Moskowitz v. A. B. Kirschbaum Co.

Argued October 19, 1926. The only question is whether appellant's motion for binding instructions should have been granted. There is no dispute of fact; the parties differ only concerning the effect of the evidence.

Plaintiff was employed in 1903 by a firm composed of four partners. In 1911 he wished to leave but was induced to remain by one of the partners who gave him the written contract of employment appearing in the reporter's statement of the case; this had been signed in the firm name by another partner. In 1912 the four partner's (and perhaps others) formed the defendant corporation which took over the business theretofore conducted by the partnership. In 1915, plaintiff first learned of the incorporation. In 1923, he was discharged on two weeks' notice; he asserted that his contract entitled him to 60 days' notice; defendant replied that it was not bound by the contract originally made by the partnership. Plaintiff sued for his wages for the difference in time and the jury found for him.

Defendant offered evidence that when it purchased the business and property of the partnership, it formally adopted only three of the contracts of employment theretofore made by the partnership, and that plaintiff's was not among them. The four partners became and have remained respectively President, 1st Vice President, 2nd Vice President, and Secretary and Treasurer of the defendant corporation.

Plaintiff's position is that he has shown that the corporation became bound to comply with the conditions of the contract. Appellant's position is that as only two of the four partners had knowledge of the conditions of employment, the corporation is not bound to perform them and for that position cases are cited holding that a corporation is not responsible for its promoters' contracts unless a majority of the corporation's promoters created the obligation and the corporation accepted the benefits of the contract or otherwise adopted it: Bonner v. Travelers Hotel Co. Inc., 276 Pa. 492, and cases cited p. 497.

If appellant's premises were true the result might follow, but the argument disregards the partnership relation and its consequences. Promoters are not partners (unless by special contract: 14 C.J. 254, sec. 287) whereas plaintiff's contract was with partners; though only two partners are shown to have had actual knowledge of his contract, what they know in the legitimate course of the firm business — and this contract was — the other partners also know: Thompson v. Christie, 138 Pa. 230,248; Adams v. Ashman, 203 Pa. 536, and case cited p. 541; 30 Cyc. 530, sec. 19. All four executive officers therefore had legal knowledge of the contract from the beginning and not having notified plaintiff that the corporation would not be bound by it, must in the circumstances disclosed in the record, now perform its obligation.

Defendant's motion was therefore properly refused.

Judgment affirmed.