
    Aaron S. Bright, Resp’t, v. Canadian International Stock-Yard and Abattoir Company, Limited, App’lt.
    
      (Supreme Court, General Term, First Department,
    
    
      Filed January 18, 1895
    
    1. Contract—Ratification.
    Ratification must be done with full knowledge of the facts.
    & Same.
    A board of directors, where they do not know anything about an agreement, which the president of the company attempted to make on their behalf, cannot ratify it.
    3. Same—Corporation.
    Where a corporation made a contract with a person introduced by plaintiff, who was employed for that purpose- by the president, without authority from, or knowledge of the corporation, the latter is not liable to plaintiff for his services.
    4. Same—Rescission—Return.
    The principle as to the necessity of a party giving up those things which he has received under a contract if he does not desire to be bound by it, has no application to such an agreement.
    Appeal from a judgment entered on a verdict in favor of plaintiff, and from an order denying a motion for a new trial.
    The contract sued on, omitting the formal parts, is as follows :
    Whereas, the above-named corporation, through its president, is desirous of securing for the association a connection with a person thoroughly conversant in detail (commercially and otherwise) with the abattoir business, and is further desirous of obtaining a loan to the amount of one hundred thousand dollars ($100,-dOO), or such sum as may be agreed upon, for one year, and which loan the party of the first part is willing to secure by the deposit of a satisfactory amount of the bonds and stock of said company, and also to allow, the parties furnishing said money full representation in the board of directors of said company, during continuance of said loan: Now, therefore, it is agreed, as between the parties hereinbefore named, that, upon the introduction by the party of the second paiS to the party of the first part, or to its president, of a person or persons with whom or from which introduction definite business shall result, or if there should be a merger or consolidation of other property with the properties of the party of the first part, through said parties so introduced or through their influence, directly or indirectly, that then the party of the second part shall be deemed to have performed his portion of the agreement, and in that case the party of the first part hereby agrees to pay, or cause to be paid, to the party of the second ■part, his heirs, executors, administrators, or assigns, immediately on consummation (as per article first), the sum of five thousand dollars ($5,000) in cash, and twenty thousand dollars ($20,000) in full-paid, non-assessable stock of the above first-named company ; and said party of the second part is and shall be at liberty to receive from any other source than the party of the first part any further sum, as commission or brokerage, without prejudice to this agreement. This agreement to be in force and effect until March 1st, 1892. And it is further agreed that the authority and •direction of the board of directors of the above-named company, if desired by the party of the second part, shall officially confirm the action of its president in executing the above contract.
    
      J. L. Bishop, for app’lt; A. Kling, for resp’t.
   Van Brunt, P. J.

This action was brought to recover a sum alleged to be due from the defendant to the plaintiff upon an alleged contract. It was strictly in its nature an action by a broker to recover commissions alleged to have been agreed upon. The contract sued upon was made by one Dodge, as the president of the defendant, with the plaintiff. It was conceded upon the trial, and the court so charged the jury, that the president of the company had no power to make this contract on behalf of the corporation, and that it was necessary, in order that the same might be binding upon the corporation, that it should be either directly or indirectly confirmed by the board of directors ; and the jury were further instructed that the corporation might, with full knowledge •of the facts, ratify the action of the president, which in its inception was not binding upon them, and that, if the directors of the •company received the fruits of any contract obtained through the instrumentality of the plaintiff, they-were liable, whether those fruits turned out to be of value or not. The defendant raised the point, upon the termination of the plaintiff’s case, and also upon the completion of all the evidence of the case, and before the same was submitted to the jury, that there was no evidence showing this contract to be binding upon the company, and that there was no liability upon the part of the defendant to the plaintiff. As has already been stated, it was conceded that there was no authority upon the part of the president to bind the corporation by such a contract; and the jury must have found their verdict either upon the theory that there was a ratification, or that the corporation could not deny the contract, because they had entered into agreements with other persons who had been introduced to them by the plaintiff. There was no evidence of ratification, because it was not shown that the board of directors, at the time they entered into the contracts which are claimed to have been Drought about by the intervention of the plaintiff, knew of the existence of the alleged contract between the president of the corporation and the plaintiff. One of the principles of ratification is that it must be done with full knowledge of the facts, and, if they did not know anything about this agreement which the president of the company attempted to make on their behalf, it would foe impossible for them to ratify. If the contract is to be supported at all, it must be upon the theory that the defendant has received the fruit of the plaintiff’s labor, and is consequently liable in respect to a contract of which it bad no knowledge. The learned court fell into an error, and made a misapplication of the principle as to the necessity of a party giving up those things which he has received' under a contract if he does not desire to be bound by it. Such rule has no application to the case at bar.- In order that the plaintiff in this action should recover as against this defendant, he was bound to show that he was employed by it to-do the thing which he did do. And it is entirely immaterial that he introduced the parties with whom the defendant negotiated, and that it completed its negotiations with those parties, if the-plaintiff .is unable to show an employment and an agreement to pay. Take the ordinary case of a broker. In order that he should recover, he is bound to show employment, and that he was the procuring cause of a sale, if a sale be the subject which is involved. If the broker introduces one party to the other, and a. sale results, unless he is able to show employment, that fact does not entitle him to compensation. So, in the case at bar, unless-the plaintiff can show that he was employed to do the things he did, certainly the defendant, in ignorance of any liability arising from his intervention, cannot be held bound to an agreement in respect to which it was absolutely ignorant. The plaintiff has failed to show any employment upon the part of the defendant, which was essential to his cause of action ; and. when it is stated that the defendant has not returned that which it received under its contract with the parties with whom it negotiated and contracted, it is clear that the rule has no application to the facts in. the case at bar. How could it return ? In what way could it restore the situation ? That -depended upon the will of other parties, and the defendant could be held to its contract by the other parties. It is not like a case where the sole question is as to a contract between two parties, in which one desires to - rescind the contract, he keeping that which he has got under it. The defendant got nothing under the contract of the plaintiff with Dodge,, and there is nothing that it can return which it has received under that contract. Therefore it seems to us evident that there was a complete failure of proof when the plaintiff failed to show an original employment upon the part of the defendant or a subsequent promise to pay.

The judgment and order appealed from should be reversed, and a new trial ordered, with costs to the appellant to abide the event.

Follett, J., concurs.

O’Brien, J.

(dissenting.)—The plaintiff and the president of the-defendant company signed a contract, by the terms of which the. plaintiff was to perform certain services, for which he was to receive some stock and money. That plaintiff performed his part, of the agreement the testimony tended to show, and, were it at contract between individuals, there can be no doubt that a verdict upon such evidence would not be disturbed. The defense is that the president of the defendant corporation had no power to make such a contract, such right being reserved to the board of directors. The evidence tends to show that the defendant reaped advantage from plaintiff’s work, but, though admittedly benefited thereby, it claims to have accepted such benefit without knowledge of plaintiff’s employment by its president. Evidence was also-offered to show that, in addition to the president, other officers; knew of the employment. Apart, therefore, from the original authority, the question was submitted to the jury as to whether "there had or had not been a ratification by the defendant, the court ■saying:

“I have also charged you, gentlemen, that a corporation may ■ratify a contract which was invalid in its inception, and it may do that in two ways : First, if, knowing all the facts, it deliberately, by a vote of the directors, ratifies the transaction; and, secondly, by receiving the fruits which have grown out of the carrying out •of the invalid contract.”

I think this was a correct statement of law, and, the jury having found in plaintiff’s favor upon the question of ratification, the verdict seems to me right, and should not be disturbed. Aside, ■however, from this, I think there was a question as to whether or not, the company was not bound, notwithstanding the provisions -of the by-law, by a contract that was made by its chief executive officer in connection with a matter which presumably was within the scope of his authority, concededly made for- the benefit and advantage of the corporation, which the latter reaped, and which it holds; and this I do not think it should be permitted to do without making just compensation to the plaintiff. Having concluded that the judgment is right, I dissent from the conclusion reached by the majority in reversing it and ordering a new trial.  