Nelligan v. Campbell — 47 N.Y. St. Rep. 576

Majority

p. 576

Maurice Nelligan, Resp’t, v. George G. Campbell, App’lt.

(Supreme Court, General Term, Fourth Department,

Filed September 30, 1892.)

Headnote

Principal and agent—Agent bound when he exceeds his authority.

Defendant, president of a corporation, executed an instrument for the-corporation whereby the latter became surety upon a lease given by plaintiff. In an action brought against the corporation to recover the defaulted rent, it appeared that defendant acted without authority, and a non-suit was granted. Plaintiff then brought action against the defendant, personally to recover the rent. Held, that defendant, having as agent exceeded his authority, was personally liable for the defaulted rent.

Appeal from a judgment of the county court of Onondaga county, affirming a judgment rendered in a justice’s court. The complaint in the justice’s court was “for breach of contract, and for rent due in the sum of $200.” The answer contained a denial of the complaint only. On the 12th of August, 1890, the plaintiff executed a lease of his premises 205 and-207 North Salina street, in Syracuse, to Ament & Waldroff, until the 1st day of May, 1891. In the lease it was stipulated “ that the lower floor of said premises shall be used for a saloon and restaurant only; and .that the family of the party of the second part shall occupy the upper floor of said premises, and occupy the same at night.” Subjoined to the lease was an instrument which recited, viz: “In consideration of the letting of the premises above mentioned to the above named Frank B. Ament and Bert Waldroff, and the sum of one dollar to me in hand paid by the party of the first part, the receipt

p. 577

whereof is hereby acknowledged, we, the Syracuse Brewing Company, a body corporate, do hereby covenant and agree to and with the pai’ty of the first part and his lawful representatives, that if any default shall at any time be made by the said Frank B. Ament and Bert Waldroff in the payment of the rent.and performance of the covenants in the foregoing lease, during said term, on their part to be paid and performed, we will well and truly pay the said rent or any part thereof, or any arrears thereof that remain due unto the said party of the first part, with tho agreement and understanding of all the parties hereto, that if said Frank B. Ament and Bert Waldroff or his assigns shall make default in the payment of any of the rents in said, lease mentioned, we shall have written notice of such default, within thirty days from the time it is made, and in consideration of said guarantee of payment, the said Frank B. Ament and Bert Waldroff hereby consents that we shall have the assignment of this lease as a collateral security for our guarantee of payment as aforesaid.

“ In witness whereof, we have hereunto set our hands and seals, this 18th day of August, 1890. .

“Syracuse Brewing Company. [l. s.]

“ By Geo. G. Campbell, President.”

Proof was given upon the trial of the service of two copies of the notice of default in the payment of the rent and demanding from the defendánt payment thereof, and that a personal demand was made of the tenants and of the defendant before the commencement of the action, and that “ There was due and unpaid on November rent, $48.00; on December rent, $83.33; on January, $83.33; no part of this has been paid to me.” Before the justice’s court the plaintiff remitted $14.66 and demanded a judgment only for $200, which was rendered in favor of the plaintiff. Prior actions were brought against the brewing company resulting in non-suits. In the trial of those actions the defendant was sworn as a witness and denied his authority to execute the guarantee of payment already referred to; he testified “ I was induced to think I had authority to sign by conversations had by some of the directors; I had no authority by any resolution of the defendant’s board of directors; I talked the matter over and they did not tell me to sign or not to sign it; directors of the company did not tell me to sign this guarantee or to make this affidavit; there was never any resolu- ' tians passed by the board of directors of the defendant which authorized me to sign guarantee or affidavit”

Waters, McLennan & Waters, for app’lt; Charles G. Baldwin, for resp’t.

—If the action is to be regarded as one founded upon an • implied guarantee on the part of the defendant to execute the contract, or an action for rent due, we think, with the laxity allowed in justice court in respect to the pleadings,, the complaint must be deemed sufficient.

p. 578

We think Bartholomae et al. v. Kauffmann, 47 Supr. Ct., 553, sustains the plaintiff’s right of recovery. That was an action to recover the rent covenanted to be paid by a certain lease between the plaintiffs as lessors and “ the trustees of the German American Institute ” as lessees, and signed and sealed by the defendant “ for the board of trustees, by S. Kauffmann, treasurer.”

On the trial it appeared that the organization was a mere voluntary association and that Kauffmann had “ no authority to bind his associates;’’ a verdict was rendered against the defendant Kauffmann, and it was said by the general term : li That the defendant Kauffmann having executed the lease as treasurer, without authority from the other defendants as patrons of the •school, some of whose children had attended it, and there being no trustees in fact, and only a mere voluntary association, by such execution of the lease he became liable.” The case was taken -to the court of appeals, and was affirmed, as appears in 91 N. Y., 654 . An abstract of the opinion delivered in the court of appeals by Danforth, J., appears in 16 W. Dig., 127, and it was held “ that K was not screened by the epithets used, and, when they were shown to be shams, he remained the contracting party, and, as such, personally liable for the obligation expressed in the lease; that is, he impliedly, if not expressly, undertook that the authority he professed to have did, in fact, exist, and as it did not, • he was also liable on that ground. Leake on Contracts, 511.” (The case was decided in January, 1883.)

In Simmonds v. Moses, 2 Eastern Rep., 299, decided by the court of appeals October, 1885, it was held: “ A contract made by an agent in excess of his authority from his principal binds the agent personally; and that is so, notwithstanding the agent acts in good faith, supposing that he is within the terms of the instructions received from his principal.” In that case it was said: “ The plaintiffs have no cause of action against the principals, for the order they executed was not their order. Hence, it was given by the defendants in excess of authority, and there seems no reason why they should not make good all damages which the plaintiffs •sustained in consequence of their belief that the authority assumed did in fact exist Baltzen v. Nicolay, 53 N. Y., 467 .” In that case the contract was in writing, “ And was, moreover, sufficient in form to satisfy the statute of frauds. The defendants are held liable because they had no authority to make it, and hence, though sufficient in form, it cannot be enforced against the apparent principals.”

Ho question was raised in the court below that the agreement, if executed by the Brewing Company, would not have been valid. Ho evidence was given upon the trial from which we can infer or assume that the contract was illegal or ultra vires.

In Whitney Arms Co. v. Barlow, 63 N. Y., 63 , it was held that “ The plea of ultra vires as a general rule will not prevail, whether 'interposed for or against a corporation, when it will not advance justice, but on the contrary will accomplish a legal wrong. ” Rider Life Raft Co. v. Roach, 97 N. Y., 378 . We think it was found

p. 579

as a matter of fact in the justice court that the defendant impliedly warranted that he had authority to execute the guarantee, whereas in fact, as the evidence revealed, he had no such authority; and that the evidence justified the judgment given to the plaintiff by the justice court, and was properly affirmed by the county court. Burnham v. Butler et al., 31 N. Y., 480 .

Judgment of the county court of Onondaga county and that of the justice’s court affirmed, with costs.

Martin and Merwin, JJ., concur.