Ney v. Eastern Iowa Telephone Co.
| Decision Date | 13 December 1913 |
| Parties | JOHN J. NEY, Appellee, v. THE EASTERN IOWA TELEPHONE COMPANY, Appellant |
| Court | Iowa Supreme Court |
Appeal from Johnson District Court.--HON. R. P. HOWELL, Judge.
ACTION to recover attorney's fees for services rendered defendant as a corporation, at the question and instance of its president, without any showing on the part of the plaintiff of authority from the corporation to employ him, or any fact from which such authority might be inferred.
Reversed.
F. B Kimball and Remley & Calkins, for appellant.
Ney & Bradley and C. S. Ranck, for appellee.
The plaintiff is an attorney at law. Defendant is a corporation organized under the laws of this state, and this action is brought to recover the reasonable value of services claimed to have been rendered by the plaintiff, to the defendant, under an oral contract of employment made by the plaintiff with the president of the defendant company. The action is in two counts. In the first count the plaintiff claims that he was orally employed by one J. H. Rohret, president of the defendant company, to take charge of a certain case and defend the corporation company in a suit brought by one O. W. Eddy against the company, in which plaintiff claims he rendered certain services, for the defendant company, to the actual value of $ 30. In the second count, the plaintiff claims that he was orally retained and employed by one J. H. Rohret, president of the defendant company, to bring a suit for and in behalf of the company, against one Fred Crow; that he appeared and conducted said suit to a final issue in the district court, for which he claims the sum of $ 1,000. The defendant company, answering plaintiff's petition, enters a general denial, and specially denies that it employed the plaintiff to perform any services for it; denies that it employed the plaintiff, through its president or any one else; that whatever employment the plaintiff had, in respect to the matters, was made by Rohret individually, and not for and in behalf of the company; that the said Rohret was never authorized or empowered to employ plaintiff, or to bind defendant corporation and its stockholders by any such contract as plaintiff avers. Defendant further alleges that, at the instance and by the procurement of Rohret individually, the plaintiff, not as attorney for the defendant, but to further the wishes and desires of a certain faction of the stockholders, who were in the minority both in numbers and shares of capital stock owned, brought said suits, improperly and unauthorizedly, in the name of said company, against one of its principal stockholders, to wit, Fred H. Crow, and therein asked recovery against him in the amount of $ 50,000, which claim was in excess and out of keeping with moneys held or dealt with by the said Crow, and that said litigation was not brought or maintained in good faith, nor by the wish of the majority of the stockholders, nor for their best interest, nor by proper direction; that said suits were not brought in the interest of the company, nor for its benefit, and Rohret in instituting said suit had no reasonable grounds for believing that said Crow was indebted to the company, or held any money or property belonging to the company; that said suit was brought for the sole purpose of embarrassing the said Crow financially, and that the said Rohret alone is liable for any services rendered by this plaintiff. The plaintiff, for reply to defendant's answer, says that the said J. H. Rohret had express and implied authority to employ the plaintiff as alleged in his petition, and that the plaintiff so believed at the time he entered into the employment, and rendered the services; that while engaged in the performance of his duties, as attorney aforesaid, the manager, R. K. Luse, all the officers of said corporation, all its directors and stockholders, then being engaged in the trial of the case of the State of Iowa ex rel. Newkirk et al. v. Rohret et al., entered into a settlement of said case, one provision of which was that the plaintiff should be continued, and that the prosecution of the case of the defendant against Fred H. Crow, then pending, in which the plaintiff was sole attorney, should be continued and carried on, without hindrance, to a determination thereof; that the plaintiff thereafter prosecuted said case to a determination in the district court, and appealed from the decision in said court, and the defendant herein dismissed said appeal, against the will of this plaintiff, and thereby prevented plaintiff from further prosecuting said case as attorney; that by said act and stipulation, and subsequent dismissal, the defendant is estopped from denying the employment of plaintiff for his services so rendered, and the plaintiff denies all other matters set out by defendant in its answer. Upon the issues thus tendered, the court instructed the jury that the only question for their consideration was the amount which plaintiff was entitled to recover for services rendered in the case entitled Eastern Iowa Telephone Company v. Fred H. Crow, and withdrew from the consideration of the jury all questions of his employment by the defendant, and all other issues tendered in the pleading, and thereupon the jury returned a verdict for the plaintiff, and, judgment being entered on this verdict, defendant appeals.
In view of the fact that the court practically instructed the jury in favor of the plaintiff, upon the issue tendered as to his employment by the defendant, and left to the consideration of the jury only the question of the amount of compensation plaintiff was entitled to for the services rendered, we must not overlook the rule, which has been established by a long line of decisions in this court, that, before the court is warranted in directing a verdict upon any issue tendered, every fact favorable to the party against whom the verdict is asked, and which the evidence tended to prove, must be conceded as established. See Degelau v. Wight, 114 Iowa 52, 86 N.W. 36; Hartman v. C. G. W. Ry Co., 132 Iowa 582, 110 N.W. 10; Scott v. St. Louis, K. & M. Ry. Co., 112 Iowa 54, 83 N.W. 818.
The first question presented for our consideration is whether or not the president of a corporation, as such, has authority, by virtue of his office, to bind the corporation and its stockholders by contracts made in its name, where no authority is shown to be invested in him to do so, except that which arises from the fact of his office. This would depend upon whether or not, as a matter of law, the word "president," or the fact that he is president, necessarily denotes the existence of the relation of agency between the corporation and the president.
Cook on Corporations, in volume 2, 5th Edition, section 712, discussing this question, says:
The board of directors have the widest powers. All the various acts and contracts which a corporation may enter into are entered into by and through the board of directors. The board of directors make, or authorize the making, . . . of contracts generally of the corporation. They appoint the agents, direct the business, and govern the policy and plans of the corporation. The board of directors elect the officers, and in this connection, it may be added, that at common law there is no limit to the number of offices which may be held simultaneously by the same person, provided that neither of them is incompatible with any other. They institute, prosecute, and compromise, or appeal suits at law and in equity which the corporation brings, or has brought against it.
The office, in itself, confers no power to bind the corporation, or control its property. The president's power, as agent, must be sought in the organic law of the corporation, in a delegation of authority from it directly, or through its board of directors, formally expressed or implied from the habit or custom of doing business. Supporting this, see Morawetz on Private Corporations, section 537; 10 Cyc. 930. Also Crump v. U.S. Mining Co., 7 Gratt. 352 (56 Am. Dec. 116).
In St. Clair v. Rutledge, 115 Wis. 583 (92 N.W. 234, 95 Am. St. Rep. 964), we find this language:
Was the act of the president of the Peerless Iron & Land Company, in attempting to extend respondent's privilege to cut and remove the timber, ultra vires? That is the sole question for decision. It is useless to spend time endeavoring to test the matter by the law respecting what a president of a corporation cannot do by virtue of his office; that it gives him no right to make contracts binding on his company; that authority to that end in fact can only be conferred upon him by the articles of organization or some by-law or resolution passed by the board of directors, and that all persons dealing with a corporation are bound to take notice of the limitation upon his authority and notice of its articles of organization and by-laws. If the evidence warranted the finding, as stated in this case, that the president is held out by the corporation as its general agent, and as having authority to do the act questioned, it is bound thereby to the same extent as if authority were conferred in the most formal manner.
In this opinion the court further says:
That an artificial person is estopped from denying that its agents possess all the authority which it gives them the appearance of, the same as natural persons, is just as well established as the principle that the president of a corporation is not, ex officio, its general agent, or possessed of authority to make contracts binding upon it.
It is also a rule governing corporations that the members of the board cannot agree separately, and...
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Ney v. E. Iowa Tel. Co.
... 162 Iowa 525 144 N.W. 383 NEY v. EASTERN IOWA TELEPHONE CO. Supreme Court of Iowa. Dec. 13, 1913 ... Appeal from District Court, Johnson County; R. P. Howell, Judge. Action to recover ... ...