Edelstone v. Salmon Falls Mfg. Co.

Decision Date06 May 1930
Citation150 A. 545
PartiesEDELSTONE et al v. SALMON FALLS MFG. CO.
CourtNew Hampshire Supreme Court

Transferred from Superior Court, Strafford County; Scammon, Judge.

Assumpsit by Harry Edelstone and others against the Salmon Falls Manufacturing Company. Case transferred on plaintiffs' exception to the granting of defendant's motion for nonsuit.

Exception overruled.

Assumpsit, for a commission upon the sale of the defendant's mill property at Somersworth. The plaintiffs' evidence tended to prove the following facts: Late in 1926 the defendant was closing out its manufacturing business, and desired to sell its plant and equipment. One Lyman was its treasurer and Queally its resident agent.

The by-laws provided that "the treasurer * * * shall be the general agent of the company, and shall superintend and regulate its affairs and make all necessary contracts in relation thereto. * * * He shall appoint all agents at the mills. He may contract debts on behalf of the company."

At a stockholders' meeting held September 14, 1926, it was "voted that the directors be and hereby are authorized to carry on negotiations for and take such steps as may seem to them advisable to carry out the sale or lease of all or any part of the property of the corporation and the liquidation of its affairs."

October 7, 1926, the directors "voted, that the Treasurer be and hereby is authorized to continue negotiations for the sale of the entire net assets of the corporation, and that he be further authorized to advise prospective purchasers that the board will recommend to the stockholders the sale of the net assets for the sum of six hundred and seventy-two thousand dollars."

In December Lyman made a contract with the plaintiffs to act as brokers upon a commission basis.

At a directors' meeting held on January 5, 1927, "the Treasurer reported to the board about various people he had tried to interest in purchasing the mills and then described different methods which might be used to develop a buyer." "The question of employing some concern which made a business of selling manufacturing plants, etc., at private sale was further considered and after a full discussion it was voted, that the President and Treasurer be and hereby are authorized at their discretion to employ such firm or company as they think best to undertake the sale of the property, upon such terms as they think fair and with exclusive rights of sale for a period not exceeding six months."

At a directors' meeting on February 7, 1927, an offer for the property was declined. The president and treasurer reported as a committee on hiring some one to sell, and the committee was discharged. A president pro tem was chosen, and he and the treasurer were appointed a committee with the same power as that given at the January meeting.

Later meetings of stockholders and directors had to do with various offers submitted, and at a stockholders' meeting on July 8, 1927, an offer of the New England Public Service Company was accepted.

There was no evidence of any other acts or knowledge of any member of the board of directors, except Lyman and Queally. Lyman had extended negotiations with the plaintiffs, and Queally, by Lyman's direction, had frequent conferences with them. Other facts are stated in the opinion.

At the close of the plaintiffs' evidence, the defendant's motion for a nonsuit because there was "no evidence of authority on the part of Mr. Lyman to make a contract for the payment of a commission on sale of the property" was granted, subject to exception.

Frederic J. Laughlin, of Portland, Me., and Conrad E. Snow, of Rochester, for plaintiffs.

Putnam, Bell, Dutch & Santry, of Boston, Mass., and Hughes & Burns, of Dover, for defendant.

PEASLEE, C. J.

The plaintiffs' evidence tended to prove a contract negotiated by Lyman. The nonsuit was ordered because of lack of proof that Lyman's acts bound the defendant. The plaintiffs claim sufficiency of their evidence to show express authority, implied authority, a holding out of the agent as authorized, and a ratification of his acts.

The general authority conferred upon the treasurer by the by-laws did not give him any power to close out the business. Such power as he had related to the conduct of the affairs of a going concern. Dow v. Railroad, 67 N. II. 1, 36 A. 510. When the issue of abandonment of the enterprise was acted upon affirmatively, a new and special grant of power to act for the shareholders was conferred. The matter of making a sale was in terms put into the hands of the directors. Thereafter, and so long as the vote remained in force, any authority to act upon that subject could come from them only.

It may be true that the by-laws were still in force, but it is a fair inference that they were not adopted with any view to conferring power to act in proceedings to wind up the corporation. The stockholders treated the situation which confronted them as something outside the transaction of business provided for in the by-laws. They deemed a new grant of power to act to be desirable, if not necessary. If they had thought that the by-laws provided an agency through which the dissolution should be accomplished, there would have been no occasion for the special grant of authority. This practical construction of the bylaws by the parties in interest should be followed as the true one. Authority to act in this matter, after the stockholders' vote of September 14, 1920, was vested in the board of directors.

The only authority given by the board to the treasurer is that contained in the vote of October 7, 1926. Apparently, the treasurer had theretofore made efforts to secure a purchaser. It was voted that "the Treasurer be and he hereby is authorized to continue negotiations for the sale of the entire net assets of the corporation" and to quote a price which the directors would advise the stockholders to accept. The contract in suit was made before any further action was taken by the board; and an important issue in the case is whether this vote gave the treasurer authority to employ a broker, and promise him a commission, if he made a sale.

The treasurer was a salaried official of the company, and there is nothing to justify the inference that the authority given him included the employment of some one else to conduct the sale at a large cost to the company. He was to "continue negotiations"; that is, he was to proceed in a way comparable to what he had been doing.

It is urged that the employment of a broker is so usual a method of securing a customer that authority to engage such service is to be implied. The answer to the argument is that Lyman was not given general authority to effect a sale. His authority was limited. He could continue negotiations, but he had no power to hire some one else to negotiate.

Argument has been advanced upon the proposition that, as the defendant is a corporation,...

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