Moore v. W O O W, Inc., 32

• Citation: 253 N.C. 1,116 S.E.2d 186
• Decision Date: 21 September 1960
• Docket Number: No. 32,32
• Court: United States State Supreme Court of North Carolina
• Parties: William W. MOORE v. W O O W, INC.

Page 186

116 S.E.2d 186

253 N.C. 1

William W. MOORE v. W O O W, INC.

No. 32

Supreme Court of North Carolina.

Sept. 21, 1960

Wilkinson & Ward, Washington, for plaintiff, appellee.

S. M. Blount and Rodman & Rodman, Washington, for defendant, appellant.

PARKER, Justice.

Defendant has filed with his brief a demurrer in the Supreme Court in which it avers that the complaint fails to state a cause of action, in that 'the complaint fails to allege that Walter Stiles was the agent, real or apparent, of the defendant corporation, or that he was acting within the course and scope of his authority.'

The allegations in the complaint in respect to the sufficiency of the complaint as challenged by the demurrer are in substance: In February 1958 Walter Stiles, vice president, a promoter, and an incorporator of defendant corporation, discussed with plaintiff the possibility of purchasing from him certain equipment owned by him and used at the time by Pamlico Broadeasting Company, Inc. Plaintiff made a list of the equipment owned by him, and indicated a willingness to sell it for $3,000. Walter Stiles, acting in his capacity as vice president, a promoter, and incorporator of defendant corporation indicated that the price was agreeable, and said if the incorporators of defendant were successful in their efforts to operate a radio station, the corporation would like to hire plaintiff as its general manager. Defendant corporation commenced business about 13 April 1958, and hired plaintiff as its general manager. A few days thereafter Walter Stiles acting as vice president of defendant told plaintiff the price of $3,000 for the equipment was satisfactory.

A few days subsequent to 13 April 1958, Walter Stiles acting in his capacity as vice president of defendant told plaintiff the defendant corporation desired to purchase certain equipment from plaintiff--a list of which is attached--and that the price of $3,000 was satisfactory to defendant.

In August 1958 plaintiff inquired of Walter Stiles when the defendant would be ready to purchase the equipment. A short time before this he had asked Walter Stiles when payment would be made, and Stiles said defendant corporation was not then able to set a definite date, that the financial position of defendant was such it could not pay $3,000 in cash. Plaintiff then prepared an inventory. Walter Stiles acting in his official capacity as an officer and incorporator of defendant examined the inventory, and said defendant had no use for the tape recorder. Plaintiff agreed to remove the tape recorder, and in order to reach a binding agreement reduced the price to $2,500. When plaintiff made this reduction, Walter Stiles acting in his capacity as officer, director, and incorporator of defendant and in furtherance of its purposes told plaintiff the defendant would pay $2,500, but did not name a definite time, saying it would be within two or three days.

About 6 September 1958, as nothing had been done to consummate the tentative agreement, plaintiff told Stiles that it would be necessary for the corporation to make immediate arrangements to pay all or a part of the $2,500. Thereupon the defendant through its officer and agent Stiles caused the following memorandum to be prepared, which is attached to the complaint as Exhibit B and made a part thereof:

'Agreement

'September 6, 1958.

'William W. Moore has offered for sale to W O O W, Inc., certain pieces of equipment and program material, all of which are owned solely by him, in consideration of $2,500. A listing of said equipment and program material is included herewith.

'Pending the preparation and signing of a mutually agreeable sales contract covering the above, by William W. Moore and John P. Gallagher, President of W O O W, Inc., Five Hundred Dollars ($500), receipt of which is hereby acknowledged, is being advanced to William W. Moore, by W O O W Inc., (W O O W, Inc., check # ch. 220, dated 9/8/58). Accepted:

'W O O W, Inc.

(s) Walter Stiles

By: Walter Stiles, V. P.

'Witness___(s) Wm. W. Moore William W. Moore Date: 9-8-58.'

During the months of September and October thereafter plaintiff repeatedly reminded defendant that the remaining $2,000 on the price of the equipment was due and unpaid, and on each occasion he was put off though all the equipment listed in the written agreement of 6 September 1958 was being used daily by the defendant corporation for its purposes and benefit. In October Stiles told plaintiff that defendant corporation was attempting to move to Greenville, North Carolina, that pending action on its application by the Federal Communications Commission, payment could not be made, but immediately after such application had been acted upon, which would be in a few days, the defendant would pay immediately.

Defendant corporation has never paid plaintiff any part of the $2,000, although the defendant has continued to retain possession of the equipment listed in the agreement of 6 September 1958, and has continued to use the same for its purposes. There was a valid sale of this equipment to plaintiff by defendant for a price stated and agreed.

There is this averment in the complaint, 'there was a valid sale of the same (relating to the articles listed in Annex A attached to the complaint) by plaintiff to defendant for a price stated and agreed.' Considering the character of defendant's business as alleged in the complaint, it was unquestionably in the power of defendant corporation to give authority to its own officers to purchase this equipment listed in Annex A to the complaint which the nature of defendant's business required in its operation. A corporation must necessarily act and contract through its officers or agents. 13 Am.Jur., Corporations, p. 852.

There is this fundamental and well settled rule of law that when, in the usual course of the corporate business, an officer or other agent is held out by the corporation or has been permitted to act for it or manage its affairs in such a way as to justify third persons dealing with such officer or agent in good faith in inferring or assuming that he is doing an act or making a contract within the scope of his authority, and who deals with him in good faith in reliance on such authority, the corporation is bound thereby, even though such officer or agent has not the actual authority from the corporation to make such a contract. This authority is known as apparent or ostensible authority. Bank of Morganton v. Hay, 143 N.C. 326, 55 S.E. 811, quoted with approval in Charleston & W. C. R. R. Co. v. Robert G. Lassiter & Co., 207 N.C 408, 177 S.E.9; 13 Am.Jur., Corporations, § 890, where cases from many jurisdictions are cited; 19 C.J.S. Corporations § 996.

It would seem that this apparent authority rule is closely related to, and is based upon the same principle as authority by estoppel. Fletcher, Cyclopedia Corporations, Per. Ed., Vol. 2, § 449. This is said in 13 Am.Jur., Corporations, p. 871: 'A corporation which, by its voluntary act, places an officer or agent in such a position or situation that persons of ordinary prudence, conversant with business usages and the nature of the particular business, are justified in assuming that he has authority to perform the act in question and deal with him upon that assumption is estopped as against such persons from denying the officer's or agent's authority.' See also Barrow v. Barrow, 220 N.C. 70, 16 S.E.2d 460; 2 Am.Jur., Agency, § 104--Estoppel of Principal to Deny Authority.

Annex A and Exhibit B are attached to the complaint and made parts thereof, therefore, they can be considered on the demurrer. 71 C.J.S. Pleading § 257; 41 Am.Jur., Pleading, § 246.

A demurrer admits the truth of factual averments well stated and such relevant inferences as may be deduced therefrom, but it does not admit any legal inferences or conclusions of law asserted by the pleader. In considering a demurrer we are required to construe the pleading challenged liberally with a view to substantial justice between the parties, and to make every reasonable intendment in favor of the pleader. N.C.G.S. § 1-151; Hedrick v. Graham, 245 N.C. 249, 96 S.E.2d 129.

The function of a complaint is to state in a plain and concise manner the material, essential or ultimate facts which constitute the cause of action, but not the evidence to prove them. N.C.G.S. § 1-122, subd.2; Parker v. White, 237 N.C. 607, 75 S.E.2d 615. It is not necessary to plead the law. The law arises upon the facts alleged, and the court is presumed to know the law. Jones v. Home Bldg. & Loan Association, 252 N.C. 626, 114 S.E.2d 638; McIntosh, N.C. Practice and Procedure, 2d Ed., p. 528.

The complaint alleges there was a valid sale of the equipment listed in Annex A, which is attached to the complaint and made a part thereof, by plaintiff to defendant corporation for a price stated and agreed. While the written agreement marked Exhibit B attached to the complaint and made a...