10 Abb. Pr. 39 | The Superior Court of New York City | 1870
The appeal pa pers submitted in this case have been prepared in a very objectionable form. They contain not only all the exceptions taken by the four appellants, which are very numerous, but also the exceptions of the respondents, which are equally numerous. Such practice, being calculated to mislead, imposes upon the court at general term much additional and superfluous labor. This should not be done. An exception taken during the progress of a trial by a party who finally succeeded, is improperly incorporated into the printed case, unless its insertion can be justified by the existence of a special reason therefor. I have, however, carefully examined the whole case as submitted, and the examination thus made has led me to the conclusion that the evidence was insufficient to authorize the referee to find as matters of fact that the drafts in question were drawn by the company, upon the condition, among others, that the company should place the plaintiffs in cash funds to meet their acceptances at maturity, and that the company put the plaintiffs in funds to meet the four drafts as they became due, except the draft dated June 5, 1865, for four thousand dollars, which became due on August 7, 1865, which last mentioned draft the said company failed to pay, or to put the plaintiffs in funds to pay, except the sum of nine hundred and
It has been repeatedly held that the liability imposed by the statute upon trustees of manufacturing companies for neglecting to make and file an annual report, is in the nature of a penalty for misconduct in office. The penalty imposed, is the debt of the corporation (Bird v. Hayden, 2 Abb. Pr. N. S., 61; McHarg v. Eastman, 35 How. Pr., 205 ; Merchants’ Bank v. Bliss, 35 N. Y., 412; affirming 1 Robt., 391; S. C., 13 Abb. Pr., 225).
Plaintiffs should be held, therefore, to strict proof of their case, and the burden of proof was upon them to establish that the debt was contracted by the corporation.
A corporation aggregate, being an artificial body— an imaginary person of the law, so to speak—is, from its nature, incapable of doing any act, except through agents, to whom is given by its fundamental law, or in pursuance of it, every power of action it is capable of possessing or exercising. The acts of such agents, in order to be binding upon the corporation, must, as a general rule, be done in the line of such agency, and within the limits of the authority conferred on them (Hartford Bank v. Hart, 3 Day, 493 ; Wyman v. Hallowell and Augusta Bank, 14 Mass., 62; Bellows v. The same, 2 Mas., 31; Salem Bank v. Gloucester Bank, 17 Mass., 1).
Thus an agreement of the president of a private corporation was held not to be evidence against the corporation, without something from which it could be inferred to have been within the scope of his authority (Pa. Supreme Court, Farmers’ Bank of Bucks Co. v. McKee, 2 Pa. St., 318).
The statute under which manufacturing corporations may be organized, places the management of their
In the case at bar, the by-laws of the Simpson Water-proof Manufacturing Company were adopted at the first meeting of the board of trustees. They provided that the officers of the company should consist of a president, a secretary, and a treasurer. The respective duties of these officers were also clearly defined. It was made the duty of the president to preside at all meetings of the stockholders and trustees, and to oversee, under the direction of the trustees, the manufacturing, selling, and all other operations of the company and its subordinate officers. It was made the duty of the treasurer to keep the moneys of the company, to deposit-them in a bank designated by the trustees, and to disburse them under the direction of the trustees; but it was expressly provided that no money should be paid unless in pursuance of a vote of the trustees, and
Thus it has been held, that, whenever a corporation have a board of directors, under whose general supervision and control the business of the corporation is transacted, an agent, who attends to the daily routine of business and its management under all ordinary circumstances, has no authority, by virtue merely of his agency, to make a contract creating a gen eral lien upon the personal property of the company, to secure money' borrowed, but such contract must receive the approval of the board of directors. A general agent might be deemed vested with power to make such contracts, when necessary, in the intervals of corporate meetings, if the corporation had no other board of control but the agent; but if they have such a board, under whose control the agent was acting, such a contract by the
The evidence given on both sides in the case at bar presents'no confliét of any consequence. It shows that the drafts were drawn by the secretary, simply because the president ordered him so to do, and that thereupon they were negotiated by the president for his private benefit; that neither of the defendants, Learned, Dixon, or Palmer, had any knowledge of any of the transactions which took place between plaintiffs and the president and secretary, or either of them, prior to the commencement of this action, and that the entries regarding the said drafts and the account with the plaintiffs were not made on the books of the company, until after the expiration of a year or more after the last transaction. It also appeared that plaintiffs, who had had previous private dealings with Simon Stevens, the president, but none with the company, accepted the drafts on the faith of the personal guarantee of said Stevens, executed at the time, and without inquiry as to his authority to bind the company, and that the funds received by plaintiffs to be applied in payment of the said drafts, were furnished by Stevens for that purpose, without any knowledge on the part of his co-trustees. Stevens himself testified that he had no authority from the company to borrow money, or to give the drafts, or to make the contract with the plaintiffs, which he did make; that he never informed his co-trustees of Ms transactions with the plaintiffs until some months after the maturity of the last draft; that he originally advanced about thirty thousand dollars to the company, a great portion of which he repaid to himself out of the proceeds of these drafts. Upon this uncontroverted state of facts, it seems clear that, within the principles decided in the case of Claflin v. Farmers’ and Citizens’ Bank (25 N. Y., 293), the acts of Presi
The evidence, in my judgment, is also insufficient to show- a subsequent ratification, either express or implied. The president and secretary certainly were not competent to ratify their own unauthorized acts (Mich. Supreme Ct., Hotchin v. Kent, 8 Mich., 526). The company, it is true, might have done so. Ho express vote seems to be necessary to a ratification by a corporation of the unauthorized acts of an agent. A ratification may be inferred from corporate acts, inconsistent with any other supposition than that the corporation intended to adopt and own the acts done in their name (Conn. Supreme Ct., Howe v. Keeler, 27 Conn., 538).
Thus, a ratification may be inferred from the acquiescence of the directors or other governing body of the corporation, from the fact that, after the facts have been brought to their knowledge, they have taken no measures to show dissent; from the fact that they did
But in all these cases the board of directors or trustees had full knowledge of the facts, and I have been unable to find a single case'in which a subsequent ratification has been inferred, without proof that the board of directors or trustees had such knowledge. On the contrary, it has been held in several cases that it must be shown by the party asserting such ratification, that the resolution or acts of the corporation, or of their directors or trustees, relied on as constituting the ratification, were performed with a full knowledge of all the material facts necessary to an understanding of their rights (Cal. Supreme Ct., Blen v. Bear River, &c. Co., 20 Cal., 602; Md. Ct. of Appeals, Cumberland Coal, &c. Co. v. Sherman, 20 Md., 117).
And where the ratification, by a corporation, of the unauthorized contract of their agent consisted in their having received the consideration of'the contract, it was held that it must be shown that the corporation, through its proper officer or officers, knew the terms of the contract, and on what account the consideration was by them received (Md. Ct. of Appeals, Pennsylvania, &c. Steam Nav. Co. v. Dandridge, 8 Gill. & J., 248; Corn Exchange Bank v. Cumberland Coal Co., 1 Bosw. 437).
As the evidence in this case unmistakably shows that, with the exception of the president, none of the trustees ever had any knowledge or notice of the unauthorized transactions which took place between said
Finally, it seems to me equally clear that the defendants cannot be held liable upon the ground that the conduct of the corporation was such as to create a well-founded belief in the plaintiffs that the president had either a general or special power to issue and negotiate the drafts. There was no proof that the president had been in the habit of borrowing of the plaintiffs in the name of the company, and that such loans had been ratified by the company, or that it was his custom of borrowing of other persons; that his act, in this respect, had been ratified by the company, and that these facts were known to the plaintiffs at the time they made the loan (Martin v. Great Falls Manufacturing Co., 9 N. H., 51). The evidence did not disclose any corporate acts from which he could have inferred such authority ; but it showed that plaintiffs, because they had neither prior dealings nor any acquaintance with the company, accepted the drafts, almost exclusively, upon the faith of the individual guarantee of the president. Nor can the plaintiffs invoke the application of the rule laid down in the North River Bank v. Aymar (3 Hill, 262), Griswold v. Ha
The judgment appealed from should be reversed as to all the defendants, and the order of reference vacated, and a new trial ordered, with costs to appellants, to 'abide the event.
Monell and McCunn, JJ., concurred.