.

Harmon S. Graves, for respondent.

GRAY, J.

The plaintiff and the defendant are corporations organized under the laws of the state of Delaware, and having offices for the conduct of their business in the city of New York. The business of the defendant is the manufacture and sale of cement, and that of the plaintiff the marketing and selling of that material. A contract was executed by their presidents, whereby the agreement of the defendant was that the plaintiff should be its sole selling agent for the entire output of its cement for a term of years, and this action was brought by the plaintiff to recover damages for the breach of the contract. The defense interposed to the action was, in brief and so far as materials to be stated, that the contract was executed by the direction of the defendant's executive committee, and that that committee was without power to make it. Upon the trial of the action, the court dismissed the complaint, upon the ground that the contract was an unusual and extraordinary one, which the executive committee was not authorized to make. The Appellate Division affirmed the judgment in favor of the defendant, with some difference of opinion as to the grounds. One of the grounds assigned was the same substantially as that taken by the trial court, and another ground was that the contract was invalid, for the lack of any consideration in the existence of mutual obligations of the contracting parties.

I think that the executive committee of the defendant's board of directors was without authority, under the circumstances, to obligate the defendant by this contract. By section 9 of the general corporation law of the state of Delaware (22 Del. Laws, p. 762, c. 394), it is provided that ‘the business of every corporation * * * shall be managed by a board of not less than three directors. * * * The board of directors may, by resolution,* * * designate two or more of their number to constitute an executive committee, who, to the extent provided in said resolution, or in the by-laws of said company, shall have and exercise the powers of the board of directors in the management of the business and affairs of the company,’ etc. A by-law of the defendant provided that the directors ‘shall have the general charge of the management of the company's property, and the regulation and government of its affairs,’ and further provided for the selection by them of an executive committee of five members, who should ‘have authority to exercise any powers of the board when the board is not in session, * * * subject at all times to the orders of the directors.’ The term of office of the directors was one year. At the time when the meeting of the executive committee was held, at which this contract was entered into on behalf of the defendant, a meeting of the board of directors had already been called by the secretary for the afternoon of the same day. The session of the board was held within two hours after this contract had been executed by the direction of the executive committee, and, a copy of the contract...