Atholwood Development Co. v. Houston

Delaplaine, J., delivered the opinion of the Court. Atholwood Development Company a Maryland corporation, has appealed from a judgment recovered by Frederick Houston in the Court of Common Pleas of Baltimore City upon a verdict for damages for alleged wrongful discharge from employment. ⁴⁴⁴ Houston testified that in October, 1939, he was engaged by Bramwell Kelly to superintend the construction of a row of houses on Frederick Road in Baltimore. He conferred thereafter on a number of occasions with Kelly and his father, G. LaMar Kelly, concerning their plan to incorporate and apply to the government for a loan. He studied the plans of the architect, recommended certain persons for the jobs of excavation, construction, and plumbing, and hired a number of laborers.

The company was incorporated in December, 1939. But in February, 1940, about the time the loan was obtained, he learned that he was not wanted for the work. The appellant contends that it was not bound by the alleged contract of employment. According to the record, Bramwell Kelly acted as one of the incorporators, attended the first meeting of the incorporators, and instructed Houston in regard to the employment of carpenters.

When first questioned in the court below, he swore that he could not remember whether he had served as a director of the corporation; but after he was shown a document bearing his signature as a director, he recalled that he had served in that capacity. G. LaMar Kelly, president of the corporation and the owner of one-half of the stock, swore that he had not authorized the alleged employment; yet he admitted on cross-examination that it was upon his own request that his son Bramwell had taken Houston to the home of their architect to enable him to study the plans and calculate the amount of lumber required for the buildings. Justice Story, in discussing the authority of officers and agents of corporations, said in the United States Supreme Court: “Anciently it seems to have been held, that, corporations could not do anything without deed. * * * Afterwards the rule seems to have been relaxed, and they were, for conveniency’s sake, permitted to act in ordinary matters without deed; as to retain a servant, cook, or butler * * *, and gradually this relaxation widened to embrace other objects. * * * The technical doctrine, that a corporation could not contract, except ⁴⁴⁵ under its seal * * * must have been productive of great mischiefs. * * * Accordingly it would seem to be a sound rule of law, that wherever a corporation is acting within the scope of the legitimate purposes of its institution, all parol contracts made by its authorized agents are express promises of the corporation; and all duties imposed on them by law, and all benefits conferred at their request, raise implied promises, for the enforcement of which an action may well lie.” Bank of Columbia v. Patterson’s Administrator, 7 Cranch 299, 305, 306 , 3 L. Ed. 351, 353 . It is now generally accepted that an officer of a corporation may enter into contracts of employment and bind the corporation without any express authority conferred by formal authorization of the board of directors.

Such authority may be inferred from the manner in which the officer has been permitted to transact the business of the corporation. A general manager or a managing agent of a corporation ordinarily has implied authority to hire employees when the employment is usual and necessary and within the scope of the corporate purpose. Slocum v. Seattle Taxicab Co., 67 Wash. 220 , 121 P. 67 ; Reynier v. Associated Dyeing & Printing Co., 116 N. J. L. 481, 184 A. 780 ; 13 Am. Jur., Corporations, secs. 917, 936, 984.

We find that there was legally sufficient evidence in this case to justify its submission to the jury. A case should not be taken from the jury on the ground of total failure of evidence, if there is any evidence, however slight, legally sufficient as tending to prove the claim. Before a prayer for a directed verdict can be granted, the court must assume the truth of all the evidence tending to sustain the suit and of all inferences of fact fairly deducible from it, even though such evidence may be contradicted in every particular by the opposing evidence in the case. Brocato v. Serio, 173 Md. 374, 381 , 196 A. 125, 128 .

The measure of damages in an action for wrongful discharge is prima facie the employee’s salary for the remainder of the period of employment. But the employer may undertake to mitigate the damages by show ⁴⁴⁶ ing that the employee has earned wages from other employment, or that he could have secured other employment by using proper effort. The general rule is well established in