Little Rock Chamber of Commerce v. Reliable Furniture Co.

• Decision Date: 21 April 1919
• Docket Number: 192
• Citation: 211 S.W. 371,138 Ark. 403
• Parties: LITTLE ROCK CHAMBER OF COMMERCE v. RELIABLE FURNITURE COMPANY
• Court: Arkansas Supreme Court

211 S.W. 371

138 Ark. 403

LITTLE ROCK CHAMBER OF COMMERCE v. RELIABLE FURNITURE COMPANY

No. 192

Supreme Court of Arkansas

April 21, 1919

Appeal from Pulaski Chancery Court; John E. Martineau, Chancellor affirmed.

Decree affirmed.

John P Streepey, for appellant.

1. Defendant was properly served with summons, so it had notice of the pendency of the suit before the decree was taken. The evidence shows that it was served on an officer of the appellee. The return of the sheriff shows this and his return is at least prima facie conclusive. 102 Ark. 255.

2. Appellee showed no valid defense to the suit, the original action. 201 S.W. 122; 116 Ark. 545-561.

Grover T. Owens, for appellee.

1. Appellee was not duly served with summons and had no notice before decree. Kirby's Digest, § 4431, sub- div. 7; 63 Ark. 323.

2. The finding of the chancellor upon a question of fact should not be disturbed. The defense interposed was not a valid one. The contract was not entered into by the appellee, as Nordlinger was without authority to enter into a contract for the purchase of real estate. It is specifically alleged in the answer that the by-laws of the corporation did not authorize it and this is undisputed. The question was thus put in issue whether an individual of a corporation had the authority to bind the corporation by an unauthorized contract. The proof is undisputed that the contract was unauthorized. An officer of a corporation has no authority other than that specifically designated to him by the by-laws. He is not empowered to bind it by his signature to contracts unless the authority is conferred by charter or directors and there was no custom to authorize him in such acts. 62 Ark. 23; 14 L. R A. 356.

3. The appellee merely purchased the assets of the Adair Company and assumed certain liabilities listed in a detailed statement. This liability is not listed and was not assumed. The chancellor was correct in vacating the judgment.

OPINION

HUMPHREYS, J.

On the 27th day of February, 1917, appellant instituted suit against appellee, successor to the Adair Furniture Company, in the Pulaski Chancery Court, to enforce the specific performance of a subscription contract of the Adair Furniture Company, of date February 29, 1912, to purchase from appellant $ 250 worth of real estate. It was alleged, in substance, that, in order to raise a fund for development purposes, the Adair Furniture Company entered into a contract with appellant to purchase $ 250 worth of property at its probable value on the 1st day of January, 1917, to be fixed by an appraisement committee, which property might be selected by said furniture company, but, upon failure to select, might be allotted to it; that, failing to select, lot 14, block 10, Chamber of Commerce Addition to the city of Little Rock, Arkansas, was allotted to it under the terms of the contract; that appellee took over the assets and became responsible for the obligations of the Adair Furniture Company, but refused to accept and perform said subscription contract.

Summons was issued against appellee and placed in the hands of the sheriff of Pulaski County for service. The following return was made upon the summons:

"State of Arkansas,

"County of Pulaski.

"I have this 20th day of March, A. D., 1917, duly served the within summons at this county by delivering a copy to H. A Ortmeyer, manager of the Reliable Furniture Company in this county.

"W. G. Hutton, Sheriff,

"Sol Wormser, D. S."

On the 9th day of March, 1918, a regular day of the October term of said court, a judgment by default for $ 250 was rendered against appellee and same was declared a lien upon said lot, the lien foreclosed and the lot ordered sold.

On the 15th day of April, 1918, a day of the regular April term of said court, appellee filed a petition, based on the 7th subdivision of section 4431 of Kirby's Digest, to vacate the judgment rendered on the 9th day of March, 1918. It was alleged in the petition, first, that the judgment was rendered without notice to appellee; second, that, in the fall of 1913, it succeeded, by purchase, the Adair Furniture Company in business, but that it did not assume the liability of the subscription contract, and did not purchase the lot in question as one of the assets of said furniture company; third, that the contract was signed by S. C. Nordlinger without any authority from the board of directors of said Adair Furniture Company.

The cause was submitted to the court upon the pleadings, exhibits thereto and evidence adduced, upon which the court decreed that the judgment rendered on the 9th day of March, 1918, be vacated, set aside and held for naught, and that the original complaint be dismissed. From the decree, an appeal has been prosecuted to this court, and the cause is here for trial de novo.

The evidence responsive to the issues to be determined on appeal is, in substance, as follows: The Adair Furniture Company, a corporation doing a furniture business in Little Rock Arkansas, on the 29th day of February, 1912, signed a subscription contract binding itself to purchase $ 250 worth of real estate from appellant at its probable value on the 1st day of January, 1917, to be fixed by an appraisement committee; that the contract provided for the furniture company to select the property, but, failing to do so, the property might be allotted to it; that, under the terms of the contract, lot 14 aforesaid was allotted to it; that the subscription contract was not listed on the books of the Adair Furniture Company as one of its liabilities and that the lot allotted to it was not carried on the books as an asset; that, in the fall of 1913, appellee, a corporation, purchased the assets and assumed the liabilities of the Adair Furniture Company, according to a list of the assets and liabilities made at the time by J. A. Scroggins, which list was certified and approved by a public accountant, after making a complete audit of the affairs of the Adair Furniture Company; that the statement made by Scroggins and said accountant did not carry or show the lot as an asset or the subscription contract as a liability; that the subscription contract was signed for the Adair Furniture Company by S. C. Nordlinger, its vice president, at the instance of L. A. Adair, its president, but without authority or direction from the board of directors of said corporation; that the subscription contract aforesaid was, on the day of , 1917, presented to appellee for acceptance, but was refused; that appellee also refused to perform said agreement. Sol Wormser, the deputy sheriff who served the summons, testified that he served it upon A. J. Ortmeyer, who was then sitting in the court room, but that, through mistake, he returned it as having been served on H. A. Ortmeyer. He gave his testimony about one year after having served the summons. A. J. Ortmeyer testified that he was a director and manager of the Reliable Furniture Company, appellee herein, at the time the summons was alleged to have been served on him; that the summons was not served on him by the deputy sheriff and that he had no notice whatever of the pendency of the suit until he read in a newspaper that a decree had been entered against appellee; that he had a good defense and would have defended the suit had he known anything about it; that, at the time the summons was alleged to have been served on him, two of his brothers were working for appellee but they had no connection whatever with the company; that their initials were, respectively, H. W. and O. R. In addition to...