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The Florida Midland and Georgia Railroad Company vs. Varnedoe

Supreme Court of Georgia1888-07-11
81 Ga. 175

Summary

Holding. The judgment was reversed. The appellate court held that the trial court committed reversible error in allowing testimony about agency and ratification that was inadmissible, and in failing to instruct the jury on the proper legal standard—namely, that a corporation cannot be bound by an individual's contract unless the corporation's authorized agent subsequently adopts it or makes a new contract on the same terms.

Varnedoe sued the railroad company for cross-ties it had cut and delivered. A jury found in his favor, and the railroad company moved for a new trial, arguing various evidentiary errors. The court below denied the motion. On appeal, the court identified several improper rulings at trial. The central issue concerned whether an individual named Peck had authority to bind the railroad company when he signed a contract with Varnedoe. The trial court allowed testimony suggesting ratification or agency authority by company representatives, but the appellate court determined that Peck's contract was his individual obligation, not a corporate contract capable of ratification. The proper question for a new trial should have been limited to whether the railroad company, through its authorized agents, subsequently adopted Peck's contract or entered into a new agreement with Varnedoe on similar terms.

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

Key issues

  • Whether testimony regarding an individual's statements about another person's agency authority could bind a corporation
  • Whether a corporation could ratify an individual contract signed by someone claiming to be its agent
  • Whether individuals acting as agents of one corporate entity could bind a different corporate entity of the same name
  • Proper jury instructions on corporate agency and contract adoption

Procedural posture

The plaintiff brought suit for cross-ties delivered pursuant to a contract; a jury returned a verdict for the plaintiff; the defendant's motion for a new trial was denied in the trial court; and the defendant appealed.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion

majority opinion

Simmons, Justice.

Yarnedoe brought suit against the railroad company for certain cross-ties cut and delivered to it. Upon the trial of the case, the jury, under the charge of the court, found a verdict for the plaintiff. A motion was made for a new trial, which was overruled, and the defendant excepted. The grounds of the motion will be found in the official report of the case.

There was no error in overruling the defendant’s motion to strike the amendment and dismiss the declaration. The amendment setting out the written contract by Peck was not a suit upon the contract, as claimed by the plaintiff in error, but was more in the nature of a memorandum in which the price of the ties and their size were detailed.

Nor was there any error in permitting the defendant in error to testify as to where the contract ■ was made, who were present, and other circumstances, as claimed in the third ground of the motion. The testimony on this point was simply a part of the history of the case, and the plaintiff was entitled to have it go before the jury. And for the same reason, the court was right in refusing to grant a new trial on the fifth ground, in regard to the testimony of Chandler.

"We think the court should have granted this motion for a new trial on the errors assigned in the fourth, sixth, eighth and twenty-second grounds of the motion. We do not think that the plaintiff should have been permitted to testify as to what Pendleton said to him concerning Peek’s agency and authority, etc. It is true it is claimed that Pendleton was a director of the company at that time; but we do not think the declarations of the director, as to whether a certain person is the agent of the company or not, are sufficient to bind the company.

We also think the court erred in admitting the newspaper extract complained of in the 8th ground of the motion. The extract appears to be the report of a public meeting in the town of Yaldosta; and what was said and done at that meeting was certainly not admissible to bind the company.

We also think the court erred in permitting the plaintiff to testify as to what McClave swore on the trial of the Bracken case. This testimony was for the purpose of impeaching McClave, and no proper foundation had been laid for its introduction.

We also think that the court should have given the request embodied in the 22d ground of the motion. It was, that “ the defendant is not bound by what MeClave, Peck, Lehlback, G-laskin or Chandler may have said to the plaintiff, without more; one man cannot make another man or a corporation his principal by saying so, nor has every employé of a corporation authority to bind it.” We think this was a sound proposition of law, and applicable to the case, and should have been given by the court as requested by the defendant.

The view we take of the ease renders it unnecessary for us to pass upon all the grounds set out in .this motion. The case seems to have been tried in the court below upon the idea that certain agents of the defendant had ratified the contract made between Varnedoe and Peck. The court below was right in ruling that this was the individual contract of Peck. It is true that he says in the contract that he is the agent of the defendant; but the contract is signed by him individually and not as agent, nor was the defendant’s name signed thereto; and Peck, in the body of the contract, promises individually to pay Varnedoe so much money. It was, then, the individual contract of Peck, and could not be ratified by the company or its agents, any more than the contract of any other individual about another matter could be ratified by the corporation. This being so, the only question which should have been submitted to the jury was, whether the defendant, by its authorized agent, adopted this contract after the failure of Peck, or made a new contract with Varnedoe upon the same terms and conditions. If they adopted this contract in substance, or made a new contract with Peck upon the same terms and conditions, then Varnedoe would be entitled to recover if he com- < plied with his part of the contract. If, however, they did not adopt this contract of Peck, nor make a new one with Varnedoe, or if they did make a new one with Varnedoe and he subsequently withdrew from the new contract, then he cannot recover. "We think that, with Peck’s individual contract out of the way, these are the only questions which it will be necessary to submit upon the next trial.

It was claimed by the plaintiff in error that Mc-Clave and Lehlback were not the agents of the Georgia corporation, but of the Florida corporation of the same name; and that therefore they could not make a contract that would bind the Georgia corporation. We are inclined to think that if McClave and Lehlback came over to Georgia and went upon the right of way of the Georgia company, and rented an office and put upon the door of the office a sign-board styling it the office of the Georgia company, it being the terminus of the Georgia company, and gave no notice that they were the agents of the Florida company and not agents of the Georgia company, with the knowledge of the Georgia company, and with its consent or without objection by it, then Varnedoe had the right to treat them as agents of the Georgia company; and if they made a contract with him, either adopting Peck’s contract or making a new one, the Georgia company would be liable.

All the other grounds of the motion are in regard to the subject of ratification, which we hold has nothing to do with this case, and it is therefore unnecessary to discuss them.

Judgment reversed.