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C.B. Snyder Realty Co. v. National Newark & Essex Banking Co.

Decided: December 21, 1953.


On appeal from Superior Court, Law Division.

For reversal -- Chief Justice Vanderbilt, and Justices Oliphant, Wachenfeld, Burling and Jacobs. For affirmance -- Justice Heher. The opinion of the court was delivered by Burling, J.


[14 NJ Page 150] This appeal brings up for review summary judgments for the defendants, entered in the Superior Court, Law Division. The action was brought by C.B. Snyder Realty Co., a New Jersey corporation (hereinafter referred to as the plaintiff) against the National Newark & Essex Banking Company of Newark, a banking corporation organized under an act of the Congress of the United States, with offices in Newark, New Jersey, (hereinafter referred to as the bank), Newark & Essex Building Corporation, a New Jersey corporation (hereinafter referred to as the building company), and Gustave E. Wiedenmayer (hereinafter referred

to as Mr. Wiedenmayer) who was an officer (president) and director of the building company and an officer (executive vice-president and cashier) and director of the bank at all times involved in the complaint. The claims of the plaintiff were laid in contract in two counts and were also asserted in a third count sounding particularly in tort, and sought relief the effect of which would compensate the plaintiff, in the sum of $200,000, for its alleged efforts in connection with a somewhat complex corporate transaction involving sale of the building company's stock. From the summary judgments for the defendants the plaintiff appealed to the Superior Court, Appellate Division. Prior to hearing there certification of the appeals was allowed upon our own motion.

At the times covered by the complaint the building company was the owner of the fee of real estate commonly known as the National Newark Building, located at 744 Broad Street, Newark, New Jersey. The bank, individually and in other capacities, controlled 85% of the stock of the building company. The directorates of the two corporations were interlocking. Preliminarily, in November 1951, Mr. Wiedenmayer contacted the plaintiff for the purpose of investigating the possibility of obtaining a purchaser for the National Newark Building on certain specific terms.

A purchaser was located by the plaintiff. There then ensued negotiations between the plaintiff, the purchaser or purchasers it obtained, and Mr. Wiedenmayer (with which negotiations other officers of the defendant corporations were acquainted) whereby the transactions were molded until the proposed sale became one of the stock of the building company. The plaintiff thereupon submitted a purchaser's offer for the stock to the defendant corporations, i.e., to Mr. Wiedenmayer, on March 12, 1952. On March 13, 1952 defendants notified the plaintiff that a better offer had been received from a different prospective purchaser and had been accepted.

The plaintiff's complaint was in three counts as above mentioned. The first count encompassed: (a) claims for

commissions for procuring a purchaser for the real estate owned by the building company, addressed to both the bank (as controlling stockholder) and the building company on their separate contracts; (b) claims for damages for breach of contract with the plaintiff to accept its purchaser and pay the plaintiff $200,000 as compensation for its services in connection with the sale of the building company's stock, addressed to both the bank and the building company as defendants on their separate contracts, and (c) a similar claim for breach of contract as to sale of the real estate. The second count encompassed claims for $200,000 against the bank and the building company for the reasonable value of the plaintiff's services in connection with the entire transaction and negotiations. The first two counts also included claims against Mr. Wiedenmayer "In the alternative and in the event" Mr. Wiedenmayer "was not authorized to act for" the bank and the building company or either of them, based upon his alleged express representation of authority or his alleged implied warranty of authority. The third count involved a claim for relief (in the amount of $200,000 damages) against the bank and Mr. Wiedenmayer sounding in tort and alleging unlawful interference with the plaintiff's contracts and business relationships.

No answer has as yet been filed by any defendant. However various stipulations extending the time to answer or otherwise move with respect to the complaint were filed, interrogatories were propounded to the corporate defendants and answered and depositions were taken of Mr. Wiedenmayer and other officers and directors of the corporate defendants. Separate motions for summary judgment were filed by each of the defendants, Mr. Wiedenmayer's on September 24, 1952, the bank's on September 30, 1952, and the building company's on October 10, 1952. Each such motion stated two grounds, namely, (1) "the complaint and each and every count thereof fails to state a claim upon which relief may be granted," and (2) "there exists no genuine issue of any material fact and that the said defendant is entitled to judgment as a matter of law." Affidavits, with exhibits

appended thereto and incorporated by reference therein, were filed by the defendants. Answering affidavits were filed (on February 18, 1953) by the plaintiff. By stipulations and by direction of the trial court argument on the motions for summary judgment was adjourned until March 12, 1953.

On March 13, 1953 the Superior Court, Law Division, after argument and consideration of the complaint and of the affidavits and depositions filed on the motions, determined that "the said complaint, affidavits and depositions show palpably that there is no genuine issue as to any material fact challenged and that the respective defendants are each entitled to summary judgment as a matter of law," and ordered entry of summary judgment in favor of each of the defendants against the plaintiff on all counts of the complaint. Final judgment for each of the defendants accordingly was entered on March 14, 1953, and the plaintiff appealed. As hereinbefore noted, the appeals were addressed to the Superior Court, Appellate Division, but were certified prior to hearing there.

The questions involved on these appeals which have been consolidated may be summarized briefly as follows: (1) Did the complaint state a claim or claims for relief against any or all of the defendants? (2) Were there genuine issues as to material facts challenged and were the defendants entitled to summary judgment as a matter of law?


Relief was sought in the first count of the complaint upon the theory that the bank and the building company were liable to the plaintiff for breach of contract with the plaintiff to accept its purchaser and pay to the plaintiff $200,000 in compensation for the plaintiff's services in connection with the proposed sale of the building company's stock. The gravamen of the complaint is not a case of an alleged contract of sale, but under the peculiar circumstances a contract to obtain a firm offer to purchase stock on the

terms propounded by the defendant corporations, which the principal of the plaintiff (i.e., one or both of the corporate defendants) might or might not accept. The crux of the plaintiff's case as presented on this appeal is that whether or not there was a contract entered into with the purchaser the plaintiff obtained, the plaintiff had fully performed its separate agreement with the corporate defendants and was entitled to its agreed compensation.

Corporations, like natural persons, are bound only by the acts and contracts of their agents done and made within the scope of their authority. Leggett v. N.J. Manufacturing and Banking Co., 1 N.J. Eq. 541, 553 (Ch. 1832). It is settled that a corporation is bound by the act of an officer or agent to the extent the power to do that act has been conferred upon him: (1) expressly (a) by the corporate charter, (b) by the by-laws of the corporation, or (c) by the corporate action of the stockholders or board of directors; (2) by implication (a) from powers expressly conferred or (b) incidental thereto; or (3) where the act is within the apparent powers which the corporation has caused those with whom its officers or agents have dealt to believe it has conferred upon them. Erie R.R. Co. v. S.J. Groves & Sons Co., 114 N.J.L. 216, 219 (E. & A. 1935). In the latter category the settled rule as reiterated in the Erie R.R. Co. case, supra, is stated in American Well Works v. Royal Indemnity Co., 109 N.J.L. 104, 108 (E. & A. 1932) as follows:

"The rule is that the principal is bound by the acts of his agent within the apparent authority which he knowingly permits the agent to assume, or which he holds the agent out to the public as possessing. The question in every case depending upon the apparent authority of the agent is whether the principal has by his voluntary act placed the agent in such a situation that a person of ordinary prudence, conversant with business usages and the nature of the particular business, is justified in presuming that such agent has authority to perform the particular act in question; and when * * * the party, relying upon such apparent authority, presents evidence which would justify a finding in his favor, he is entitled to have the question submitted to the jury. * * *"

Adjectively, the pertinent principles as to the application of Rule 3:56-3 (now R.R. 4:58-3) concerning the allowance of summary judgment, were expressed in Mayflower Industries v. Thor Corp., 15 N.J. Super. 139, 155-157 (Ch. Div. 1951), affirmed for the reasons expressed by Judge Francis, in the Superior Court, Chancery Division, 9 N.J. 605 (1952), as follows:

" Rule 3:56-3 provides that summary judgment shall be granted only 'if the pleadings, depositions, and admissions on file, together with the affidavits, if any, show palpably that there is no genuine issue as to any material fact challenged and that the ...

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