77 Fla. 830 | Fla. | 1919
(after stating the facts.)— Two primary questions are presented by the record: First, had the corporation the power, as against subsequent judgment creditors, to mortgage its Tand for a sum greater than the amount of its authorized indebtedness as stated in the charter, and second', is the mortgage in question sl-own by the evidence to be the mortgage of the Phillips Manufacturing Company?
Considering the last question first, our attention is called, to the manner in which the mortgage was executed. The testimonium clause and signature are as follows:
“IN WITNESS WHEREOF, The said party of the first part has caused these presents to be signed in its corporate name by its Secretary and its corporate seal affixed the day and year first above written.
The Phillips Mfg. Co. (Seal)
By Geo. W. Phillips (Seal)
(Seal) Secy &. Mgr.
Two witnesses signed and the impression of the corporate seal appears.
Section 2459, General Statutes, 1906, provides: “Any corporation may conevy land by deed sealed with the common or corporate seal, and signed in its name by its president, vice-president or chief executive officer.”
But it is argued' that no such authority is shown to have been delegated to the secretary in this case. It is true that no such authority is testified to directly in the evidence, but the seal of the corporation was affixed to the mortgage; the corporation received and used the consideration stated therein; knew the mortgage had been given and paid the interest for a number of years. Moreover the mortgage was offered and received in evidence without any ruling as to its competency being obtained from the chancellor, hence it must be regarded by this court as competent evidence. Barnes & Jessup Co. v. Williams, 64 Fla. 190, 60 South. Rep. 787.
Admitting the competency of the evidence above summarized, its sufficiency to show that the mortgage was the mortgage of the corporation, either by previous authorization or subsequent ratification can not be doubted. Allis v. Jones, 45 Fed. Rep. 148; First Nat. Bank v. Kirby, 43 Fla. 376, 32 South. Rep. 881.
It also seems that the record of the mortgage should be held just as effectual, as notice, as if it had been executed by the usual officers. If any competent person may be authorized to execute a mortgage on behalf of a corporation, then by whom it is executed can not affect the notice imputed to subsequent creditors by the records. The
Reverting now to the first question, we must determine the relative rights of a mortgagee whose mortgage is for a greater sum than the authorized indebtedness of the corporation as against subsequent lienors.
The statute nowhere provides to what extent a manufacturing corporation may incur debt, but Section 2648 requires “The highest amount of indebtedness or liability to which the corporation can at any time subject itself” to be stated in the articles of incorporation. No penalty is provided in case the corporation shall incur debt to exceed the stated limit, nor is such debt declared to be void', illegal and not enforceable. In fact the statute is wholly silent as to what result shall follow such conduct, and the charter of this corporation is equally silent.
Councel for appellants ably argues that the statute intended it to be “impossible” for a corporation to incur debt to exceed its charter limit, basing his contention chiefly upon the use of the word “can” in the above quoted portion of Section 2648 together with the fact that no penalty is imposed for exceeding the debt limit. We are not warranted' in prolonging this opinion to dilate upon the word “can” by discussing its possible shades of meaning. As employed in this statute, however, it certainly implies a restriction or limitation beyond which a corporation may not go when such restriction is timely and properly invoked; but by and against whom, and under what circumstances may the restriction be invoked? And this leads us to inquire for whose benefit the limitation
Where the stockholders have taken no steps to prevent the corporation exceeding its debt limit, and the limit has been in fact exceeded and the benefits of the transaction have accrued to the corporation, the American authorities quite generally hold that the obligation may be enforced both against the corporation and subsequent creditors.
“Bonds secured by mortgage and' issued by a corporation are valid and enforceable, although they exceed in amount the limit prescribed by charter or statute.” Cook on Corporations (7th ed.) §760, and authorities cited in notes on page 2810-2813.
“A mortgage securing a debt in excess of the statutory amount is “binding on the corporation as well as its subsequent creditors.” Jones on Mortgages (7th ed.) §126a and cases cited in Note 47.
It is unnecessary to .state here at length the reasoning by which the courts have reached the conclusion stated. The cases are collated in the text-books above cited' and may be obtained by reference thereto. Some of them are: Union National Bank v. Matthews, 98 U. S. 621, 25 L. Ed. 188; Sioux City Terminal Railroad & Warehouse Co. v. Trust Co. of North America, 173 U. S. 99, 43 L. Ed. 628, 19 Sup. Ct. Rep. 341; Wood v. Corry Water Works Co., 44 Fed. Rep. 146, 12 L. R. A. 168; Central Trust Co. of New York v. Columbus H. V. & T. Ry. Co., 87 Fed. Rep. 815; International Trust Co. v. Davis & Farnum Mfg. Co., 70 N. H. 118, 46 Atl. Rep. 1054; Hawke v. California Realty & Const. Co., 28 Cal. App. 377, 152 Pac. Rep. 959; Sioux City Terminal Railroad & Warehouse Co. v. Trust Co. of North America, 82 Fed. 124; Allis v. Jones, 45 Fed. Rep. 148. Also see 19 Cyc. 1171.
Some courts hold that inasmuch as the statute does not declare such excess indebtedness void or not enforceable, the courts should' not do so; others that after
This court also has settled the general principles controlling this case, quite in line with the authorities above quoted and cited. Southern Life Ins. & Tust Co. v. Lanier, 5 Fla. 110; Allen v. Freeman’s S. & T. Co., 14 Fla. 418, and see especially the first page of the opinion, 428; McQuaig v. Gulf Naval Stores Co., 56 Fla. 505, 47 South. Rep. 2.
In fact we have found no authority holding that :a. corporation under such circumstances, can avoid legal liability for the money it has received and' used, but a few cases say the creditor must disavow the contract by suing on the common counts, and such is the argument of appellants in this case. But it seems rather technical to say that while the money secured by the mortgage may be recovered, the mortgage as securtiy therefor may not be enforced. The Iowa Court has aptly said “It is the debt which is prohibited, and not the mortgage, and so long as the debt in any form can be enforced, the mortgage should stand.” Beach v. Wakefield, supra.
If the corporation is bound by the mortgage, it would' seem that its judgment creditors whose judgments were obtained after the mortgage was recorded, should be equally bound, and the authorities generally so hold. Fidelity Insurance, Trust & Safe Deposit Co. v. Western Pennsylvania & S. C. R. R. Co., 138 Pa. St. 494, 21 Atl. Rep. 21, 21 Am. St. Rep. 911; Beach v. Wakefield, supra; Jones on Mortgages (7th ed.) §126a.
We have not failed to carefully consider the case of Bell & Coggeshall Co. v. Kentucky Glass Works Co., 106 Ky. 7, 50 S. W. Rep. 2, on which appellants mainly rely, but we are unable to agree that the rule there announced should apply in Florida.
“Under the statute the proper record of a mortgage affords constructive notice of its contents” (Tyler v. Johnson, supra,) and if as the Kentucky court holds “Persons dealing with a corporation are charged with notice of the limit of the indebtedness prescribed by its-articles,” then if a mortgage securing an amount in excess of such limit has been duly recorded', they must be held to know that such limit had theretofore been exceeded, and they can not under such circumstances be heard to impeach the lien of such prior mortgage.
The practicability of the doctrine championed by the Kentucky Court, that a debt created by a corporation in excess of the charter limit is void for the excess, is strikingly illustrated by the limitation imposed by the same court, that one lending money to a corporation to an amount within the charter limit, • without knowledeg of other loans, the aggregate of which exceed the charter limit, is not affected by the limitation. Citizens’ Bank v. Bank of Waddy, 126 Ky. 169, 103 S. W. Rep. 249, 11 L. R, A. (N. S.) 598.
If' the corporation can not -incur debt to exceed the charter limit, that is if it has not that capacity, the ability ■or competency, then what difference can it make whether
The decree should be affirmed.
— The record in this cause having been considered by this court, and the foregoing opinion prepared under Chapter-, Acts of 1919, adopted by the Court as its opinion, it is considered, ordered and adjudged by the Court that the decree herein be and the same is hereby affirmed.