Bellanca Corporation v. Bellanca

BRAMHALL, Justice

(dissenting):

I cannot agree with my associates that the judgment for plaintiff should be affirmed. I would set aside the verdict and enter judgment for defendant.

The majority have held that the agreement for the sale of the total assets of the airplane business of the corporation was made with the full knowledge that the purchaser had been supplied by plaintiff and that plaintiff expected to be paid for his services in so doing. They have also held that, because of such knowledge on the part of defendant, defendant, by implication, has promised to compensate plaintiff for his services.

I do not here question the principles of law enunciated by the majority in support of their conclusions; I question that the facts of this case and the implications which may reasonably be drawn therefrom justify such conclusions. Specifically, I do not agree that the knowledge or notice relied upon by the majority has been brought home to defendant in such fashion as to make it legally responsible to plaintiff in this action.

The property sold by defendant constituted all the assets of its airplane business. Obviously, no apparent authority may be inferred on the part of either Baldini or Albert, or any of the other officers, since only the directors of defendant could authorize such a transaction. Atlantic Refining Co. v. Ingalls, 7 W. W. Harr. 503, 185 A. 885 . See Fletcher on Corporations (Per. Ed.), § 605. The majority rest their case upon the *393 alleged ratification on the part of defendant by knowingly accepting the benefits of the transaction, that is, the purchaser found by plaintiff. Of course, if defendant accepted the benefits of plaintiff’s efforts with full knowledge thereof, either actual or by implication, defendant would be responsible and the verdict for plaintiff in this case would stand. I agree with the majority that the crucial question is: Did defendant have notice that the purchaser for the business was secured through the efforts of plaintiff? Apparently contrary to the opinion of the majority, I think that because of the fact that the sale was for the whole of the airplane business, such notice must be to the directors, not to the “officials”, since the “officials” would have no authority to make the sale.

To support its finding that defendant had notice that plaintiff secured the purchaser for said business and expected to be compensated for his efforts, the majority rely upon certain testimony relating to plaintiff’s alleged presence at a meeting at the “plant”, along with three of the directors of defendant, at which the terms and conditions of the proposed agreement were discussed. They also attempt to bolster their position by stating that when Baldini informed plaintiff that plaintiff would receive no commission for his efforts, Baldini gave as the reason for such refusal the statement that too many persons had been involved in the purchase of the business, an assertion that was apparently false.

To say that the evidence as to plaintiff’s presence at any meeting at the plant, at which three directors of defendant were present, is unconvincing, is an understatement. Although plaintiff testified fully as to all other meetings at which he was present, he was completely silent as to his presence — if he was present — at any meeting at the “plant”. The only testimony tending to prove plaintiff’s presence is that of Piasecki, the president of the corporation purchasing the business, and Davis, the attorney for that corporation. *394 Their testimony was that they “thought”, but were not certain, that plaintiff may have been present at one of the meetings at the “plant”. There is no specific evidence as to which meeting plaintiff attended or that plaintiff made any statement of any nature at such a meeting indicating that he was the finder or that he expected to receive a commission — or, in fact, any other statement whatever — for his services. While I, of course, agree that it was for the jury to determine whether or not plaintiff was present, it seems to me that the complete uncertainty of this testimony, coupled with the fact that there is not the slightest evidence of any assertion on the part of plaintiff at such meeting that he was the finder of the purchaser for which he expected to receive a commission, or that he participated in the discussion to any extent, necessarily must be considered in determining what inference may be drawn therefrom.

I have at least considerable doubt that as a matter of law any notice which may be inferred from the presence of the three directors at this meeting amounted to a legal notice to the corporation. The property involved constituted all the assets of the airplane business of the company. The complete lack of authority on the part of either Albert or Baldini, as far as the sale of this business is concerned, compels plaintiff to rely entirely upon the alleged ratification on the part of the Board of Directors, since a ratification cannot be based upon the imputed knowledge arising out of an unauthorized act of an agent. Horst Co. v. Grand Rapids Brewing Co., 280 Mich. 49 , 273 N. W. 388 . See Fletcher on Corporations, § 759. Knowledge on the part of a minority of the directors of a corporation is not necessarily imputed to the corporation, even though at the time the minority directors were acting on behalf of the corporation. Whitewater Tel. Co. v. Cory, 117 Kan. 463 , 232 P. 609 ; Hudson v. Alaska Airlines, Inc., 43 Wash. 2d 71 , 260 P. 2d 321 . Edelstone v. Salmon Falls Mfg. Co., 84 N. H. 315, 150 A. 545 . See Fletcher on Corporations, § 759. Knowledge on the part of a director who is *395 directly interested in a contract is insufficient to charge the corporation. Commercial Lumber Co. v. Ukiah Lumber Mills, 94 Cal. App. 2d 215 , 210 P. 2d 276 . Even the fact that in the proper discharge of their duties the directors should have known is not sufficient. See Fletcher on Corporations, § 757.

If we assume, as contended by the majority, that the knowledge of plaintiff’s presence at this one meeting is imputable to the corporation, I still do not agree that any inference may be drawn therefrom which would be sufficient to impute to the corporation such knowledge of plaintiff’s activity on its behalf as to make the corporation responsible to plaintiff for plaintiff’s efforts. The mere presence of plaintiff at one meeting proves nothing. The record is silent as to what took place at that meeting or how long plaintiff was present. There is no evidence that plaintiff participated in the meeting. If we should accept certain general statements to the effect that the details of the transaction were fully discussed as having occurred at this particular meeting, then we must also consider that it was generally understood that the price which would be paid for this business was to be net to the corporation. The directors of defendant, with the exception of Baldini, have stated that they never knew of plaintiff’s interest in this transaction and have denied that plaintiff ever attended any meeting at which they were present. Under such circumstances, plaintiff would have been clearly under a duty to state unequivocally that he was the finder and that he was expecting to receive compensation for his services.

I fail to see how an inference may be drawn, or that the corporation was put on notice by plaintiff’s mere presence at some meeting attended by three directors of defendant, that plaintiff was the finder of the purchaser and that the defendant accepted the purchaser with full knowledge of plaintiff’s activities and with knowledge of the fact that plaintiff expected to receive compensation for his efforts. Having no knowledge of plaintiff’s activities, these directors might just *396 as easily have assumed that plaintiff was expecting to be compensated by the purchaser. Unless a broker’s position is made clear by some specific statement, it is frequently difficult to determine his exact position in any given transaction. It seems to me, in a case such as this, where the knowledge of the corporation is to be imputed to the corporation, that the circumstances must be such as to warrant a clear inference as to all material facts. Monaghan, Inc. v. M. Lowenstein, 290 Mass. 331 , 195 N. E. 101 . I do not find such an inference here.

I would set aside the verdict for plaintiff and enter judgment for defendant.