Coleman v. Hotel de France Company
REITERATIONFacts
The Antecedents: Plaintiff, Geraldine Coleman, a professional gymnast, entered into a written contract with defendant, Hotel de France Company, through its manager, Ignacio Arnalot, on September 13, 1912, in Sydney, Australia. The contract stipulated that the plaintiff would entertain patrons of the hotel in Manila for three months at a salary of £12 per month, with the defendant providing board, lodging, laundry expenses, and passage to and from Manila. Procedural History: The plaintiff sued for damages due to the breach of contract by the defendant. The trial court rendered a judgment in favor of the plaintiff for P585.42. The Petition: The defendant appealed the judgment, raising several defenses: (1) the contract is void under immigration laws; (2) the contract is void as ultra vires; (3) the defendant was justified in cancelling the contract due to plaintiff's alleged violation of its terms; and (4) the court erred in the measure of damages awarded.
Issue(s)
Whether the contract for the plaintiff's services as a professional gymnast is void under the immigration laws in force in the Philippine Islands. Whether the contract is void because it exceeded the corporate capacity of the defendant corporation (ultra vires). Whether the defendant company was justified in cancelling the contract due to the plaintiff's alleged violation of its terms. Whether the measure of damages awarded to the plaintiff was correct.
Ruling
The Supreme Court affirmed the judgment of the lower court, holding that the contract was valid and enforceable, and the defendant company was liable for damages for its breach. The plaintiff is entitled to recover the full amount she would have earned under the contract, less any amount she actually obtained or could have obtained from other employment.
Ratio Decidendi
On the validity of the contract under immigration laws: The Court held that the contract was not affected by the immigration laws. Section 2 of the United States Immigration Act of February 20, 1907, expressly excludes "professional actors, artists, lecturers, singers, ministers of any religious denomination, professors for colleges or seminaries, persons belonging to any recognized learned profession, or persons employed strictly as personal or domestic servants" from the provisions applicable to contract labor. The plaintiff, being a professional acrobat and "artistic gymnast" and "trapeze artist" with ten years of experience, clearly falls within the exception for "professional actors." Therefore, her entry into the Philippine Islands under contract for her professional services was lawful. On the ultra vires defense: The Court found the defendant's contention regarding its lack of corporate capacity to enter into the contract to be without merit. Citing Chicago, Rock Island and Pacific R. R. Co. vs. Union Pacific Ry. Co. and Railway Co. vs. McCarthy, the Court stated that a corporation cannot make a contract and then repudiate it when it becomes onerous. Corporations are presumed to contract within their powers, and the doctrine of ultra vires should not prevail if it defeats the ends of justice or works a legal wrong. The Court found that the defendant's articles of incorporation, which involved operating hotels and resorts, could reasonably include the power to employ vaudeville artists for entertainment to attract patronage. Thus, executing a contract for such services was within the incidental powers of the corporation. On the justification for cancellation: The Court found that the defendant's contentions justifying the cancellation of the contract due to the plaintiff's alleged misconduct were sufficiently and satisfactorily disposed of by the trial judge. The Supreme Court did not elaborate further on this point, deferring to the trial court's findings which were not controverted in the appellate court. On the measure of damages: The Court agreed with the trial judge that the plaintiff was entitled to recover not merely compensation for services rendered before the breach, but the full amount she might have earned under the contract. This amount should be less any compensation she actually obtained or could have obtained from other employment during the unexpired term of the contract. The burden of proof to show the reduction in damages was placed upon the defendant, as per the ruling in Aldaz vs. Gay.
Main Doctrine
A corporation that enters into a contract and enjoys its benefits cannot repudiate it when it becomes onerous, unless it clearly appears that the action taken is beyond its corporate powers. Furthermore, professional artists are expressly excluded from the provisions of the immigration laws concerning contract labor.