Erie R. Co. v. S. J. Groves & Sons Co.

• Decision Date: 10 January 1935
• Docket Number: No. 98.,98.
• Citation: 176 A. 377
• Parties: ERIE R. CO. v. S. J. GROVES & SONS CO.
• Court: New Jersey Supreme Court

176 A. 377

ERIE R. CO.

v. S. J. GROVES & SONS CO.

No. 98.

Court of Errors and Appeals of New Jersey.

Jan. 10, 1935.

Appeal from Supreme Court.

Action by the Erie Railroad Company against the S. J. Groves & Sons Company. Judgment for defendant, and plaintiff appeals.

Affirmed.

Hobart & Minard, of Newark, for appellant.

Wright, VanderBurgh & McCarthy, of Hackensack, for respondent.

PERSKIE, Justice.

This appeal brings up for review a judgment in favor of the respondent, defendant below, and against the appellant, plaintiff below, which judgment was based on a jury verdict.

One phase of this suit, based on the second count thereof, was against the Liberty Surety Bond Insurance Company, a corporation of this state, as surety for respondent in the premises. It resulted in a judgment of $25,000 in favor of the appellant and against the surety; and that judgment was affirmed by this court. 111 N. J. Law, 100, 166 A. 205.

The other phase of this suit, based on the first count thereof, is now before us. On this count plaintiff sought to recover of the defendant the difference between the $25,000 recovered on the second count aforesaid and the sum of money it paid to Howard C. Firth on the judgment recovered by him against it, which difference amounted to $33,592.41. The basis for this recovery was the purported letter of the respondent under date of October 15, 1928; the details thereof, as well as a general statement of the subject-matters controversy, are sufficiently stated in the cited case.

Respondent's answer to the instant suit, with the exception of the admission of the first paragraph thereof which relates to the corporate existence, etc., of appellant, consisted of a denial of the allegations of the complaint, based on the purported execution and liability under the terms and provisions of the letter dated October 15, 1928, and the separate and distinct defense (first), "that the alleged agreement set forth in the complaint was not the act and deed of this defendant."

The learned trial judge, in a charge that was instructive, fair, and correct, submitted the issues involved and the law applicable thereto to the jury. The latter, as already stated, found for the respondent.

That finding, although no adverse criticism is made of the correctness of the legal principle as charged by the trial judge, is now challenged on the grounds: (1) That "the trial judge should have held as a matter of law that the contract upon which the action was based was signed by an agent of the defendant who had apparent authority so to do"; and (2) that, "Whether or not defendant's agent had apparent authority to sign the contract upon which the action was based, the trial judge should have ruled as a matter of law that said contract was ratified by the defendant."

Our careful study of all the proofs in the case leads us to the conclusion that the contentions of the appellant are without merit.

It is, of course, the well-settled law of this state that, in order to obligate a corporation upon a contract, "it was incumbent upon the plaintiff to show that the contract upon which suit was brought was the contract of the defendant. To bind the defendant the contract must be proven to have been the act of the defendant either by corporate action, the act of an authorized agent, or by adoption and ratification. Beach v. Palisade Realty & Amusement Co., 86 N. J. Law, 238, 90 A. 1118. A corporation is bound by the act of an officer or agent only to the extent that the power to do the act has been conferred upon such officer or agent expressly by the charter, by-laws, or corporate action of its stockholders or board of directors, or can be implied from the powers expressly conferred, or which are incidental thereto, or where the act is within the apparent powers which the corporation has caused those with whom its officers or agents have dealt to believe it has conferred upon them." Aerial League of America v. Aircraft, etc., Corp., 97 N. J. Law, 530, 532, 117 A. 704, 705, and cases therein cited.

And "the rule is that the principal is bound by the acts of his agent within the apparent authority which he knowingly permits the agent to assume, or which he holds the agent out to the public as possessing. The question in every case depending upon the apparent authority of the agent is whether the principal has by his voluntary act placed the agent in such a situation that a person of ordinary prudence, conversant with business usages and the nature of the...