p. 602Michael Filon et al., Pl’ffs, v. The Miller Brewing Co., Impl’d, Def't.(Supreme Court, General Term, Fifth Department,Headnote
Corporations—Ultra vires—Cannot become surety on lease to anOTHER.At the request of one Harris, the secretary of defendant executed with him, in the name of defendant, a lease to said Harris. No general authority in the secretary to do so was shown, but it was shown that he obtained the individual consents of a majority of the trustees to his execution of a guaranty of a lease to Harris. Held, that this conferred no authority on him to sign the lease; that neither the individual members of the board nor the board of trustees itself could confer such authority, as it had not the authority itself, as the contract was ultra vires, and' that the fact that Harris agreed to buy his beer of the company if it would guarantee his lease, did not bring the contract within the scope of the corporate powers.
Motion by the plaintiffs for a new trial on a case and exceptions ordered heard in the first instance at general term, after verdict for the defendants directed by the court, at the Monroe circuit, March, 1890.
C. C. Davy, for the motion; D. Hays, opposed.
The action was on a lease alleged to have been executed by the defendant corporation as lessee, with one John F. Harris, who was impleaded as defendant, but suffered default. The plaintiffs were the owners of the property described in the lease, which was a restaurant and summer hotel on Irondequoit Bay. The defendant, the Miller Brewing Company, was a corporation organized under the general manufacturing companies act, for the purpose of the manufacture and sale of beer and malt. The defendant Harris applied to the plaintiffs to rent the premises above described ; they refused to lease to him without security, and he procured the secretary of the defendant first to sign a guaranty, and afterwards, upon the plaintiffs’ refusal to accept that security, to execute a lease with him, in the name of the corporation. The signing being without the corporate seal, no presumption of authority in the secretary existed in favor of the plaintiffs. Peoples' Bank v. St. Anthony's Church, 109 N. Y., 512 ; 16 N.Y. State Rep., 856; and no evidence was given tending to show any general authority in that officer to execute any contract in behalf of the defendant; on the contrary it was shown that the duties of the secretary as prescribed by the by laws excluded any such authority. There was an attempt to show special authority in this case, by evidence to the effect that the secretary saw several of the trustees of the company (a majority, including himself) and obtained their individual consent to his executing a guaranty of Harris’ lease. But this evidently constituted no authority to execute the lease itself, even if it had been sufficient to authorize him to sign the guaranty. But it was not sufficient for the latter purpose.
■ In the first place such an authority could be created only by the action of the board of trustees, and such action could be taken only by the board in its collective capacity, when convened as
p. 603such, and not by the assent of individual members,
Bank v.
St. Anthony's Church, supra, 521-522 , and in the second place the board of trustees could not have conferred such authority upon its secretary, because it had not the authority in itself as a board. It was
ultra vires. The contract as executed by the secretary, was that of an accommodation surety, for Harris’ rent. It was not within the scope of the business for which the defendant was organized, and the plaintiffs were chargeable with knowledge of the limitation of the defendant’s powers.
Nat. Park Bank v.
G. A. M. W. & S. Co., 116 N. Y., 281 ; 26 N. Y. State Rep., 675;
Jemison v.
Cit. Sav. Bk., 122 N. Y., 135 ; 33 N. Y. State Rep., 335. The fact, which the testimony of Harris tended to show, that he agreed with the secretary to buy his beer of the company if it would guarantee his lease, was not material. Such a consideration did not bring the contract within the scope of the corporate powers. The defendant was not to derive any benefit from the lease; it was to have no use or occupation of the premises demised, and the fact that it was to have in the tenant a customer for its beer, gave to it no more interest in the lease than if it was to receive a money consideration for becoming surety for his rent. Whether an act is within corporate powers depends upon the character of the act itself, and not upon the consideration for which it is performed.
There were abundant reasons upon all or either of the grounds refered to why this action could not be maintained. The direction of a verdict for the defendant was, therefore, properly given and the motion for a new trial must be denied.
Motion fora new trial denied, with costs, and judgment ordered for the defendant on the verdict.
Macomber, J. concurs.