Koerber v. Middlesex College

• Decision Date: 07 October 1969
• Docket Number: No. 1945,1945
• Citation: 258 A.2d 572,128 Vt. 11
• Parties: Edward W. KOERBER v. MIDDLESEX COLLEGE et al.
• Court: Vermont Supreme Court

Page 572

258 A.2d 572

128 Vt. 11

Edward W. KOERBER v. MIDDLESEX COLLEGE et al.

No. 1945.

Supreme Court of Vermont.

Oct. 7, 1969.

John A. Burgess, Montpelier, for plaintiff.

Paterson, Gibson, Noble & Brownell, Montpelier, for defendant.

Before HOLDEN, C. J., and SHANGRAW, BARNEY, SMITH and KEYSER, JJ.

BARNEY, Justice.

The planning of the Middlesex College campus outran the organization of the educational corporation. The architect felt that this happenstance should not bar his compensation for his work, including the preparation of plans and specifications, even though no construction was undertaken. The trial court and the jury essentially agreed with him and he recovered a verdict. The defendant college corporation has appealed.

There is a contract at the center of the controversy. It was executed by the plaintiff as the architect employed, and by Dr. Georges de Nagy representing the 'Trustees acting for Middlesex College', on July 29, 1964. Articles of association for Middlesex College Corporation were executed on August 14, 1964, and filed with the secretary of state on August 18, 1964. Based on this time schedule, the defendant college argued that it could not be bound by any contractual obligation entered into by others before the college came into corporate existence. This issue was raised by amended answer and pressed in motions for directed verdicts both at the close of the plaintiff's case and at the end of all of the evidence. It was denied in each instance by the lower court.

Dr. de Nagy was also a named defendant in this suit, assumedly on the theory that under 11 V.S.A. § 264 he would be personally liable as president for contracting to employ the plaintiff before the articles of association of the college were filed on August 18, 1964. The jury found him not liable, and this determination has not been challenged here. The defendant college did, after verdict, move to have the verdict against it set aside and a new trial granted, or, in the alternative, for a remittitur 'to an amount reasonably reflecting the evidence as to damages.' These motions were also denied below.

The real question here is whether or not the defendant college can be said by its actions, to have adopted or ratified the contract with the plaintiff. It is undeniable that the execution of the contract preceded the filing of the incorporation papers. Moreover, nothing by way of formal or documented ratification has been advanced in evidence. The plaintiff relies on evidence he claims sufficiently establishes that the corporation accepted the benefits of the contract and therefore may be said, under Glass v. Newport Clothing Co., 110 Vt. 368, 375, 8 A.2d 651, to have ratified the contract.

The defendant makes some argument that ratification could not occur until the corporation records showed that all of the organizational steps with respect to electing its full board had been complied with, a circumstance that the defendant claims was deferred a year. But 11 V.S.A. § 45 provides that with the recording of the articles of association with the secretary of state the corporation becomes a legal unit. Although a situation might arise whereby a corporation might be entitled to defend a claim on the ground of its own failure to carry out each of the organizational requirements of its charter and bylaws, in the usual case a legal corporation will be denied the right to avoid obligations to third parties by neglecting some formality in its own organizing procedure. See Vt. Central R. Co. v. Clayes, 21 Vt. 30, 36.

The court submitted to the jury, as an issue of fact, the question of adoption or ratification by the defendant college of the contract with the plaintiff. The charge, among other things, instructed the jury to hold defendant de Nagy liable on the contract, if it was performed, only if the defendant college had not ratified or adopted it. By its verdicts the jury discharged Dr. de Nagy and held the college liable to the plaintiff. Thus, we have a clear finding of ratification by the jury. Since this verdict is challenged, this Court must look to the favoring evidence to determine whether or not this result has adequate factual support. Smith v. Blow & Cote, Inc., 124 Vt. 64, 66, 196 A.2d 489.

It is clear that Dr. de Nagy was the moving force behind the founding of Middlesex College. Through his efforts a group of people, including William J. Ryan, Esquire, Mr. Homer F. Smith and Dr. Townsend Scudder, began, in 1964, to work together to bring the college into being. Dr. de Nagy and Mr. Ryan, later two of the three corporators of the infant college, were already dealing with the plaintiff to the end of having him draw sketches of proposed buildings before the school was organized. This culminated in the contract in evidence.

Publicity about the impending organization of the college was released, and on July 18, 1964, a ground-breaking ceremony was held. Dr. de Nagy announced the appointment of the plaintiff as architect for the college on July 28, 1964, and the release was accompanied by the sketches of proposed buildings furnished by the plaintiff. As has already been noted, the employment contract was dated July 29, 1964, and signed by the plaintiff and by Dr. de Nagy, representing 'the Trustees acting for Middlesex College'.

Articles of association were prepared and filed with the secretary of state and the town clerk of Middlesex on August 18, 1964. The corporation was formed as a non-profit, charitable organization, so there was no...