Sales-Davis Co. v. Henderson-Boyd Lumber Co.

• Decision Date: 03 June 1915
• Docket Number: 565
• Citation: 193 Ala. 166,69 So. 527
• Parties: SALES-DAVIS CO. v. HENDERSON-BOYD LUMBER CO.
• Court: Alabama Supreme Court

69 So. 527

193 Ala. 166

SALES-DAVIS CO. v. HENDERSON-BOYD LUMBER CO.

No. 565

Supreme Court of Alabama

June 3, 1915

Rehearing Denied June 30, 1915

Appeal from Circuit Court, Coffee County; H.A. Pearce, Judge.

Action by the Sales-Davis Company against the Henderson-Boyd Lumber Company. Demurrer to complaint sustained, and plaintiff appeals. Transferred from the Court of Appeals of Alabama under section 6, Act April 18, 1911 (Gen.Acts 1911, p. 449). Reversed and remanded.

The complaint is for the proportion due by the defendant on a fire insurance policy issued to plaintiff by the Lumbermen's Inter-Insurance Association, executed by Wallace Pratt, Jr., as attorney in fact, and containing the usual stipulations and provisions of an ordinary insurance policy, with the exceptions as indicated in the opinion. It is then alleged that, at the time said policy of insurance was issued by the said Wallace Pratt, Jr., he had full written legal power and authority to issue said insurance policy and deliver same to plaintiff, and thereby bind the defendant, as a member of said Lumbermen's Inter-Insurance Association, to all of the terms, conditions and stipulations in said policy, and that under such authority said Pratt did in fact deliver said policy to plaintiff, and at the time, on, to wit, the 5th day of June 1908, plaintiff and defendant with the other said corporations hereinbefore mentioned, were members of and subscribers of said Lumbermen's Inter-Insurance Association, and as such members and subscribers were and still are bound by all the terms, liabilities, stipulations and requirements contained in said insurance policy, and plaintiff and defendant, with the other corporations, were such members and were so bound on the 21st day of October 1908; that on the said 21st day of October, 1908, all of said property embraced in said insurance policy and insured thereunder was destroyed by fire, and the defendant has had notice of the said fire and the said loss attendant thereon; that under said policy defendant insured plaintiff against loss or injury by fire for the term of one year, commencing on the 14th day of June, 1908, and ending on the 14th day of June, 1909; that at the time said policy was issued to and delivered by said Lumbermen's Inter-Insurance Association to plaintiff, the defendant was a member of and subscriber to said Lumbermen's Inter-Insurance Association, and carried a policy in it, issued in the same way, in the same terms and conditions, and had and received from plaintiff the same agreement on its part to pay to defendant as plaintiff now claims from the defendant on said policy; that plaintiff was a member and subscriber to said mutual agreement between it and the other members and subscribers, including the defendant, of said Lumbermen's Inter-Insurance Association, and was so bound to insure as such member, and did insure as such member, the property of defendant against loss by fire; that South Port, on St. Andrews Bay, Fla., and Anderson, Fla., are one and the same place; that the entire property insured and set out in said policy was wholly destroyed by fire, and defendant's proportionate loss of liability to plaintiff is $1,000; and plaintiff avers that on said 21st day of October, 1908, the day said loss by fire accrued, the liability of defendant for insurance was $1,000, which was the same proportion to the total liability assumed under said policy as the amount of yearly premiums payable by defendant bore to the total amount of premiums in force at the date of said loss, as shown by the books of said Wallace Pratt, Jr., attorney in fact as aforesaid. Wherefore plaintiff sues. The demurrers raised the questions discussed in the opinion.

Espy & Farmer, of Dothan, and W.W. Sanders, of Elba, for appellant.

Riley & Carmichael, or Elba, for appellee.

THOMAS J.

In this case the defendant demurred to the amended complaint. The demurrers were sustained, and, plaintiff declining to plead further, judgment was rendered for defendant. The questions presented are: (1) Does the complaint show that the power of attorney to Wallace Pratt, Jr., was executed by the appellee? (2) Does it appear that the execution of such power was ultra vires? And (3) do the facts alleged show that appellee was liable under policy No. 1278 of the Lumbermen's Inter-Insurance Association, on which the suit is brought?

The complaint recites the formation of the Lumbermen's Inter-Insurance Association, the participation therein of the Henderson-Boyd Lumber Company and of the appellant, and the appointment by each of them of Wallace Pratt, Jr., as its lawful attorney to consummate the intention and purpose of the association, and its participation therein, and sets out the power of attorney so authorizing Pratt to act as such attorney in fact, together with the policy of insurance on which the suit is brought. Whether the power of attorney was executed by the Henderson-Boyd Lumber Company may be shown by parol evidence. Briel v. Exchange Nat. Bank, 172 Ala. 475, 55 So. 808; Drake v. Flewellen, 33 Ala. 106; Lazarus v. Shearer, 2 Ala. 718. The demurrer directed to this phase of the complaint was improperly sustained by the trial court.

The real question presented is whether the purpose of the Lumbermen's Inter-Insurance Association, as shown by the power of attorney and by the contract of insurance sued on, is within the corporate power of the several members of the association, including the appellant and the appellee, each of whom was a corporation operating sawmills and making lumber. It was a mutual association of distinct corporate entities, with the object and purpose of insuring each other against fire loss--all being engaged in the same hazardous business. The complaint sets out in full the power of attorney to Pratt as executed by defendant company, proviso 1 of which reads as follows:

"That no contract shall be made in our behalf which binds us jointly, it being expressly understood and agreed that the liability of each subscriber to the Lumbermen's Inter-Insurance Association shall be several, and not joint, and that the amount of such several liability of each subscriber shall, on each policy, bear the same proportion to the total liability assumed under such policy as the amount of the yearly premium payable by such subscriber bears to the total amount of premiums in force at the date of loss under such policy, as shown by the books of our attorney in fact. Separate accounts are to be kept by said attorney with each subscriber. All accounts are, however, open to the inspection of each and every subscriber."

Of the question of ultra vires we may observe that the tendency of judicial construction is well stated by Cook on Corporations (6th Ed.) pp. 2059-2062, as follows:

"There is no clearly defined principle of law that determines whether the particular act is ultra vires or intra vires. The courts are becoming more liberal, and many acts which 50 years ago could have been held to be ultra vires would now be held to be intra vires. The courts have gradually enlarged the implied powers of ordinary corporations, until such corporations may do almost anything that an individual may do, provided the state and the stockholders and creditors do not object." Curtis Land Co. v. Land Co., 137 Wis. 341, 118 N.W. 853, 129 Am.St.Rep. 1075; Swedish Am. Bk. v. Koebernick, 136 Wis. 473, 117 N.W. 1020, 128 Am.St.Rep. 1090.

It is well established that contracts between two corporations, in order to bind either of them, must be within the powers of both. Central O. & F. Co. v. Capital Dairy Co., 60 Ohio St. 96, 53 N.E. 711, 64 L.R.A. 395; Anglo-American L. Co. v. Lombard, 132 F. 721, 68 C.C.A. 89; L. & R Co. v. Kentucky, 161 U.S. 677, 16 Sup.Ct. 714, 40 L.Ed. 849; Clark & Co. v. Parker & Co., 131 Mich. 139, 91 N.W. 134; 3 Thomp. on Corp. § 2806. Whether the making of the power of attorney in question was ultra vires could be determined only by a...