93 A. 222 | Md. | 1915
The appellee sued the appellant on three certificates of indebtedness, two being for $5,000 each, and the other for $3,150. The form of the three (except as to the amount) is the same and is as follows:
"This is to certify that the Conowingo Land Company of Cecil County, Maryland, a corporation, is lawfully indebted to bearer in the sum of five thousand dollars ($5,000.00) with interest at the rate of six per centum per annum from the first day of April, 1902, until paid. The same being a part of the purchase money advanced and paid for the real estate of said company, and in order to secure its repayment, with interest, this certificate of indebtedness and negotiable instrument is made, executed, issued and delivered, pursuant to resolutions authorizing the same, duly passed by the Board of Directors of said Land Company.
(Conowingo Land Witness the signature of the Company Treasurer, together with the seal Incorporated of said corporation, annexed 1902 hereto, duly attested by its of Cecil Secretary. County) Geo. K. McGaw, Attest: Treasurer. Chas. R. McConkey, Secretary."
The narr. originally contained six common counts, and a special count, but later the seven counts were withdrawn, with leave of Court, and an amended declaration was filed containing three counts, in each of which it is alleged that on the 13th day of January, 1903, the defendant by its writing *646 obligatory in the following language (one of the certificates being then set out in each count) promised to pay, etc.
The defendant filed six pleas: 1st. That the alleged cause of action did not accrue within three years before the institution of this suit; 2nd, that it did not accrue within three years before the filing of the amended declaration; 3rd, that the alleged deeds are not the defendant's deeds; 4th, that the alleged paper writings were procured by the fraud of the plaintiff; 5th, that the alleged writings obligatory were procured by the fraud of the plaintiff; and 6th, that defendant was never indebted as alleged. The plaintiff demurred to the first and second pleas, joined issue on the third, traversed the fourth and fifth and joined issue on the 6th. The demurrer to the first and second pleas was sustained and there was a joinder of issue on the replications to the fourth and fifth pleas. The case was tried before the Court and resulted in a verdict for the plaintiff for $22,618.00, and this appeal was taken from the judgment rendered thereon.
1. The appellant contends that the papers sued on were not writings obligatory — not to be treated as specialties — and hence the limitation of three years was applicable. It is true that it does not necessarily follow that because the seal of a corporation is attached to a note it is a specialty, but the cases cited by the appellant support, rather than refute the theory that these certificates are instruments under seal. InJackson v. Myers,
The cases cited in addition to those in 43 Md. were Hamburger
v. Miller,
But in addition to that, the amended declaration declared on them as writings obligatory. In Smith v. Woman's College,supra, where the declaration was framed in debt on a specialty, and the pleas filed were that the defendant was never indebted as alleged and it did not promise as alleged, this Court held that the pleas were not good, and therefore the lower Court erred in entering judgment against the plaintiff for his refusal to reply to them. That was a suit under the Practice Act of Baltimore City (Chapter 184 of the Acts of 1886), and although the Court held that the instrument sued on was not a specialty, yet because the declaration was framed in debt on a specialty those pleas were held to be bad. So in this case, as the instruments were declared on as specialties, pleas of the statute of limitations applicable to simple contract debts were not good, and hence the demurrer was properly sustained.
2. Ten exceptions were taken to rulings on evidence. Some of them do not now seem to be pressed, and without discussing all of them separately, we are of opinion that there was no injurious error in the rulings. The fifth exception was taken to the Court's permitting the three papers sued *648 on to be offered in evidence. The reasons alleged in the appellant's brief for excepting to that action of the Court are: (a) Because they were not writings obligatory; (b) "Because according to the uncontradicted evidence there was no consideration for the appellant to give to McGaw, or any other person the obligations sought to be collected in this proceeding"; (c) "Because under the facts disclosed by the record in this case the said paper writings were illegally and fraudulently issued"; and (d) Because the proceedings of the directors and stockholders of the appellant in reference to these instruments were ultra vires.
Objection (a) is answered by what we have already said. Treating the plea of non est factum as a good plea, which we will discuss later, it was incumbent on the plaintiff to prove the execution and delivery of the certificates; and when that was done they were at least prima facie valid, being signed by the treasurer and the seal, attested by the secretary, being affixed, as in our judgment the signature of the president in the absence of some by-law or something to require it, was not necessary. The offer of the certificates in evidence at the time they were was possibly premature, but the resolutions of the directors authorizing the debts alleged to be due the plaintiff and Mr. Harlow to be secured in some way were already in evidence, and if it can be said that their execution and delivery were not then sufficiently proved they were proven subsequently, and hence the defendant was not injured. In Edelin v. Sanders,
It may be well, in passing, to say that in order to be writings obligatory it was not necessary that these instruments should contain an express promise to pay the amounts respectively named. In Cover v. Stem,
3. The Court granted the following prayer offered by the plaintiff: "The plaintiff asks the Court to instruct the Court sitting as a jury that under the pleadings and evidence in this case the plaintiff is entitled to a verdict for the full amount of all three of the writings obligatory offered in evidence, with interest thereon at six per cent from the 2nd day of April, 1902."
There was error in granting that prayer, as it not only excluded from the consideration of the Court, sitting as a jury, all questions of fact, but it is too general. Without now discussing them, there were disputed questions of fact to be passed on. It is contended, however, on the part of the appellee, that by reason of Section 9 of Article 5 of the Code, the ruling of the Court on that prayer cannot be objected to in this Court, as there was no special exception to it. The *650
appellee relies on Morrison v. Hammond,
It is true that in many cases in which such decisions have been made, the prayer was rejected below, and hence was not an "instruction actually given," but that is by no means so with all of them. In Mottu v. Fahey,
It is clear, therefore, that there was reversible error in granting the plaintiff's prayer. The defendant's first prayer was properly rejected. The certificates made a prima facie case, as we have seen, and the Court could not say there was no evidence legally sufficient to entitle the plaintiff to recover. Its second prayer was also properly rejected for reasons already stated. The third was intended to present the question of the consideration for the certificates, and the fourth whether the defendant had the power to issue them.
Inasmuch as the seal imports consideration it could not be properly said that there was no evidence legally sufficient to show any consideration — especially when taken in connection with the resolutions of the directors in the record. This prayer refers to the pleadings, and as the case was tried before Ch. 109 of the Acts of 1914 took effect (Sept. 1, 1914) it is unnecessary to consider that Act. The plea of never was indebted as alleged "always was and still is improper" in debt on specialties, 1Poe, sec. 625. Therefore, no question as to the consideration could properly be raised by that plea. The only one under which it could be claimed to be was the third — "that the alleged deeds set out in the plaintiff's declaration are not the defendant's deeds." That was not in proper form, as it was not sworn to, as required by section 11 of Article 75, but as issue was joined on it we will treat it as sufficient, Milburn v. State,
The fourth prayer asked the Court to say that there was no evidence legally sufficient to show that the defendant had legal authority to execute and issue to the plaintiff the paper writings offered in evidence, and therefore the plaintiff was not entitled to recover. That likewise referred to the pleadings, and, without discussing other points, the general rule seems to be well established that the defense of ultra vires must be pleaded specially. France on Principles of Cor. Law (2nd Ed.), 125; 5 Ency. of Pl. and Pr., 95; 3 Thompon Cor. (2nd Ed.), sec. 3255, 10 Cyc. 1156. That is certainly the safe and fair rule, and we think that the prayer was properly rejected for that reason, as well as because it could not properly be said that there was no evidence legally sufficient, etc.
We must not, however, be understood as holding or intimating that the fact that the certificates are under seal will preclude the defendant from showing, if it can, that there was no consideration for the certificates, or that the directors had no authority to authorize them to be given, but we only hold that the prayers as framed were properly rejected. There can be no doubt that if the stock was paid for by the conveyance of the Bell property, and the amounts advanced by Messrs. McGaw and Harlow, for the purchase of the property was not included as a part of the consideration for the property, there was nothing due them by the company on account of that conveyance. Under those circumstances the directors would have had no power to bind the company for the amounts so advanced by them. The provisions in the statute in reference to payment of the stock of a corporation with property would be rendered nugatory and of no protection, if parties could purchase property, convey it to a company organized by them in payment of the stock of the company, and then have the directors (the stockholders and directors being the same persons) pay, or provide for paying *654 them the amount of purchase money which they had paid for the property, although they had used the property in payment of the stock. Sections 61 and 62 of Article 23 of the Code of 1888 (which was in force at the time of this transaction) were intended to protect subsequent stockholders and others dealing with the company and required records of payment of stock with property to be so kept that those interested could readily ascertain the facts. In this case Mr. McGaw sold his stock within two or three years. Acceptance of property in payment of stock was done under section 61 by the stockholders in meeting assembled for the purpose of considering the propriety of receiving the subscription and of fixing the terms upon which it should be received. Those interested therefore look to the proceedings of the stockholders and not to those of the directors to ascertain the terms of such subscriptions.
Mr. McGaw, however, testified without objection that, "We incorporated the Conowingo Land Company and transferred this property to them, having Mr. Caldwell do it, subject to this first mortgage, and these indebtedness that they owed Mr. Harlow and myself," etc. Of course, if it can be legally shown that the property was conveyed to the company subject to the amount paid out by Messrs. McGaw and Harlow, as well as the Bell mortgage, a very different case from that above referred to would be presented. As the case will have to be retried, it is hoped that the actual facts can be ascertained, and that they can be made clearer than many of the important ones in the record are. If that is done, there can be no great difficulty in applying the law to the facts proven.
Judgment reversed and new trial awarded, the appellee to paythe costs, above and below. *655