Fischer v. Motor Boat Club of America

here to the secretary to sign, seal, or deliver the lease. The general rule is that corporations are bound only by the act and contract of their agents, done and made within the scope of their authority, and that one who deals with them is bound to know their powers and the extent of their authority, express or implied (Alexander v. Cauldwell, 83 N. Y. 480 ; Columbia Bank v. Gospel Tabernacle Church, 127 N. Y. 368 , 28 N. E. 29 ), and the secretary of a corporation has no implied authority to execute and deliver a lease on behalf of his corporation (Karsch v. Pottier & Stymus Mfg., etc., Co., 82 App. Div. 232 , 81 N. Y. Supp. 782 ; Cook on Corporations, 782, 783; Parmelee v. Associated Physicians & Surgeons, 9 Misc. Rep. 458 , 30 N. Y. Supp. 250 ).

The membership corporation law (Laws 1895, p. 336, c. 559, as amended by Laws 1900, p. 438, c. 208), under which defendant was incorporated, provides, in section 13, as follows:

“No purchase, sale, mortgage or lease of real property Shall be made by a membership corporation, unless ordered by the concurring vote of at least two-thirds of the whole number of its directors, provided however that when the whole number of directors is not less than twenty-one, the vote of a majority of the whole number shall be sufficient”

There were nine members of the board of governors of the defendant in office during all this time, so that, to delegate to the secretary the ministerial duty of signing a lease, the concurrent vote of six governors was required. ' There were only five members present at the meeting held August 2, 1907, when the question was considered, and thus from no point of view was proper authority given. As defendant was a membership corporation, with strictly limited powers and sharply defined methods of procedure, any person dealing with it was bound to know of these limitations and methods, and acted at his peril. The restrictions on the powers of the board of governors of a membership corporation must be strictly construed, for the statute imposes upon each director a liability for the debts of a corporation, and before that liability can be fixed the directors are entitled to the protection afforded them by the statute. The plaintiff, however, claims that, in any view, the defendant is bound by the lease for the reason that it ratified and affirmed the act of its secretary in making the same. The rule is laid down by the Court of Appeals as follows:

“Where third parties have dealt with the company relying in good faith upon the existence of corporate authority to do an act, there it is not needed that there be an express assent thereof on the part of the stockholders to work an equitable estoppel upon them. Their conduct may have been such, though negative in character, as to be taken for an acquiescence in the act; and when harm would come to such third parties, if the acts were held invalid, the stockholders are estopped from questioning it. We suppose acquiescence or tacit assent to mean the neglect to promptly and actively condemn the unauthorized act and to seek judicial redress after the knowledge of the committal of it, whereby innocent third parties have been lead to put themselves in a position from which they cannot be taken without loss.” Kent v. Quicksilver Min. Co., 78 N. Y. 159 .

In the case at bar we have the evidence of the three meetings of the defendant and the resolution of the board of governors to accept plaintiff’s terms, and that alterations and improvements were to be made. There are two letters of one of the committee delegated to attend to

the alterations, one letter to the architect, and one to Mr. Gambel, showing that the alterations were going on. There is the letter sent by the plaintiff to defendant that plaintiff had complied with all the requirements of the lease, and had demanded the rent. There is the evidence of the plaintiff that he received a message to get the furniture, and that the plaintiff sent his wagon for the furniture, that the furniture was taken from the defendant’s club house, and taken to the leased premises, and that one or two meetings were held at said premises. There is the evidence of the vice commodore, Dr. Seynour Oppenheimer, “that a meeting of the club was held,” that notices were sent out for this meeting, and there is testimony that business of the defendant was transacted at the meeting. The evidence is as follows:

“Q. AVas there any business transacted there at all? A. At the meeting? Q. Yes. A. Yes, sir. Q. Of the Motor Club? A. Yes, sir.”

Where a party does work or furnishes material toa a corporation, to the-knowledge of its officers, without prompt dissent on the part of the corporation, it will be held to have ratified the contract and be liable thereunder. Cunningham v. Massena Springs, etc., 63 Hun, 439 , 18 N. Y. Supp. 600 ; Lee v. Pittsburgh Coal & Mining Co., 56 How. Prac. 373. The fact that defendant held at least, one meeting at the leased premises, and transacted business of the defendant at their meeting, was evidence tending to show that they took possession, and that there was a ratification (White v. Sheppard, 41 App. Div. 113 , 58 N. Y. Supp. 563 ; Kent v. Mining Co., 78 N. Y. 159 ), making the act of the secretary equivalent to an original authority on the part of such secretary. The testimony tends to show that the acts of the secretary were with the knowledge and assent of the board of' governors and tends to establish a ratification. Globe Gaslight Co. v. Met. Ins. Co., 10 App. Div. 342 , 41 N. Y. Supp. 797 . Although the secretary had no authority, his act will be presumed to have been ratified, unless the corporation dissented within a reasonable time. Indianapolis R. M. Co. v. St. Louis, etc., 120 U. S. 256 , 7 Sup. Ct. 542 , 30 L. Ed. 639 ; Pittsburgh R. R. Co. v. Keokuk Bridge Co., 131 U. S. 371 , 9 Sup. Ct. 770 , 33 L. Ed. 157 . There was sufficient evidence of ratification and change of position to warrant the trial judge in sending the case to the jury, and their finding on the subject is conclusive.

There are no errors of such weight as to call for a reversal, and the judgment should be affirmed, with costs.

Judgment affirmed, with costs.