Catholic Foreign Mission Soc. of America Inc. v. Oussani

• Decision Date: 04 May 1915
• Citation: 215 N.Y. 1,109 N.E. 80
• Parties: CATHOLIC FOREIGN MISSION SOC. OF AMERICA, Inc., v. OUSSANI et al.
• Court: New York Court of Appeals Court of Appeals

215 N.Y. 1

109 N.E. 80

CATHOLIC FOREIGN MISSION SOC. OF AMERICA, Inc.,

v.OUSSANI et al.

Court of Appeals of New York.

May 4, 1915.

Appeal from Supreme Court, Appellate Division, Second Department.

Action by the Catholic Foreign Mission Society of America, Incorporated, against Joseph Oussani, impleaded with others. Judgment for plaintiff was modified and affirmed by the Appellate Division (157 App.Div. 893, 142 N.Y.Supp. 1111), and defendant Oussani appeals. Reversed, and new trial granted.

David Leventritt, Maxwell C. Katz, and Otto C. Sommerich, all of New York City, for appellant.

J. Addison Young, of New York City, William S. Beers, of New Rochelle, and John K.M. Ewing, of New York City, for respondent.

CARDOZO.

The action is for specific performance. The defendant Oussani is the owner of a tract of land in Westchester county. He undertook to sell it to the plaintiff, a membership corporation. The plaintiff was represented by its president, Father Walsh. A memorandum of the terms of the agreement was put in writing, and signed. It is dated July 12, 1912. It calls for a conveyance of the land free from all incumbrances. In particular, it provides that a road known as the Longwood road, which ran through the land, shall be closed. Unless this change can be made within one week, the plaintiff is to be “in no way obliged.” The price is to be $45,000, of which $15,000 is to be paid in cash, and $30,000 by a purchase-money mortgage.

Longwood road was a public highway, and the local authorities refused to close it. Father Walsh went to view the land on July 18th, and again on the day following. His purpose was to ascertain whether the road would interfere with the construction of a building. He then stated to Oussani that he would waive the condition of the contract to the effect that the road must be closed. There is evidence from which the inference may be drawn that Oussani requested the waiver and approved of it. That the buyer's purpose might not be doubtful, a letter was mailed on July 19th, in which Oussani was again informed that there had been a waiver of the condition. On the following day he gave notice that he would not carry out the sale. He had sold the property, it appears, at a larger price to some one else. There was a tender of the money and of a purchase-money mortgage. The tender was rejected, and this action was begun.

[1] The first question to be determined is whether there ever was a contract. The statute provides (Membership Corporations Law [Consol. Laws, c. 35] § 13):

No purchase, sale, mortgage or lease of real property shall be made by a membership corporation, unless ordered by the concurring vote of at least two-thirds of the whole number of its directors, providing, however, that when the whole number of directors is not less than twenty-one, the vote of a majority of the whole number shall be sufficient.”

The whole number of the plaintiff's directors was less than 21. The concurring vote of at least two-thirds of the directors was, therefore, necessary before a purchase of real property could lawfully be made. The president had no authority to make such a purchase by virtue merely of his office. This is conceded. It is urged, however, that resolutions adopted by the directors on June 29, 1912, contain the requisite grant of power. We think that, unexplained, they fail of that effect. One resolution reads:

“Resolved, that the president and vice president be empowered to take charge of the fiscal affairs until the by-laws are adopted.”

This was not a grant of power to purchase land. It made the president and vice president the fiscal officers of the corporation. That is an office which in most corporations is filled by a treasurer. The purchase and sale of real estate has no relation to its functions. But there is another resolution which reads:

“Resolved, that the president has authority to sign and execute all documents.”

This does not mean that he may make any contract he pleases. It is not an attempt to delegate to him the entire powers of the board. It means that when contracts have been duly authorized the president is to sign them. It touches, not the power to contract, but the form and manner of contracting. The command of the statute that there must be a concurring vote of two-thirds of the directors would be frittered away if we were to hold that a resolution at once so sweeping and so indefinite is a sufficient statement of their concurrence. Standing by itself and unexplained, the resolution does not confer the requisite authority. Holtzinger v. Nat. Corn Ex. Bank, 6 Abb.Prac. (N.S.) 292, affirmed in this court, 3 Alb.L.J. 305: Jacoby & Co. v. Payson, 91 Hun, 480, 36 N.Y.Supp. 240.

[2] It is urged for the plaintiff that the contract, though unauthorized when made, may be held to have been ratified. We find no evidence of ratification. The action was begun in August, 1912, and was tried in October of that year. Down to the time of the trial there had been no meeting of the directors since the making of the contract. They never ratified the contract collectively and as a board. They never ratified it, if that be possible (People's Bank v. St. Anthony's R.C. Church, 109 N.Y. 512, 17 N.E. 408), singly and as individuals. There is no evidence that two-thirds of the directors, or even one director, ever heard of the contract. All that the president did, either in making tender of the price or in prosecuting this action, was done of his own motion. By that time the seller had already repudiated the contract. Whether there could be an effective ratification after notice of Oussani's withdrawal may be doubted. The case of Bolton Partners v. Lambert, L.R. 41 Ch.Div. 295, which holds that ratification in such cases in our own country (Mechem on Agency [2d Ed.] §§ 514, 515; Cowan v. Curran, 216 Ill. 598, 75 N.E. 322;Baldwin v. Schiappacasse, 109 Mich. 170, 66 N.W. 1091;Kline Bros. Co. v. Royal Ins. Co. [C.C.] 192 Fed. 378, 387;Atlanta Buggy Co. v. Hess Spring & Axle Co., 124 Ga. 338, 52 S.E. 613, 4 L.R.A [N.S.] 431), and has not escaped criticism in England (Fry on Spec.Perf. [5th Ed.] appendix, note A; Mechem, supra; Fleming v. Bank of New Zealand, [1900] A.C. 577, 587; Matter of Tiedemann [1899] 2 Q.B. 66). See, also, Cook v. Tullis, 18 Wall 332, 21 L.Ed. 933;Matter of Gloucester Municipal Election, [1901] 1 K.B. 683. It is everywhere conceded, however, that ratification, if possible at all after notice of withdrawal, must be announced within a reasonable time ( Matter of Portuguese C.C. Mines, L.R. 45 Ch.Div. 16. That is true even though the action is at law. It is still more plainly true in equity, where the right to specific performance is conditioned upon mutuality of remedy. When this action was begun, the inchoate contract had not been made binding by the ratification of the plaintiff's directors, and, so far as the record shows, it is not binding yet.

[3] In thus holding that the resolution empowering the president to sign all documents does not confer authority to purchase land, we limit ourselves to a construction of the resolution standing alone and unexplained. There is nothing to show that a purchase of land was then contemplated by the directors. There is nothing to show that they first assented to the project, and then, in order to facilitate its execution, resolved that the president should be empowered to sign the necessary documents. If there was such assent, it may be established by evidence of what was said at the meeting of the board, and the meaning of the resolution may be explained and enlarged accordingly. A formal...