Fair Mercantile Co. v. Union-May-Stern Co.

• Decision Date: 13 June 1949
• Docket Number: 41061
• Parties: Fair Mercantile Company, a Corporation, Appellant, v. Union-May-Stern Company, a Corporation, Respondent
• Court: Missouri Supreme Court

221 S.W.2d 751

359 Mo. 385

Fair Mercantile Company, a Corporation, Appellant, v. Union-May-Stern Company, a Corporation, Respondent

No. 41061

Supreme Court of Missouri

June 13, 1949

Motion for Rehearing or to Transfer to Banc Overruled July 11, 1949.

Appeal from Circuit Court of City of St. Louis; Hon. William B Flynn, Judge.

Affirmed.

SYLLABUS

The president of plaintiff corporation had authority to enter into an oral stipulation in open court settling the case, and the trial court properly granted specific performance of such settlement agreement upon an amended pleading asking for such relief.

Albert E. Hausman for appellant.

(1) Neither Phillip Paull, as vice-president nor Albert Paull, as president, had implied authority to compromise the cause of action of Fair Mercantile Company v. Union-May-Stern Company. President or vice-president, unless expressly authorized to do so, cannot bind the corporation, except in matters strictly incident to his office by usage or necessity. Stevens Davis Co. v. Sid's Petroleum Corp., 157 S.W.2d 246; Sparks v. Despatch Transfer Co., 104 Mo. 531. (2) Neither Phillip Paull nor Albert Paull, as Directors of Fair Mercantile Company, could authorize settlement of the cause of action of Fair Mercantile Company against Union-May-Stern Company, except by participation in a formal board meeting at which formal action was taken. Separate consent of directors of a corporation to a proposed action of the corporation is not equivalent to formal action of the board. Therefore, neither Phillip Paull nor Albert Paull could bind the corporation by their separate action. Coleman v. Northwestern Mut. Life Ins. Co., 273 Mo. 620, 201 S.W. 544; Farmers & Merchants Bank of Eureka v. Boland, 175 S.W.2d 939. (3) The burden was on defendant to show that Phillip Paull or Albert Paull had authority to agree to settle the litigation pending between Fair Mercantile Company and Union-May-Stern Company. They had no implied authority to do so. General Motors Acceptance Corp. v. Holland, 30 S.W.2d 1087. (4) An accord and satisfaction is not binding on either party unless consummated by payment of, and acceptance of, the consideration therefor. Therefore, as Fair Mercantile Company refused to accept the stated consideration for said accord and satisfaction, it is not binding on either party. Chapman v. Adams, 204 Mo.App. 659; Western Military Academy v. Viviano, 133 S.W.2d 1098; B.F. Goodrich Rubber Co. v. Newman, 271 S.W. 1029. (5) The court was without jurisdiction to render a decree in this case which is not within the issues made by the pleadings. Therefore, the judgment in this case which directs and orders plaintiff to execute a release to defendants, and others, who are not parties to the case, is void because this is an action at law and no equitable relief is asked, nor could it be asked. Congregation B'Nai Abraham v. Arky, 20 S.W.2d 899; Charles v. White, 214 Mo. 187.

Burnett, Stern & Liberman and Robert Burnett for respondent.

(1) Phillip Paull and his son, Albert Paull, had ample, apparent and implied authority to make the compromise agreement of May 6, 1947, and appellant corporation is estopped to deny such authority. Civil Code of Missouri, sec. 41; 2 Fletcher, Cyc. Corp., sec. 576, pp. 456, 457; Chamberlain & Churchill v. Mammoth Mining Co., 20 Mo. 96; James H. Forbes Tea & Coffee Co. v. Baltimore Bank, 139 S.W.2d 507. (2) The settlement agreement was a stipulation made in open court and is enforceable. 60 C.J., p. 43, sec. 8; Id., p. 91, sec. 89; Dittmeier v. Laughlin, 253 S.W. 777. (3) A party to a compromise agreement cannot refuse to perform by rejecting performance or tender of performance by the other party to the agreement. Priest v. Oehler, 41 S.W.2d 783; Scriba v. Neely, 109 S.W. 845; Landers v. Fox, 209 S.W. 287; Evans v. Evans, 28 S.W.2d 416; Union Central Life Ins. Co. v. Imsland, 91 F.2d 365. (5) The supplemental answer, stating equity and praying for affirmative equitable relief, made the case one in equity. Shafer v. Detie, 90 S.W. 131; Bouton v. Pippin, 91 S.W. 149; Dinkelman v. Havekamp, 80 S.W.2d 681; Columbia Natl. Life Ins. Co. v. Dubinsky, 160 S.W.2d 727.

OPINION

Clark, P.J.

Plaintiff, a corporation, appeals from a judgment of the circuit court dismissing its cause of action and ordering it to comply with the terms of a compromise found to have been made in open court.

The original petition prayed damages for breach of contract, wrongful conversion of personalty and for seeking to acquire control of plaintiff's business and trade by wilfully and maliciously advertising that defendant had acquired the assets and business of plaintiff and that plaintiff was no longer in business. Judgment was prayed for $ 9,136.16.

During the trial a recess was declared to enable the parties to negotiate for a compromise. Phillip Paull, vice-president, and Albert Paull, president, of plaintiff, were put upon the witness stand in the absence of the jury. Each testified that an agreement had been reached whereby defendant would pay plaintiff $ 2,500.00 in full settlement and pay all costs, and that plaintiff would execute a release to defendant its officers and directors. Both the Paulls testified that the agreement was made, although Albert Paull said he doubted that it was a good settlement.

The jury was then called in and told by the court that the case had been settled and their service would no longer be needed.

Thereafter defendant tendered its check for $ 2,500.00, but plaintiff refused to execute a release. By leave of court plaintiff's attorneys withdrew from the case.

Defendant filed a supplemental answer and counterclaim, setting up the alleged settlement as a complete bar to plaintiff's cause of action, asking that Phillip Paull be made a cross-defendant and that actual and punitive damages be awarded against the plaintiff and cross-defendant for malicious prosecution.

Many months later Phillip Paull on behalf of plaintiff, without being represented by counsel, filed a paper designated "Answer to Defendant's Supplemental Answer and Counterclaim." This paper takes up thirty pages of the transcript, sets up much extraneous matter, lists many items of alleged damages and asks judgment for $ 236,591.58 actual damages and $ 100,000.00 punitive damages.

Defendant filed a motion to strike this last pleading of plaintiff and a motion for judgment on the pleadings.

One of the attorneys for plaintiff who had previously withdrawn entered his appearance as attorney for plaintiff and the cross-defendant. Defendant's motions were argued and submitted. Later the court sustained defendant's motion to strike plaintiff's cause of action and rendered judgment finding that the parties had made a valid compromise, [as hereinbefore set out] ordering defendant to pay $ 2,500.00 into the registry of the court, and ordering plaintiff to execute a release to defendant, its officers, agents and directors.

Plaintiff appeals and makes contentions which we summarize as follows:

(1) Neither Phillip Paull, as vice-president, or Albert Paull, as president, of plaintiff, acting separately or together, had implied authority to compromise the case; (2) the burden was upon defendant to prove such implied authority; (3) an accord and satisfaction is not binding on either party unless consummated by payment and acceptance of the consideration therefor; (4) the court was without jurisdiction to render the decree which it did.

In support of its first two contentions appellant cites Stevens Davis Co. v. Sid's Petroleum Co., (Mo. App.) 157 S.W.2d 246; Sparks v. The Despatch Transfer Co., 104 Mo. 531, 15 S.W. 417; Coleman v. Northwestern Ins. Co., 273 Mo. 620, 201 S.W. 544; Farmers and Merchants Bank v. Boland, (Mo. App.) 175 S.W.2d 939, and General Motors Acceptance Corp. v. Holland, (Mo. App.) 30 S.W.2d 1087. Those cases hold: that the president of a corporation, without any special authority from the board of directors, may perform for the corporation all acts of an ordinary nature which, by usage or necessity are incident to his office; that the authority of directors to bind the corporation belongs to them collectively, not individually, and their actions are to be shown by the minutes of the corporation; however, where the president or other officer of a corporation acts as its agent and is by it so recognized and treated, or held out to the world, his acts within the scope of authority given to him are binding on the corporation; but that such agency cannot be established by proof of acts, declarations and conduct of the alleged agent, unless the same are known to the principal, or are so often repeated that knowledge on the part of the principal is implied.

In accordance with the holdings of the above cited cases, do the facts of the instant case establish that Phillip Paull and Albert Paull had authority to compromise this case?

Defendant's supplemental answer and counterclaim alleges that plaintiff is a "family corporation", all the stock in which is owned by Phillip Paull, his wife and three sons; that Phillip Paull founded the business and has at all times dominated and directed all its activities; that he made his son Albert president of the corporation, but Albert has been president in name only and that Phillip Paull has at all times acted as president and general manager, conducting the business as though it were his own and not that of the corporation; that Phillip Paull made a contract with defendant to sell plaintiff...