Henderson v. Western Gas Engine Co. , 8 Cal. App. 247 ( 1908 )

Action by brokers to recover commissions for services in selling corporate stock. Findings and judgment for defendant. Plaintiffs appeal from the judgment and from an order denying a new trial.

The record discloses that defendant corporation, through its board of directors, passed resolutions authorizing its president to sell at par certain of its corporate stock then in the treasury; that when said action was taken there was a custom and usage throughout California that officers, unless otherwise directed, when so authorized, in the usual and ordinary course of business placed and listed such stock with brokers on a commission basis without express instructions from the board of directors, and in cases where such stock was so listed to pay commissions to such brokers. That the president, after ineffectual attempts to sell the stock by advertisement and otherwise, listed the stock with plaintiffs, who were then engaged in the brokerage business in Los Angeles, and agreed, if the stock was sold to a customer introduced by plaintiffs, to pay them a commission of seven and one-half per cent. It is conceded that plaintiffs found a customer and introduced him to the president, to whom the stock was sold at par, and that the commission of seven and one-half per cent was a reasonable one.

The court found that no services were rendered by plaintiffs and no indebtedness against the corporation arose by reason of the transaction. The specifications of error relate to the insufficiency of the evidence to support such findings.

We are of opinion that from the record it appears, without contradiction, that the services were rendered under a valid agreement, and it being stipulated that the commission claimed was a reasonable one, that the indebtedness was clearly established for the amount claimed in the complaint. Treating the president, under the authority given him by the resolution, as a mere agent of the corporation, his power to employ plaintiffs as such brokers existed under section 2319, Civil Code: "An agent has authority: 1. To do everything necessary or proper and usual, in the ordinary course of business, for effecting the purpose of his agency." The trial court, that it might know what was proper and usual in the ordinary course of business in such transactions, admitted proof of the custom obtaining in relation thereto. Such custom being established, knowledge thereof must be imputed to the board when it passed the resolution ordering the sale, and such resolution is susceptible of no construction other than it authorized a sale by the president at par in the usual and ordinary manner. That such manner was observed is uncontradicted; that in its observance the employment of plaintiffs resulted and that they performed the services and earned the commission is unquestioned. If, as a fact, the corporation did not desire the usual custom of business to be followed in connection with this sale, it was incumbent upon it to so specify its desire in its resolution directing the same; otherwise, the plaintiffs had a right to assume that the employment was warranted. "A corporation which suffers appearances to exist, and its officers and agents to so act, as to give one employed by such officers and agents reason to believe that he is employed by the company, becomes liable to such person as his employee to pay for the services rendered." (Crowley v. Genesee Min. Co., 55 Cal. 276.) The defendant having given this general authority to its president, the plaintiffs had a right to assume under the custom of business that it was the intention of the corporation that the usual manner of business in such transactions should be observed and their employment authorized. The matter of an agent's employment of a subagent is not here involved, but rather the use by the agent of the instrumentalities necessary in the prosecution of the business, the use of which, by fair inference, may be said to have been contemplated by the principal in his appointment.

The order denying a new trial is reversed, and cause remanded for further proceedings.

Shaw, J., and Taggart, J., concurred.