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THE DRAGON CORPORATION v. SYPHERS.
33779.
Complaint; from Brunswick City Court-- Judge Little. July 12, 1951.
CARLISLE, J.
The president of a corporation has no power to bind the corporation merely by virtue of his office, and, a petition which alleges only that the plaintiff entered into a contract with the president of the defendant corporation, but which fails to allege that such president acted as the agent of the corporation or had power to bind it by his contracts is fatally defective. For this reason it was error to overrule the general demurrer to the petition.
Charles Syphers filed in the City Court of Brunswick, against The Dragon Corporation, a petition, which as amended alleged: that prior to April 14, 1950, the plaintiff was the president in charge of the general operation of a Florida corporation known as Tropic Star Cruises Inc.; that he and his wife each owned 25% of the stock therein, and Mr. George Hamerick Jr. and his wife owned the other 50%; that the corporation owned a vessel called the Tropic Star, which was under the plaintiff's supervision; that the defendant corporation wished to purchase this vessel; that on April 14 he had various conferences with two stockholders of the defendant regarding the sale, and "The Dragon Corporation through its president, Sidney T. Bottenfield, as an inducement to your petitioner to secure his assent to said transfer of said vessel by Tropic Star Cruises Inc. to The Dragon Corporation, agreed to employ your petitioner and pay [him] the sum of $50 per week in consideration of the performance by petitioner of such services as might be required of him by said defendant," and that "said agreement was to remain in effect so long as the defendant continued in business and your petitioner was capable of performing such reasonable services as might be required of him"; that thereupon the plaintiff assented to the transfer, and by his assent a majority of the stock necessary to the making of the transfer was secured and the transfer was then effected; that the plaintiff thereafter received $50 per week until June 10, 1950, on which date the defendant ceased paying the agreed weekly salary; that the plaintiff has at all times performed such duties as were assigned to him and holds himself ready, willing, and able at all times to do his job according to the agreement. The plaintiff sued for $50 per week from June 11, 1950, to the date of commencement of this suit.
General and special demurrers were filed to the original petition. The grounds of special demurrer were met by amendment, after which additional general and special demurrers were filed to the petition as amended. These demurrers were overruled, and exceptions pendente lite preserved. The case was then tried and a verdict returned in favor of the plaintiff. The defendant's motion for a new trial as subsequently amended was overruled, and error is assigned on this judgment and on the exceptions pendente lite to the overruling of the demurrers.
The second general demurrer to the original petition is on the ground that it is not alleged by what authority the oral contract upon which the plaintiff sued was made. The second ground of the renewed demurrers again attacks the petition on the ground that the corporate authority is not alleged, and in the third ground the petition is demurred to because it alleges that the contract of employment was made with two of the stockholders rather than with the corporation.
The petition as amended alleges that two stockholders of the defendant corporation came to the plaintiff on two occasions to induce him to consent to the sale of the boat by the corporation, in which he owned 25% of the stock and his wife 25%, to The Dragon Corporation; and that on the second occasion the defendant through its president Bottenfield, as an inducement to secure this assent, offered to employ the plaintiff at a salary of $50 per week. A simple allegation that a corporation by its agent committed an act is a sufficient allegation to bind the corporation. Conney v. Atlantic Greyhound Corp., 81 Ga. App. 324 (58 S. E. 2d, 559). When such direct allegation is not made, but the petition attempts to set out facts upon which to base the conclusion that the corporation acted through its authorized agent in a certain particular, the facts must be sufficient to substantiate such conclusion. Rothberg v. Manhattan Coil Corp., 84 Ga. App. 528 (66 S. E. 2d, 390). It is here alleged that Bottenfield is a stockholder in and president of the corporation, but it is nowhere alleged that he is the agent of the corporation or was its duly authorized agent for the purpose of making such a contract with the plaintiff. Neither is it alleged that either as stockholder or president he had authority to bind the corporation by contract generally, or by an oral contract which would obligate the defendant so long as it should continue in business. "The president of a corporation, merely by virtue of being such, has no power to bind the company by a contract." Hale-Georgia Minerals Corp. v. Hale, 83 Ga. App. 561 (63 S. E. 2d, 920). In consequence, a contract entered into by the president of a corporation in its behalf is not binding upon the corporation unless (1) the charter or bylaws give the president such authority, or (2) the authority may be inferred from a course of dealing, or (3) the corporation ratifies his acts. Potts-Thompson Liquor Co. v. Potts, 135 Ga. 451, 460 (3, 4) (69 S. E. 734). It is not here alleged that the president had such authority, or that he entered upon a course of conduct from which it might be inferred. It is shown that prior to the sale the plaintiff managed the boat, and that for some weeks immediately thereafter the defendant employed him to continue his supervision thereof; but the petition must be construed against the pleader, and this act on its part is equally consistent with a purpose to have someone familiar with the boat on hand during the first few weeks of its ownership, as with the theory that in so doing the defendant ratified what amounted to an oral contract for lifetime employment. Hale-Georgia Minerals Corp. v. Hale, supra, also involved an oral contract between the president of a corpora-
tion and another. In that case it was held as follows: "If the plaintiff sought to show ratification of the contract by the corporation, he failed to do so. Assuming that the corporation did receive the benefits of the plaintiff's alleged services, in order to prove ratification by the corporation he must prove that the principal, the governing body of the corporation or some official or agent who had authority to receive such notice had full knowledge of all material facts in connection with the transaction in question. And such knowledge must have been acquired by the principal otherwise than by the knowledge of the agent the ratification of whose acts is contended for. Kephart v. Gulf Refining Co., 59 Ga. App. 432 (2) (1 S. E. 2d, 221)." See also Lindale Co-op. Store v. Ailey, 32 Ga. App. 30 (2) (122 S. E. 718).
The petition here sufficiently shows that the president of the corporation had knowledge of the fact that the plaintiff was on the payroll of the corporation for $50 per week, but it does not show that notice of this fact to the president was notice to the corporation, any more than the petition otherwise shows that such president had authority to make the contract in the first place. It is not alleged that the stockholders, by their conduct or by resolution on the minutes of the corporation or otherwise, ratified the alleged contract. See, in this connection, Rothberg v Manhattan Coil Corp., supra. Ratification is not pleaded as such, and the petition does not otherwise sufficiently show it.
There being no allegation as to the authority of the stockholders or president of the defendant to enter into such contract, and it not being alleged that these persons were acting as the duly authorized agents of the defendant in the premises, the alleged contract would not be binding on the defendant. The trial court erred in overruling the general demurrer to the petition.
Since it is held that the judge erred in overruling the general demurrer, it is unnecessary to examine or pass upon the special demurrers, and all further proceedings were nugatory. Bugg v. Knowles, 33 Ga. App. 710 (127 S. E. 813); Columbus Railroad Co. v. City Mills Co., 135 Ga. 626 (4) (70 S. E. 242).
William R. Killian, contra.
G. B. Cowart, A. A. Nathan, for plaintiff in error.
DECIDED MARCH 14, 1952 -- REHEARING DENIED APRIL 1, 1952.
Saturday May 23 05:04 EDT


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