1. Where a party who discloses his principal and is known to be
acting as an agent enters as such into a contract, he is not liable
thereon in the absence of his express agreement to be thereby
bound.
2. Where a corporation, organized pursuant to the provisions of
a statute, but before its articles of association were filed with
the county clerk, entered into a contract for certain machinery to
enable it to carry on its business,
held that its
subsequent recognition of the validity of the contract was binding
upon it although the statute declares that a corporation so
organized shall not commence business before such articles are so
filed.
The facts are stated in the opinion of the Court.
MR. JUSTICE SWAYNE delivered the opinion of the Court.
This action was brought to recover the value of certain
Page 101 U. S. 393
machinery manufactured by Whitney, which he alleged he had sold
and delivered to Wyman and the other defendants.
The defendants insisted that they had contracted for and
received the machinery in behalf of a corporation which they were
officers, and that hence were not personally liable.
The plaintiff lived in Massachusetts and the defendants in
Michigan.
The latter addressed a letter to the former, which was as
follows:
"GRAND HAVEN, Feb. 1, 1869"
"BAXTER WHITNEY, ESQ., Winchenden, Mass.:"
"SIR -- Our company being so far organized, by direction of the
officers, we now order from you, manufactured and shipped at as
early date as possible -- for the manufacture of the Mellish fruit
basket -- 1 large rounding lathe, 1 quart do. do., 2 lathes for
peach basket bottoms, 3 do. do. quart do. do., pint do. do. Also
the necessary small fixtures for clasping, &c., of which Mr.
Whitney is advised, and will give you more definite order."
"CHARLES WYMAN"
"EDWARD P. FERRY"
"CARLTON L. STORRS"
"
Prudential Committee Grand Haven Fruit Basket Co."
To which the plaintiff replied:
"WINCHENDEN, MASS., Feb. 10, 1863"
"GRAND HAVEN FRUIT BASKET COMPANY:"
"GENTLEMEN -- Yours of the 1st inst. is received, in which you
order machinery for fruit baskets, &c. I had already
anticipated your order by commencing on the machinery on Mr.
Whitney's verbal order, and I am now driving it with all the force
I can get on it."
"Yours respectfully, BAXTER D. WHITNEY"
The plaintiff wrote further, as follows:
"WINCHENDEN, April 14, 1869"
"MESSRS. C. E. WYMAN, E. P. FERRY, C. L. STORRS:"
"GENTS -- I herewith send bill of machinery ordered by you Feb.
1st, and have drawn on you at sight for the amount, $6,375. The
machinery was delayed two days in order to get into one of the blue
line cars. It has gone from the depot now and I have to send
Page 101 U. S. 394
to Fitchburg for through bill of lading, which I expect tonight,
and will forward it as soon as I procure it."
"Yours respectfully, BAXTER D. WHITNEY"
The plaintiff charged the defendants individually on his books
for the machinery. His draft was protested, and he thereupon wrote
as follows:
"WINCHENDEN, MASS, May 14, 1869"
"MESSRS. CHARLES E. WYMAN, EDWARD P. FERRY, CARLTON L.
STORRS:"
"GENTS -- I have just received notice of protest of my draft on
you. Reason given, machinery not arrived. I doubt not the machinery
has arrived before now, and if so, I hope you will forward me draft
on New York at once. I need the money very much, from the fact that
parties here on which I relied for money have been burned out and
they are unable to pay me at present."
"Yours respectfully, BAXTER D. WHITNEY"
The last two letters were not answered.
The machinery was delivered at Grand Haven, and the freight was
paid by Edward P. Ferry as the treasurer of the corporation. The
draft of Baxter was protested because it was addressed to the
drawees individually. They claimed that he had no right so to draw
on them.
The corporation was organized under a statute of Michigan which
authorized mining and manufacturing companies to be created
pursuant to its provisions. It took the name of "The Grand Haven
Fruit Basket Company."
On the 5th of January, 1869, thirty-two stockholders, including
the defendants, subscribed the articles of association and
acknowledged their execution before a notary public.
On the 21st of the same month, there was a meeting of the
stockholders, at which a code of bylaws was adopted. It provided
for the election of seven directors and of a president, secretary,
and treasurer, and that the directors should elect out of their
number one who, with the president and treasurer, should be a
prudential committee, and that the committee should be charged with
such duties as might be devolved upon it by the board of directors.
The defendants and four others were elected directors.
Page 101 U. S. 395
On the 25th of the same month, the board of directors elected
the defendant Storrs president, the defendant Ferry treasurer, and
the defendant Wyman for the third member of the prudential
committee.
The articles of association were filed with the secretary of
state on the 19th of February, 1869, and with the county clerk on
the 12th of May following. The statute declares that they shall be
so filed before the corporation shall commence business. The notary
public who certified the acknowledgment of the articles was himself
a subscriber, and his name is included in his certificate. It was
proved, by parol evidence, that the directors authorized the
prudential committee to contract for the machinery.
The corporation received the machinery, bought an engine to run
it, manufactured baskets with it, and carried on the business until
some time in the year 1870.
On the 3d of March, 1870, Lyman and Fairbanks, two of the
directors, were authorized to settle with the plaintiff on the best
terms they could obtain.
The court instructed the jury in substance that the letter of
the prudential committee of Feb. 1, 1870, bound the corporation,
and not the defendants, if there was then a corporation and the
defendants were authorized by it to give the order, and that if the
corporation had acted as such and exercised its franchises, then it
was a corporation
de facto, and that in such case any
irregularity in its organization was immaterial.
The plaintiff excepted to these instructions and took numerous
other exceptions in the course of the trial, which are set forth in
the record.
The jury found for the defendants, and judgment having been
entered for them, Whitney removed the case here.
Where the question of agency in making a contract arises, there
is a broad line of distinction between instruments under seal and
stipulations in writing not under seal, or by parol. In the former
case, the contract must be in the name of the principal, must be
under seal, and must purport to be his deed and not the deed of the
agent covenanting for him.
Stanton v. Camp, 4 Barb. (N.Y.)
274.
In the latter cases, the question is always one of intent,
and
Page 101 U. S. 396
the court, being untrammeled by any other consideration, is
bound to give it effect. As the meaning of the lawmaker is the law,
so the meaning of the contracting parties is the agreement. Words
are merely the symbols they employ to manifest their purpose that
it may be carried into execution. If the contract be unsealed and
the meaning clear, it matters not how it is phrased nor how it is
signed, whether by the agent for the principal or with the name of
the principal by the agent or otherwise.
The intent developed is alone material, and when that is
ascertained, it is conclusive. Where the principal is disclosed and
the agent is known to be acting as such, the latter cannot be made
personally liable unless he agreed to be so.
Looking at the letter of the defendants of the 1st of February,
1869, and the answer of the plaintiff of the 10th of that month, we
cannot doubt as to the understanding and meaning of both parties
with respect to the point in question.
The former advised the latter of the progress made in organizing
the corporation, that the order was given by the direction of its
officers, and the letter is signed by the writers as the
"Prudential Committee of the Grand Haven Fruit-basket Co.," which
was the name in full of the corporation. The plaintiff addressed
his reply to the "Grand Haven Fruit-basket Company," thus using the
name of the corporation as the party with whom he knew he was
dealing and omitting the names of the defendants and their
designation as a committee according to the style they gave
themselves in their letter.
It seems to us entirely clear that both parties understood and
meant that the contract was to be, and in fact was, with the
corporation, and not with the defendants individually.
The agreement thus made could not be afterwards changed by
either of the parties without the consent of the other.
Utley
v. Donaldson, 94 U. S. 29.
But it is said the corporation at the date of these letters was
forbidden to do any business, not having then filed its articles of
association, as required by the statute.
To this objection there are several answers.
The corporation subsequently ratified the contract by
recognizing and treating it as valid.
Page 101 U. S. 397
This made it in all respects what it would have been if the
requisite corporate power had existed when it was entered into.
Angell & Ames, Corp., sec. 804 and note.
The corporation having assumed by entering into the contract
with the plaintiff to have the requisite power, both parties are
estopped to deny it.
Id., sec. 635 and note.
The restriction imposed by the statute is a simple inhibition.
It did not declare that what was done should be void, nor was any
penalty prescribed. No one but the state could object. The contract
is valid as to the plaintiff, and he has no right to raise the
question of its invalidity.
National Bank v. Matthews,
98 U. S. 621.
The instruction given by the court to the jury with respect to
acts of user by the corporation in proof of its existence was
correct. If there was any error, it was in favor of the plaintiff.
Angell & Ames, Corp., sec. 635.
The record shows clearly that the plaintiff was not entitled to
recover, and that the verdict and judgment are right. We therefore
forbear to examine the other assignments of error. Conceding that
all the exceptions to which they relate were well taken, the errors
could have done him no harm.
Barth v. Clise,
Sheriff, 12 Wall. 400.
Judgment affirmed.