Mausert v. Feigenspan

The opinion of the court was delivered by Gummere, Chief-Justice. By a formal agreement under seal, entered into by the parties to this litigation on May 20th, 1902, the respondent (a brewing company) contracted to lease to the appellant certain premises in the city of Newark, and to expend tire sum of $2,500 — and $1,000 more, if necessary — in fitting them up‘ for use as a beer saloon by him. He agreed, on his part, among other things, to [677] use and sell only the goods manufactured and sold by the respondent company, or imported from outside the United States, and also to give to it a chattel mortgage upon the goods and fixtures contained in the saloon for such sums as the respondent might invest in the premises or loan or advance to him. The fitting up of the premises in the manner provided by the agreement having been completed in the latter part of September, the appellant entered into possession, although no lease had been executed by the respondent. At the same time he gave td the respondent a chattel mortgage upon the stock and fixtures of- the saloon. Some two or three months later a lease was tendered him by the respondent, containing a prohibition against his subletting the premises. He declined to accept the lease with this provision in it, for the reason that his contract with the company contained no such prohibition. Some months later he applied to the president of the respondent company to be permitted to sell beer brewed in Milwaukee, Wisconsin, and claims that unrestricted permission, to do so was granted to him by that officer. This the respondent denies, but admits in its answer that it granted permission to him to sell from two to four half barrels of that product, upon the express understanding that he would discontinue its sale upon notice from the respondent company to that effect. About a year after the appellant took possession of the premises, a dispute having in the meantime arisen between the parties as to his right to sell the Milwaukee beer, and also as to the amount due on the chattel mortgage, the bill in this case was filed. It has a twofold aspect. By it the appellant seeks — first, to compel the respondent company to execute and deliver to him a written lease for the premises, in compliance with the provisions of the contract of May 20th, 1902, as modified by tire alleged agreement made subsequently by the president of the respondent company with relation to the sale of Milwaukee beer in unrestricted quantities; and second, to obtain an accounting of the amount due upon the chattel mortgage, and a decree of redemption upon payment of the amount found to be due upon such accounting. By the decree of the court of chancery it was adjudged — first, that the appellant was entitled to have a written lease executed [678] and delivered to him by the respondent, and that the lease should contain the provisions of the contract of May 20th, 1902, with the restricted modification relating to the sale of Milwaukee beer, which was admitted by the respondent to have been made by it, but not with the unrestricted modification claimed by the appellant to have been made by the respondent company’s president; second, that the amount due upon the chattel mortgage was the sum of $6,691.55, and that the appellant was entitled to redeem the property covered by it upon payment of this amount. The appellant appeals from both branches of the decree, contending that the amount found due upon the chattel mortgage is excessive, and that he is entitled to have the lease contain a provision permitting the unrestricted sale of Milwaukee beer. The opinion filed in the court of chancery by the learned vice-chancellor who heard the cause contains a full statement of the facts out of which the controversy arose between the parties with relation to the amount due upon the chattel mortgage, and also the reasons upon which his finding rests that the amount due was the sum above stated. A restatement of either of them by this court is not necessary. It is enough to say that this portion of the decree is affirmed on that opinion. The vice-chancellor placed his conclusion that the appellant is not entitled to have a provision permitting him to sell Milwaukee beer in unrestricted quantities, upon two1 grounds— first, that the agreement for the sale of liquors contained in the contract of May 20th, 1902, is a restriction of the use of lands, an equity attached to them by the lessor, and that a subsequent parol agreement altering it, if made, is void under the statute of frauds; and second, that it was not shown that the president of the company had authority to modify the contract in the manner claimed by tire appellant. We concur in the view of the vice-chancellor that the agreement of the president of tire company to modify the provision in the contract relating to the sale of liquor (if such agreement was made by him) did not bind the respondent. No' attempt was made to show any express authority conferred upon him [679] for this purpose by the board of directors, and he had no power virtute officii to alter the provisions of a formal agreement under seal entered into by the corporation itself. The act of the president of a corporation, unless it is shown to pertain to his official duty, or to be within the scope of his employment, cannot be regarded as the act of the corporation, and is not binding upon it. Titus v. Cairo and Fulton Railroad Co., 37 N. J. Law (8 Vr.) 98. His powers over its business and property are strictly the powers of an agent, delegated to him by the directors, who are the managers of the corporation) and the persons in whom the control of its business and property is vested. He may, without any special authority from the board of directors, perform all acts of an ordinary nature which by usage or necessity are incident to his office, and may bind the corporation by contracts in matters arising in the usual course of business. To this extent, by virtue of his office, he is the agent of the corporation, but beyond this his official position gives him no more control over its property, funds or business, than any other director. Stokes v. New Jersey Pottery Co., 46 N. J. Law (17 Vr.) 237. Any act done by him which is outside the scope of the powers which inhere in his office will not bind the corporation, unless it is shown that authority was conferred upon him for the purpose bj the directors, either expressly or by their consent and acquiescence in permitting him to assume the direction and control of the business of the company. Stokes v. New Jersey Pottery Co., supra. As has already been said, no express power was shown to have been conferred upon the president of the respondent company to alter its formal agreément, executed by it under its corporate seal, and it cannot be inferred from the testimony that such power had been conferred upon him inferentially, by his assumption of the direction and control of the business of the corporation, with the consent and acquiescence of the directors. Reaching the conclusion that the agreement of the respondent company’s president to modify the provision of the contract of May 20th, 1902, relating to the sale of liquors (if such an agreement was made by him) did not bind the respondent, we find it [680] unnecessary to consider the interesting question whether that provision of the contract is a restriction of the use of lands, and, for this reason, within the statute of frauds. The decree appealed from must be affirmed. For affirmance—The Chief-Justice, Dixon, Garrison, Fort, Garretson, Pitney, Swayze, Bogert, Vredenburgh, Vroom, Green, Gray—12. For reversal—None.