Vacarezza v. Realty Inv. Co.

CARD, J. Appellant, Steve Vacarezza, sued the Realty Investment Company, a corporation, R. I-I. Wester Company, a firm which is alleged to be composed of R. H. Wester and C. F. Ketter, and said parties individually, for specific performance of a contract to convey to him a lot of land and improvements thereon at Nos. 312-314 on South Concho street in San* Antonio, Bexar county, Tex., and, in the alternative, $5,000 damages, in addition to the recovery of $100 paid as earnest money. R. H. Wester Company, R. H. Wester, and C. F. Ketter answered by general demurrer, general denial, and specially that R. H. Wes-ter Company had the $100, but did not know bow it should be applied, and asked the court to direct its application. They claimed that plaintiff had agreed that same might be applied as rent on the premises. The Realty Investment Company answered by the same attorneys, demurring generally, and entering a general denial. This defendant further made special answer that the contract signed in the name of Realty Investment Company by O. F. Ketter, secretary, was made without authority; that Ketter knew the corporation did not own the property, and that it was not the purpose of this defendant to become personally bound by the contract; that Ketter knew that R. H. Wester Company was acting as the rental agent for said property, and that Realty Investment Company had no interest therein, and that R. H. Wester Company had no interest therein, except as rental agent therefor. It was further alleged that they believed that one J. E. Barnell had power to [517] bind tbe true owner, be claiming to be attorney in fact for tbe true owner, and that it was only intended to bind tbe true owner, tbe corporation acting for tbe purpose of making a commission solely, and that Ketter was not authorized to bind tbe corporation. Tbe answer further sets out that, after tbe contract was made, plaintiff paid the rent to Blanche Roy, who was using and occupying tbe premises, and that, when Ketter found they could not comply with tbe contract of sale, be called upon plaintiff within ten days and told him tbe contract could not be complied with because of tbe condition of tbe title, and offered to return tbe earnest money or to apply it to rents, to which latter application plaintiff made no objection, and be did so apply it and same was credited to Mrs. A. Bonnin, tbe owner, in tbe R. H. Wes-ter Company ledger, but that no part of it was bandied by or credited to Realty Investment Company, and that tbe corporation bad naught to do with the property or tbe earnest money; that thereafter one Candido Miorelli bought the property, and plaintiff attorned to him as tenant, and paid the rent for Blanche Roy. It is alleged that plaintiff knew defendant did not own tbe property, and acquiesced in tbe sale to Miorelli by at-torning to him; and, further, that tbe acts of Ketter in seeking to bind the corporation were without authority and ultra vires, and that Vacarezza bad never pretended to recognize tbe contract as binding on tbe corporation. By reason of all this, estoppel was pleaded. To this answer, by supplemental petition, plaintiff urged a general demurrer and a number of special exceptions, and pleaded that R. H. Wester Company is but another name under which Wester and Ketter do business, as partners, and that tbe acts of tbe Wester Company are binding on Realty Investment Company, and, by trial amendment, alleged that Wester and Ketter owned the stock of Realty Investment Company, except one share, and that they received and retained tbe earnest money, and bad acquiesced in and ratified tbe contract, and that same is binding on tbe corporation whose officers and directors bad not repudiated. The court instructed the jury to find in favor of Vacarezza against R. H. Wester, doing business under the name of R. H. Wester Company, in the sum of $100, with interest at 6 per cent, from October 28, 1911, and in favor of tbe other defendants, which was accordingly done. “Hence this appeal.” Tbe contract dated October 28, 1911, is signed by Vacarezza and Realty Investment Company, by C. F. Ketter, secretary, and provides for the sale of tbe property to Vaca-rezza by tbe Investment Company upon terms specified, abstract to be furnished in ten days, and, on completion of tbe sale, the balance of tbe cash payment to be made and note to be executed for tbe remainder. Appellant gave his check to R. H. Wester Company for tbe $100 earnest money; and Ketter testified be was acting for R. H. Wes-ter Company as agent, and tbe money was passed to tbe credit of Mrs. Bonnin in Wes-ter Company ledger, and be says be signed Realty Investment Company by mistake or ignorance, and that be had no authority so to do. The by-laws of .the corporation show that sales and purchases are only to be made by order of tbe directors, and no such authority was given. Vacarezza says that; “Four years ago, when Mrs. Bonnin went to France, be made a lease to Miss Roy for $52.50, payable to Mr. Albert Bitter, on Commerce street. He got sick; then Miss Blanche Roy told me she was paying Mr. Wester, and Mr. Bitter said to turn all collections over to Mr. Wester, and Mr. Wester has been collecting ever since. I knew Mrs. Bonnin and that she owned the property Miss Roy leased.” “Mr. Ketter signed it for tbe R. H. Wester Company. . Tbe lease is dated March 31, 1911. Blanche Roy signed it, and then I and Mr. Ketter witnessed it. This $52.50 was paid for this property under this lease to R. H. Wester Company up to and for October, 1911. Rent was paid for September and for August and every month up to tbe time tbe property was sold to Miorelli.” He repeatedly says he was dealing with R. H. Wester Company, and says-that Ketter told him at the time, “We own it,” and that he was talking for R. H. Wester Company, the same parties who were collecting the rent. “He knew and I knew that Wester was collecting tbe rent from the property as agent. When I made that paper, I knew be represented R. H. Wester Company.” There are two reasons why the Realty Investment Company cannot be held: [1] 1. Because Vacarezza knew at tbe time that the company did not own the property, and that R. H. Wester Company were acting as agents. [2] 2. Because Ketter was not authorized to bind the corporation in a contract of sale. Article II, section III, of the by-laws of the corporation provide that tbe president shall sign all papers and contracts, deeds, etc., and article IV provides that no purchase or sale of realty shall be consummated without tbe consent of the board of directors. The evidence clearly shows that the consent of the board of directors was never given in this matter. Furthermore, tbe undisputed testimony shows that the contract was really made for tbe benefit and on behalf of R. H. Wester Company, and that Vacarezza thought be was dealing with that company. [3] A corporation, being a creature of tbe law, must act and be bound as tbe law provides. Parties dealing with it are charged with the duty of knowing this. They must know that whatever power tbe agent has is derived from tbe board of directors. Fitzhugh v. Frango-Texas Land Co., 81 Tex. 306, 16 S. W. 1078; Green v. Hugo, 81 Tex. 456, [518] 17 S. W. 79, 26 Am. St. Rep. 824; Franco-Texan Land Co. v. McCormick, 85 Tex. 416, 23 S. W. 123, 34 Am. St. Rep. 815; Tres Palacios Rice & Irrigation Co. v. Eidman, 41 Tex. Civ. App. 542, 93 S. W. 698; Standard Underground Cable Co. v. So. Ind. Telephone Co., 134 S. W. 429; Hermitage Hotel Co. v. Dyer, 125 Tenn. 302, 142 S. W. 1117; Elk Valley Coal Co. v. Thompson, 150 Ky. 614, 150 S. W. 817. We therefore conclude that the trial court was correct in directing a verdict against R. H. Wester Company and denying relief against the Realty Investment Company, and the judgment is affirmed.