Morris v. Ernest Wiener Co.

Lehman, J. The complaint alleges that the plaintiff leased certain premises to the America-West Africa Trading Company and that the said company did not pay the rent therefor which became due on the first day of January and the first day of February, 1908; that thereafter the said company requested the plaintiff to give up and cancel the said lease and that the defendant, the Ernest Wiener Company, in consideration that the plaintiff would give up and cancel the said lease and make no further claim against the said West Africa Trading Company thereon, promised and agreed to pay to the plaintiff the amount of rent that became due on the first day of January and the first day of February, 1908. Conceding that at the trial the plaintiff produced sufficient evidence of the cancellation of the lease and the agreement upon behalf of the defendant, either made or ratified by its [19] president, to pay the amount of rent then due from the America-West Africa Trading Company, nevertheless she has shown no cause of action against the defendant. Corporations have the power to do certain acts specified in their articles of incorporation or in the general statutes and such powers as flow from and are incident and necessary to the exercise of the enumerated powers, but no power to assume the debt of another corporation for a consideration moving to the original debtor. It seems well settled that such a power is not incidental to the powers expressly conferred on corporations organized under statutes authorizing the formation of corporations for business or manufacturing purposes. National Park Bank v. German-American Mutual W. & S. Co., 116 N. Y. 281. The act of the president could, therefore, not bind the corporation; nor should the corporation be estopped from setting up that this act was ultra vires. The doctrine of estoppel in ultra vires is based upon the rule that, where the contract has been executed, the corporation is presumed to have received the benefit and should not be permitted to escape the burden; but, where the benefit is alleged and proven to have been rendered to another and at the request of the party benefited, the rule does not apply. The case is absolutely barren of any proof of benefit to the defendant corporation. The judgment should be reversed and a new trial ordered, with costs to appellant to abide the event. Gildersleeve and Seabury, JJ., concur. Judgment reversed and new trial ordered, with costs to appellant to abide event.