Hosher-Platt Co. v. Miller, 238 Mass. 518 (Mass. 1921)

Braley, J.

The plaintiff originally sued in equity but after the decision in Hosher-Platt Co. v. Miller, 190 Mass. 285, that the bill could not be maintained an amendment was allowed under R. L. c. 173, § 52, as amended by St. 1911, c. 275, changing the suit into an action at law, and the case was referred to an auditor who had acted as special master in the former proceedings. The auditor, subject to the objection of the defendant Miller to whom we shall refer as the defendant, admitted the master’s report, and no further evidence being offered he found the facts substantially as set forth by the master, and upon the coming in of the report the defendant moved that it be discharged and recommitted. The motion having been denied, the plaintiff offered the report in evi

dence, to the admission of which the defendant excepted because the findings of the auditor did not appear to be based on any competent evidence, and that in so far “ as the report relied on the authority of the order ” of the court “ with respect to the taking of evidence and the use of the earlier report of the master, exceeding the ordinary powers of an auditor in such matters, it was inadmissible.”

It was settled before the enactment of St. 1914, c. 576, that rulings of law contained in the report of an auditor constituted no part of a report which is to be dealt with in the trial before the court only as a recital of facts. Zembler v. Fitzgerald, 234 Mass. 236. If a party deems himself aggrieved by the admission of incompetent evidence, he must make his objection by a motion to recommit, and, the rule havinig issued, on November 13, 1909, the report was properly admitted. Collins v. Wickwire, 162 Mass. 143, 145. Jean v. Cawley, 218 Mass. 271. See now St. 1914, c. 576, § 6. D’Urso v. Leone, ante, 58.

The order of September 24, 1914, that the auditor may in his discretion without further hearing of evidence make as his report the whole or any part of his report as master, and “he shall not be required to hear anew any evidence offered before him when sitting as master ” did not exceed the discretionary power of the court. The case having been amended from law into equity, the master’s report could have been treated as having the effect of an auditor’s report. Stockbridge v. Mixer, 227 Mass. 501, 510.

It is said in the exceptions that the evidence as reported by the auditor is substantially a correct statement of the facts appearing at the trial in so far as it purported to state them, but further evidence was introduced by the defendant, and upon all the evidence he contends as matter of law that a settlement between him and the plaintiff of all matters in dispute had been effected, and that the action cannot be maintained. It appeared that on March 4, 1904, one Flinn, purporting to act for the plaintiff, entered into an agreement under seal with the defendant whereby the plaintiff upon receipt of “fifteen hundred dollars ” which was duly paid, discharged him from all further liability. If the plaintiff is bound by the agreement, it is conceded that the defendant’s request for a directed verdict should have been granted. The defendant’s first contention is, that under Flinn’s contract of employment by

the plaintiff, Flinn had authority to make the compromise. The judge rightly ruled as matter of law that the contract did not create a partnership. It shows that he was employed as the plaintiff’s accredited representative in the New England States, “and all business resulting from his efforts and secured by him and accepted by the . . . [plaintiff] within said territory,” or all inquiries received by the plaintiff therefrom were “to be referred” to him. The charter of a plaintiff corporation moreover is the measure of its powers. It is a foreign corporation. It is not shown by any statute of its domicil to have been given authority to enter into a partnership with an individual, and at common law the capacity to form a partnership is not an inherent corporate power. If a “corporation may enter into partnership with an individual, there would be two principals, the legal person and the natural person, each having, within the scope of the society’s business, full authority to manage its concerns, including even the disposition of its property.” Whittenton Mills v. Upton, 10 Gray, 582, 595. The contract of employment, while undoubtedly conferring on Flinn authority to make the agreement with Miller in the name of the company subject to the plaintiff’s acceptance, which was given, and the performance of which by Miller left a very considerable balance due from him to the plaintiff for materials and supplies, did not expressly nor by necessary implication, empower him to accept in settlement a sum much less than ihe amount shown by the account to be due and to execute and deliver an instrument under seal releasing Miller from all indebtedness. Upton v. Suffolk County Mills, 11 Cush. 586. Temple v. Pomroy, 4 Gray, 128, 131. The power of an agent to cancel a contract of his principal, cannot ordinarily be inferred from a general authority to make the contract. Paige v. Stone, 10 Met. 160. Craig Silver Co. v. Smith, 163 Mass. 262, 269. Saunders v. Whitcomb, 177 Mass. 457, 466. Williams v. Dugan, 217 Mass. 526. Berthold v. Goldsmith, 24 How. 536.

The balance of the defendant’s indebtedness as claimed by the plaintiff was $3,849.90. It appeared and the jury could find that on February 28, 1904, Flinn by letter informed the plaintiff’s president that after a long talk with Miller, “ he is going to N. Y. tonight, & will be in to see you in the morning. He proposes to give you a check for $2000.00 & a note for the balance, & clean

the matter up & I advise you to take it,” and that on or about February 29, 1904, the defendant in an interview in New York with the president, claimed that a reduction should be made, and a considerable discount allowed by reason of the failure of the plaintiff to comply with the terms of its contract. On March 3, 1904, the president wrote Flinn at Boston enclosing a statement of the account showing the balance due, and directing Flinn to see Miller “ without fail and obtain this settlement,” which the jury also could find meant the payment in full of $3,849.90. Flinn on March 4 wrote the defendant enclosing a copy of the president’s letter, and the bill was either transmitted with the letter, or was in the defendant’s possession. It was on this date and under these circumstances that the agreement of compromise was made by Flinn in the name of the plaintiff, and the defendant thereupon paid “fifteen hundred dollars ... to the attorney who accompanied Flinn.” > The plaintiff’s president March 10 having been informed of what had been done sent a telegram to the defendant, saying that Flinn “was unauthorized to sign receipt as agent or otherwise. The settlement you offered Flinn unsatisfactory and will not be accepted.” It is clear that Flinn’s authority could not be enlarged by his own declarations or acts, Mussey v. Beecher, 3 Cush. 511, and the judge correctly held that the letter shown to the defendant “ did not as a matter of law give him authority to make a compromise settlement.” The ostensible powers of an agent are his real powers, Danforth v. Chandler, 237 Mass. 518, and the only substantial defence remaining is, whether Flinn had been given apparent authority on which the defendant could rely to make the settlement. This was a question of fact on all the evidence. Temple v. Pomroy, 4 Gray, 128, 131. Rintamaki v. Cunard Steamship Co. 205 Mass. 115. Beaucage v. Mercer, 206 Mass. 492.

But even if the jury determined that the compromise was unauthorized, the defendant further contends that acceptance and retention of the money was a ratification. Murray v. Mayo, 157 Mass. 248, 249, 250. The answer is, there was no evidence that the money even came into the plaintiff’s possession. If the settlement was unauthorized, the plaintiff was not chargeable with any payment made to Flinn, or to his counsel, no part of which had ever been forwarded to, or demanded by the plaintiff. “ The

meaning of ratification is, and always has been, the adoption of an act purporting to be done, or, at least, done in fact, on behalf of the ratifier.” New England Dredging Co. v. Rockport Granite Co. 149 Mass. 381, 382.

The defendant’s requests for a directed verdict, and that it sufficiently appeared that Flinn had authority to make the settlement, and that “ the contract between the plaintiff and Flinn and the written instructions to him so far as they were communicated to the defendant authorized Flinn to make the settlement in question,” were rightly refused. The remaining requests, that, if Flinn had authority to employ counsel, a settlement made in pursuance of instructions to the attorney would bind the plaintiff, and that, if such apparent authority appeared, the defendant was justified in making the settlement in accordance with the terms agreed upon with the attorney, were sufficiently covered by the instructions or assumed conclusions of fact on conflicting testimony. Dolphin v. Plumley, 175 Mass. 304. Carnes v. Howard, 180 Mass. 569. The uncontradicted evidence of Flinn tended to show that in an action brought by him against the company he “understood that this amount was credited to the plaintiff by the court,” meaning the “fifteen hundred dollars.” The credibility of the witness however was for the jury, and the defendant as matter of law cannot complain of the instructions, that if the jury found for the plaintiff, the amount paid under the alleged compromise should be deducted, and a verdict returned for the balance, or of the question asked when the verdict was returned, whether such deduction had been made, and the answer in the affirmative, although neither the defendant nor his counsel was present. Edwards v. Worcester, 172 Mass. 104.

We have examined all of the defendant’s exceptions, and no error of law appearing they must be overruled.