Am. Employers' Ins. Co. v. H. G. Christman & Bros. Co., 126.

• Court: Supreme Court of Michigan
• Citation: 278 N.W. 750,284 Mich. 36
• Docket Number: No. 126.,126.
• Parties: AMERICAN EMPLOYERS' INS. CO. v. H. G. CHRISTMAN & BROTHERS CO. et al.
• Decision Date: 04 April 1938

284 Mich. 36

278 N.W. 750

AMERICAN EMPLOYERS' INS. CO.

v.H. G. CHRISTMAN & BROTHERS CO. et al.

No. 126.

Supreme Court of Michigan.

April 4, 1938.

Action by the American Employers' Insurance Company, a Massachusetts corporation, against the H. G. Christman & Brothers Company, an Indiana corporation, and/or Howard Emmons, receiver, and another, to recover on an indemnity agreement. From a summary judgment in favor of defendants, plaintiff appeals.

Vacated and remanded.Appeal from Circuit Court, Ingham County; Leland W. Carr, judge.

Argued before the Entire Bench.

Mason, Davidson & Mansfield, of Detroit, for appellant.

Shields, Ballard, Jennings & Taber, of Lansing, and Hammerschmidt & Johnson, of South Bend, Ind., for appellees.

BUSHNELL, Justice.

Sometime in May of 1932 defendant receiver, Howard Emmons, then an auditor of defendant H. G. Christman & Brothers Company, an Indiana corporation, and in charge of the accounting for H. G. Christman Company, another Indiana corporation, requested plaintiff's agent, John H. Lloyd, then doing business in South Bend, Ind., as Lloyd Insurance Agency, to secure a construction bond for the H. G. Christman Company. The latter company required a bond in the penal sum of $331,000, running to the United States of America, in connection with the construction of the Veterans' Administration Hospital at Des Moines, Iowa. Lloyd made inquiry as to the possibility of plaintiff, the proposed surety on the bond, being indemnified by defendant H. G. Christman & Brothers Company, and, relying largely on information furnished by Emmons, he investigated the ownership and financial structure of these two companies and others similarly held.

An agreement of indemnity was executed on or about June 21, 1932, in the name of H. G. Christman & Brothers Company, by Emmons and Julius B. Christman, who was vice-president of both the indemnitor and obligor corporations. Lloyd forwarded the agreement to plaintiff, together with a certified resolution furnished him at his request by Emmons, purporting to authorize the execution of the contract. These were returned by plaintiff to Lloyd with instructions to have the contract and resolution impressed with the seal of defendant corporation. Lloyd then delivered these instruments to Emmons, who redelivered them, sealed, to Lloyd on or about July 15, 1932. The requiredbond was thereafter executed by plaintiff. Plaintiff claims that it has been required to respond on the bond in a sum in excess of $100,000, and seeks judgment against defendant corporation under the indemnity agreement.

Defendant corporation, in its answer, denied that it entered into the indemnity agreement and averred that such agreement was not authorized by its board of directors nor were its officers or agents authorized to execute the same; that the persons purporting to have signed such agreement were neither its officers, agents, or representatives, etc. It gave notice of certain special defenses, to which reply was made by plaintiff. Defendants thereafter filed a motion for a summary judgment, supported by the affidavits of Emmons and J. Fred Christman, secretary of defendant corporation, in which they stated, in substance, that the indemnity contract was never authorized by the board of directors of the defendant corporation, that its execution by Emmons and Julius B. Christman was outside the scope of their powers, and that its performance did not result in any benefit to the defendant corporation. These affidavits were met by counter affidavits of Lloyd and others in behalf of plaintiff and depositions were taken and submitted to the court.

The trial judge determined that ‘the material averments in defendant's affidavits' were not controverted; that ‘the facts set forth in plaintiff's affidavits' were ‘not such as to justify a finding of either express or implied ratification’ by defendant corporation; and he was of the opinion that, if the case were tried before a jury and the proofs were limited to the matters of fact set up in the affidavits of the parties, ‘defendant would be entitled to a directed verdict as a matter of law.’ The court, therefore, granted defendants' motion for a summary judgment.

The decisive question before us on plaintiff's appeal is whether defendants were ‘entitled to a judgment as a matter of law, without deciding any controverted issue of fact.’ Michigan Court Rule No. 30, § 7. See, also, Dempsey v. Langton, 266 Mich. 47, 253 N.W. 210;McDonald v. Staples, 271 Mich. 590, 261 N.W. 86; and Maser v. Gibbons, 280 Mich. 621, 274 N.W. 352.

We are unable to agree with the conclusions of the trial court because we find:

First. From the affidavits and depositions a question of fact was raised as to the authority of Julius B. Christman and Howard Emmons to execute the indemnity agreement.

Defendants contend, and it may be true, that the claimed resolution attached to the indemnity agreement was never adopted by the board of directors of defendant company. There is evidence, however, that there was attached thereto, and to the agreement itself, the corporate seal of the company. 3 Comp.Laws 1929, § 14203, provides: ‘Any corporation * * * may have a common seal which it may alter at pleasure, and such seal affixed to any instrument purporting to be executed by any such corporation, * * * shall be prima facie proof of the due adoption of said seal, and that it was affixed to said instrument by due authority, and that said instrument was in fact lawfully executed by such corporation.’

The record indicates that, while defendant corporation's articles intrusted the secretary with custody of the corporate seal, it was in fact kept by Howard Emmons. However, it does not appear whether he or someone else affixed the seal to the indemnity contract. At least, in the absence of a clear showing that the seal was not affixed by someone authorized to do so, the statutory inference, arising from the...