First National Bank v. Drake
35 Kan. 564
Kan.
1886
Check Treatment

The opinion of the court was delivered by

Johnston, J.:

*576„ .. ,, , National bank— ?n directorías aboard. *574This case can be easily disposed of. The only question presented arises upon the refusal of the court to enter judgment in favor of the plaintiff upon the findings of the jury ‍​​‌​‌‌‌‌‌‌​‌‌​‌​​‌‌‌​‌‌‌​‌​‌‌​​‌​​​‌‌​​‌‌‌​‌‌‌‌​‍for the amount оf money taken from the bank by the defendant as interest on demand certificates of deposit that had been issued to himself while he was serving as president *575and cashier of the bank. The dеfendant admits that he took the money at the times and in the amounts charged by the plaintiff, and thе jury have found that during all the time the defendant was acting as an officer of the bank, there еxisted a rule or by-law of the bank which prohibited the payment of interest on demand certifiсates of deposit, and” that at no time while the defendant was an officer of the bank did hе ever inform the board of directors that he had taken interest on these certificatеs; and it was also found that the directors did not at any meeting of the board authorize or ratify the action of the defendant in taking interest. The defendant contended and contends that аlthough his act in taking the money was contrary to the by-laws of the bank, yet that there had been а ratification of the unauthorized act by the board of directors which is binding upon the bank. After stating that the directors had never at any meeting of the board ratified the taking of interest by the dеfendant, the question was asked the jury: “Did the board of directors at any time ratify the taking of ‍​​‌​‌‌‌‌‌‌​‌‌​‌​​‌‌‌​‌‌‌​‌​‌‌​​‌​​​‌‌​​‌‌‌​‌‌‌‌​‍the several amounts of interest?” To this question an affirmative answer was given; but in the next finding the jury explained particularly how the supposed ratification had been made, finding that it was “ by individual consеnt of a majority of the board.” The last finding, stating particularly what was done, controls and. prеvails over the former one stating the general conclusion that there had been a rаtification. These findings clearly show that the only sanction which the unauthorized acts of the defendant have received from the plaintiff, was given by the individual members of the board acting singly аnd separately, and not as a board. Action thus taken is not binding on the bank, and does not cоnstitute a defense to the plaintiff’s claim. The statute declaring the method in which the bank may еxercise corporate power provides ■ that the appointment and dismissal of its officers, the enactment of by-laws regulating the manner in which its officers and agents shall cоnduct its business, and the general supervision and management of its affairs, shall reside in and be exercised by a board of directors. (Rev. Stat. U. S. *576§ 5136.) This statute provides for the election of , 1 a president of the board, and otherwise assumes that the directors shall aсt unitedly as an organized body. The election of an individual as a director does not cоnstitute him an agent of the corporation with authority to act separately and independently of his fellow-members. It is the boai’d duly convened and acting as a unit that is made the representative of the company. The assent or determination of the members of the bоard acting separately and individually is not the assent of the corporation. The law proceeds upon the theory that ‍​​‌​‌‌‌‌‌‌​‌‌​‌​​‌‌‌​‌‌‌​‌​‌‌​​‌​​​‌‌​​‌‌‌​‌‌‌‌​‍the directors shall meet and counsel with each other, and that any determination affecting the corporation shall only be arrived at and expressed after a consultation at a meeting of the board attended by at leаst a majority of its members. As the only powers conferred upon directors are those whiсh reside in them as a board and when acting collectively as such, the individual consent of a majority of the members acting separately is not enough to ratify the unauthorized appropriation of the money of the bank by the defendant. (Angell & Ames on Corporations, § 504, et seq.; Morawetz on Private Corpоrations, § ‍​​‌​‌‌‌‌‌‌​‌‌​‌​​‌‌‌​‌‌‌​‌​‌‌​​‌​​​‌‌​​‌‌‌​‌‌‌‌​‍247; Field on Corporations, § 242; Baldwin v. Canfield, 26 Minn. 43; First National Bank v. Christopher, 11 Vroom, 435; Junction Rld. Co. v. Reeve, 15 Ind. 236; In re Marseilles Rly. Co., Law Rep., 7 Ch. App. 161; D’Arcy v. Tamor &c. Rly. Co., Law Rep., 2 Exc. 158; Schunn v. Seymour, 24 N. J. Eq. 143; Cammeyer v. United German Churches, 2 Sandf. Ch. 186; Edgerly v. Emerson, 3 Foster, 555; Stoystown & Greensburg Turnpike Road Co. v. Craver, 45 Pa. St. 386; Keeler v. Frost, 22 Barb. 400. See also the following cases, which are ‍​​‌​‌‌‌‌‌‌​‌‌​‌​​‌‌‌​‌‌‌​‌​‌‌​​‌​​​‌‌​​‌‌‌​‌‌‌‌​‍somewhаt analogous and applicable: Aikman v. School District, 27 Kas. 129; Mincer v. School District, 27 id. 253; Comm’rs of Anderson Co., v. P. & F. R. Rly. Co., 20 id. 534; P. & F. R. Rly. Co. v. Comm’rs of Anderson Co., 16 id. 302; Herrington v. District Township of Liston, 47 Iowa, 11; McCortle v. Bates, 29 Ohio St. 419.)

The conclusion which we have reached renders it unneces*577sary to consider the other questions so much and sо well argued by counsel with regard to the relations existing between the cashier and the board or directors, and which both of them sustain toward the bank, and whether the doctrine of ratificаtion can have application to a transaction wholly between the Board оf directors'and the cashier.

The ruling of the district court disallowing the plaintiff’s motion for judgment non obstante veredicto' will be rеversed, and the cause remanded with directions to enter judgment on the special findings of thе jury for the additional amount appropriated by the defendant without authority of the bank as interest on demand certificates of deposit, in accordance with the plaintiff’s application.

All the Justices concurring.