Computer Maintenance Corp. v. Tilley, 68227

• Decision Date: 25 September 1984
• Docket Number: No. 68227,68227
• Citation: 172 Ga.App. 220,322 S.E.2d 533
• Parties: COMPUTER MAINTENANCE CORPORATION et al. v. TILLEY et al.
• Court: Georgia Court of Appeals

Page 533

322 S.E.2d 533

172 Ga.App. 220

COMPUTER MAINTENANCE CORPORATION et al. v. TILLEY et al.

No. 68227.

Court of Appeals of Georgia.

Sept. 25, 1984.

Mark V. Spix, Atlanta, for appellants.

John W. Gibson, James B. Deal, Atlanta, for appellees.

CARLEY, Judge.

Appellant-plaintiff Horton was an employee, shareholder, officer, and director of Computer Maintenance Corporation ("CMC"). In conjunction with his relationship with CMC, Horton executed several documents. The first such document (the "May agreement") provided: Horton would enter into the employ of CMC for a period of three years and would be made a director of the company. Horton would receive an annual salary of $36,000. If the corporation terminated his employment prior to its natural expiration, Horton would be entitled to receive all compensation to which he would have been entitled if his employment had not been so terminated. Additionally, Horton would purchase 100,000 shares of ten-cent par value CMC stock at a price of twenty cents per share. He would pay the company $10,000 and would receive 50,000 shares of stock immediately, and he would purchase the remaining 50,000 shares in installments over a twenty-month period. The company and its shareholders would re-evaluate the stock to a par value of twenty cents per share. Horton would enter into a stock buy-sell agreement such as the one which the other CMC shareholders had previously executed.

Some time after signing the May agreement, Horton became a signatory to the buy-sell agreement which was already in force among the other shareholders. He also executed a certificate of agreed value which set the value of CMC stock at ten cents per share (the "July agreement").

Less than a year after Horton had begun his relationship with CMC, his employment was terminated. CMC attempted to re-purchase its stock from Horton at a price of ten cents per share, in accordance with the July agreement. However, Horton refused CMC's tender, contending that the buy-back price of his stock should be twenty cents per share. Horton instituted the instant lawsuit, which was characterized as a shareholder's derivative action as well as a suit by Horton individually. The defendant-appellees named in this action were the corporation and its officers and directors. Horton alleged, in relevant part, that CMC had breached its agreement with him, and that the individual defendants had committed acts of waste and mismanagement. Defendant-appellees answered and filed a counterclaim seeking to enforce the July buy-sell agreement. The counterclaim further alleged that defendant-appellees were entitled to an award of the expenses of litigation because Horton had brought the shareholder's derivative suit without reasonable cause. An additional count of the counterclaim sought an award of damages on the ground that Horton had committed certain misdeeds in his capacity as officer and director of CMC.

Cross motions for summary judgment were filed. The trial court granted appellees' motion with regard to their counterclaim to enforce the July buy-sell agreement. Appellees were also granted summary judgment with regard to the shareholder's derivative aspects of Horton's complaint. Horton's motion concerning the breach of contract count of his original complaint and the remaining allegations of the counterclaim was denied. Horton appeals.

1. Horton's claim for breach of contract is based upon the May agreement. Appellees contend that that document is unenforceable because of defects in its execution and that Horton's claim is therefore unviable.

The May agreement purports to be a contract among Horton, CMC, and four individual shareholders of the corporation. A separate signature line is provided for each of those six parties. The line provided for CMC merely bears the signature of appellee Tilley, who was and is president of the company. Although the corporate seal is also affixed, there is nothing on the face of the document to indicate that Tilley signed it in his official capacity. Additionally, his signature is not attested by the secretary or any other officer of the corporation. Thus, the corporate signature requirements of OCGA § 14-2-4 are not met. Compare Teri-Lu, Inc. v. Ga. R. Bank, etc., Co., 147 Ga.App. 860, 250 S.E.2d 548 (1978). See generally Brega v. CSRA Realty Co., 223 Ga. 724, 157 S.E.2d 738 (1967).

"A president of a corporation does not, by virtue of his office alone, have authority to contract in its behalf [ (cits.) ], although being the alter ego of the corporation he may be presumed to have power to act for it in matters within the scope of its ordinary business. [Cits.]" Western American Life Ins. Co. v. Hicks, 135 Ga.App. 90, 91, 217 S.E.2d 323 (1975). " 'An instrument executed in the name of a corporation by its president and under the seal of a corporation is presumed to have been executed by its authority, but this presumption is rebuttable.' [Cits.]" Adams Loan, etc., Co. v. Dolvin Realty Co., 48 Ga.App. 183, 184(3), 172 S.E. 606 (1933). In the instant case, the uncontroverted evidence established that the May agreement was not within the scope of the ordinary business of CMC and was not a standard corporate contract. There was further uncontradicted evidence that Tilley was not authorized to act on behalf of the corporation in this particular matter without the assent of all of the shareholders. Such assent is not apparent from the face of the document, inasmuch as only two of the four shareholders of the company signed it.

This absence of two of the shareholders' signatures presents yet another difficulty with regard to the execution of the document. As previously noted, each of the shareholders was identified as a party to the May agreement. That agreement provides that the shareholders are to perform certain specified acts, and the language and the format of the document indicate an intent for each shareholder to be a signatory. "When the intent is manifest that the contract is to be executed by others than those who actually sign it, it is inchoate and incomplete, and does not take effect as a valid and binding contract. [Cits.]" Peacock v. Horne, 159 Ga. 707, 723, 126 S.E. 813 (1924). See also Denton v. Etheridge, 73 Ga.App. 221, 36 S.E.2d 365 (1945).

In light of the foregoing defects in the execution of the May agreement, it cannot be said as a matter of law that the signatures which appear on the document were sufficient to establish a binding contract. However, Horton contends that the May agreement was ratified by performance. "The object of securing signatures of the parties to a written contract is, of course, to take it out of the Statute of Frauds and to afford mutuality so that it may be enforced. [Cits.] But this is not the only manner of obtaining mutuality. If one of the parties has not signed, his acceptance is inferred from a performance under the contract, in part or in full, and he becomes bound. [Cits.]" Cooper v. G.E. Constr. Co., 116 Ga.App. 690, 694, 158 S.E.2d 305 (1967). See also Western American Life Ins. Co. v. Hicks, supra. It appears from the record in the case at bar that Horton was employed by CMC in the capacities described in the May agreement. However, there is also evidence that the performance of the parties was not undertaken pursuant to the May agreement, but was in accordance with subsequent oral arrangements. Since the evidence is in conflict as to whether the parties ratified the May agreement by their subsequent conduct, the issue of its enforceability is for jury determination. See Rogin v. Dimensions South Realty Corp., 153 Ga.App. 75, 264 S.E.2d 555 (1980). The trial court did not err in denying Horton's motion for summary judgment as to the breach of contract count of his complaint.

2. Horton enumerates as error the trial court's ruling that, even if the May agreement is enforceable, the parties had mutually departed from some of its terms. The alleged mutual departure involves the provisions governing Horton's purchase of CMC stock, the value of the stock, and Horton's salary.

The record shows that Horton received a salary of $2500 per month, rather than the $3000 per month provided in the May agreement. Horton contends that he received $2500 per month because $500 of his monthly salary of $3000 was withheld as payment for CMC stock. While that arrangement would have been in keeping with the terms of the May agreement, there is no evidence that such was ever effected.

The record of the case further indicates that contrary to the terms of the May agreement, Horton purchased CMC stock at a price of ten cents per share. He paid the corporation $10,000 and received 100,000 shares of CMC stock immediately, rather than acquiring the stock over a twenty-month period. This transaction occurred in accordance with the terms of the July agreement and with the terms of a letter of intent which was executed by Horton on the same day he signed the July agreement.

Horton contends that the foregoing facts are not established by uncontradicted evidence, so that a jury issue remains as to whether a mutual departure occurred. In support of this contention, Horton relies on his verified complaint, which alleges that the May agreement is binding and that he paid $14,500 toward the purchase of CMC stock. It is true that verified pleadings which meet the requirements of OCGA § 9-11-56(e) may create a factual issue sufficient to defeat a motion for summary judgment. Foskey v. Smith, 159 Ga.App. 163, 283 S.E.2d 33 (1981), cert. dismissed 249 Ga. 32, 289 S.E.2d 248 (1982). However, the verification accompanying Horton's complaint provides that the allegations contained therein are true "as I verily believe." Such a purported verification is "just a variation of our old friend 'information and belief.' [Cits.]" Heavey v. Security Mgt. Co., 129 Ga.App. 83, 85, 198 S.E.2d 694 (1973). " ' "[U]ltimate or conclusory facts and conclusions of law, as well as...