Lockwood v. Title Insurance

Plaintiffs were the owners of adjoining parcels of land situate in the city of Buffalo and title to which was acquired by the grade crossing commission in condemnation proceedings. One of these parcels was unincumbered; the other was incumbered by two mortgages which in the aggregate amounted to much more than the value of the land and for the payment of which mortgages the plaintiffs were not personally responsible. The defendant, which makes abstracts of title and has its principal place of business in New York city, furnished the abstract of title for the commission for use in said condemnation proceedings and it erroneously certified

After this had taken place a purported agreement was made between the plaintiffs and defendant acting through one Clinton to the effect that if plaintiffs would refrain from suing the defendant and would allow it in their names to institute any proceedings which might be deemed proper for the purpose of correcting the award and for the purpose of securing the moneys which should have been paid to plaintiffs, the defendant would pay to to plaintiffs the damages which they had suffered as a result of the error in the search. Although this supposed agreement was carried out by the plaintiffs, they refraining from bringing suit against defendant and permitting Mr. Clinton to institute proceedings for the purpose of correcting the error which had been made, when these latter proceedings failed the defendant repudiated liability on the agreement made in its behalf by Mr. Clinton and the sole question presented upon this appeal is the one whether the latter did have real or apparent authority to bind it by the agreement which he attempted to make. There is no question that he acted in, good faith and in the supposition that he had power to make the contract, and the repudiation by the defendant of his authority seems to be due simply to its desire to avoid liability for its error.

We are forced to the conclusion that he did not have, such authority. It is necessary in the determination- of this question first to consider the relations between the defendant and a corporation organized as the New York and Buffalo Title Company, for it is claimed in behalf of the plaintiffs that this relationship is of some importance in determining the authority of Mr. Clinton. It seems

But it is urged that the defendant in effect permitted Mr. Clinton to hold himself out in making this contract as one of its vice-presidents and managers and that as such officer he could bind it by the attempted contract.

It is a fact that Mr. Clinton in his negotiations with plaintiffs did describe himself as vice-president at various times. But he was not a vice-president of the defendant and the evidence indicates that plaintiffs through their representatives were advised of this fact rather than misled into thinking that he was such an officer of the

There is one other aspect of the evidence which may be briefly considered. On the title search was printed a list of a “ Board of Managers” which included Mr. Clinton. As a matter of fact these men were managers of the Buffalo corporation and not of the defendant, but it is possible that a jury would have been permitted to say that this list was printed in such form upon defendant’s search that persons like plaintiffs would have been justified in reading it as a list of the managers of the defendant. Undoubtedly that would have been a -question of fact for a jury and not one to be disposed of by the court by a directed verdict. But even assuming that plaintiffs would have been authorized by defendant’s conduct to assume that Mr. Clinton was one of a board of several managers, the question would remain whether plaintiffs in the absence of actual authority, which is not shown, would have been entitled to assume that such a manager had power to make such a contract as this where no apparent authority so to do had been conferred upon him by the corporation by a course of dealings. We think this question clearly must be answered in the negative. We do not think that any case can be found holding that a mere director of a corporation in the absence of actual or apparent authority is authorized to go forth and make unusual contracts, such as this one was, binding the corporation of which he is an officer.

As has been said, the verdict in this case was directed,

The judgment should, therefore, be reversed and a new trial granted,, with costs to abide the event.

Collin, Cardozo, McLaughlin, Crane and Andrews, JJ., concur; Pound, J:, not sitting.

Judgment reversed, etc.