stated to the evidence, we cannot say that the finding of the court is not sustained by sufficient evidence or is contrary to law. It follows that the court did not err in overruling appellant's motion for a new trial. Judgment affirmed. (176 Ind. 682) WAINWRIGHT v. P. H. & F. M. ROOTS CO. (No. 21,871.) (Supreme Court of Indiana. Jan. 9. 1912.) 1. CORPORATIONS (§ 407*)-OFFICERS-Pow ERS. Under Burns' Ann. St. 1908, § 5070, providing that the business of corporations shall be managed by the board of directors, in the absence of authority conferred by the board, the president has no authority, as such, to contract, on behalf of the corporation, with a third person for the management by him of a part of the business of the corporation for a specified compensation and a percentage of profits in such part of the business. [Ed. Note.-For other cases, see Corporations, Cent. Dig. §§ 1615-1619; Dec. Dig. § 407.*] 2. CORPORATIONS ($_407*)-OFFICERS "GEN ERAL MANAGER"-POWERS. The general manager of a corporation is impliedly invested with authority to do such acts as are necessary in the ordinary course of the company's business, but, in the absence of authority from the board of directors, he may not make a contract, on behalf of the corporation, with a third person, whereby the latter shall have the entire control over a specified part of the company's business for a fixed compensation and a percentage of profits therein, to continue for a term of years (citing 4 Words and Phrases, 3073 et seq.). [Ed. Note. For other cases, see Corporations, Dec. Dig. § 407.*] 3. CORPORATIONS (§ 316*)-CONTRACTS-PER FORMANCE. A manufacturing corporation agreed to install a part of its business in a special foundry shop, to be properly constructed and equipped by it, and to place plaintiff, a director, in exclusive control thereof for a specified compensation and a part of the profits. A building, already erected for manufacturing purposes, was suitable for the purposes of the contract, and the corporation suggested to the director that such building be used for the business, instead of erecting a new building, and the corporation repeatedly notified the director that it was willing to equip the building in accordance with the contract. The contract did not fix the location of the building, but the director insisted that a location in a designated city where he lived was intended. The existing building was in a suburb of and in close proximity to that city. Held, to show a substantial compliance by the corporation with the contract, and the director, failing to act on the request of the corporation, could not complain. [Ed. Note. For other cases, see Corporations, Dec. Dig. § 316.*] 4. CORPORATIONS (§ 316*) — OFFICERS TRACTS-VALIDITY. CON The directors of a corporation are its agents, governed by the law regulating agency, and a director may deal with the corporation, if on equal terms; and a contract between a corporation and a director, made, on the part of the corporation, by a majority of the directors, acting for its interests honestly and [Ed. Note.-For other cases, see Corporations, Dec. Dig. § 316.*] 5. CORPORATIONS (§ 316*) — Officers — CONTRACTS-VALIDITY. A corporation prepared a contract with a director, and it was executed on its part by the president and general manager. The corporation had full knowledge of the transaction, and the contract required the director to render services outside of his duties as director, and similar to duties which he had performed, under different terms as to compensation, for several years. Held, that the contract was valid, as against the objection that a director may not make a contract with the corporation. tions, Cent. Dig. §§ 1401-1415; Dec. Dig. § [Ed. Note. For other cases, see Corpora316.*] 6. SET-OFF AND COUNTERCLAIM (§ 29*)—CON TRACTS. 7. SET-OFF AND COUNTERCLAIM (§ 33*)—“SETOFF" STATUTES. Under Burns' Ann. St. 1908, §§ 352, 353, authorizing a defendant to set forth in his answer a set-off, in actions for a money demand on contract, and providing that the set-off must consist of matter arising out of debt, duty, or contract, a "set-off" may embrace matter which is not germane to the action, but which constitutes an independent cause of action, subject to the qualification that the demands must be mu tual. [Ed. Note.-For other cases, see Set-Off and Counterclaim, Cent. Dig. §§ 54, 55; Dec. Dig. § 33.* For other definitions, see Words and Phrases, vol. 7, pp. 6439-6444; vol. 8, pp. 7798-7799.] 8. SET-OFF AND COUNTERCLAIM (§ 33*)—CONTRACTS-ACTIONS. of an employer to perform his contract of A demand, based on the negligent failure employment, is based on breach of contract, and is available as a set-off, in an action on a subsequent contract, for breach thereof. [Ed. Note.-For other cases, see Set-Off and Counterclaim, Cent. Dig. §§ 54, 55; Dec. Dig. § 33.*] 9. JUDGES (§ 32*) — SUCCESSOR - POWER TO MAKE FINDINGS. The judge trying a case without a jury took the case under advisement, and died before announcing, in open court, his findings, and before he filed any findings, but after he indicated what his findings would be. After his death, special findings were found in his private office, outside of the courthouse. Held, that his successor in office was without authority thereon, but there must be a new trial. to adopt such findings and render judgment Cent. Dig. §§ 158-162; Dec. Dig. § 32.*] [Ed. Note.-For other cases, see Judges, Appeal from Circuit Court, Henry County; Ed Jackson, Judge. Action by William W. Wainwright against | breach, alleging the refusal of appellee to the P. H. & F. M. Roots Company. From a perform its part of the conditions and his judgment for defendant, plaintiff appealed readiness at all times to perform those imto the Appellate Court, and it transferred posed upon him. In addition to the general the cause to the Supreme Court, under denial, appellee answered the complaint by Burns' Ann. St. 1908, § 1405. Reversed, second, third and fourth paragraphs of anwith instructions. swer, to which appellant demurred. These demurrers were overruled, and these rulings are relied on by appellant as being reversible errors. R. E. Barnhart, L. H. Stanford and Finly H. Gray, for appellant. Forkner & Forkner and Conner, Conner & Chrisman, for appellee. COX, J. The appellee is a private manufacturing corporation, organized under the laws of this state, and carrying on its business in the city of Connersville.. Appellant was formerly the superintendent of its factory, under the supervision of its president, and while acting in this capacity, under a written contract of employment for a term of years, which had not yet expired, and as a director of the corporation, entered into another written contract which by its terms canceled the existing contract, and in which it was agreed, in substance, that appellee would separate from its factory a particular and considerable part of its manufacturing business, and install it in a special foundry and machine shop to be properly constructed and equipped by appellee with the necessary machinery and appliances; that therein the certain named articles, so to be separated from the main business, were to be manufactured at a fixed schedule of prices; that in addition to providing the building and machinery appellee was to furnish all necessary capital to pay for labor and materials for manufacturing the articles to be turned out by the special factory; that appellant was to have entire control over the special factory, and was to provide all labor and materials necessary to promptly and efficiently turn out the work contemplated, and was to turn it out complete and first class in respect to workmanship, design, and material at the prices fixed in the contract, or lower, if possible; that the work was to be done under the cost system, and that if appellant succeeded in producing work at less than the prices fixed in the schedule the difference between the prices so fixed and the actual cost should be divided equally between appellant and appellee; that in addition to such percentage of possible additional profits appellant was to be compensated by a yearly salary of $1,800, and onehalf of the profit on repairs of articles manufactured and returned for repairs; that appellant was not to incur any liability in case of his inability to produce the various articles to be manufactured at the prices named; and that the relation created by the contract should continue for five years. This contract was entered into and executed by the president and general manager of appellee and the appellant. The performance of its provisions was never entered upon, and appellant sued for damages for its The second paragraph of answer was verified, and admitted the status of the appellee as an Indiana manufacturing corporation and the execution of the contract by Johnston its president and general manager; but it averred, in substance, that the authority of such president was only that which the law gave the president of such a corporation, and that no extra or additional powers had been delegated to him as president; that the only authority that Johnston had, at the time of the execution of the contract, as general manager of the company, was to manage its ordinary business affairs; that he was not authorized by the by-laws nor by the board of directors to engage in new enterprises, or to delegate, by contract or otherwise, any part of the business of the company to the management and control of another; that Johnston, neither as president nor general manager, had authority to execute the contract in the name of and for and in behalf of the company; and that neither the directors nor the stockholders had ever ratified or approved the action of Johnston in executing the same. The statute authorizing the creation of corporations, such as appellee, provides that the business of such corporation shall be managed by the board of directors, for the election of which the statute makes provision. Section 5070, Burns 1908. [1] The second paragraph of answer alleges that as president Johnston had only such powers as the law gave him. This action of the statute placed the power to manage the business of appellee in its board of directors, and no such power is conferred on the president as such. The general rule is that the office of president of a private corporation of itself confers no power on the incumbent to bind the corporation or control its property. His powers as agent must come by delegation from the corporation, through the board of directors, formally and directly granted, or implied from its habit or custom of doing business. 10 Cyc, 903; 3 Cook on Corp. (6th Ed.) 716; 2 Thomp, on Corp. (2d Ed.) §§ 1451, 1464; National State Bank v. Vigo County National Bank, (1895) 141 Ind. 352, 355, 40 N. E. 799, 50 Am. St. Rep. 330. The answer alleges that no authority beyond that the law gave him had been delegated to Johnston as president. [2] The office of general manager is of broader import than that of president, and implies authority in one invested with it But here we have a contract of rather an unusual and extraordinary character. The general manager gets his authority by delegation from the board of directors. Under our statute, the directors are elected annually by the stockholders. The stockholders then may make an entirely different board of directors in one year's time, and such new board may displace the general manager and select another. The terms and character of the contract under consideration not only give rise to the implication that it may be beyond the usual and ordinary course of the business of the appellee in the separation of the part dealt with from the main business, and placing it under the entire control of appellant, with a division of the profits, but it also does this for a period of five years, which may be both beyond the terms of the general manager and board of directors. Added to this showing, the answer directly alleges that Johnston, as general manager, had no authority to execute the contract for the corporation, and that it was never ratified or approved by the board of directors or stockholders. The answer, by force of this last allegation, was sufficient to withstand a demurrer, and raised an issue of fact whether Johnston had such authority. National State Bank v. Vigo County Nat'l Bank, supra; Kennedy v. Supreme Lodge, 124 Ill. App. 55; La Plant v. Pratt-Food Co., 102 Minn. 93, 112 N. W. 889; Perryman & Co. v. Farmers', etc., Co., 167 Ala. 414, 52 South. 644. to do such acts as are necessary in the | for the business to be carried on under the usual and ordinary course of the business contract; that appellee thereupon arrangcarried on by the corporation. 10 Cyc. 909; ed with the owner of the building to lease 3 Cook on Corp. (6th Ed.) 719; 2 Thomp. on it for the purpose of carrying out the conCorp. (2d Ed.) §§ 1465, 1466, 1575; 4 Words tract; that appellee repeatedly notified apand Phrases, p. 3073 et seq.; Louisville, etc., pellant that it was ready and willing to Co. v. McVay (1884) 98 Ind. 391, 49 Am. properly equip said building, and in all Rep. 770; Cushman v. Cloverland Coal Co. things comply with the terms of the con(1907) 170 Ind. 402, 405, 84 N. E. 759, 16 L. tract, except the one provision for the erec: R. A. (N. S.) 1078, 127 Am. St. Rep. 391. tion of a new building; that appellant was secretly trying to arrange with other parties to enter business as a competitor of appellee, and repeatedly notified appellee that he would not carry out the contract upon his part, unless appellee would construct a new building. Appellant's objection to this paragraph of answer does not go to the fact that appellee had offered to provide a building then existent, rather than to build a new one in accordance with the provision of the contract, but that this building was in a different place from that contemplated for the erection of the new one. The contract, it is conceded, does not fix such place, but it is insisted by counsel for appellant that a location in the city of Connersville, where he lived, and where appellee's shops and business were located, was intended. If this be so, it would seem to be apparent that the location of the building proffered was fairly within that intent. It was in close proximity to the city and obviously a suburb of it. It is alleged that it was a larger and better building than the contemplated new one, and that a new one could not have been erected at a more advantageous location, or one better adapted to the purpose of the parties. The doctrine of substantial performance is not limited to building contracts. 3 Paige on Contracts, § 1388, and the numerous cases there collected. We think the answer alleged facts sufficient to show, as against the demurrer, that appellee had held itself in readiness to substantially comply with its part of the contract. [4] The fourth paragraph of answer alleg [3] Appellee's third paragraph of answered that at the time of the execution of the alleged, in substance, that at the time of the contract sued on, and thereafter, the appelexecution of the contract there was no def-lant was a duly elected, qualified, and acting inite agreement relative to the particular place where the building for the new enterprise, which, by the terms of the contract, appellee agreed to construct and equip, was to be located, but that the location was left to the discretion of the appellee; that at the time there was in East Connersville, which was in close proximity to the city wherein appellee's main business was located, a building, erected for manufacturing purposes, which was a better one for the purpose involved in the contract than the one contemplated by the parties to the contract, and advantageously located in respect to transportation facilities and otherwise; that soon after the execution of the contract appellant personally inspected such building, and expressed his opinion that the director of the appellee, and that the contract was therefore illegal and void. That the contract was illegal and void is the pleader's conclusion from the bare fact of appellant's relationship to the appellee, as one of its directors, at the time the contract was made, and the question for decision is therefore whether, as a matter of law, it must be so held to be. The cases of Port v. Russell, 36 Ind. 60, 10 Am. Rep. 5, and Wayne Pike Co. v. Hammons, 129 Ind. 368, 27 N. E. 487, are relied on by counsel for appellee as sustaining the action of the trial court in overruling the demurrer to this answer, and the proposition that contracts between directors and their corporations are unqualifiedly void. It is true that language is used in the opinion of the court in the case first mentioned Ed.) § 516 et seq.; 2 Purdy's Beach on Priv. Corp. §§ 739, 742; 2 Pom. Eq. Jurisp. (3d Ed.) § 956 et seq.; 3 Pom. Eq. Jurisp. (3d Ed.) § 1077; 1 Paige on Contracts, § 181. who wrote it firmly believed that the rule | 1224 et seq.; 1 Morawetz on Priv. Corp. (2d should be that all such contracts should be considered to be void and unenforceable. But this language was used in passing upon the sufficiency of a complaint for equitable relief against contracts between directors and the corporation, which the allegations of the complaint showed were procured through a conspiracy among the directors, and were saturated with frauds against the company and for the benefit of the directors, in the manner in which they were executed. The allegations of fraud, together with the fiduciary relation of the directors to the corporation, manifestly made a case for equitable relief against the contract. So far as that case may be said to assert the broad rule to be that all contracts between directors and their corporate body are void, it must be considered dictum without appreciable support anywhere. Where the opinion in the case of Wayne Pike Co. v. Hammons, supra, touches the question in this case at all, we find the for lowing: "The officers of a corporation are its agents, and they are governed by the rules of law applicable to other agents, as between themselves and their principal, in so far as such rules relate to honesty and fair dealing in the management of the affairs of their principal. They can no more use the business of their principal for their own private gain than any other agent, and should they do so they should be held to the same strict rule of accountability as the agent of a private person." The court then applied this statement of the duty of corporate officers to test the sufficiency of a complaint for equitable relief, which charged conspiracy and fraud on the part of directors of a corporation, in dealing with the corporate concerns, to their personal advantage. There are in the books almost innumerable and seemingly conflicting and irreconcilable judicial expressions on this question, many of which are dicta. These judicial pronouncements run from the broad and unqualified proposition that in no case can a director be allowed to take or make a contract with his company, and that such contracts when made are void, to the other extreme, that such contracts are valid. Between these two boundaries of the case law on the subject is found what is, perhaps, the more practicable view, that such contracts are merely voidable, at the option of the corporation. Mingled with these three general rules, there are numerous cases which seemingly involve various departures from the modifications of all of them. A general review of what seems to be a condition of fog and confusion in the many cases dealing with the question would be unprofitable and impracticable in this opinion. See, however, 10 Cyc. pp. 794, 807; 21 Am. & Eng. Ency. of Law (2d Ed.) p. 899 et seq.; 2 Cook on Corp. (6th Ed.) § 649; 2 Thomp. on Corp. (2d Ed.) § From the mass of legal discussion of the various phases of the question, this appears: That the validity of such a contract, and whether it is even avoidable, often depends very much upon its nature and terms, the circumstances under which it was made, and who acted for the corporation in the making. Contracts for the loan of money by a director to his company, and contracts for personal services to it, which are outside of the scope of his duties as an officer, are generally upheld as valid, when such contracts are open and otherwise free from blame. 10 Cyc. 812; 21 Am. & Eng. Ency. of Law (2d Ed.) 905; 1 Paige on Contracts, § 181; 2 Thomp. on Corp. (2d Ed.) § 1224 et seq.; Levering v. Bimel, 146 Ind. 545, 45 N. E. 775; Nappannee Canning Co. v. Reid, 159 Ind. 624, 64 N. E. 870, 1115, 59 L. R. A. 199; Kenner v. Whitelock, 152 Ind. 635, 53 N. E. 232; Twin Lick Oil Co. v. Marbury, 91 U. S. 589, 23 L. Ed. 328; Savage v. Madelia, etc., Co., 98 Minn. 343, 108 N. W. 296; Henry v. Michigan, etc., Co., 147 Mich. 142, 110 N. W. 523; Canning Co. v. Stanley, 133 Iowa, 57, 110 N. W. 171; Mitchell v. United Box Board Co., 72 N. J. Eq. 580, 66 Atl. 938; Bagley v. Carthage, etc., R. Co., 165 N. Y. 179, 58 N. E. 895; Babcock v. Farwell, 146 Ill. App. 307; Beach v. Miller, 130 Ill. 162, 22 N. E. 464, 17 Am. St. Rep. 291, note p. 300. The law was correctly stated in Wayne Pike Co. v. Hammons, supra, that directors of corporations are its agents, and in this relationship are governed by the same rules of law, and are held to the same strict rule of accountability, honesty, and fair dealing, between themselves and their principals in dealing with the subject-matter of their agency, as other agents. If the agent act for himself and his principal at the same time, in a matter connected with the relation between them, his conduct is constructively fraudulent, and if a contract be the result it is avoidable at the election of the principal. It is presumed, where he is thus potential on both sides of the contract, that self-interest will overcome his fidelity to his principal, to his own benefit and his principal's hurt. But he may deal directly with his principal, and if they are on equal terms, and the principal has full knowledge of the matter, the contract will be valid, and he may so deal with the principal through other agents, who have authority to adequately represent the principal's side of the contract. So the general rule seems to be that, where the contract between a corporation and one of its directors is made, on the part of the company, by a majority of the directors, acting for its interests honestly and in good faith, and with full knowledge of the matter, or by another independent agent with authority to act for it, such contract is not even voidable, except for unfairness or fraud, for the presence of which courts will closely scrutinize the contract. 2 Am. & Eng. Ency. of Law & Pr., pp. 1059, 1069; 1 Morawetz, on Priv. Corp. (2d Ed.) $ 527; 2.Purdy's Beach on Priv. Corp. § 739; 2 Thomp. on Corp. (2d Ed.) § 1224 et seq.; 2 Cook on Corp. (6th Ed.) § 649; Pomeroy, Eq. Jurisp. §§ 957, 1077, supra, and notes; Clark on Corp. (2d Ed.) p. 498; Note to Beach v. Miller, supra, pp. 300, 307. [5] In the case before us, we have a complaint involving a contract, so far as the appellant is concerned, to render services to his company, in the matter of management and superintendence of a part of its general manufacturing business, which were wholly outside of his directorial duties. He had been performing similar duties, the allegations of the complaint show, under different terms as to compensation, for years. The contract was prepared by the company and urged upon appellant, and was executed on its part by the president and general manager, an independent agent. It is apparent that the company had full knowledge of the transaction, and if the president and general manager was clothed with authority to make the contract for the corporation it is not only not void, but not necessarily voidable. The demurrer should have been sustained to the fourth paragraph of answer. the cross-complaint is not connected with nor does it grow out of the cause of action pleaded in appellant's complaint. The mere fact that the contract sued on in the complaint had, by its terms, terminated the former contract does not so connect negligent and wrongful acts of appellant, alleged in the cross-complaint to have been committed by him! in the discharge of his duties under the first contract, before its termination, with the cause of action stated in the complaint as to make them matters for cross-complaint as counterclaim. If the matters alleged in the cross-complaint state a cause of action, it is one entirely independent of that depended on by appellant in his complaint. [7] It is settled by our decisions that the new facts which may be introduced into a pending action by means of a cross-complaint, under our counterclaim section of the Code, which may embrace recoupment or matters cognizable in the cross-bill in equity, are such only as are necessary for the court to have before it in deciding the question raised in the original action, to enable it to do full and complete justice to all of the parties before it, in respect to the cause of action upon which the complaint rests. If a defendant attempts to go beyond this, and to introduce by a cross-complaint in counterclaim new and distinct matter which does not grow out of that involved in the complaint, and which is not essential to the prop[6] Appellee filed in the case a cross-com- er determination of it, although he may plaint against the appellant, demanding a show a perfect case against the plaintiff, his recovery of damages, alleged to have been pleading will not be a cross-complaint, but sustained by it by the alleged breach by ap- an original and independent cause of action, pellant of the former terminated contract and as such is not germane to the issue. between the parties, by a negligent and im- Douthit v. Smith, 69 Ind. 463; Washburn proper performance upon his part of his du- v. Roberts, 72 Ind. 213; Standley v. Northties as superintendent under that contract, western, etc., Co., 95 Ind. 254; Miller v. prior to the termination of it by agreement | Roberts, 106 Ind. 63, 5 N. E. 707; Blue v. of the parties. Appellant first moved to Capital Nat'l Bank, 145 Ind. 518, 43 N. E. strike out this cross-complaint, and then demurred to it for want of facts. Both the motion and demurrer were overruled, and, to sustain the claim that these rulings were error, it is contended that the matters alleged are not germane to the matter constituting the cause of action alleged in the complaint, and that the cross-complaint is But the rule just stated does not apply to based on tort, and not on contract. The con- a set-off, and it may embrace matter which tention of counsel for appellant that the is not germane to the main action, and which matters alleged in the cross-complaint are constitutes an independent cause of action, if not germane is correct, and the pleading is not good as a counterclaim in recoupment. What appellant did in the performance of his duties as superintendent of appellee's manufacturing establishment during the continuance of the former contract, and under its provisions, had nothing to do with the issue tendered by the complaint for the breach of the last contract. Whether, in the execution of the first contract, he discharged his duties with scrupulous care and exact fidelity or carelessly, improperly, and faithlessly is not necessarily or properly connect 655; Harris v. Randolph Bank, 157 Ind. 120, 60 N. E. 1025; Heaton v. Lynch, 11 Ind. App. 408, 38 N. E. 224; Buscher v. Volz, 25 Ind. App. 400, 58 N. E. 269; Nickey v. Bonker, 31 Ind. App. 88, 67 N. E. 277; Burns 1908, § 355; 5 Ency. of Pl. & Pr., pp. 640, 641, 674, 678, 679. it be pleaded in an action for a money demand on contract, and if it arises out of debt, duty, or contract, liquidated or not, held by the defendant at the time the suit was commenced, and matured at or before the time it is pleaded. There must, of course, as a general rule, be mutuality in the demands. Burns 1908, §§ 352, 353. While the Code (section 352, supra) provides for answering a complaint by set-off, it is not strictly a defense, but is properly in the nature of a cross-action, may be pleaded as such, and must show a cause of ac |