104 Neb. 631 | Neb. | 1920
The defendant corporation was a stockholder in the Lumbermen’s Cement & Brick Company of Kansas City, Missouri. On January 22, 1913, the cement company desired to obtain $28,000 additional working capital. In order to raise this amount it executed its notes to the Corn Belt Bank of Kansas City by a written guaranty to the amount of $2,000 each, signed by a number of its stockholders. The name of the defendant was signed by its vice-president to the guaranty thus, “Independent Lumber Co., of Omaha, by John W. Towle, Y. Pres.” The notes and guaranty were afterwards transí erred to the plaintiff in this action. Afterwards other notes were executed for the same debt and these notes attached as collateral. Defendant’s share of the obligation, if bound, remains unpaid, and this action is to recover the same.
The signature is not denied, but the defense is that Towle had no authority to execute the guaranty, that it has not been ratified, and that the Lumbermen’s Cement & Brick Company and .the Corn Belt Bank had full knowledge of the want of authority of Mr. Towle. The reply, pleads ratification, and pleads that plaintiff is an innocent holder of the notes. The cause was tried to a jury, and a verdict rendered in favor of the defendant. Plaintiff appeals.
Mr. Towle was also a stockholder in the cement company individually, and was a director of that company. He is a director and vice-president of the defendant company, but according to the evidence takes no active part in the management of the business. Mr. Towle testified that he did not inform the manager or other officers of the defendant that he had signed its name to the guaranty until Mr. Millard, the president and manager of the company, after receiving a letter from Kansas City dated March 28, 1914, asked him about the transaction. Mr. Millard testified that he never knew of the guaranty until he received this letter. It appears
If the trust company had received prompt information that the defendant repudiated the guaranty, it might have at once demanded additional security or applied on the debt any securities it might have belonging to the cement company. An act performed for a corporation by an authorized person may be ratified by conduct, and it is the duty of one who learns of an unauthorized act committed in his name, or who desires to repudiate it, to disaffirm the transaction and refuse to be bound by it within a reasonable time, so that one who has relied upon the act may not be prejudiced.
The admissions of Towle and Millard show conclusively that the defendant was given full information as to the execution of the guaranty by the letter of March 28, and the conversation with Towle immediately after its receipt. Notwithstanding this, it took no steps to repudiate the transactions, to return the bonds, or in any wise to notify the plaintiff of its disaffirmance. Since after full knowledge the defendant continued to treat-the transaction as valid until after the maturity of the note, and did not disaffirm it, there was an implied ratification of Towle’s act, Alexander v. Culbertson Irrigation & Water Power Co., 61 Neb. 333; Rich v. State Nat. Bank, 7 Neb. 201; Johnston v. Milwaukee & Wyoming Investment Co., 49 Neb. 68; German Nat. Bank v. First Nat. Bank, 59 Neb. 7; Pittsburgh, C. & St. L. R. Co. v. Keokuk & Hamilton Bridge Co., 131 U. S. 371. The verdict of the jury is contrary, to the instruction quotedj and must be set aside.
Defendant insists that any error occurring at the trial was without prejudice because the. guaranty itself con-
Reversed.