DeForest v. Northwest Townsite Co.
DeForest v. Northwest Townsite Co.
Opinion of the Court
Opinion by
Judgment was entered in the court below for want of a sufficient affidavit of defense, and the question here is whether this was error. Suit was brought to recover an alleged balance claimed to be due on a guaranteed annual salary. The contract sued on was made by the president of the corporation without the authority of the board of directors. It is contended for the corporation that no liability attaches to it because the contract was made without authority; while, on the other hand, the appellee here, who was a party to the contract, urges that even if the contract was made without authority in the first instance, the board of directors assented to its terms by acquiescence and thus bound the corporation by ratification. There is no doubt that the board of directors had the power to make the contract relied on to sustain this action, and although that power may not have been exercised in a manner to make it binding on the corporation in the first instance, subsequent ratification may give it binding effect: Kelsey v. National Bank, 69 Pa. 426; Manhattan Hardware Co. v. Phalen, 128 Pa. 110; Wayne Title & Trust Co. v. Railway Company, 191 Pa. 90; Greensboro Gas Co. v. Oil & Gas Co., 222 Pa. 4. We cannot agree with the argument of the learned counsel for appellant, that
Judgment reversed and record remitted in order that the case may be tried on its merits.
Reference
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- DeForest v. Northwest Townsite Company
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- Syllabus
- Corporation — Power of president — Contract of employment— Ratification by directors — Question for jury. Although a contract of employment made by the president of a corporation may not be binding upon the company because of the lack of power of the president to make it, yet if the directors accept services under the contract, and fail to disavow within a reasonable time, their acquiescence in the arrangement may operate as ratification, and bind the company. Ratification may be made by formal action, or by passive acquiescence, but in either event, such acts must be established as will warrant the proper finding. The burden is on the plaintiff to show such acquiescence in, knowledge of, and adoption of his services by the corporation, as will warrant a jury under instructions as to the law, in finding a ratification.