Bussing v. Lowell Film Productions, Inc.

Van Kirk, P. J.

An assignee of the Quigley Publishing Company brings this action to recover for advertising. The defendant, “ Lowell Film Productions, Inc.,” was organized to make and produce a moving picture. The advertising was of this picture and its object to sell territory within which to present the picture. Russell, one time president of defendant, executed a contract with defendant which authorized him as agent to sell territory on a commission basis. Russell executed the advertising contract with plaintiff. The question is whether or not Russell had authority to execute that advertising contract on behalf of defendant. In using the word “ plaintiff ” we refer to the Quigley Publishing Company and its assignees. Both parties moved for the direction of a verdict; the court thereupon directed a verdict for the defendant of no cause of action.

The question whether a certain act is within the scope of the servant’s employment is ordinarily one for the jury to determine. (Conant v. American Rubber Tire Co., 48 App. Div. 327, 330; Patterson v. Robinson, 116 N. Y. 193; Mott v. Consumers’ Ice Co., 73 id. 543, 550.) The contract in question was signed “ John L. Russell, Pres., Lowell Film Productions.” The approved manner of executing a contract by an agent is to do so in the name of the principal by his agent. (Sun Printing & Publishing Assn. v. Moore, 183 U. S. 642.) In.the recitals of the contract the first party is the “ Lowell Film Productions.” Though in the form in which the contract is signed, the words “ Pres., Lowell Film Productions ” merely identifies the man, yet, with the name of the party recited in the instrument and this being a contract not under seal (Stanton v. Camp, 4 Barb. 274), it may on its face appear to be the contract of the corporation, and if Russell’s act is within the general powers of the corporation and he has personal charge of the business which the corporation was organized to transact, a prima facie case for the plaintiff is made. His act would be one which the directors could authorize or ratify. (Sun Printing & Publishing Assn. v. Moore, 183 U. S. 642.) If then we assume that the plaintiff made a prima facie case of Russell’s authority to make this contract, still defendant had a right to combat this proof and, if substantial opposing proof is presented by defendant, a question of fact is raised which the court is called upon to decide. (Patterson v. Robinson, supra.)

The general powers of a president of a corporation “ may be limited or restricted by the charter or by-laws of the corporation.” (Oakes v. C. W. Co., 143 N. Y. 430, 436.) Under the by-laws of defendant the powers of Russell as president were restricted; he had not authority to make this contract; such a contract could only be made by the signature of two officers of the company. Also Russell had been removed from his office six days before he executed this contract.

The directors had full authority to remove Russell as president “ at pleasure.” (Stock Corp. Law, § 60.) Officers of corporations are usually elected annually. If there is any presumption that one once an officer continues to be, that presumption disappears when direct substantial proof to the contrary is presented and the question would remain whether the presumed officer had authority to act for the corporation.

It is true that, if the corporation has openly allowed one to act for it and represent it in a particular line of action within the authorized business of the corporation, to the knowledge of a third party who contracts with him, the corporation may be bound. But there is no proof in this case that the plaintiff knew, at the time the contract was made, of any transaction by any one with Russell as president of the corporation. The contract with Russell which gave him authority to sell territory was with Russell the individual, not the president. He did make such selling contracts, but the plaintiff had no knowledge thereof. Not until this action was begun, and at the trial, were any of these contracts brought to the attention of the plaintiff. A short time prior to the making of this selling contract Russell had advertised with plaintiff. For this advertising Russell paid with his personal check drawn upon a bank in which defendant had no account. The defendant never had knowledge of this check, or of this advertising, and evidently the canceled check was never returned to the defendant. Nothing in this transaction could have led the plaintiff to understand that Russell had authority to bind the defendant for printing. The expense of printing was not a debt of the defendant. Advertising is a part of selling; the cost thereof is one of the expenses of selling. Russell’s contract to sell territory did not provide that defendant should pay his expenses; he was to have commissions only. Neither the defendant nor any of its officers knew of this advertising, and, had it come to their knowledge, it would not suggest that any debt was being incurred against the corporation, the officers knowing of the selling contract. It is said that there was an office in New York. If there was such, it was without the knowledge of the defendant or any of its officers and no charge for rentals has ever been made against, or paid by, the defendant. Russell had evidently taken the office for bis personal use in performing his selling contract. No act of the defendant, and nothing done with its knowledge or the knowledge of any of its officers, had come to the attention of the plaintiff which could have suggested that Russell had authority to make the contract on which the action is brought, or to rent an office in New York for the defendant. “ The principal is responsible only for that appearance of authority which is caused by himself, and not for that appearance of conformity to the authority which is caused only by the agent. (Edwards v. Dooley, 120 N. Y. 540, 551.) ” (Conant v. American Rubber Tire Co., supra, 329.) The fact of agency or the extent of his powers may not be established by the representations of the agent. Wakefield Rattan Co. v. Tappen, 80 Hun, 219.)

The time of making the contract casts suspicion on the good faith of the plaintiff. The publications were completed in May, 1924. Demands were made immediately upon Russell for payment and for a settlement of the account. In a few months Russell went to California and thereafter no further demands were made upon him and at no time was any demand made upon the defendant until December, 1929. There was never demand made upon, the defendant for leave to see its books and accounts. When Russell refused to show the books of the company he was not the president and had not the custody or control of them. Beecroft, who had made the demands upon Russell, knew that the offices of the defendant were in Gloversville; he made no demand there, nor did he make any such demand upon any officer of the company. In fact defendant had no suspicion of any claim against it of the character made here. No claim was made against it for more than four years; and some three and a half years passed after any demand was made on Russell.

The publishing company did not sue in its own name, but assigned the claim first to an employee and then to another party. The plaintiff did not produce Russell as a witness to establish what his authority was. Negotiations concerning an advertising contract had been going on, according to the testimony of Beecroft, for a considerable time, but the contract was made six days after Russell had been removed as president, and after Russell had been charged with failing to turn over to defendant moneys due it from him. One might easily infer that the parties then may have decided that a contract would be necessary in order that Russell might avoid his own indebtedness and that the publishers might collect from the corporation.

That Russell continued to sell territory after he was removed as president has no great significance. He had the sole contract to sell territory; this contract was not revoked and what he did thereafter he did solely under this contract.

There is no claim that the company ever in any manner ratified the contract sued upon and, under the evidence in the case and under the authorities above cited, the defendant was not estopped from disputing Russell’s authority to execute the contract and bind the corporation.

The defendant having no knowledge of any dealings by this plaintiff with Russell could not give notice that Russell had been removed. But in any event, in the light of the evidence here presented, this failure to give notice could not affect the question of Russell’s authority to contract for the defendant.

We conclude that the question of fact was presented and that the evidence justified the trial court in finding that Russell had not authority to execute this contract on behalf of the defendant.

The judgment should be affirmed.

All concur, except Hill, J., who dissents with an opinion, in which Whitmyer, J., concurs.