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Lawskills.com Georgia Caselaw
ROTHBERG v. MANHATTAN COIL CORP.
33576.
Complaint; from Fulton Civil Court-- Judge Parker. March 6, 1951.
TOWNSEND, J.
1. (a) "The broker's commissions are earned when, during the agency, he finds a purchaser ready, able and willing to buy, and who actually offers to buy on the items stipulated by the owner." Code, 4-213.
(b) In pleading agency it is sufficient (1) to allege simply that the defendant corporation by its agent committed the wrongful act, or (2) to allege that the wrongful act was the act of the defendant's servant and committed in the prosecution of the principal's business and within the scope of the employee's authority, or (3) to allege the special facts by which the pleader claims that the relationship of principal and agent exists, alleging the agency as a conclusion. In this latter method a demurrer raises the question as to whether the conclusion is good in law under the facts pleaded.
(c) Where, pursuant to a judgment of a trial court sustaining a demurrer to a petition with leave to amend within a specified time, which amendment is accordingly allowed and filed, and thereafter the petition is demurred to as amended, the whole pleadings are reopened for a fresh adjudication on the merits, whether the petition was subject to demurrer in the first instance or not. On the bearing of such second demurrer the petition must be considered as amended without regard to its status before the amendment.
(d) The implied authority delegated to the chairman of a board of directors of a corporation to make any and all ordinary contracts in behalf of the corporation does not include authority to sell the property owned and occupied by the corporation in the transaction of its business, it not being alleged that the corporation was regularly engaged in the purchase and sale of real property, or that the agent by any course of dealing in buying and selling its real property had received authority to do so by implication. Authority to do an act as agent will not be implied from the doing by such agent of totally distinct and different acts on behalf of the principal.
Samuel Rothberg filed suit in the Civil Court of Fulton County against Manhattan Coil Corporation, alleging in substance that on June 30, 1950, the plaintiff was engaged by the defendant corporation acting through its agent, I. M. Weinstein, chairman of its board of directors, to procure an offer to purchase real estate owned and occupied by the defendant for a purchase price of $300,000; that the defendant, acting through said Weinstein, promised to pay the regular real-estate commission should he procure such an offer; that he did procure a written offer for the purchase of the property for the agreed sum in cash; that the defendant then refused said offer and refused to pay the plaintiff a commission in accordance with the contract; that the plaintiff fulfilled his contract by bringing the defendant a purchaser able and willing to purchase at the price agreed and is entitled to the regular real-estate commission thereon. General and special demurrers were filed to the petition, on the ground that the allegation that the chairman of the board of directors of the defendant corporation possessed the authority to employ petitioner as alleged is a mere conclusion; that his authority is not shown; that such authority cannot be presumed, and that an allegation that such authority existed cannot be presumed, it not being alleged that the corporation is in the business of buying and selling real estate. A demurrer on the ground that the petition does not show why petitioner is entitled to any sum as real-estate commission was met by an amendment as follows: "At all times referred to in the petition plaintiff was and now is a real estate broker duly licensed as such under the laws of Georgia."
The plaintiff then filed a second amendment alleging that at the time referred to and long prior thereto I. M. Weinstein acted as alter ego of the defendant; that although his official title was chairman of the board he acted with the power and authority usually possessed and exercised by a president and general manager, "that is, as one having implied authority by virtue of his office to make any and all ordinary contracts in behalf of the corporation"; that whatever formal approval of the actions of Weinstein by the board was actually had from time to time was a mere formality; that the board had by acquiescence in such conduct held Weinstein out as having implied authority to make any and all ordinary contracts in its behalf; that Weinstein was a principal stockholder and as such permitted to act as its alter ego, which fact was known to plaintiff; that he had further endorsed a note in the sum of $700,000 of the defendant to a bank, which note was secured by real estate and machinery of the defendant, was overdue, and about to be foreclosed, and that the contract was entered into by the defendant acting through Weinstein because of the pressure put upon it to pay the note.
The defendant thereupon renewed its previous demurrers and demurred to the amended petition on the ground that it failed to meet the court's previous demurrer ruling; that it affirmatively discloses that Weinstein had no express actual authority to bind the defendant and that there had been no subsequent ratification of his acts; that it failed to raise any inference that the alleged contract was within the scope of the usual duties of the agent; that it sets out no alleged acts or course of conduct from which it could be inferred that the agent did in fact act as the alter ego of the corporation, and that the allegation that Weinstein had implied authority to enter into such a contract was a mere conclusion not substantiated by the facts pleaded. Special demurrers were also interposed to each allegation of the amendment. After hearing, the court sustained the general demurrer and dismissed the petition. This judgment is assigned as error.
(After stating the foregoing facts.) The petition as finally amended set out a contract to procure a buyer for the defendant's real property; the commission to be charged upon completion thereof; the fact that the plaintiff was a licensed broker entitled to the commissions charged, and that he did procure one ready, willing and able to purchase the property on the terms stipulated. A real-estate broker is entitled to collect his commission under these circumstances, whether or not the sale is actually consummated. See Code, 4-213. In consequence, the sole question for decision was whether or not the defendant was bound under the terms of the contract, and this in turn depends upon the authority of the alleged agent to bind the corporation in this transaction.
The methods of pleading agency so as to hold the principal responsible in tort actions are set out in Conney v. Atlantic Greyhound Corp., 81 Ga. App. 324 (58 S. E. 2d, 559). The same rules are applicable in pleading agency in actions sounding in contract. In his original petition here the plaintiff used the method set out in headnote 2 as follows: "Another way of pleading agency so as to make the alleged principal responsible for the wrongful acts of the agent is to allege by a simple direct statement that the defendant corporation by its agent committed the wrongful act." The petition alleges that the defendant corporation acted through I. M. Weinstein, "he at said time and place having full authority to act for the defendant in the premises to procure an offer to purchase real estate occupied and owned by the defendant . . ." The demurrer, which was sustained by the trial court in the first instance, contended that this allegation constituted a conclusion of the pleader, notwithstanding the fact that it conforms to the proper method of alleging agency under headnote 2 of the Conney case, supra. The plaintiff, however, failed to except to this ruling, but on the contrary sought to amend his petition so as to conform to the method of alleging agency as set out in headnote 1 thereof as follows: "One way of pleading that an agency existed so as to make the alleged principal responsible for the wrongful acts of the agent is by pleading nothing except facts as they really exist or, by legal fiction or presumption, are deemed to exist. It is, generally speaking, unnecessary to allege matters of law, for judges are always presumed to know judicially what the law is. However, in this method of pleading, if the preliminary or special facts by which the pleader claims that the relationship of principal and agent is established so as to make the employer responsible for the wrongful acts as a matter of law, the pleader may plead his legal conclusions in the nature of general allegations for the purpose of obtaining a decision of the court below. A demurrer would then raise the question whether the conclusions were good in law." Thereafter, a demurrer was interposed to the petition as amended. This opened the entire pleadings for a fresh adjudication on the merits, whether the petition was subject to demurrer in the first instance or not. On the hearing of such second demurrer the petition must be considered as amended without regard to its status before the amendment. See Tingle v. Maddox, 186 Ga. 757 (2) (198 S. E. 722); Green v. Spires, 189 Ga. 719 (7 S. E. 2d, 246). It follows therefore that, while the allegation of the petition before amendment, which was simply to the effect that the agent had full authority to act, was not subject to demurrer as being a conclusion of the pleader, because at that time it did not detail facts upon which this conclusion was reached, yet since amendment the petition must be examined with a view to determine whether the detailed facts now alleged therein support the conclusion that the agent acted with authority. In the Conney case, supra, at page 327, it is held as follows: "It is, generally speaking, unnecessary to allege matters of law, for judges are always presumed to know judicially what the law is. However, in this method of pleading, if the preliminary or special facts by which the pleader claims that the relationship of principal and agent is established so as to make the employer responsible for the wrongful acts as a matter of law, the pleader may plead his legal conclusions in
the nature of general allegations for the purpose of obtaining a decision of the court thereon. A demurrer would then raise the question whether the conclusions were good in law. It is in cases where this form of pleading is adopted by the pleader that many of the Georgia cases use the expression where general allegations setting up that a named person is agent for another named person (that is, agency) are followed by specific detailed averments, and such averments negative or contradict such general allegations, or if the pleader alleges the ultimate fact that a named person was the agent of another but sets up special or preliminary facts by which he claims to establish such relationship, and if these special facts fail to establish such general allegation of agency, and then the pleader follows with the general allegation that the agent is acting within the scope of his employment or service, this latter general allegation is treated as a conclusion of the pleader and as having been made in order to obtain a decision as to whether the act was committed in the scope of the agency or service. In such a form of pleading the general allegations setting up agency will yield to specific detailed averments."
The amendment set up a series of allegations as to the course of conduct pursued between Weinstein and the defendant corporation which affirmatively showed that Weinstein had no express authority from the corporation to enter into the contract sued upon and that no ratification of his conduct had been had subsequently thereto, but which attempted to allege facts sufficient to hold the defendant on the theory that Weinstein had implied authority to make such a contract.
In Hale-Georgia Minerals Corp. v. Hale, 83 Ga. App. 561 (63 S. E. 2d, 920) it is held as follows: " 'Proof of a contract with a corporation includes proof of the authority of the agent purporting to act for it to make the alleged contract, or proof that the contract as made was subsequently ratified by the corporation.' Lindale Co-operative Store v. Ailey, 32 Ga. App. 30 (2)." "Such authority may be inferred from a course of dealing." "The president of a corporation, merely by virtue of being such, has no power to bind the company by a contract." It has further been held that a general manager of a corporation likewise has no authority to make a sale of any part of the physical property of the corporation without express authority first being delegated to him for that purpose. See Nunez Gin & Warehouse Co. v. Moore, 10 Ga. App. 350 (73 S. E. 432); Ware & Harper v. Atlanta Coffee Mills Co., 16 Ga. App. 749 (86 S. E. 47). In consequence, the allegation that the agent acted with the authority usually possessed and exercised by a president and general manager show no authority on his part to bind the defendant corporation on the contract in question. The fact that he was liable as an endorser on the corporation's note is no evidence of implied authority to sell the property pledged as security thereon; indeed, as contended by counsel for the defendant, it might be evidence that his position was adverse to that of the corporation, and that he desired a sale for personal reasons to reduce his potential liability as endorser.
So far as any general course of dealings between Weinstein and the corporation is shown, the amendment indicates that the corporation took action to formally approve his acts from time to time. That he was a principal stockholder gives him no authority to sell the property of the corporation. It is not alleged that the board of directors either expressly authorized him to procure a purchaser of the corporate property or that they subsequently met and approved his action. The allegation that he was the "alter ego" of the corporation, under these circumstances, is not supported by the special facts pleaded. Further, it is alleged only that his implied authority extended to the making of "any and all ordinary contracts in behalf of the corporation." It is not alleged that this was an ordinary contract, or that the corporation ordinarily bought and sold real estate. It appears that the premises were occupied by the defendant corporation, and the sale of the property in which a corporation carries on its business activities is not as a general rule an ordinary or routine business transaction in the accepted sense.
Garmany v. Lawton, 124 Ga. 876 (53 S. E. 669), cited by the plaintiff, is a case where the corporation president who mortgaged its property had for a period of time carried on all the company business with the acquiescence of its stockholders, and on numerous occasions bought and sold the corporate property, so that the acquiescence of the stockholders in these former transactions gave rise to implied authority on his part to continue to buy and sell or mortgage such property. Where a corporate agent is held out as having authority to make a specified type of contract by ratification of similar contracts made by him over a period of time, such authority will be implied in the absence of anything to the contrary. See Fitzgerald Cotton Oil Co. v. Farmers Supply Co., 3 Ga. App. 212 (59 S. E. 713). But authority to do an act as agent will not be implied from the doing of totally distinct and different acts on behalf of the principal. See Collins & Toole v. Crews, 3 Ga. App. 238 (59 S. E. 727). An express agency for a specified purpose includes all acts reasonable and necessary to effectuate that purpose, but does not include other acts which, although they may arise in the course of the transaction, are merely collateral to it. See Wise v. Mohawk Rubber Co., 23 Ga. App. 255 (98 S. E. 100); Terry v. International Cotton Co., 138 Ga. 656 (75 S. E. 1044); Hood v. Hendrickson, 122 Ga. 795 (50 S. E. 994). Even one with express authority to do all acts usual and necessary in the ordinary course of the company's business has no authority to do any act over and beyond the ordinary course of business. See Pickens Co. v. Thomas, 152 Ga. 648 (111 S. E. 27). Agency by express contract is limited to the authority delegated. Agency by implication rests merely upon rational inference, and the authority to be implied from acquiescence in acts usual and ordinary in the course of business will not include other acts of a collateral or dissimilar character. Nothing in the amended pleadings gives rise to the inference that the corporation gave Weinstein authority, express or implied, to sell the property in which it was carrying on its business, or to contract with a broker to procure a buyer for the property, which amounts to the same thing, in that it would impose the same liability on the corporation. See Brooke v. Cartersville Chero-Cola Co., 23 Ga. App. 671 (99 S. E. 150).
The preliminary or special facts by which the pleader claims that the alleged agent of the corporation was authorized to act for the corporation in the premises fail to support the legal conclusions that such person was so authorized.
The judgment of the trial court sustaining the demurrer and dismissing the petition as amended is without error.
Israel Katz, I. T. Cohen, for defendant.
Smith, Kilpatrick, Cody, Rogers & McClatchey, for plaintiff.
DECIDED JUNE 12, 1951. REHEARING DENIED JULY 30, 1951.
Saturday May 23 05:34 EDT


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