Stammelman v. Interstate Co.

• Decision Date: 17 June 1933
• Docket Number: No. 443.,443.
• Citation: 166 A. 724
• Parties: STAMMELMAN v. INTERSTATE CO.
• Court: New Jersey Supreme Court

166 A. 724

STAMMELMAN

v. INTERSTATE CO.

No. 443.

Supreme Court of New Jersey.

June 17, 1933.

Appeal from District Court, Essex County.

Action by Rose Stammelman against the Interstate Company, a corporation of the state of Delaware. From a judgment in favor of plaintiff, defendant appeals.

Affirmed.

Argued January term, 1933, before TRENCHARD, CASE, and BROGAN, JJ.

Donald Lewis, of Newark (Charles H. Meyer, of New York City, of counsel), for appellant.

Maurice C. Brigadier, of Bayonne, for respondent.

CASE, Justice.

The action is for rent for the months of April and May, 1932. The District Court judge, sitting without a jury, found for the plaintiff, and the defendant appeals. The lease sued upon was in writing, dated November 13, 1928, and was for a term of ten years commencing on the 1st day of January, 1929, and ending on the 31st day of December, 1938. The execution on behalf of the tenant was in the name of the defendant company by E. B. Aymar, as vice president. The seal of Interstate Company was affixed. The defendant entered into possession of the premises on the first day of the term, vacated the same on October 15, 1930, and discontinued the payment of rent March 31, 1932.

The appellant argues that Aymar, vice president, in signing the lease, signed as an agent of the corporation, and that, as the lease exceeded the term of three years and said agent had not been lawfully authorized in writing, the lease, under section 1 of the Statute of Frauds (2 Comp. St. 1910, p. 2610), had the legal effect of a lease at will only.

Plaintiff first denies, unsuccessfully we find, the factual assertion that the authority was not in writing. By the defendant's by-laws the president was given the power to "sign and execute all authorized bonds, contracts or other obligations in the name of the corporation," and the vice president was empowered to perform the duties of the president during the absence or inability of the president. At the time of the execution the president was absent in California, and Aymar was vice president. But the vice president had no power that the president would not have had if present, and the president would not have had the power to sign a lease agreement unless the board of directors had authorized the same. There was consequently a break in the written authority of Aymar to execute.

Plaintiff next asserts that the execution by Aymar was the act of the corporation itself and not that of an agent, and that consequently the authority need not be in writing. The argument is that the acts of officers of a corporation in the execution of an instrument are not acts of agents, but are acts of the corporation acting in chief; and American Soda Fountain Co. v. Stolzenbach, 75 N. J. Law, 721, 68 A. 1078, 16 L. R. A. (N. S.) 703, 127 Am. St. Rep. 822, is cited in support. Before discussing that case, it may be well to glance at the general background of our jurisprudence on the subject.

Mr. Justice Depue, speaking for the Court of Errors and Appeals, in Fifth Ward Savings Bank v. First National Bank, 48 N. J. Law, 513, 7 A. 318, 325, said "The powers of the officers of a corporation over its business and property are strictly the powers of agents,—powers either conferred by the charter, or delegated to them by the directors or managers, in whom, as the representatives of the corporation, the control of its business and property is vested."

In Mausert v. Christian Feigenspan, 68 N. J. Eq. 671, 63 A. 610, 611, 64 A. 801, our late Chief Justice Gummere, also speaking for the Court of Errors and Appeals, said: "The act of the president of a corporation, unless it is shown to pertain to his official duty, or to be within the scope of his employment, cannot be regarded as the act of the corporation, and is not binding upon it. Titus v. Cairo & Fulton Railroad Co., 37 N. J. Law [8 Vroom] 98. His powers over its business and property are strictly the powers of an agent, powers delegated to him by the directors, who are the managers of the corporation, and the persons in whom the control of its business and property is vested." The Court of Errors and Appeals has repeatedly affirmed the principle thus enunciated. Kuebler Foundries v. H. J. Koehler Motors Corp., 100 N. J. Law, 163, 124 A. 781; Aerial League v. Aircraft, etc., Corp., 97 N. J. Law, 530, 117 A. 704; Thomson v. Central Pass. Railway Co., 80 N. J. Law, 328, 78 A. 152.

With the principle thus thoroughly established that the powers of an officer of a corporation are strictly the powers of an agent conferred either in the charter or delegated by the board of directors, the sole authority cited in opposition is the American Soda Fountain Case, supra. We think that the decision does not have the wide application that respondent would give it; specifically we think that it does not purport to hold that an officer of a corporation, in undertaking to bind the corporation by a solemn contract that is not shown to be in the usual course of business, acts otherwise than as an agent who must keep within the scope of his authority. That this application was saved from involvement in the determination quite conclusively appears from the language of the opinion itself, as for instance at page 731 of 75 N. J. Law, 68 A. 1078, 1082: "This whole line of argument [viz., the attempted application of the law of agency] is not only wide of the mark for the reason already stated, but also involves the further and fundamental error of assuming that the issue here arises under the law of principal and agent, and the question is as to the authority of an officer to bind a corporation as by a contract, where the corporation repudiates the act and denies the corporate obligation; whereas the question here is at once a narrower and different one."

In the case at bar the corporation was in the business of operating soda fountains and luncheonettes and selling candies and tobacco. If we assume that the president and, in his absence, the vice president were authorized to manage the defendant's business, we have no proof that the making of long-term leases was within the usual course of business. The plain inference is that it was not.

We conclude that the act of Aymar in executing the lease was that of an agent whose authority to bind his principal was required to be in writing, and that there was no such authority at the time the instrument was executed.

But the respondent further contends that, in any event, the lease was, subsequent to...