(US
DDERU.. BJi:p()RTEB,
voL 49.
ity.and.: its officers: in carrying out its judgments; and this is one o(th(i)secases. The court bas attentively considered the arguments of counsel for respondent, bu' is unable to . reach a conclusion differing from that !InI,lounced upon. tbehearing on the application for the rule nisij nor is the answer for defendant in any respect sufficient to exonerate him from the legal consequences,of the defiant attitude which he has taken towards the proper order of ·this court itl ,a matter of which it had both prior and plenary jurisdiction: While the announcement is made with very grE".atreluctance, the duty devolves upon the court to make the rule ab"IOlute, and cause the Ilottachment to issue against the defendant, direct· ing tbemarsbalto arrest and commit him for his contemptuous disregard of tlw d,ecree oOhe court. If there is further disobedience on the part wbatsoever,tbe court will grant a writ of assistance ,the marshal to. take actual possession of the property of the defendant c»rpora.tion. It will be so ordered.
"
I
PABB:' BROS. &: Co" Limited, ·
11. KELLY AXE'M'ANUF'G
Co.
Coun Qf Appeatl, SI:tth .,
January 29, 1892.) ' .'
So
1"LB,Q)l1I....
Ji. .ileinulrer to an answer plalntlff'a power to make the· contract sued upon doea not'admit the fact.a therem iilleged, ao as to make the'm part of the petition; alldit is error. forthe'court, on overruling the demurrer, to regard them as part ot the petition, and disiniss the auit.
.. Lnrt'TBD P&KTNBRSHIP8--CoNTRACTIlo
Al.tboughAct Pa. June 2, 1874, 5 5, limitathe liablllty of partnerships formed thereunder to $500 on a aingle undertaking, unless the same ia in writing signed by two manageI"S, yet a failure to so sign a contract for a larger amount will not prevent the Pllrtnership troltl suing thereon when it has made or tendered full per' .
.. S£MIII-'-'CbNftAOTBT AGliNor-RATIJ'IOATION.
6" B.uut.'. . The bringing of a suit by a limited partnership on a contrBOt made by an agent is a ratification of its terms. I. CoNI'LJOlrOJ' LAWs-CONTRAOTIl-LunTBD PARTNBRSHIPS. The legality of the execution of a contract made in Kentucky by an agent for a limited partneI"Ship organized under the laws of Pennsylvani!'t iii a suit brought in the fOrmer state, la, to be .determined by the laws of KentuckY. and not by the act underwhiph the partnership was created.
The lIJlegation that the contract in suit was made by an agent for the benefit of plaintiif, a, .limited partnership, organized under Act Pa. June 2, 1874, and that it haa smce beell adoptedhy the partnership, is sulllcient to sustain the action; there bema nothing in the statute to :prevent such ratifioation.
Circuit Court of the United States for the District of " ' .' Action by Park Bros. Co., Limited,against Kelly Axe ManUfacturing Coxnpany. Dexnurrer'bYc defendant Plaintiff brings eltor. Reversed. ,'. Humphrev. tti)avie, (or plaiptiff in
In
PARK BROS. '"
CO. 11.
KELLY AXE MANUF'G
CO.
619
Before JACKSON, Circuit Judge, and SAGEand SWAN, District Judges. JACKSON, Circuit Judge. It appears from the record in this case that on December 9, 1887, the plaintiff in error submitted to the defendant in error, a Kentucky corporation, located and doing business at Louisville, in said state, the following written proposition: "We propose to supply you with all the axe and hatchet steel, of good and suitable quality. you will use in :your works prior to December 31, 18l:l8. not to exceed 125 net tons, nor be less than 100 net tons, at l:lt cents per pou nd. The above price is guarantied against our own and association decline on the undeli \'ered portion of th is contract at the date of said decli ne. Terms: Fourmonths note, or 3 per cent. discount for cash In 30 days from date of shipmeut. Deliveries to be made f. o. b. Pittsburgh. less freight to Louisville, Ky. To be specified for as follows. at the rate of 10 tons per month. In the event of serious fire. strikes, or delays, unavoidable or beyond our control. the provisions of this contract shall cease until such cause shall have been ramo\'ed. In case any shipment of steel proves unsuitable. it is understood that you will immAdiately discontinut' its use, and you (us) of the facts, that we may have the opportunity of deciding what shall be done under the circumstances, 80 that possiLle loss and damagp. to either you or ourselves shall be prevented." This proposition was signe.d, "PARK BROTHERS & Co., (Limited.) JOHN A. SUTTON," and was dated at Louisville, Ky., where it was submitted to and accepted in writing by the Kelly Axe ManUfacturing Company. Thereafter, plaintiff proceeded with the delivery of the steel, and when 80,097 pounds thereof had been received, the defendant declined and refused to accept the baiance, amounting to 119,903 pounds, which plaintiff alleges was duly tendered. Partial payments were made by deiElDdant on 80,097 pounds received, leaving a balance due thereon of $1,756.54 according to the contract price, which defendant retused to pay. The plaintiff thereupon instituted this suit in July, 1889, against the defendant, to recover the sum of $5,120.32, with interest thereon from January 1, 1889, as the damages sustained by its ulleged breaches of said contract. The first count of the original petition or declaration claims the sum of $3,363.78 as the net protit the plaintiff would have made upon the 119,903 pounds of steel which was tendered to and refused by defendant; said net profit being the alleged differences between the cost of producing that quality of steel, with the freight thereon to Louisville, Ky., from Pittsburgh, and the contract price of 81 cents per pound to be paid therefor. The second count of the petition seeks to recover the unpaid balance of $1,756.54 on the 80,097 pounds received and accepted. In thepetitiun or declaration the plaintiff avers that it is and was at all times a corporation established and existing by and under authority of the law of the state of Pennsylvania, with power and rights, under the laws of said state, to contract and be contracted with, to sell and be -sold; that since its creation it has had and still has its office and place of business at Pittsburgh, said state of Pennsylvania, of which it is a citizen. The delendant is alleged to be a corporation and citizen
620
J'lCDERAL REPORTER,
.vol.49.
The defendant demurred to this petition, setting up as grounds of demurrel:4-'.,First,'that the sum claimed in either or both paragraphs (or counts) of the petition was not sufficient in amount to bring the subjectmatter within the jurisdiction of the court; second, that said petition, and neither paragraph thereof, states facts sufficient to constitute any cause of action as against defendant. This demurrer was properly overruled and disallowed by the court, for the reason that the petition claimed more than $2;000 for the alleged breach of the contract, and because, if the two counts could be regarded as presenting two distinct causes of action, they could properly be joined in one suit under the Kentucky Code, so as to make the" matter in dispute" sufficient to give the court jurisdiction. The theory of the demurrant was that the measure of damage set up in the first paragraph of the petition for non-acceptance of the 119,903 pounds of steel tendered, was stated in a way that would only entitle plaintiff to nominal damages; which, added to the $1,756.54 by the second paragraph, would be less than the $2,000 requisite. '90nfer jurisdiction. This was clearly an erroneous view to take ofthe petition, which claimed agai,.nst defendant the sum of $5,120.32 for· the breaches complained of, and the court below was right in overruling the demurrer. i Thereafter the plaintiff, by leave of the court, amended the first paragraph of its petition, and alleged, ih substance, that defendant's refusal to accept the 119,903 pounds tendered it under the contract was not because of any alleged uIlsuitQ.bleness of said steel; that, by reason of said refusal,. plaintiff had been compelled to and had disposed of said 119,903pountis of steel at the best market price procurable for the same, which was 5t cents per pound; and that after allowing defendant credit for the sum thus realized, and the further credit of $233.31 as the freight on said quantity of steel to Louisville, Ky., and charging it with the con8f cents per pound on the same, the difference amounted to tract $3,064;02,. which, with interest since December 31, 1888, constituted plaintiff'g damage for the non-acceptance by defendant of the 119,903 pounds of steel. To the petition as thus amended the defendant interposed several defenses. By the first paragraph of its answer, it denied plaintiff's corporate existence. By the second, after admitting the written agreement sued on, and its acceptance thereof, it denied that plainhadprepa,red or offered to it axe and hatchet steel in·quantities of 10 tons per month, or any quantity, during the period covered by said agreemeJJt, of good and suitable quality, needed in its work; that plaintiff, had tendered the 119,903 pounds of steel free on board the cars at any part oHt, good or suitable for use in its factory; that it ,had refused any tender of such steel; that the cost of manufacturing sl!lch steel was: 5 cents per pound; that there was any profit to plaintiff' such steel, as claimed; that its refusal to accept the steel was npt caused. by its unsuitableness; that plaintiff had the right, under said c<?I).tract, to deliver within the year ending DecemberS1, 1888, the 119,9Q3 pounds of steel, or any part thereof, or to receive 8f cents per pound therefor; that plaintiff was, by its refusal or failure to accept said steel,
to
PARK BROS. &
KELLY ,AXE MANUF'G
co.
621
()()mpelled to dispose of the same; that the market price thereof, after ita alleged refusal to accept",was5t cents per pound; that the steel was disposed of at that price; and that the sum claimed by plaintiff was due from it. By the third paragraph the defendant set up as a special defense that the plaintiff and the other makers of steel throughout the United States had about and before December, 1887, entered into a trust combination to raise the price of said steel from 6 cents pflr pound, which was a reasonable price, and afforded a reasonable profit to the steel-makers, to 8t cents per pound; that defendant having a large axe and hatchet factory, in which much money was invested and numerous operatives were employed, was forced to sign said contract with plaintiff in order to procure the supply of steel needed to carryon its works; that 8t cents per pound was more than the steel was worth, a11dwas an unreasonable price therefor, extorted from defendant under said trnst .combination; and thatit was not, therefore, bound by said contract to pay said price, but was only liable .for the actual value of· the steel delivered to it, which was of no value. By the fourth it waa ;alleged the use of the 80,097 pounds of steel delivered to and ceived by defendant had resulted in or caused a loss and damage to its business, occasioned by the trade rejecting and refusing to handle. its axes and hatchets because of the inferior quality or said steel employed in making the same,etc.; and for this damage a counter-claim of $10,000 was .set up. By the fifth .paragraph of its answer the defendant averred that plaintiff was' a joint-stock association, known as a partnership, (limited,) organized under an act ofPennsylvania passed June 2, 1874, with power to sue and be sued in the firm name of Park . Limited; that plaintiff and defendant attempted to make the contract sued on, but that the same was and is from the first null and void; that plaintiff, under said act of June 2, 1874, had no power to make any .contract, for the non-performance ofwhich it could be subjected to a lia'bility in excess of $500, unless such contract was reduced to writing, and signed by ,at least two managers of said association; that the written con·tract declared on -was not signed by any manager or managers of said as-sociation, and that said John A. Sutton, who claimed to be theltgent -of said association, in fact had no authority td bind it;· and that, as said ·contract subjected plaintiff to a liability in excess of $500, it was null and void, ahd defendant was not bound thereby. To these special oefenses, constituting the 3d, 4th, and 5th paragraphs of the answer, the plaintiff demurred on the grounds that they, nor either of them, presented any defense or cause of action. The court did nat act upon the demurrer so far as it related to the defense setting up the trust tionbetween plaintiff and other steel-makers, but sustained it as to the counter-claim and overruled it as to the defense setting up the invalidity ·of the contract under the Pennsylvania act of June 2, 1874; and thereupon the court adjudged and'decreed "that said demurrer be now'car..ied back to the petition, and the court adjudges that said petition is insufficient mlaw, and the demurrer is sustained thereto;" to which' plainltiff excepted; tlnd, under.1eavegiven, plaintifftbereafterfiledanamended
622
FEDERAL REPORTER,
vol. 49.
petition, setting Jorth that although said John A. Sutton executed the .wltitten'c.ontract: sued on in his ;ow:nindividual name, and was bound ,thereon ibdividually, he made the saMe as agent for and for the benefit -ofplaintiff,isnd.tbat "plaintiff has adopted and does adopt said contract as its own;" etc.· The defendant demurred to the plaintiff's petition as thus amended because insufficient in law to sustain its action. The court this demurrer, and thereupon ordered the dismissal of the plaintiff's suit, from· which judgment the plaintiff prosecutes the present writ of error, and, ;al!!signs for error in'the action of the court below-First, that the court erred in overruling its demurrer to the fifth paragraph of the defendant's answer, which set up the invalidity of tbe contract nnder the Pennsylvania act of June 2,1874, for want of signature by two man.agers of the association; 8econd, that the court erred in its order carrying .back the demurrer of the plaintiff to the petition. and adjudging the said petition to be insufficient in law. and sustaining the demurrer thereto; thtird. that the court erred in sustaining the delimdant'sdemurrer to the petition as amended, and holding the SaIne as insufficient in law; and, jourth,.that:the court erred in its final judgment, entered July 9,1891, dismissing the petition·. ' ltdoes not appear from the record that the plaintiff was given or allowed. the .right of replying to said fifth paragraph of the answer upon the demurrer theretobeil'1g overruled by the court, nor that its right to make reply thereto was waived or abandoned. On the contrary, it is shown by the record that upon overruling that demurrer of plaintiff the court proceeded to earlY the same baokto the petition, and adjudge that . it waS ins.Uffioientin law, notwithstanding a direct demurrer thereto by defendant ,had beeut pre\1iously overruled. It is undoubtedly a wellsettled rule that a. demurrer reaches back to the first error in the pleadings, and juflgment may, properly qe given against the party who committed it. In Cooke v. Graham, 3 .Cranch, 229-235, Chief Justice MARSHALL thus states the rule: "When theWbole pleadin!!;s areth11llsprpall upon the record by a demurrer. it is the dut)·(:):f the ('OU1't to examine the whole. and go to the Iil'st error. When tl1e special the:Phtintiff. his own pleadings are to be court will notice what would bad upon a general demurrer." TheprincipJe has no· application, however, where the defect is one of formn'nd,rllOt· of substance. Aurora City v. West, 7 Wall. 82, and Railroad v. Harris. 12 Wall. 84. In the present case the original petition, as firstamendtld on the mE'asure of damages, was not bad upon general ,demurrer. It states a good and valid cause of action against the defendant, ",hose demurrer thereto had been properly overrnled. Upon whatprimciple{'then, coul<l plaintiff's demurrer to the fifth paragraph oOhe aus:wer;operate to read into the petition the facts and averments setup in tbeAif4ihparagrapb of theanswel', on overruling plaintifl"s demurrer to.tha.tparagraph, and thus make the petition bad? There is'no rule of:plea1fhlg: such a: procedure as that. Plaintiff's demurrer to said: fifth paragraph, while admitting the facts therein alleged
PARK
& CO. II. KELLY AlXEiMANUF'G CO.
623
for tM'pu;rpose oftesting their legaHufficiency as a defense to the suit, did not so 'admit them as to make them a part· of the .8.verments of the petition, or authorize the court. toincorpomte. them into said petition, and thereby create defects therein which did not otherwise exist on the face of the pleading itself. Weare accordingly clearly of the opinion that the second ,assignment of. error, is well taken, and should be sustained; The other assignments of error are so connected as to be properly. considered together. The action of the court in overruling plaintiff's demurrer to the fifth paragraph of the answer, and in sustaining defendant's demurrer to the petition as·thereafter amended, proceeded upon the theory that the written contract between plaintiff and defendant, which fQrmed the cause of action sued upon, was invalid or wanting in binding force as to the plaintiff because not signed by two of its managers, and that being invalid, and Dot obligatory upon the plaintiff, there was, no mutual and reciprocal:obligation such as the law required to make the contract binding upon the, defendant. was rested upon the provision of section ,5 of the Pennsylvania act of June 2, 1874, .relating to and providing for the organization of limited partnerships, which provided: "That there shall be at least one meeting of the members of the association in each year, at which there sh,all be elected not les8 thantbree normoretbau live managers of said assoCiation. Qne. of whom shall be. the ,one the ;lull one, orOne may be both treasurer and secretary, who shall hold their respective offices for one year, anduqtil their successors are 'duly jnstallediandnodebt shall be contracted or liability incu rredfor Said aSllOOiation except by one or 'Inore of said managers, 'and no liability for an amount exceedingJive hundred dollars. except against the person incurring it, s,hall binll the said ass04;lation, unless reduced to writiQg. and signed by at two !Jlanagers." In Melting 00. v. &ese, USPa. 8t.355, 12 Atl. Rep. 362, and, WalMr v. Brewing 00., 131 Pa. 8t.546.' 20 .Atl. Rep. 309, the supreme court of Pennsylvania had this section before it for construction in suits limited partnerships organized under the act upon verbal contracts mp,de by one manager, which the partnership company had repudiated. Thus, in Melting Co.v. Reeae. 118 Pat St. 355, 12 AU. Rep·. 362, the chairman of the limited partnership verbally contracted to seU 600 tierces of oleomargarine oil at 6j- centa, when ,the market price. was 8! cents. The company refused to confirmtbe sale and deliver the oil. The purchaser tendered the price, and brought suit to enforce the contract. ,The aupreme court held that the manifest purpose of the a,ootion was" to protect the association and its members from all obligations not sanctioned in the manner especially provided;" that under the enactment the individual !members did not have the authority of general partners to bind, the association or limited partnership; that strangers dealing with such,limHild partnership, being supposed to kll<ilW. the law. are bound hy theliinitation imposed upon the members, and could not have the 'inferences w-hich flow from a relation of general partnership merely, an(i .that".a .contract of sale made by the. chairman of the board of managers ofsuch'association, withQut. ex.press authority from. the board, orauthon-
624
FEDERAL REP?RTER,
ity to be implied from a course of like sales made without objection, is not binding." ,-Walker v. Brewing 0>., 131 Pa. St. 546, 20 Atl. Rep. 309, ill to the same effect. In Andrews Bros. C-o. v. Youngstown Coke Co. , 39 Fed. Rep. 353, a bill was filed to reform an irnprovidentcontract made by one manager, and which the company had disavowed and repudiated, by compelling its execution by two managers of the association, to the end that it might be legally ,enforceable against the defendant. The relief sought was denied by the circuit court; ACHESON, J., holding that said seCtion was in the nature of a statute offrauds. of which the association could avail itself; and could not be deprived of the right so to do by a court of equity. 'These decisions fall far short of holding that all verba;} contracts of limited partnerships, involving a lilibiljtyexceeding the sum of $500, are null and void ,unless made and signed by two managers oftha-association. They do not so construe said section 5 of the act, which, ,being intended for the protection of ,such association and their members; admits of no such construction. Theiniiroation; if not the direct ruling, in Melting 0>. v. Reese, 118 Pat S1.i3M, 12 At!. Rep. 362, is that :asingle member of a limited partner.. ship, under express authority, from the board of managers, or authority t.o:be implied "from s.course,to£.1ike sales made withQut objection, might bind'theass0ciati6ni' It will be noticed that the contracts sought to be enfqrcedagainst'theassocilitionsin the above cases were Pennsylvania c0r'ltracts;that they were l1eV.E!rapproved, ratified" or, acted upon by th as!Joc}lltion, bqt promptly ,disaffirmed and The court balow.:while conceding that said section of the act of 18U ,did not mab the,contract in ,question null and void, yet ,held thatthefifth paragraph ofthe IlDswer,which set it up as a defense to theW-hole petition, was a good defense to the plaintiff's recovery of damages forbi'each of the executorycontract .of sale and purohase, for the reason that said contract could not, have been enforced against the plaintiff if it had chosen to in.. sist,upon the informality in the written contract. From the construc" tiongiven the ·actby the supreme C",.Qurt of 'Pennsylvania, the court con· sidered it followed necessarily "that executory contracts of any kind cannot be enforced against either party, where, as in this case, there is no other consideration than the mutual agreement of the parties thereto." We do not concur-in this view and ruling as a Gorrect application of the law-to !the present'Cllse. The legal principle that contracts must be mutual does not mean that each.party niustbe entitled to the same rem· edy for Itbreaohby the other, There must be mutuality of obligation, but not heoessarily mutuality of remedy. Brown v.Munger, (Minn.) 44 N. W.Rep. 519. This question aroseiri Fwhmongers' 0>. v. Robertson, 6 Man.'&' G. 131, where' it was contended that as the plaintiffs were a body 'corporate, and the agreement which they sought to enforce was not under seal, as required by law, it did not bind thein, and could not be obligatory· on the defendant. TINDAL, C. J., said, in delivering the ijudgnlent of the court, that:the argument for the· defense was that the company could not SeUe as plaintiffs on an agreement which could not ·have been. enf-Orced against them as defendants. The court held· the de.
PARK BROS. &: 00. f'. KELLY AXE MANUF'G 00.
625
Censes bad, inasmuch as the declaration contained an averment oC the performance of every matter which was a condition precedent to the right of action. As the result of this and other like decisions cited, it ' is said in Hare on Contracts (page 380) that "what is essential a recovery is not that the contract shall be mutually obligatory, but that the plaintiff shall have complied with the terms on which the defendant declared his willingness to be bound." Contracts covered by the statute of frauds furnish analogous illustrations of their principle. Thus a contract for the sale of merchandise is obligatory on the vendor, under the seventeenth Of that statute, although the vendee does not sign the same, and could not be compelled to pay the price; and so, conversely, the vendee caimotdefend an action for the purchase money on the ground that vendor did not sign the memorandum, and might have withheld the 'goods. 'A defendant who has reCeived or been tendered the full benefttiti( a contract cannot be allowed, in reason:io!.' justiCe, to set up as a defense to an action upon such contract that the plaintiff was not originally; or at the time ofits execution. bound to perform the same. This ia clearly recognized in StOrm v. U. S., 94 U.S. 76, where it was'he1d tbat a defendant who bad received the consideration of a written agl'eem'entcotild not, in all action brought against him for a breach of hii!coVellli.nt or contract, aet tip that the agreeinent' did not bind the to perform his covenants,provided it appears that he formed them in good faith, and without prejudice to the defendant. 'In that case the defendants attempted to show that the agreement between themselYes and the United States was inoperative because it contained a provisioll that it might be ,terminated at such time as the quarter-master general might direct, and in consequence of the further provision that it was made subjecit to the approval of the department and division commander., There wa$ no direct evidence that said commander had ap.;. proved the contract. The court say: ' "Beyond d!'lubt the written agreement went into operation, and it is not even suggested that 'department and di vision commanders ever expressed any disapproval of its terms and condition. * * * Suppose it be true that the quartermastel' general might terminate it, if heshollid see fit. It is a sufficien,t answe.r tq the suggestion to,say that he never did interfere in the matter, and that the contract continued in full force and operation out the whole periOd for which the necessary supplies were purchased by the ' United States in open And then proceed to lay down the rule that" where defendant has received the consideration of a written agreement, it is no answer to an action fora breach on his" part to say that it did not bind the plaintiff when,executed; citing Add.Cont. (6th Ed.) 15,and Mortm/, v. Burn, 7 AdoI. &$. 25. Now,ilUhepresentcase, it is distinctly shown by the petition, and by the anawer, that the written agreement between the parties was nut only made, but went into actual operation; that plain,tiff ,801 097 of the 200,000 pounds of steel agreed to be fur,nishedand;.received; that defendant paid tlae"contract price therefor, less v.49F.no.8-40
626
FEDERAL REro!RTER. 'vol.
49." 1
tM sum of 81l'156;54; thatthe balance<of the steel was by: plaintiff anti .refused by defendant·. · What is the legal effect of ,those , averments; if true? 'They establish full performance'of the contract on the 'patt ofplainti'ff, under the rule laid down in Hepburn v. Auld,l craneD, 821..,..s,aO, ,whereiHs said by the chief justice, speaking for the court; that-', f entitle, theltl'Belves to the money for which the suit was instituted. it ts incumbent,on t,M'}ilaintUJII tOtlhow tliatthey have performed the ver,}' act on perfqrmanee of which ,the payable. ,or that they are ,excused );>y ,tile the dl"fendlint for The act itself has not beenperforllled; but a tender and refusal IS eq nal to a performance... . is fully supported by authorities; and, after such plafPtiff alleged in this i,t is no an,swel'to the 8CtJOP for aJlegedbreach of the contract to sa.y thatJplaintiff have pe:rformed or tendered such per" ' '.. · . ,' .' if it, be conceded ,that plaiptiff was not originally bound by the'lVptteD. on, it is in ,the last amendment Qf plaintiff l)ad and did adoptsa.id contract. Tltere a!3 tosubject-Iflatter or terms to render illegalpr contrary to, public policy, or that it was, and authority of the plaintiff to make,or, i( mfj.qe, by an Ullltuth0l'lzed agent, to pl;event the plaintiff froIll r.a:tifYingapd adqptipg it; nor wp,uld such ratification and adoption to be maqein the form or with,the formality of a ,-w,ritingsigned py manaReraof the;partnershin In section ,2 Mor. :priv,r:pprp., the rule is accurately stated as fqllows: ',. ,"It is to that a provisiQn in aohaner fOfa plality in ,the f()r!uation, of a contract, doe,S notnecessarilY,lPl,ll.\esuch t'ormality essential to the ratification of a contr,act' alreadv formed.l\Ddthe ,superior agents of a corporation may have autbohty to dispense withfol"lnalities which lllade ..y uP9ninferior or subordinate agents." ;CjtJ,l\g Beecher v. RI,Jlling-Mill, (Jp., 109" W. Hep.69&. v. Xele. gr.aph 00., 6 El.&;BI. 341. ,In, the charter of. the. defendant corporation, prohibited 'th!l cQmpany trdm' beingbounli by contracts above 'ii certain value. ;@'less"theywel;esigued,byat least directors. The company was sued on a contract above the prescribed. value, which had .beenmade by the chairman alone, verbally; and it was held that the contract. executed 'by the chairman alone; without authority, had been binding upon the companyby the subsequentacquiescenee on its'part. J.fl il8on v. :Railtroad Cb.;'2 :DeGex;J. & S. 475,'ie to the sameeffeck 'Thedecisions of 'the supreme"Court establish beyond question thesamegel)eral principle. Supervisor8 v. Schi'/llck, 5 Wall. 782; Bank v. Matthew8;98 U. S. .i629; OresweU ".-;LanaM/I'/" '101 U.S. 349-351; PittBburgh, O'.<t. Bt.L. Ry. Oo.v.Keokuk:tcrH. B1'idge 00.· 131:U.'S. 381, 9 Sup. Ct. Rep. 770. So in Ke18e'JlVo.' 'Ba.nk, 69 St. 426429" the court said: ' , "The law flJ'Well settled that a prinelpal who neglects promptly to disavow an actof hit agent.' ,by, which lattel' has transcended his authority.
any
PARK BRO!I.& CO.
v.
KELLY. AJ;E MA!!TUF'G CO.
627
makes the act'bis own; and the maxim whicb. makes ratification equivalent to precedent authority is as milch predicable of ratification by a corporation as it is of ratification by any other principal. and it is equally to be presumed from the absence of dissent."
It admits of no question that plaintiff, in its corporate or limited partnership capacity, had the power, as a company or association, to make the contract in question. There is nothing in the act of June 2, 1874, set up in the fifth paragraph of the answer, to limit and confinE.' the plaintiff', whether regarded as a corporation or association, to the single mode of E.'nOOring into contracts by two of its mllnagerSj and, whatever contract it could make as a body, it can ratify when made by an agent who has acted without ptevious There is, indeed, nothing in the pleadings in the 'presE'nt case to negative the presumption that SuttOll, who acted on behalf of plaintiff, did not have full and ample authority to make the contract sued on for plaintiff. The statement in the fifth paragraph of the answer that he did so without proper authority is a legal conclusion not admitted by the demurrer to said paragraph. But, however this may be, plaintiff's ratification and adoption of the contract is sufficiently alleged to enable ino sue upon the same. Besides, the. bringing of suit upon the contract is a ratification thereof, and of the act of the agent in entering into it for pla.intiff. Bank v. Sharp, 4SmedeR &M., 75.. In Fishmongers' 00. v. Robertson,5 Man. & G., 131, the court seems to have considered that the ratification implied in bringing suit thereon rendered the contract obligatory on the company: See, also, to the same point, Richards v. Grpen, 23 N. J. Eq. 537, and Fry, Spec. Perf. (2d Amer. Ed.) § 297. It is not, however, necessary to discuss what acts or contracts on the part' of the will constitute a ratification of an unauthorized act done by another in his name or on his behalf. It being distinctly allegp.d that plaintiff had adopted, and had, in legal effect, performed, the contract, the right to maintain the action thereon was clear. But, aside from the views already expressed, there is presented by the record another ground for holding the action of the lower court to be erroneous. It seems to have been assumed by the court, and the same assumption is made by counsel for defendant in this court, that the written contra(!t bet\Vel'n plaintiff and defendant, which constituted the foundation of the'sI.Ht, Was a Pennlly]vania contract, governed and controlled hy the said act of June 2, 1874. The contrad was date.d and executed at Louisville, Ky;; by or on behalf of both parties. The aill'ged defect in the agreement is that it was not signed or executed by or for plaintiff' in proper form, or according to the formalities required by thefiJthllection orthe Pennsylvania act of June 2, 1874, in to make if binding on plaintiff. It is settled bitbe authorities thnt the plage of mnking the contract governs'as to the formalitil's necessary to 10e validity of thecontlllct. Wheat. Conti. Laws, § 401; Pars. Bills & ,In Scudder v.Bank, 91 p. the court say: a'contract shall be in writing, oJ" may be made by parol,fs R'formality to be determined by the law of the place where it is made. If valid
628 thele,' the contract fs lJinding, although the law of the placeo'f 'performance may require the contract to be in writing." Citing Dacosta/v. Dams, 24 N. J. Law, 319. ' It is further said by the court that"Matters bearing upon tbe execution,tbe interpretation, and the validity of 8 contract are determined by the law of the place where the contract is made. Matters connected with its p\lrformance are regulated by ,the law prevailing at the place ot I:lerformance. Matters respecLing the remedy, sucb as the 1:Jringing of suits, admissibility of evidence, statutes of limitation, depe!1d upon the law of the place where the suit is brought." In Pritchard v. Nortnn., 196 U. S. 130, 1 Sup. Ct. Rep. 102, the foregoing propositions are See, also, Matthews v. Murchwem, 17 Fed. Rep. 768, It follows from the foregoing principles and authorities that, the contract in having, been' executed at Louisville, Ky., its validH)'; and binding operation is not to be by tile of 18'74, set up as a defense by the fifth para-, graph of the answer, and plaintiff's demurrer thereto should have been sustained.,. Other presented need not be specially referred to; as the foregoing conclusioDsdispose pf the case. We think the plaintiff's assignments of erlQr are well ta,l\:en, and that the action of the lower court in plaintUi's demurrer, and in. sustaining defendant's, demurrer to the petition as amended" and in dismissing the suit, was and should be reversed·. It, is accordingly so ordered and adju'dged,and the cause will be reml1-nded to<the circuit court for the district of Kentucky for furthElJ' proceedings therein in conformity with this ,opinion, ",od with leav,e toplaintUftl>furtheramend its petition SOM to show the citizenship of its members, if it is an association or limited partnership and not a corpory.tion, as may,be necessary umier the autuC)rity of Ohapman V" Barneg,129 U. S.682, 9 Sup. Ct. Rep. 426. '
POST ". PULASXI COUNTY.
(Circuit Court of AppeaZ8. Seventh
March 8,t899,)
L 0011NTT BoNn$.:-REoiTAL-NoTIOE.
A recital iii county bonds that they are issued pursuant to an omerof the connty court "JilutsaU persons dealing in the bonda upon inquiry as to. the of the order. : . ' , . ,,'. , ' ,
.. SA1tlE"':"RAlLnoAD AID BoNllS:-VALJDITY. l and
,A;0t"Mal'ch6; 1867, i!10()rpPrating the C. &I V. :a. Co:' empowered municipal corporatlOns, wh'!n authorlzedoy popular vote. to subscribe for stock in the Company, issue bonds in payment,therefor. A county agreed, by popular vote, wsu!); scribe fOr, '100,000 of. swck:. and, issue bonds therefor, but bt'lfore issuance of the .bonds theooullty authorit\ell agreed w sell the stock back to the company in exOhange for tl5,OOO in bonds." .In fact, only$95,ooO of bonds were issued 'and delivered to the ?Ompally,and ,no.stook. receivctdby the, tbl't the bonds were void, smce theuaosactlon, being a gift and not a subscription, was no't'authorized by:the stat1;lte.nor assented to by the popular vote. Oh0i88eT v. People, (IlL Sup.) lW N. E. Rep.:!I#J. followed. ;, ,, " ,