Opinion
Argued June 3, 1881
Decided October 4, 1881
Lewis E. Carr for appellant.
J.W. Culver for respondent.
That the president of the defendant corporation had no authority derived from his official position to incur the liability sought to be enforced, and that no express and formal action by the board of directors conferring such authority was shown, was conceded in the charge of the court to the jury, and in the approval of that charge by the General Term. By both tribunals the plaintiff's right of recovery was put upon the ground that the iron bought by the president was used in an extension of the company's track, without protest or dissent from the board of directors, who acquiesced in, and thereby ratified the original purchase. The general rule is not here disputed, but the contention is that such ratification could not occur without knowledge by the directors of the terms of the contract, or, at least, of the fact that the purchase was upon the credit of the corporation. But there were no terms of the contract except what the law implies from the acceptance of property sold, which is, that the vendee will pay the value. There was nothing else to know; no other fact remained; the only terms of the contract were those implied by the law, which the defendant was bound to know. The more plausible suggestion which, perhaps, to some extent, involves the other is, that the vendee who ratifies, only does so when his use of the purchased article is with knowledge that it was bought on his credit. But it is difficult to see how we can avoid assuming that the company had such knowledge, or, at least, how a jury could resist such natural and necessary inference. There is the iron, being laid in the company's track and appropriated to the company's use. What must a director, looking on, necessarily understand? Evidently, that such iron is sold to the corporation, or given to it or loaned for its use. The supposition of a gift or loan would be so unlikely and improbable, in the absence of any such actually existing fact, that he could hardly avoid understanding a sale to the company upon its credit. The fact of the delivery of the iron and its appropriation and use by the corporation for its proper and ordinary purposes with his knowledge and assent is some evidence that the directors knew of its sale to the company, and justifies such inference by the jury, especially in a case where there is proof of a sale in fact intended, and no shadow of evidence of either a loan or a gift.
It is argued, however, that such directors might, under peculiar circumstances, have the right to suppose that the iron was furnished upon the credit of some other person or corporation, and that such peculiar circumstances existed in the present case. Still, if there was no gift or loan, the suggestion only changes the inference as to who is the vendor entitled to receive payment, and not the inference that he who appropriates and uses the property does so with a knowledge that he must pay its fair value to the real owner. The circumstances relied upon as justifying the supposition were also shown to have occurred after the delivery and acceptance of the iron, and so could not have affected the inference to be drawn. The lease to the Oswego Midland, by which that company assumed the funded and floating debt of the defendant, was dated May 24, 1871, and finally executed on the 30th of that month. The plaintiff swears that all the iron was delivered before the execution of that lease. In any point of view, therefore, there was evidence in the case tending to prove a ratification and which warranted such a conclusion by the jury.
These views indicate the grounds of our opinion that the motion for a non-suit was properly denied, and that the court correctly charged that if the defendant received the property bought by its president, and converted it to the use of the corporation, and used it for the corporate purposes for which the material was designed, that would be an adoption and ratification of the act of the officer, and that the directors using the material purchased were bound to inquire and presumed to know whether it was paid for or not, and also that the court properly declined to charge that it was essential to an adoption of the act of the officer that the directors should know the terms of his contract.
The remaining questions in the case relate to the admission and rejection of evidence.
James N. Pronk, the secretary of the defendant corporation, was called as a witness on its behalf. On his direct examination he testified only to the signatures to the lease executed to the Oswego Midland, and to the payment by that company, alone or in connection with the New Jersey Midland, of the cost of grading the extension of the defendant's track. On his cross-examination new matter was broached, not growing out of the testimony he had given. In the course of such cross-examination he testified that, so far as he knew, the defendant did not procure any iron from any source to lay the extension. He was then shown four letters written by him, as secretary of the company, to Culver, the vendor of the iron, which showed that he did know that Culver was to furnish the iron to the defendant. These letters, after having been shown to the witness, were offered in evidence, were objected to as incompetent and immaterial, the objection overruled and an exception taken. Treating the witness, so far as the new matter inquired about was concerned, as a witness for the plaintiff, it was nevertheless proper to endeavor to refresh his memory and correct his recollection by producing and showing to him, his own letters relating to the subject-matter of the inquiry. While they were written after the negotiations of Culver with the defendant's president, they were also written, partly before the delivery of the iron had commenced and partly during the process of its delivery. They purported to come from the general office of the company and the writer was its secretary. We think the letters were admissible as part of the res gestæ. ( Wild v. N.Y. Austin Silver Mining Co., 59 N.Y. 644.) The secretary was an agent of the corporation, writing the letters in the usual course of business, and in the performance of official duty. The first letter, written in April, 1871, declares the writer's knowledge that Culver was to furnish the iron for "our track," and urges that it be promptly forwarded to prevent "our contractor" from losing his men after the grading should be finished. The next, written in the last of the month, expresses a fear that the iron has been wrongly shipped. The third, written on the 1st of May, again reminds him of the iron and recites the anxiety of "our contractor" to close his work. And the last, dated on the 24th of May, directs that any supplies "for our Unionville extension" may be consigned as before. These letters, therefore, related to current events, to business then in progress, to the delivery and the use of the iron in question, and are not at all open to the criticism of the appellant as being subsequent declarations, or recitals of past events.
Other exceptions argued before us were founded upon the rejection of evidence offered to show the transactions between the New Jersey Midland and the Oswego Midland, with reference to the iron in question, and the assumption and payment of the claims of the former company by the latter. The offers were to show entries in the accounts of the two companies referred to, indicating a charge of the iron by one and its allowance by the other. Such entries were not evidence against the plaintiff, and the transaction was wholly between third persons. The foundation fact sought to be reached did not go far enough to affect or contradict plaintiff's title. Culver says that he bought the iron of the New Jersey Midland. His title is not destroyed, or his right to recover of his vendee affected by such later transactions. It is suggested that the New Jersey Midland was Culver's agent, and payment to the agent might be shown. There was no such agency. The New Jersey Midland was Culver's vendor, having no authority except to deliver the iron as the latter directed. It is further argued that the evidence was admissible as bearing upon the understanding of the directors of the defendant corporation in making use of the iron. But the lease was not made until after the whole or some part of the iron was laid, and the alleged settlement between the New Jersey Midland and the Oswego Midland was still later. How could these subsequent events, in and of themselves, affect the prior understanding of the defendant's directors?
Other considerations affecting the case generally were very elaborately argued. We have given them due attention, but have failed to find any just reason for the reversal of the judgment. It should be affirmed, with costs.
All concur.
Judgment affirmed.