Summary
In Langer v. Superior Steel Corp., 1935, 318 Pa. 490, 178 A. 490, authority was found lacking in the president, who acted in direct violation of a directors' resolution, to promise a pension for life in return for past services.
Summary of this case from Lee v. Jenkins BrothersOpinion
March 28, 1935.
April 22, 1935.
Corporations — Powers — Directors — Officers — President — Contract to pay retired employee pension during life — Evidence.
The board of directors of a corporation by resolution authorized the treasurer, until further action of the board, to pay to a dismissed employee a specified amount monthly. By letter to the employee the president of the company stated that the directors had decided that the employee would receive a pension in the amount specified as long as he lived and preserved his attitude of loyalty. The by-laws of the corporation provided that its powers were vested in the board of directors, and that the president should exercise, subject to control of the board, a general supervision over the affairs of the company and perform such other duties as might be assigned to him by the board. Monthly payments were made to the retired employee for a period of years and then discontinued. Held, that the president was without authority to bind the corporation to make the specified payments during the life of the employee and that no contract had been created.
Argued March 28, 1935.
Before FRAZER, C. J., SIMPSON, KEPHART, MAXEY, DREW and LINN, JJ.
Appeal, No. 110, March T., 1935, by defendant, from judgment of C. P. Allegheny Co., Jan. T., 1932, No. 1843, in case of William F. Langer v. Superior Steel Corporation. Judgment reversed.
Assumpsit for breach of alleged contract. Before MUSMANNO, J.
The opinion of the Supreme Court states the facts.
Verdict and judgment for plaintiff. Defendant appealed.
Error assigned, among others, was refusal of judgment n. o. v.
Carl E. Glock, of Reed, Smith, Shaw McClay, with him Fred T. Ikeler, for appellant. Charles G. Notari, of Marshall, Braun Notari, for appellee.
The appellee, suing for breach of alleged contract, has judgment on a verdict in his favor. The appellant denies that the transaction resulted in a contract.
The record shows that appellee had been employed by appellant some thirty-three years; and that it became necessary to supersede him by "a more technical man." On July 28, 1927, the board of directors took action recorded in the minutes, in evidence, as follows: "The President explained the existing conditions in the Annealing Department. It was the consensus of opinion that the interests of the Corporation would be best served by dispensing with the services of Mr. W. F. Langer, present Foreman of the Annealing Department. Mr. Langer has been in the employ of the Company for more than thirty years and without establishing a precedent but in recognition of his loyalty and many years of faithful service, the following action was taken: On motion of Mr. Liggett, seconded by Mr. Lambie, and carried, the Treasurer was authorized until further action of the Board to pay Mr. W. F. Langer One Hundred Dollars ($100.00) per month as a retired employee."
He testified that immediately before retirement his compensation was "$375 a month, plus some bonus now and again."
Instead of advising the appellee, in accord with that resolution, that he would receive the payment "until further action of the board," the president sent him the following letter, on which he bases his right to recover: "August 31, 1927. Mr. Wm. F. Langer, Dear Sir: As you are retiring from active duty with this company, as Superintendent of the Annealing Department, on August 31, we hope that it will give you some pleasure to receive this official letter of commendation for your long and faithful service with the Superior Steel Corporation. The Directors have decided that you will receive a pension of $100.00 per month as long as you live and preserve your present attitude of loyalty to the Company and its Officers and are not employed in any competitive occupation. We sincerely hope that you will live long to enjoy it and that this and the other evidences of the esteem in which you are held by your fellow employees and which you will today receive with this letter, will please you as much as it does us to bestow them. Cordially yours, Frank R. Frost, President."
The monthly payments of $100 were made until October 1, 1931, when appellee was notified that they would be discontinued.
On a statutory demurrer to the statement of claim, the common pleas held that no cause of action was stated; on appeal, the Superior Court was of opinion that plaintiff had sufficiently averred a contract. Thereupon appellant filed an affidavit of defense, setting forth the resolution of the board of directors, the by-laws specifying the president's authority, and the contention that the president's letter (the basis of plaintiff's claim) went further than he was authorized to go.
Though the evidence clearly showed that no authority existed in the president to make the alleged contract, the court nevertheless submitted the question to the jury. Appellant now complains that its point for binding instructions was refused and that subsequently its motion for judgment n. o. v. was dismissed. The judgment cannot be sustained.
Appellant presents several contentions, only one of which needs discussion. Assuming, without deciding, that the evidence would have supported a finding that a contract existed, if the president had been authorized to bind the corporation, as plaintiff contends, his case must fail for want of sufficient evidence that the president had authority to bind the corporation to pay the sum of $100 a month as long as appellee should live.
The by-laws in evidence provided: "Article 4, Section 2. Powers [of Directors]. All the powers of the Corporation are vested in and shall be exercised by the Board of Directors, except as otherwise prescribed by statute." "Article 6, Section 2. President. The President shall preside at all meetings of the stockholders, unless the stockholders shall appoint a Chairman (who may be the President) and the President shall also preside at all meetings of the Board of Directors. He shall exercise, subject to the control of the Board of Directors, a general supervision over the affairs of the Corporation, and shall perform such other duties as may be assigned to him from time to time by the Board."
The duty "assigned to him . . . by the Board" was to notify appellee of the action to pay $100 a month "until the further action of the Board." To agree to pay a pensioned employee for life was not within article 6, section 2: DeForrest v. Northwest Townsite Co., 241 Pa. 78, 88 A. 293. Appellee would avoid this result by evidence of several directors who gave their recollection of what was said and done at the directors' meeting. Apart, now, from the uncertainty of their recollection, shown in the evidence, it is to be noted that there is no suggestion in their testimony that the minutes do not accurately record the action of the board, both as taken at the time and as subsequently approved. There is no evidence that appellant proposed to do anything more than to pay to appellee the sum of $100 a month "until further action of the board."
The judgment is reversed and is here entered for defendant.