Opinion
No. 3655
Decided September 26, 1944. Decided November 4, 1944.
Political party executive committee — Chairman executing lease for office space on behalf of committee — Personal liability for rent — Court of Appeals — One judge concurring in judgment did not hear oral argument — Not ground for rehearing.
1. A chairman of the state executive committee of a political party, who executes a lease on behalf of the committee for office space which was thereafter occupied by the committee, is, in the absence of any agreement to the contrary, not personally liable for the rent under such lease.
2. The fact that one of the judges of a Court of Appeals which decided a case, was sitting by designation in place of a judge who was on the bench when the court heard oral argument, does not warrant the allowance of a rehearing.
APPEAL: Court of Appeals for Franklin county.
Mr. Hugh M. Bennett, for appellant.
Messrs. Druggan Gingher and Mr. J. Paul McNamara, for appellee.
This court has already rendered three opinions in this case; one on the 30th day of October 1943, one on the 31st day of December 1943, and one on the 21st day of April 1944. Those opinions were all addressed to the procedure from the trial court to this court. By virtue of amendments permitted to the notice of appeal and proper diminution of the record, the case is now before this court for final determination on the merits.
In the amended petition filed in the court below, it is stated that the plaintiff is a corporation; that Francis Poulson was at the time mentioned a member of the Democratic state executive committee, an unincorporated voluntary organization; that prior to the 12th of November 1936, Ralph H. Beaton was receiver of the property of the American Insurance Union; that on the 12th of November 1936, the defendant, purporting to act on behalf of the Democratic state executive committee and as chairman of such committee, rented from Beaton, receiver, certain space in the American Insurance Union building for a period of 25 months for an annual rental of $4,800, payable in monthly installments of $400; that the defendant entered into the possession of the premises and remained in possession during the full term; that the rent under the lease for the last five months of the term in the amount of $2,000 is due and unpaid; that Beaton as receiver of the American Insurance Union property did, on the 21st day of December 1938, sell and assign the same, including the lease of the defendant, to the plaintiff; that the defendant was not authorized by the Democratic state executive committee to execute the lease, although this fact was not disclosed to Beaton, receiver; that by the breach of the covenant there is due and owing to the plaintiff from the defendant as rent under the lease the sum of $2,000; and that for the purpose of conferring jurisdiction of the controversy of the Municipal Court, the plaintiff remits the excess of the claim over $1,500.
For answer the defendant admits certain matters, including the fact that he executed the lease on behalf of the state executive committee; and that the committee entered into possession, but denies that there is due the sum of $2,000 or any other sum.
A second defense was asserted which was later withdrawn.
A reply was filed by the plaintiff.
The matter came on for hearing in the Municipal Court of Columbus and was submitted to the court without the intervention of a jury. The court found in favor of the defendant and dismissed the plaintiff's petition.
The plaintiff filed an assignment of errors embracing eight paragraphs, which may be epitomized to the effect that the Municipal Court erred in rendering judgment on behalf of the defendant and that it should have found under the issues that the defendant was liable for the unpaid rents. A bill of exceptions was filed in which is exhibited the lease in question, which is on a form of the American Insurance Union building, of certain space in the building, to the Democratic state executive committee. The lease is signed by Ralph H. Beaton, receiver of the American Insurance Union property and premises, as lessor, and the Democratic state executive committee, by Francis Poulson, chairman, as lessee.
The Democratic executive committee occupied the premises for a period of 20 months, paying therefor the monthly installments of rent by checks to Ralph H. Beaton, receiver of the American Insurance Union property, the checks being signed by the printed signature, "Democratic state executive committee, Theda Jacobs, Asst. Secretary." All vouchers for such monthly rent were in the name of the Democratic state executive committee.
It nowhere appears that Francis Poulson individually ever entered into a contract with the predecessors of the plaintiff, by which he agreed either to rent the property or to pay any of the several installments of rent. The committee moved from the premises to another location at the end of the 20th month, leaving five months of the lease for which rents were not paid. It is asserted by the plaintiff that Francis Poulson had no authority to enter into a lease on behalf of the Democratic executive committee; that he as agent of the committee is personally liable for his unauthorized contract in the name of the principal; that there is no statute authorizing the appointment of a chairman of the executive committee, under which the defendant may avoid personal liability for the debt; and that the executive committee, as a committee distinct from its individual members, was not obligated on the lease.
Section 4785-63, General Code, provides for party-controlling committees and is generally to the effect that the controlling committee of each political party shall be a state central committee consisting of enumerated members to be elected by direct vote at the primaries held in even numbered years; that each party-controlling committee shall elect an executive committee which shall have such powers as may be granted to it by the party-controlling committee and as may be provided by law.
Section 4785-64, General Code, provides for the organization of committees and is to the effect that the members-elect of the party central committee shall meet within a certain time following the primary election, and that a temporary chairman and secretary shall be chosen and the committee shall proceed to organize by the election of a chairman and other officers.
The report of the proceedings of the state central committee discloses the fact that the members of the central committee met at the proper time and place for organization. One of the first actions of the central committee was to unanimously elect Poulson as chairman of the state executive committee. A resolution was adopted to the effect that all the powers vested by law in the state central committee of the Democratic party be delegated to an executive committee; that the executive committee have and possess all the powers vested by law in the state central committee and be empowered to conduct the business of the state Democratic party during such time as the state central committee is not in session; and that when the state executive committee is not in session all the powers delegated to the state executive committee are to be exercised by the chairman. Thereupon Poulson announced certain appointments of officials to act in behalf of the committee and upon roll call a full executive committee as provided by statute was selected by the central committee.
Thereupon the activities of the political organization were reposed largely in the control of Poulson as chairman of the state executive committee, neither the central committee nor the executive committee being active in the functioning of the organization.
It is urged that Poulson by virtue of the fact that he was chairman of the executive committee and had signed the lease in the name of that organization is now personally liable for the unpaid rent by virtue of the fact that the executive committee was not empowered to enter into the contract and that he as agent of the executive committee was personally liable for his unauthorized contract in the name of his principal.
As before stated it nowhere appears that there was any attempt to personally bind Poulson, the lease being made to the executive committee, and Beaton stating that inasmuch as the Democrats were in power it was assumed that they would have money to discharge their obligations, and that the lease was made directly with the executive committee by Poulson, its chairman.
Without attempting to discuss the legal principles advanced by the plaintiff in this case, under which it asserts that Poulson is personally liable for the unpaid rents, we arrive at the conclusion that the plaintiff has failed to show any obligation upon the part of Poulson to pay this defaulted rent. Certain cases are cited which counsel claims are pertinent to the issues here before the court. They are not Ohio cases and in themselves are not clear as to the holding of the courts, and we do not regard them as authority supporting the claim of plaintiff. The cases cited are Lightbourne v. Walsh, 89 N.Y. Supp., 856; McCabe v. Goodfellow, Treas., 133 N.Y. 89, 30 N.E. 728, 17 L.R.A., 204; Empire City Job Print, Inc., v. Harbord, 265 N.Y. Supp., 450.
Were the position asserted by counsel for plaintiff to become established, to the effect that the chairman and other members of a voluntary political organization should be personally responsible for all the debts and obligations that might be incurred by such organization, it would be practically impossible to get any responsible individual to assume these important political positions. Such a conclusion would be so out of harmony with what is generally understood to be the obligation of a chairman of a committee that we must refuse to establish such an obligation without more convincing authority than has been suggested by counsel for plaintiff.
All the assignments of error asserted by plaintiff are overruled. The judgment is affirmed.
Judgment affirmed.
HORNBECK and MONTGOMERY, JJ., concur.
MONTGOMERY, J., of the Fifth Appellate District, sitting by designation in the Second Appellate District.
ON APPLICATION for rehearing.
This matter is again before this court on application for rehearing, it being insisted that the court in its former decision in this case, dated September 26, 1944, was in error in sustaining the trial court.
This is the fourth time this case has been before this court.
Counsel quotes a gratuitous comment of this court, to the effect that if the position asserted by counsel for plaintiff, i.e., that the chairman and other members of a voluntary political organization should be responsible for debts when they are incurred by such organization, should become established, it would practically be impossible to get persons to assume those important political positions. Counsel asserts that this view of the court would tend to encourage financial profligacy by political parties in Ohio, and that it says in effect that contracts can be made without any financial liability. Counsel comments to the effect that under such view great sums could be spent in more expensive political campaigns than Ohio has ever witnessed, without any heed having to be given to the payment of the cost of such extravagance; that the court's view is a sure way to impair further the foundation upon which our democracy rests; that lavish political programs can be planned and executed without any thought of the high costs because no one need pay for them; and that the decision of the court would encourage reckless spending by all political parties in Ohio.
We are unable to follow the argument of counsel in this matter.
If the court has properly held that no member of a voluntary committee should be held for the obligations of the committee, where the contract is made with the committee and not with the individuals, such a ruling would, instead of permitting profligacy, tend to make those who furnish services to the committee more cautious in extending credit than such persons otherwise would be if they could, upon the failure of the assets of the committee, pursue its individual members.
Persons furnishing services to a committee do not furnish such services unless they are reasonably assured of the ability of the committee to pay.
The testimony in this case is to the effect that the contract in writing was made in reliance upon the committee's ability to pay, and that there was no purpose of holding members of the committee personally liable.
Beaton, by whom the lease was originally made, states such fact, and says in substance that the fact that the committee represented the party in power would indicate that it would have money sufficient to pay its obligations.
Instead of promoting reckless political extravagances the court is of the opinion that the knowledge that no one but the political organization would be responsible for the payment of the debts incurred by the chairman of the committee would restrain those dealing with the committee from entering into excessive contracts.
Counsel asserts that the court was badly confused because it stated that three cases involving New York decisions were cited by the plaintiff, whereas, as a matter of fact, they were cited by the defendant.
We do not regard it as a matter of consequence to whom the citations of those cases were attributed, if the cases themselves do not support the contention of the plaintiff.
Counsel states in speaking of those cases, "No one of them supports the claim of the plaintiff, as the court states."
This court certainly had the power to consider the effect of those decisions even though it attributed their citations to the wrong party.
It is asserted by plaintiff that it relies upon Ohio cases and that no mention of those Ohio cases is made in the decision.
This court did not cite those cases because on first reading it was of the opinion that they announced no authoritative principles controlling the case at bar.
We have again read those cases and are still of the opinion that there is no principle announced which would support the original claim of the plaintiff.
In Devoss v. Gray, 22 Ohio St. 159, it is held:
"In order to hold a member of such society responsible for its debts, it must be shown that such member, in some way, sanctioned or acquiesced in their creation."
It is true that the political representatives of the political party designated Poulson as the ultimate authority in the management of the business of the committee. However, this authority so granted did not attempt to make Poulson liable for the debts to be incurred, but merely constituted him as agent in the transaction of the business.
Counsel cites the case of Scanlon v. Duffield, 103 F.2d 572. We are of the opinion that that case might well have been cited by counsel for the defendant. The court, on page 574 of the opinion, stated:
"The true test of liability is to whom did appellant's testate knowingly extend credit. The law in such a case places the burden of payment on the person to whom credit is knowingly and exclusively given."
The case last cited gives consideration to Section 8125, General Code. That section provides in substance that when the instrument contains, or a person adds to his signature, words indicating that he signs for or on behalf of a principal or in a representative capacity, he is not liable on the instrument if he was duly authorized.
The case of Cannon, Jr., v. Miller Rubber Products Co., 128 Ohio St. 72, 190 N.E. 210, related to the personal obligation of one signing a promissory note. It holds that "a petition in an action against the officers signing such note, seeking to hold them personally liable thereon, fails to state a cause of action and is subject to demurrer, in the absence of allegations fixing personal liability."
It may be urged that both Section 8125, General Code, and the case last cited relate to promissory notes, and, therefore, are not applicable to the liability of Poulson on a lease which is not a promissory note.
We are of the opinion that the section referred to relates to any obligation and is not confined to a promissory note. This we think will be demonstrated if counsel will read the cases cited under the section referred to.
The further objection is made that oral argument was made before Judges Hornbeck, Geiger and Barnes, and that the case was decided by Judges Hornbeck, Geiger and Montgomery. Judge Montgomery never heard the oral argument in this case. Plaintiff asserts that it is entitled to argue the case orally before the court which decides it. "This is a right granted to appellant by a rule of the court."
The only section of the rules we find that is possibly applicable to oral argument is Rule V, Courts of Appeals, which relates generally to the presentation of the case and the limitation of time. See, also, Rule II, Section 8 and Rule III, Supreme Court.
Counsel was advised by common rumor that Judge Barnes would not be able to sit in the determination of this case, and was also advised that Judge Montgomery would sit by designation in his stead. Counsel was then in possession of the facts which would have permitted him to represent to the court that he had orally argued the case before Judge Barnes and that he desired to present an oral argument to Judge Montgomery.
We feel that counsel was not justified in neglecting a request for oral argument before Judge Montgomery, and, if the decision was rendered, in objecting to it because he claimed a right to present the case orally to Judge Montgomery. If he lost any advantage on this account it was through his own oversight, as he had possession of all facts.
We know of no rule either of our court or of the Supreme Court by which every judge participating in the decision must be present to hear the presentation of oral arguments. It often happens that a judge for one reason or another does not hear the oral argument, but participates in the decision. We see no cause for complaint upon the part of the plaintiff for this reason.
Counsel concludes with the following observation:
"It is respectfully suggested that if the trial court is to be affirmed, some sound legal principle be chosen as the basis for such affirmance rather than the dangerous ground upon which this decision now rests."
We, of course, deny the allegations, but if the court has been in error in promulgating a dangerous ground, the road is open to the final consideration by the Supreme Court.
Fifty West Broad, Inc., should have taken prompt action when it realized that its tenant was moving away, to secure the payment of the balance of the rent out of whatever assets the committee might then have had, and it was common rumor that the committee at that time had an abundance of assets.
The application for rehearing is denied.
Application denied.
HORNBECK, GEIGER and MONTGOMERY, JJ., concur.
MONTGOMERY, J. of the Fifth Appellate District, sitting by designation in the Second Appellate District.