Horowitz v. S. Slater & Sons, Inc.

• Decision Date: 30 November 1928
• Citation: 265 Mass. 143,164 N.E. 72
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: HOROWITZ v. S. SLATER & SONS, Inc., et al. SAME v. BROWN et al.

265 Mass. 143

164 N.E. 72

HOROWITZ

v.S. SLATER & SONS, Inc., et al.

SAME

v.BROWN et al.

Supreme Judicial Court of Massachusetts, Suffolk.

Nov. 30, 1928.

Exceptions from Superior Court, Suffolk County; Robert F. Raymond, Judge.

Actions by Jacob Horowitz against S. Slater & Sons, Inc., and others, and against Jacob F. Brown and others, were tried together. A verdict was directed for defendant Brown, and the jury found for defendant S. Slater & Sons, Inc., and plaintiff brings exceptions. Exceptions overruled.T. W. Proctor and R. W. Nason, both of Boston, for plaintiff.

F. W. Knowlton, C. F. Choate, and R. Wait, all of Boston, for defendant S. Slater & Sons, Inc.

E. O. Proctor, of Boston, for defendant Brown.

SANDERSON, J.

In the first of these actions the plaintiff seeks to recover a commission of five per cent. on the purchase price for procuring the American Woolen Company as a customer to buy the South Village Mills, so called, of the defendant S. Slater & Sons, Inc., together with mill machinery, raw materials for manufacture, material in process of manufacture, manufactured goods and other property. The action is based upon an alleged oral contract between the plaintiff and the president of the defendant corporation, Jacob F. Brown, who is the defendant in the second action.

In the latter case the plaintiff seeks to recover the same commission on the same sale, on the ground that the contract was made with Brown as an individual. Counts in tort were also added in this case, alleging that the defendant fraudulentlyrepresented that he had authority to bind the corporation by the contract of employment of the plaintiff as a broker. The two cases were tried together. The judge directed a verdict for the defendant Brown and the jury found in favor of the defendant S. Slater & Sons, Inc. In the action against the corporation the plaintiff excepted to parts of the charge in which the judge instructed the jury, in substance, that upon the evidence Brown had no authority to make the alleged contract of October 6, 1921. Under the rulings in that case the question of the defendant's liability was to be determined by the jury upon the issue of ratification.

[1] (1) The ruling to the effect that Brown, by virtue of his office either as president or general manager, had no authority to sell the mills or to employ a person to sell them, was right. By the verdict for the defendant corporation it was settled that the corporation did not ratify the employment of the plaintiff.

The corporation ran three mills. The one in question, referred to as the South Village Mills, was a woolen and worsted mill and had a greater value than either of the other mills, its output being about one-half of the total business of the corporation. It is not within the implied powers of an officer of a manufacturing corporation to make conveyance of all or a substantial part of its property. England v. Dearborn, 141 Mass. 590, 592, 6 N. E. 837;Selden Truck Corp. v. Selden Truck Service Co., 257 Mass. 58, 153 N. E. 259;G. L. c. 156, § 42. See Craig Silver Co. v. Smith, 163 Mass. 262, 268, 39 N. E. 1116;Frederick v. Letteney, 214 Mass. 46,101 N. E. 49;Sears v. Corr Manuf. Co., 242 Mass. 395, 136 N. E. 266. A ‘contract * * * made by * * * officers * * * for which authority is primarily presumed * * * must be one within the power of the corporation itself to make * * * in the general course of its business.’ They may not contract to sell an integral part of the assets without special authority from the stockholders. N. A. Berwin & Co., Inc., v. Hewitt Realty Co., 199 App. Div. 453, 191 N. Y. S. 817, 819, affirmed by Court of Appeals, 235 N. Y. 608, 139 N. E. 754. ‘The directors, and not the president, have the powers of the corporation, and the president has no implied authority as such to act as the agent of the corporation, but, like other agents, he must derive his power from the board of directors or from the corporation.’ Wait v. Nashua Armory Association, 66 N. H. 581, 582, 23 A. 77, 78 (14 L. R. A. 356, 49 Am. St. Rep. 630).

There was nothing in the course of dealing between Brown and the directors or the stockholders of the defendant corporation to justify an inference that he had been clothed with authority to dispose of a substantial part of its assets such as the mill and all that went with it as a going concern. The by-laws gave him no such power. It did not appear that Brown had more authority to employ a broker to sell the mills than he had to sell the mills themselves. Trulock v. Kings County Iron Foundry, Inc., 216 App. Div. 439, 447, 215 N. Y. S. 587.

The case of Henderson v. Raymond Syndicate, 183 Mass. 443, 67 N. E. 427, is not in conflict with the cases cited. There the general manager was held to have authority to sell real estate which had come to the corporation as security for debt. As the property in that case had been acquired in the course of the business of the corporation and was not needed for the conduct of its business, the jury could find that the manager was authorized to make the sale and that the employment of a broker was necessary to effect the sale; this was not a sale of capital assets.

[2] (2) The plaintiff testified, in substance, that when he told Brown on October 6, 1921, that Wood, the president of the American Woolen Company, would like some definite figures concerning the mills, Brown tore a piece from a page of a book and, after writing some further information on another slip, gave the papers to the plaintiff suggesting that he have them typewritten to submit to Wood. These papers purported to be a balance sheet showing the assets and liabilities of the defendant corporation with other information concerning it. The question-what the plaintiff, in his talks with Brown and in receiving the balance sheet, understood he was to procure a customer for-was excluded subject to the plaintiff's exception. The plaintiff was also asked what, according to his understanding in his talks with Brown, was included in the term ‘mills,’ and what he understoodhe was offering Wood when he talked with him on the subject of the purchase of the Slater Mills; the questions were excluded. Counsel offered to show that the plaintiff would testify that he understood in his talks with Brown that he was to find a purchaser for the inventories as well as for the real estate, and that mills included inventories, supplies, furniture, spare machinery, unfinished goods and such things as that; and that in his talk with Wood he understood that Wood was to be the purchaser of the real estate, such part of the inventories as he saw fit to take, and unfinished goods and other personal property. Testimony as to the understanding of the plaintiff concerning the matters to which the inquiries related was incompetent. It was for the jury to say what both parties had a right to understand from the conversations and acts, but neither party could testify to his own interpretation of their significance. Miller v. Lord, 11 Pick. 11. The unexpressed understanding of one party cannot bind the other. West v. Platt, 127 Mass. 367, 372, 373;Farnum v. Whitman, 187 Mass. 381, 73 N. E. 473;Tallant v. Stedman, 176 Mass. 460, 467, 57 N. E. 683.

The plaintiff also excepted to the exclusion of the question, asked by his counsel in direct examination of the treasurer of the Slater Mills, whether or not it was the treasurer's understanding that the contract referred to in a receipt, which was before the witness, was the proposal accompanying a letter of April 11, 1923, and its acceptance by the American Woolen Company. It did not appear that the treasurer knew how the contract was formed or to what the receipt related, and his understanding was not material.

[3] (3) The judge permitted the jury to look at a page of Poor & Moody's manual marked for identification. It was competent for the defendant corporation to prove that the information, which the plaintiff contended was given him by Brown to show the president of the American Woolen Company in response to a request, made by Wood, for more definite figures about the mills, was taken from a printed manual available to any one and was in fact cut out of such a manual. As the plaintiff had put in the balance sheet upon the ground that it had a tendency to prove that he had been given information about the mills by Brown, it was competent for the corporation to show the source from which the figures came, and that similar figures were available to the public. The sheet was shown for the purpose of comparison and not as evidence of the facts stated upon it. If the information was available to the general public, that fact might have a bearing on the question whether the plaintiff's efforts were the predominating, effective cause of procuring a customer. In any event it does not appear that the plaintiff's right could be prejudiced by reason of the fact that the jury were permitted to see a book with figures identical with those in evidence.

[4][5][6] (4) The judge permitted the defendant's counsel in cross-examining the defendant Brown, called by the plaintiff, to introduce a letter from Brown to Wood, dated April 12, 1922, acknowledging the receipt from Wood's son of a copy of a letter from Wood to one Connolly, and containing the statement, among other things, that it would be a source of regret to the writer ever to do business with Wood at ‘arm's length’; that ‘When it comes down to business it would be much more pleasant to get along without any intermediary. * * * If the time should come that I am convinced that the property is to be sold you may rest assured that before it is sold to any one you will have a good fair chance at it directly from me. In the meantime I think your attitude in not allowing any of these outsiders to get in an entering wedge is entirely proper.’

Connolly was apparently trying to get a buyer for the property. The copy of the letter from Wood to him had been...