O'Grady v. Howe & Rogers Co.

Robson, J.: The action is by a vendor to obtain specific performance of a contract to convey real estate. Leaving out of view for the moment the alleged liability of the defendant Howe & Rogers Company as a vendee, there is no question that a valid contract in writing for the sale and purchase of real estate was established between the plaintiff as vendor and defendant Thoms as vendee. The completed contract is made by two papers. The first is in terms between plaintiff as party of the first part, and Thoms as party of the second party thereto. It was executed in duplicate, one of which duplicates was retained by the plaintiff and the other delivered to Thoms. They differ only in the fact that plaintiff’s copy does not bear an executed certificate of acknowledgment. The effect of this agreement was to give to Thoms an option to purchase the premises described therein on the terms and in the manner therein specified, “provided,” as the contract, states, “the said party of the second part shall accept the terms of this contract within sixty (60) days from the date hereof, said party of the first part tó furnish a full and complete transcript or abstract of title certified to by the County Clerk, also to pay C. M. Thoms, two and one-half (2%) per cent commission, which he is authorized to deduct from the amount of said purchase price.” The option agreement bears date January 11, 1913, and under date of February 17, 1913, Thoms in writing, signed by him, delivered to plaintiff an acceptance of the option, and on the same date, as stated in the acceptance, paid to the former $1,000 to apply on the purchase price. Contemporaneously therewith plaintiff gave Thoms a. receipt in due form acknowledging the receipt of the acceptance of the option and of the $1,000 to apply on the purchase price. It appears that of this sum of $1,000 plaintiff actually received but $250 in cash, the remaining sum being retained by Thoms under the provisions of the agreement above referred to as his allowance on the purchase price, provided he should accept the option. Plaintiff alleges in his complaint, and the court has found that he established on the trial, that while the purchase agreement was made in the name-of Thoms, he was in fact acting therein as agent for the defendant Howe & Rogers Company. [554] The first objection raised by appellant Howe & Rogers Company is pointed to the initial proposition that the contract is under seal, and that, therefore, even though Thoms was in fact acting as the agent of Howe & Rogers Company, under the established law announced in many decisions no person, save the parties named in the contract and who actually signed it, can sue or be sued thereon. This statement of the law is unimpeachable, and was reasserted in the recent case entitled Case v. Case (203 N. Y. 263). But it seems to me that the contract which plaintiff seeks to enforce in this action is not under seal. True, the preliminary option agreement is under seal. But that agreement standing by itself gave neither party a right to enforce it as a contract to sell the land. No obligation to accept the option rested on Thoms. Something more must be done by him before any contract of sale came into being. That was an acceptance of the option by Thoms within the period of the option. This he did by the written acceptance above adverted to; but this acceptance was not under seal. It would seem to follow that the rule of law above stated cannot apply to prevent proof of the fact for whom Thoms was acting in accepting the option. It is the acceptance, and not the sealed option, that must be considered in determining whether Thoms’s agreement to purchase was a contract under seal. But it is claimed by appellant Howe & Rogers Company that the proof was not sufficient to warrant- the finding that Thoms in making the contract was acting as agent for the former. It is quite true that the proof was perhaps insufficient to warrant the finding of an original employment of him by the company to act as its agent to make the purchase. But the evidence is ample to sustain the finding that his acts as its agent in making the purchase were subsequently ratified by the company. In order to understand the transactions out of which the matters now in controversy arose it is advisable to refer to the circumstances preceding the making of the contract. Howe & Rogers Company apparently contemplated the purchase of premises on the southwest corner of Clinton avenue south and a street entering Clinton avenue from the west known as Johnson park and the subsequent erection of a building thereon. At [555] a special meeting of the directors of the company, held February 6, 1913, certain resolutions were adopted by which two of their number, Howe and Connors, were authorized to negotiate for the purchase of certain premises which are designated in the resolution. These properties abutted either on Clinton avenue or Johnson park, or both. Plaintiff’s premises are not, however, designated in the resolution; but they lie directly west of and adjoining the tract made up of the designated properties and extend west to Stone street, which is a street running north and south parallel with Clinton avenue. If all of the properties above referred to were purchased by the Howe & Rogers Company, it would then own land extending from Clinton avenue on the east to Stone street on the west. This purchase seems at least to have been at that time contemplated by Connors, who was the secretary and treasurer of the defendant company. All the negotiations between Thoms and the defendant company with reference to the purchase of plaintiff’s land were had by Connors. But both Thoms and Connors understood that Thoms in procuring and in accepting the option to purchase the land was acting for the company. Connors directed Thoms to accept the option and gave Thoms the check of the defendant Howe & Rogers Company for $1,000, with which the latter made the payment on the purchase price at the time he accepted the option. Howe, the vice-president of the defendant company, was consulted by Connors and was kept apprised of what had been done. The payment of the $1,000 upon the purchase price of the premises was duly entered in the books of account of the company and down to the time of the trial the account was carried on its books as an account relating to these premises. Rogers, the company’s president, was absent from the State at the time the contract was made; but he seems to have been advised of what had. been done on his return as early as the May following. The proposed deed from plaintiff and the required abstracts of title were delivered by plaintiff to Thoms, who immediately delivered them to Connors. Thence they passed into the hands of the company’s attorney apparently for examination, and the attorneys for this defendant produced them on the trial. No definite attempt seems to have been made either to return the papers before [556] or after the action was brought, or distinctly to disavow the company’s liability as principal in the contract till after action on the contract was begun. I think under all the circumstances a ratification of Connors’ acts, even if he was not originally authorized to bind the company in employing Thoms as an agent to buy the property in question for it, was well warranted by the evidence. That a corporation may ratify acts not previously authorized by it of one assuming to act as its agent cannot be doubted. As was said in Hoyt v. Thompson's Executor (19 N. Y. 207, 218): “A corporation may, like an individual, ratify the acts of its agents done in excess of their authority, and such ratification may, in many cases, be inferred from an informal acquiescence in and approval of those acts.” It should also be noted that neither the company’s president, Rogers, nor its vice-president, Howe, was produced as a witness to deny or even minimize the effect of his knowledge of these transactions tending to show a ratification of the acts of Connors as the agent of the company in reference to this purchase. I think there can be little doubt that the finding of ratification was fully supported by the evidence. The judgment, however, should be modified in one particular, as claimed by appellant Thoms. If Thoms was the agent of defendant company, then the latter would be the principal debtor and Thoms’s liability would be second and subsequent only. The judgment should, therefore, be modified so as to provide that in case of a deficiency on the sale thereby directed no execution shall issue therefor against the defendant Thoms until the return of an execution therefor against the defendant Howe & Rogers Company unsatisfied in whole or in part. This modification may be made by adding after the words “ that the plaintiff have judgment against the defendants for such deficiency and have execution therefor ” the words “except that no execution therefor shall issue against the defendant Thoms until the return of an execution therefor against the defendant Howe and Rogers Company unsatisfied in whole or in part.” Doubtless, when plaintiff’s motion for judgment on the pleadings against defendant Thoms was granted by the trial court at the opening of the trial, the defendant Howe & [557] Rogers Company could then have insisted that plaintiff had made an election binding upon him to hold the agent only; and a motion for dismissal of the complaint as against the remaining defendant, if made, must have been granted. But no such motion was made either then or thereafter and no request made that the court so hold. I think we must hold that the point was waived. The judgment, modified as hereinbefore stated, should be affirmed, with costs against the appellant Howe & Rogers Company. All concurred. Judgment modified so as to provide that in case of a deficiency on the sale thereby directed, no execution shall issue therefor against the defendant Thoms until the return of an execution therefor against the defendant Howe & Rogers Company unsatisfied in whole or in part, and as so modified the judgment is affirmed, with costs against the defendant Howe & Rogers Company.