H. L. Judell Co. v. Goldfield Realty Co.

By the Court, Sweeney, J.: The plaintiff in this action brought suit to obtain a judgment against defendant in the sum of $961.15, with interest and costs, on account of an indebtedness due plaintiff for — 354 — goods, wares, and merchandise sold and delivered by plaintiff to the Goldfield Catering and Café Company, a California corporation, which indebtedness the plaintiff alleges defendant assumed and agreed to pay. The defendant company interposes a defense to the complaint that its manager and secretary was not authorized to bind the company in the execution of said promissory note, evidencing the amount of the indebtedness in dispute, a determination of which issue is determinative of this appeal. An examination of the record on appeal discloses that the Goldfield Realty Company is a corporation organized under the laws of the State of Nevada, and during the times mentioned was conducting the Goldfield Hotel at Goldfield, Nevada. Among the various objects for which this corporation was formed, as disclosed by its articles of incorporation, we find: " (a) To purchase, sell and own real estate, to erect buildings thereon, and to engage in a general hotel business. (b) To engage in the business of buying and selling merchandise, wines, liquors and cigars either at wholesale or retail. (c) * * * (ci) engage in a general commission business, and to do all and anything necessary, suitable or convenient for the accomplishment of any of the purposes or attainment of any of the objects hereinbefore enumerated.” The transcript further discloses that the Goldfield Catering and Café Company is a California corporation, and owned, operated, and conducted the café and restaurant in the Goldfield Hotel, as well as the bar and cigar stand in connection therewith; that in January, 1908, the Goldfield Catering and Café Company was indebted to various creditors, not only for furniture and fixtures, but also for goods, wares, and merchandise sold to it in conducting the said branches of business, and for part of which said indebtedness notes had been given to some of its creditors and indorsed by the appellant, Goldfield Realty Company. To secure the Goldfield Realty Company for indorsing these notes of indebtedness, a mortgage was executed by the Goldfield Catering and Café Company on January 17, 1908, to the Goldfield Realty Company, under the terms of which, however, the Goldfield Catering and Cafó — 355 — Company was permitted to remain in possession of all of the personal property so mortgaged. Pursuant to certain negotiations between the officers and agents of the Goldfield Realty Company and the Goldfield Catering and Café Company, the following resolution, prepared and drawn by J. F. Douglass, general manager and secretary of the Goldfield Realty Company, was passed on February 19, 1908, by the board of directors of the Goldfield Catering and Café Company: "Whereas, the Goldfield Catering and Café Company is indebted to various merchants of Goldfield, San Francisco, Oakland and other places in large sums of money, aggregating many thousands of dollars, for the equipment and supplies used in the kitchen, dining-room and bar room in the Goldfield Hotel; and whereas, owing to prevailing conditions it is unable to secure the money for payment of these bills either through profits of its café and bar, or by any other means; and whereas, the Goldfield Realty Company is desirous of purchasing said equipment and stock from the persons and concerns from whom the same was secured, providing the Goldfield Catering and Café Company releases all its claim, both in law and in equity, in and to said equipment and stock to said persons and concerns from whom the same was secured. Now', therefore, be it resolved, that in consideration of the surrender of all promissory notes given by this company in payment for said equipment and stock, and the release of this company from all indebtedness on account of said equipment and stock where same is not secured by notes or otherwise by its several creditors, this company will surrender all its right and claim of whatsoever nature in and to said equipment and stock of goods to the persons from whom same was secured, and that this resolution be effective as to any individual instance of indebtedness as soon as this company is released from same. (Signed) 0. Groppengiesser. Harry Cole, Acting Secretary. Approved: Harry Cole, Arthur Starkey, B. J. Sears.” Pursuant to this resolution, the business and assets of the Goldfield Catering and Café Company in the Goldfield Hotel — 356 — were turned over to the appellant, which included all of its furniture, stock, etc., in bar, kitchen, and dining-room, which the appellant accepted and received. Afterwards the Goldfield Realty Company leased the said business formerly owned and conducted by the Goldfield Catering and Café Company to the individual stockholders or part of them of the said Goldfield Catering and Café Company. In conformity with the understanding evidenced by the foregoing resolution, J. F. Douglass, the secretary and manager of the defendant company, while in San Francisco arranging the indebtedness with the creditors of the catering company, called upon the plaintiff, and proposed, executed, and delivered the note in dispute in behalf of the defendant company, and represented to the plaintiff that he was fully authorized to make the arrangements for an assumption of the indebtedness of the Goldfield Catering and Café Company for the defendant Goldfield Realty Company, and recited in the note given that he was duly authorized to make said note as evidenced by the following indenture: "[Letterhead of Plotel St. Francis.] San Francisco, Cal., March 2nd, 1908. H. L. Judell & Company, San Francisco, Cal. — Gentlemen: For and in consideration of the substitution of the Goldfield Realty Company, as your debtor in the sum of nine hundred and fifty dollars ($950.00), subject to correction, in the place of the Goldfield Catering and Café Company, and the further consideration of your extending the time for the payment of the said amount as hereinafter provided, we, the undersigned, Goldfield Realty Company, by J. F. Douglass, our secretary, first duly authorized, hereby agree to pay the said amount above named, at the times and in the manner following, to wit: One-half of said amount to be paid April first, 1908; and one-half of said amount to be paid May first, 1908. Respectfully, Goldfield Realty Company, By J. F. Douglass, Secretary.” It appears from the evidence that after the Goldfield Realty Company had taken over the furniture and fixtures of the Goldfield Catering and Café Company, it retained possession of said property and was considered publicly to be the owner thereof. It publicly conducted the cafó and bar, bought supplies for both, paid for labor, and retained the benefits and — 357 — receipts from the same, and paid a part of the said unsecured debts of the Goldfield Catering and Café Company as well as indebtedness for which notes had been given. The evidence shows that J. F. Douglass was the general manager and secretary, and so represented himself, of the Goldfield Realty Company, and that he conducted the business without consultation with the board of directors; that he was held out by the company as the man having absolute control of the business, and the directors admitted at the time of the trial that J. F. Douglass was the sole manager to look after all of the business of the company within the scope of its powers as defined by its articles of incorporation, and that J. F. Douglass was in the entire charge of all of its business. It appears that the Goldfield Catering and Café Company delivered possession of everything contained in the bar, kitchen, and dining-room to the Goldfield Realty Company, and that thereafter the realty company conducted the busi-. ness by leasing the same. .By acceptance of the assets of the catering and café company the Goldfield Realty Company obligated itself to pay the debt owing to the respondent herein, and the catering and café company turned over to the realty company the bar and grill upon the telegraphic instructions of J. F. Douglass, with whom the understanding was had. While the witness Douglass testified that he was not specially authorized by the directors of the Goldfield Realty Company to enter into the arrangement wherein this debt was assumed, yet the evidence discloses that Douglass had been authorized by the defendant company as its sole representative to manage all contracts and expenditures for material necessary for the construction of the Goldfield Hotel, a building reputed to have cost from $150,000 to $200,000, and the evidence further discloses that Mr. Douglass' had full charge of all the business affairs of the company, and had been permitted to transact all of its business, and was so held out to the public at Goldfield and elsewhere. Similar notes given under similar circumstances to other creditors of the catering and café company by J. F. Douglass in behalf of the realty company were paid by the realty company without objection from the board of directors. — 358 — In addition to all this the company received and retained the property of the catering and café company, and in view of the representations made by Mr. Douglass, the general manager arid secretary of the realty company, that he had the authority to execute the promissory note in question, and informed the respondent that he was making similar arrangements with other creditors of the catering and café company to assume their indebtedness, which was assumed and after-wards paid by the realty company, and the fact that the said Douglass was held out in the community as the sole representative of the realty company, which said company accepted the benefits of the agreement entered into by its general manager and secretary, and where it is clear the realty company had the authority under its articles of incorporation, to purchase the property of the catering company for the benefit of the hotel owned by the realty company, we do not think it can be said, under these circumstances, that this corporation is not bound by the act of its general manager and secretary. We believe that the Goldfield Realty Company had ample authority, under the scope of its enumerated powers in its articles of incorporation, to take over the business of the Goldfield Catering and Café Company, and its general manager was vested with ample authority to make this contract for and on behalf of the realty company with the catering and café company. The Goldfield Realty Company was incorporated to do a general hotel business, which necessarily included the authority to buy and sell merchandise, wines, liquors, and cigars, and such other materials as go to stock a hotel, café or restaurant. The word "hotel” which is synonymous with the word "inn” is defined as a place for the accommodation of travelers with food and lodging, and necessarily implies the right to purchase the business of the catering and café company in question, especially where, as in this case, said café and bar were in the lobby of the Goldfield Hotel, the main property of the realty company. (20 Cyc. 1070; Pinkerton v. Woodward, 33 Cal. 557, 91 Am. Dec. 657.) After a careful review of the evidence in this case, we are of the opinion that it is conclusively shown that Mr. Douglass, as general manager and secretary of the Goldfield Realty Com — 359 — pany, was vested with complete authority by the board of directors of the said realty company, in his capacity as general manager and secretary of said company, to execute the said promissory note in dispute for said company under the circumstances disclosed. Said secretary, J. F. Douglass, having been held out by said company to be its general manager, and having been shown to have done transactions of a similar nature in behalf of the realty company, and all of his actions accepted and none repudiated by the board of directors, except this especial act of Mr. Douglass, and that the said realty company having taken over the property of the catering and café company, and having received and retained the benefits of the agreement entered into by its representative with the said catering and café company, and the said general manager and secretary of the realty company having represented to respondent herein that he was authorized to bind the realty company, as it is shown he was authorized to do with other creditors of the catering and café company, we believe the respondent herein had the right, under the circumstances, to accept as it did the representations made in good faith, and that the Goldfield Realty Company is in no position to avoid the responsibility of the act of its general manager in this transaction, and that the judgment of the lower court should be affirmed. (Western Homestead Co. v. First National Bank, 47 Pac. 721; Colorado Springs Co. v. Am. Pub. Co., 97 Fed. 843, 38 C. C. A. 433; Greig v. Riordan, 99 Cal. 316, 33 Pac. 913; Union Gold M. Co. v. Rocky Mt. Nat. Bank, 2 Colo. 565, affirmed 96 U. S. 640, 24 L. Ed. 648; Brown v. Crown Gold M. Co., 150 Cal. 376, 89 Pac. 88; Allen v. Citizens' Steam Nav. Co., 22 Cal. 28; Extension G. M. Co. v. Skinner, 28 Colo. 237, 64 Pac. 198; Meyer v. V. & T. R. Co., 16 Nev. 341; Bergtholdt v. Porter Co., 114 Cal. 681, 46 Pac. 738; Whitaker v. Kilroy, 70 Mich. 635, 38 N. W. 606; Moss v. Averell, 10 N. Y. 449; Siebe v. Joshua Machine Works, 86 Cal. 390, 25 Pac. 14; Shaver v. Bear River Co., 10 Cal. 396; Carey v. Phil. Petroleum Co., 33 Cal. 694; Gribble v. Columbus Brewing Co., 100 Cal. 67, 34 Pac. 527; Morawetz on Corp., secs. 630 and 633; Kelsey v. Bank, 69 Pa. 426; Murray v. Lumber Co., 143 Mass. 250, 9 N. E. 634; 1 Beach, Corp. Dec. 195; Sherman v. Fitch, 98 Mass. 59; Edwards — 360 — v. Carson Water Co., 21 Nev. 469; Bean v. Pioneer M. Co., 66 Cal. 451, 6 Pac. 86, 56 Am. Rep. 106; Main v. Casserly, 67 Cal. 127, 7 Pac. 426.) It is so ordered.