Twelfth Street Market Company versus Jackson

Supreme Court of Pennsylvania1883-04-16

102 Pa. 269

Summary · law.co

Holding. The judgment in favor of the plaintiff was reversed because the company did not authorize the plaintiff as a broker, nor did it ratify his employment and services; the president alone could not bind the corporation in financial and debt matters committed to the finance committee, and ratification requires actual knowledge and assent by the proper corporate authority.

The Twelfth Street Market Company engaged in negotiations to reduce its ground-rent obligation from $6,000 to $5,000 annually. A man claiming to be a broker asserted that he had been hired by the company's president to arrange financing for this reduction and that his efforts led to the successful agreement. However, the court found no evidence that anyone in the company other than the president knew of the broker's involvement or the negotiations he conducted with a potential lender. Because corporate authority cannot be exercised by a single officer acting unilaterally in matters assigned to committees, and because the broker's employment and services were never communicated to or ratified by the company as a whole, the court determined the company had not validly engaged him.

The court emphasized that individual corporate officers cannot bind the corporation through their unauthorized actions, and that a company's adoption of an officer's unauthorized acts requires actual knowledge and assent by the proper corporate authority, not merely a coincidental favorable outcome. The plaintiff's claim for compensation depended on proving either prior authorization or subsequent ratification by the company, neither of which was established.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Whether a corporate president may unilaterally bind the corporation in matters assigned to specialized committees
Whether corporate ratification of unauthorized acts may be inferred from favorable results without evidence of actual knowledge and assent
Whether a single officer's unauthorized engagement of a broker creates enforceable corporate liability

Procedural posture

The plaintiff brought an action for compensation as a broker, claiming the company had employed him to arrange financing for a ground-rent reduction, and the trial court rendered judgment in his favor, which the company appealed.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

majority opinion

Mr. Justice Trunkey

delivered the opinion of the court, April 16th 1883.

The Twelfth Street Market Company has power to take in fee-simple or upon ground-rent real estate necessary for a public market house, its government and control, and the management of its property, and the corporate powers, are vested in a board of nine managers -who shall have general and entire control of the affairs and interests of the company. Article VII. of the by-laws provides that the “ president shall have the general charge and direction of the business of the company, as well as all matters connected with the interests and objects of the corporation, and shall be ex offieio a member of all standing committees.” And article XII. provides that the committee of finance “ shall make arrangements for providing the necessary funds for meeting all liabilities of the company, and report to the board any suggestion they may consider advisable for paying off, or discharging any of the permanent indebtedness of the company.”

However extensive the authority given to the president, it does not include what is expressly and in unmistakable terms given to the finance committee. That committee shall provide funds to meet all liabilities of the company, and report to the board their suggestions respecting the permanent indebtedness. The provisions of the two articles can well stand, without concurrent authority in the president over subjects which are only named when placed in the care of others. Éven if the language of article VII. is so broad that it might be interpreted to embrace those subjects, the subsequent article shows there was no such intention.

The president was a member of the finance committee, but one member was not authorized to act alone. For transaction of business all should be convened, or warned so .they may be present, for the advice of each may be useful though they do not unite in opinion : Allegheny County Workhouse v. Moore, 95 Pa. St. 408; Pike County v. Rowland, 94 Id. 238.

On June 13th 1879, the board of managers authorized the execution of an agreement with the Pennsylvania Company for Insurance dri Lives and Annuities, for the reduction of the ground-rent from $6,000 to $5,000 .per annum for.a period of ten years, and that said rent should not be redeemable within said period. The plaintiff claims that- the consummation of that agreement resulted from his services. He was employed by John Rice, presidentof the company, to secure a loan of-$100,000 to pay off the principal of the ground-rent and create a now one, at five per centum, which service he performed by obtaining the promise of the Penn Mutual Life Insurance Company to loan the money and take an assignment of the ground-rent, or a new ground-rent, at five per centum, for ten years. Very soon after he communicated his success to Rice, the company closed its contract with the owner of the ground-rent for the reduction. But there is not a particle of evidence that any officer, or committee of the company, other than Rice, had knowledge of the plaintiff’s employment by Rice, or of the negotiations with the Penn Mutual Life Insurance Company. Plence, the making of the contract with the owner of the ground-rent was not an adoption of the plaintiff’s acts, or a ratification of his employment. His own testimony is, that Rice is the only person connected with the company that he saw about the matter, and that he never brought Rice and any one on behalf of the Penn Mutual Life Insurance Company together.

To entitle the plaintiff to recover, he must establish his employment as a broker by previous authority, or by acceptance of his agency and adoption of liis-acts: Keys v. Johnson, 68 Pa. St. 42. “ Unless they are authorized, the individual members of a corporation cannot bind it by an express promise, nor can corporate engagements be implied from their unauthorized and unsanctioned acts or declarations Allegheny County Workhouse v. Moore, supra. When there is no evidence that the facts were ever communicated to the party, or that he had knowledge of and assented to the acts alleged to have been done for him, it shall not be submitted to the jury to find á ratification: Moore v. Patterson, 28 Pa. St. 505.

Judgment reversed.