Kelly v. Citizens Finance Co. of Lowell
| Decision Date | 10 September 1940 |
| Citation | 28 N.E.2d 1005,306 Mass. 531 |
| Parties | JOSEPH G. KELLY v. CITIZENS FINANCE COMPANY OF LOWELL, INC. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
March 5, 1940.
Present: FIELD, C.
J., DONAHUE LUMMUS, QUA, & DOLAN, JJ.
Agency, Scope of authority, Ratification. Corporation, Officers and agents. Practice, Civil, Verdict; Exceptions: whether error harmful. Error, Whether harmful.
One who was president, treasurer and one of two directors of a corporation had no authority merely by virtue of his offices to agree in its behalf to pay an attorney at law a specified amount to defend a receivership suit against it.
A finding that an express contract, purported to have been made by an officer of a corporation in its behalf to pay an attorney at law a specified sum for handling certain litigation, was ratified would not be warranted by the fact that the corporation knew he was working on the case and expected to be paid, nor by its protesting the amount of his bill for the case, nor by a letter discharging him as its attorney.
A single verdict for the plaintiff could not stand where this court could not ascertain from the record whether it was rendered erroneously under incorrect instructions on a count alleging an express contract by the defendant to pay a sum equivalent to the amount of the verdict, or was rendered properly on a count on an account annexed for the same amount; and a new trial was ordered.
CONTRACT. Writ in the District Court of Lowell dated February 9, 1939. Upon removal to the Superior Court, the action was tried before Beaudreau, J. There was a verdict for the plaintiff in the sum of $2,000. The defendant alleged exceptions.
H. L. McLaughlin for the defendant. A. W. Wunderly, for the plaintiff.
An attorney at law brings this action to recover for legal services rendered in defending a suit in equity wherein one Donovan, a stockholder of the defendant, sought the appointment of a receiver for the defendant and a "dissolution" of the corporation.
The first count of the declaration alleges a special contract by which the defendant was to pay the plaintiff $2,000 for defending the suit. The second count was on an account annexed containing a single item of $2,000 for legal services between certain dates.
The defendant's motion for a directed verdict in its favor on the first count should have been allowed. The evidence bearing upon the alleged special contract tended to show that one Comerford who was the president (and according to the plaintiff's testimony, the treasurer), and who was also one of the two living directors of the defendant, orally employed the plaintiff, and was then informed by the plaintiff that his charge would he $2,000 for "handling" the case in the Superior Court "in all its phases." The plaintiff contended that he had fully and successfully rendered all of the agreed service. There was no evidence of any authority having been delegated by the defendant to Comerford to enter into the alleged special contract in the defendant's behalf, other than such inferences as might be drawn from the names of the offices which he held. There was no evidence that he exercised powers of general management over the corporation or that he habitually attended to such matters as the defence of law suits.
The authority to manage the business affairs of a corporation is primarily vested in its board of directors. Its president and treasurer, merely as the holders of those offices, have little or no inherent power to bind the corporation outside of a comparatively narrow circle of functions specially pertaining to their offices. Mahone v. Manchester & Lawrence Railroad, 111 Mass. 72 , 75. Merchants' National Bank of Gardiner v. Citizens' Gas Light Co. of Quincy, 159 Mass. 505 . Craig Silver Co. v. Smith, 163 Mass. 262 , 268, 269. Sears v. Corr Manuf. Co. 242 Mass. 395 . Cashin v. Corporation Finance Co. 251 Mass. 60 . Horowitz v. S. Slater & Sons, Inc. 265 Mass. 143, 147, 148. Horowitz v. State Street Trust Co. 283 Mass. 53 , 58, 59. Massachusetts Hospital Life Ins. Co. v. Nesson, 286 Mass. 216 . See Stoneman v. Fox Film Corp. 295 Mass. 419 , 424, 425.
In the cases in this Commonwealth in which a president or a treasurer has been held to have general authority to make contracts it will be found that such authority has been delegated to him either expressly, by means of some by-law or vote of the directors relative to the matter in question or granting to the officer the powers of a general manager, or impliedly by reason of his continued exercise of similar powers in such a manner that knowledge and approval of the directors or of a majority of them can reasonably be inferred. See for example Trustees of Smith Charities v. Connolly, 157 Mass. 272 , 275, 276; Hartford v. Massachusetts Bowling Alleys, Inc. 229 Mass. 30; Knight v. Whitmore Manuf. Co. 248 Mass. 531 , 535; Forgeron v. Corey Hill Garage, Inc. 249 Mass. 163; Conde Nast Press, Inc. v. Cornhill Publishing Co. 255 Mass. 480 , 485; Washington & Devonshire Realty Co. Inc. v. Freedman, 263 Mass. 554 , 559; McCrillis v. L. Q. White Shoe Co. 264 Mass. 32; Ryan v. Charles E. Reed & Co. 266 Mass. 293; DeBlois v. Boylston & Tremont Corp. 281 Mass. 498 , 519, 520; Lydia E. Pinkham Medicine Co. v. Gove, 298 Mass. 53 , 63; S. C. 303 Mass. 1; 305 Mass. 213; Ross v. Colonial Provision Co. Inc. 299 Mass. 39 , 41.
In the present case these requirements are not met. The contract of employment here alleged related to a law suit of an unusual nature vitally affecting the possibility of continuing the corporation's business. The defence of such a suit does not fall within the familiar duties of a president or a treasurer. Pacific Bank v. Stone, 121 Cal. 202. Ney v. Eastern Iowa Telephone Co. 162 Iowa, 525, 530. Comerford as one of...
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