
    Samuel B. Parmelee, Respondent, v. The Associated Physicians & Surgeons, Appellant.
    (New York Common Pleas—Additional General Term,
    August, 1894.)
    One who deals with an officer of a corporation to whose office no inherent executive authority attaches is chargeable with notice of his apparent want of authority, and so deals at his peril.
    A contract of employment made by the treasurer of a corporation, in disregard of a by-law restricting the execution of such a contract by him alone, is not binding on the corporation.
    Reabgument of an appeal from a judgment of the District Court in the city of New York for the seventh judicial district, rendered by the justice, without a jury, in favor of the plaintiff.
    Action upon a contract of employment made by plaintiff with the treasurer of the defendant corporation, the act of such officer purporting to be the act of the corporation.
    
      The principal defense was that the defendant was not chargeable under the contract in view of the fact that a by-law of the corporation prohibited the making of an agreement involving a liability to the extent of that in suit, without the approval of the president, which had not here been given.
    
      David B. Simpson, for respondent.
    
      Charles De Hart Brower, for appellant.
   Bischoff, J.

Further consideration of this case, upon reargument, but serves to strengthen our opinion that the judgment is not to be supported.

An examination of the later decisions of the Court of Appeals, taken with those of earlier date, leads to the conclusion that the rule to be deduced, with regard to the effect of by-laws restrictive of the powers of an agent as officer of a corporation upon a contract entered into through such agent or officer, opposes a recovery upon his contract by the plaintiff herein.

This rule may properly be stated to be that if the officer assuming to act for the corporation, in the making of a contract with a third person, is one whose office is attended with inherent general executive authority for the ordinary conduct and management of the corporate business, and the contract .is one which is within the power of the corporation to make, and the making of which could, therefore, be delegated to an officer or agent, the officer so assuming to act is clothed with apparent authority upon which such third person may rely in the absence of notice of limitations upon the officer’s authority which are imposed by the by-laws or the proceedings of the board of directors; but if the officer, with a liability for whose act the corporation is sought to be charged, is one to whose office there is attached no inherent executive authority, then, and in that event, the third person dealing with the officer in an executive capacity is chargeable with notice of an apparent want of authority and so deals with the latter at his peril; and in such a case, if the officer’s authority to make the contract is disputed, it is incumbent upon such third person to establish the authority by proper evidence. If the by-laws, which are relied upon as evidence, impose certain limitations or restrictions upon the exercise of the authority,such limitations or restrictions may not be disregarded, but. must be held to determine the extent of the authority. Rathbun v. Snow, 123 N. Y. 343; Patterson v. Robinson, 116 id. 193 ; Jemison v. Bank, 122 id. 135 ; Wilson v. Kings Co. El. Ry. Co., 114 id. 492; F'irst Nat. Bank v. Ocean Nat. Bank, 60 id. 278; Lee v. Pittsburgh C. & M. Co., 56 How. Pr. 373; 75 N. Y. 601.

In Patterson v. Robinson, 116 N. Y. 193, it was held that where a contract, made in the name of a corporation by its president, is one which the corporation had power to authorize its president to make, a presumption that such officer was' so authorized obtains, but in Jemison v. Bank, 122 N. Y. 135, the court say that a party dealing with an agent of a corporation is chargeable with knowledge of the extent of such-agent’s powers. In Wilson v. Kings Co. Ry. Co., 114 N. Y. 492, it was held that the burden is upon the party claiming under a contract with a corporation, when made through an-agent, to prove the authority of the person so assuming to act as agent, the party thus dealing with the corporation being' chargeable with knowledge of the actual or apparent authority-of its agents or officers, and to the sainé effect is the case of First Nat. Bank v. Ocean Nat. Bank, 60 N. Y. 278.

In Chemical Bank v. Kohner, 85 N. Y. 189, the court held that the president and cashier, general executive officers, of a-bank would be presumed to have authority to enter into contracts in the course of the usual business of the bank, and in Lee v. Pittsburgh C. & M. Co., 56 How. Pr. 373; 75 N. Y. 601, the president of a corporation was held to be possessed of apparent general executive powers in furtherance of the business of the corporation, and so in Rathbun v. Snow, 123 N. Y. 343, in dealing with a case involving the apparent powers; of a general managing agent of a corporation, the court, say-that these apparent powers are not to be restricted as to third persons by secret limitations contained in the by-laws.

But the treasurer of a corporation is an agent with special powers merely, and cannot bind such corporation by the performance of acts without the scope and ordinary course of the duties of his office (Boone Corp. § 143), and so also of' the secretary. Id. § 145.

Applying the rule before stated to the decisions of this court in Westerfield v. Radde, 7 Daly, 326; Rathbun v. Snow, 15 id. 141, and Bohm v. Gambrinus Brewing Co., 16 id. 80, it is apparent that the rule stated in those cases, namely, that persons contracting with a corporation through an officer thereof are affected by limitations imposed by the by-laws upon the latter’s authority, and of which by-laws such person may have had no actual notice, must be accepted with the qualification that it applies only to cases where the officer assuming to act for the corporation was not, by virtue of his incumbency of an executive office, clothed with apparent authority to act in the premises.

Further, in the case of Bohm v. Brewing Co., 16 Daly, 80, the contracting party had knowledge of the by-law requiring that such contracts as that in suit should be signed by the treasurer as well as the president, and it appears that a request to approve the contract was made of the former in accordance with such knowledge and refused.

It follows, from the views expressed, that the contract for employment made with plaintiff by the treasurer of the defendant corporation, in disregard of the by-law restricting the execution of such a contract by that officer alone, was not binding upon the defendant, and that this action as brought upon such contract must fail.

The judgment should, therefore, be reversed and the complaint dismissed, with costs.

Bookstaveb, J., concurs.

Judgment reversed and complaint dismissed, with costs.  