Ky.-Penn. Oil & Gas Corp. v. Clark
| Decision Date | 31 January 1933 |
| Citation | 247 Ky. 438 |
| Parties | Kentucky-Pennsylvania Oil & Gas Corporation v. Clark et al. |
| Court | United States State Supreme Court — District of Kentucky |
2. Principal and Agent. — Apparent or ostensible agency rests on estoppel, and cannot be evoked by third person, unless he has suffered some injury, or has changed his position, in reliance on representations of purported agent.
3. Principal and Agent. — In suit for specific performance of executory contract executed by defendant's purported agent, plaintiffs could not plead apparent agency, where they never changed their position.
4. Principal and Agent. — "Implied appointment" of agent exists where circumstances and facts prove actual agency and authority, notwithstanding categorical denial by alleged principal.
5. Principal and Agent. — Principal is equally liable to third person in case of "implied agency" and "agency by estoppel," but only in "agency by estoppel" must third person rely on principal's conduct.
"Implied agency" is an actual agency, and is a fact to be proved by deductions or inferences from other facts while in a strict sense "agency by estoppel" should be restricted to cases in which the authority is not real but apparent. In cases of true "implied agency," the third party need have no knowledge of the principal's acts, nor have relied on them, since the agent by implied authority is an actual agent and the principal is liable for his acts as though the authority had been express.
6. Principal and Agent. — To constitute binding precedents, as regards establishing implied agency, transactions must not only be of similar things done, but of things done in similar way.
7. Principal and Agent. — Person who alleges agency has burden of proving it.
8. Principal and Agent. — Neither agency nor scope thereof can be established by proof of declarations of purported agent.
9. Corporations. — Governing power of corporation is vested in board of directors, which can bind corporation only when acting as a body.
10. Principal and Agent. — Mere representations of purported agent, even when coupled with signing paper as agent, are not sufficient to show his agency or extent thereof.
11. Corporations. — General manager has implied power only to do customary acts in business, and cannot bind corporation by acts beyond his apparent scope.
12. Corporations. — Corporation superintendent is only authorized to act within his apparent scope, and within course of ordinary business of corporation.
13. Principal and Agent. — Principal is never bound where person dealing with agent knows, or has reason to know, agent is exceeding his authority.
14. Corporations. — In suit against corporation for specific performance of contract to exchange oil lease interests, previous dealings held to put plaintiffs on notice that agent, who executed contract for defendant, was unauthorized to bind it in such matters.
15. Frauds, Statute Of. — Parol agency to sell real estate must be established by clear, convincing proof.
Agent's authority to sell real estate is not to be readily inferred, and the intention of the principal to give him such authority must be plainly manifested; it must be clear and distinct, and of such a character that a fair and candid person may without hesitancy say that the authority is given.
16. Specific Performance. — Specific performance of land contract does not lie as matter of course, but depends on equity under circumstances.
17. Specific Performance. — To authorize specific performance of contract, contract must be reasonably certain as to subject-matter, stipulations, purposes, parties, and circumstances of making.
18. Corporations. — In suit against corporation for specific performance of contract executed by corporation's alleged agent, involving sale and exchange of oil lease interests, evidence of alleged agent's implied agency to bind corporation by contract held not to entitle plaintiffs to specific performance.
Appeal from Hart Circuit Court.
J.P. HARRISON, PARKER W. DUNCAN, LARIMORE & NICHOLS, and ALEX M. CHANEY for appellant.
N.B. HUNT and DOWLING & BAIRD for appellees.
OPINION OF THE COURT BY STANLEY, COMMISSIONER.Reversing.
The question on this appeal is whether the appellant, a corporation, is bound by an act of a purported agent in accepting a proposition to buy and exchange certain interests in oil leases. The relief sought and granted was specific performance by the appellant of that contract, which had been repudiated by the company. There is no claim of express authority. The case is rested upon an agency arising or implied from the conduct and attitude of the company in relation to previous activities of the person assuming to represent it.
The instrument involved is a letter of date August 8, 1931, addressed by Clark and Snyder, appellees, to " offering $2,200 cash and an undivided one-fourth working interest in their Sturgeon acreage for an undivided one-half interest in the company's Carter lease. The letter was indorsed " The suit also asked for a reformation of the contract in order to make it more specific as to the description of the properties. The facts are complicated by the creation of a corporation upon the foundation of a partnership and a continuation of the business.
On October 21, 1930, a written contract or partnership was entered into between Frank C. Wilson, L.A. Lovejoy, O.M. Long, and C.E. Lovejoy, for the expressed purpose of "organizing, operating and conducting a company for general contracting but for the time being confining attention to that of drilling for oil, gas, etc." The name of the partnership was " ." In this contract C.E. Lovejoy was named the manager and given power to buy and sell and "full and complete power of attorney * * * to manage any and all of the affairs of the company as in his judgment shall seem necessary and proper during the time necessary to fully pay for said equipment," and the repayment of $2,000 advanced by Wilson.
Long testified for the plaintiffs. He says that at the first meeting of the partners there was a modification of the written agreement, or rather that, without any reference to it, it was agreed that the venture should be broadened to include the buying and selling of leases, and that, because of his greater experience, he became manager and superior in authority to L.A. Lovejoy. Both of them became residents in the oil field, and each was to receive a salary. He says they never operated under the written partnership covenant, and that he was verbally given authority by his three associates to make contracts and to acquire, sell, and transfer leases even after the corporation was formed and that he continued in this relation until after the transaction involved in this suit. It was understood from the beginning that he was to supersede C.E. Lovejoy as manager, and that the corporation was to be later formed on the same basis; the partnership being terminated. This is denied by the other parties. Whether there was such specific understanding or not, the fact is that Long became the active representative in the field, although L.A. Lovejoy, secretary and treasurer, was living there, and was generally consulted by Long in the negotiations conducted by him, and seems to have had about as much to do with all those transactions, other than that involved in this suit, as did Long. C.E. Lovejoy, designated in the articles of partnership, and who later became president of the corporation, lived in Louisville and was frequently in Hart county.
A Delaware corporation was formed in the latter part of December, 1930, by the two Lovejoys and Wilson, with the name of "Kentucky-Pennsylvania Oil & Gas Corporation." Its charter powers were very extensive, and covered every phase of business relating to oils and gas. The evidence is that there were at the time involved other stockholders than the three organizers. Long was not a stockholder. C.E. Lovejoy was chosen as president and L.A. Lovejoy as secretary and treasurer, and Wilson as vice president. According to Long, he assumed that this was a formality, and that he continued to have a one-fourth interest in the business as before. He testified, however, he realized after the formation of the corporation that he had no power to bind the company or its officers in the matter of assigning or conveying property of the company, and that it had to be by the officers, and that he had not signed any paper which might have had that effect until the one involved in this litigation. As to it, he intended to bind the company.
The other side is to the effect that the corporation was not a continuation of the partnership, but was formed for a different purpose, that is, to deal in and develop oil and gas leases, the partnership being continued only as a drilling company until its affairs could be wound up by payment of its debts. Up to that time there had been no profit. Whatever may have been the plan, the fact is that the relations became so interwoven as to constitute a merger so far as the public was concerned. While it appeared that the title to the two drilling rigs was not transferred to the corporation, the latter did take over the partnership's leases and pay their debts. Subsequent transactions by this group of men were had in the name of the corporation. The same men conducted its affairs in the locality of operations in the same manner as theretofore. It is fair to say that Long's associates, officers of the corporation, testified that Long was given no authority to act for the corporation, that his services for the partnership had been unsatisfactory, and one of the reasons for forming the corporation was to close...
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