48 P.2d 800 | Colo. | 1935
THIS controversy arose out of a suit to foreclose a trust deed. The action was brought in the district court by defendant in error Reddin, as executor of the last will and testament of Mary Etta Driscoll, against plaintiff in error Home Builders Company, the Union Deposit Company and others, and in this opinion reference will be made to the parties by name or as plaintiff and defendant or company, respectively. A money judgment was sought against the Home Builders Company on its alleged assumption of the indebtedness secured by the trust deed.
The facts as shown by the record are as follows: In 1929 Forest Breland executed his note for $4,000 to the Union Deposit Company and secured the same by trust deed on the property now in foreclosure. The Union Deposit Company sold the note to Mary Etta Driscoll, who died December 10, 1932. Forest Breland sold the real property covered by the trust deed to one Dr. Dixon in April, 1929, who assumed and agreed to pay the encumbrance of $4,000 against the property. As part of the consideration in the transaction Dr. Dixon gave a note for $1,900 to Forest Breland, secured by a second trust deed on the property, which at the time of the present suit had been reduced to about $1,200 and was held by defendant, the Home Security Company. This latter company appears to bear a close relationship to the defendant Home Builders Company, both having the same *234 directors. No point is made of this fact, however, and for the purpose of this opinion it may be considered that the note secured by the second trust deed was the property of the defendant, the Home Builders Company. Dr. Dixon was unable to make his payments on the $4,000 note. Foreclosure was threatened, which fact was known to Hildebrandt, secretary and treasurer of the Home Builders Company. In May, 1932, Hildebrandt presented to Dr. Dixon a warranty deed, which he had drawn, conveying the property now in foreclosure to the company, subject to the aforementioned first and second deeds of trust. Dr. Dixon kept the deed for examination, and conferred with a friend who was in the real estate business, who suggested that after the exception of the encumbrances there should be written the words: "All of which second party (the company) assumes and agrees to pay." Dr. Dixon inserted those words, upon Hildebrandt's return informed him that he had done so, and Hildebrandt accepted the deed. Dr. Dixon then accompanied him to a notary, where he acknowledged the deed and left it with Hildebrandt, at the same time taking from the Home Builders Company a lease on the property for two and one-half months, executed by Hildebrandt, paying the latter $100 therefor. It was on the assumption clause so inserted in this deed that the plaintiff sought to procure judgment against the company.
The Home Builders Company denied any authority on the part of Hildebrandt, express or implied, to accept the deed or to assume the indebtedness, and alleged that he was merely one of the directors and the secretary and treasurer of the company, possessing no powers except such as are incidental to those offices; denied that the board of directors, as such, or that the other directors individually, had knowledge of Hildebrandt's action in the matter until shortly prior to August 17, 1932, on which date the company through its attorney tendered back to Dr. Dixon the deed, which had not been recorded, and the $100 received from him for the lease, which *235 tender Dr. Dixon refused, and which the company alleged it kept good. The company denied that there was a delivery of the deed to the company or that there was any assumption by the company of the indebtedness, and alleged that it repudiated the whole transaction, which latter fact is well evidenced by its defense of this suit.
With substantially the foregoing facts before the trial court the Home Builders Company interposed a motion for nonsuit on the ground that the evidence did not show that the company, acting by any officer or agent, duly authorized by the corporation, assumed or agreed to pay the indebtedness sued on or accepted a deed containing such assumption clause. The court denied the motion, found for plaintiff and entered judgment against the company on its assumption, and agreement to pay, contained in the deed.
[1, 2] The court was in error in denying the company's motion for nonsuit and in entering judgment against it. A corporate director, being secretary and treasurer, as such, has no implied power to obligate his company or to purchase land. Such power might be inferred or arise from a course of dealing, but none is here shown. The trial court in making its decision relied on Woods Investment Co. v. Palmer,
Particular attention is called to the italicized portion of the above quotation. In the Woods case there was an attempt to separate the authority to accept the deed from authority to assume the encumbrance. The delivery of the deed in that case was admitted, and the authority to assume the encumbrance denied. This the Court of Appeals said could not be done. A careful reading of the case, we believe, will disclose that it was determined on the ground that the defendants could not retain the deed and at the same time escape their obligations created by assumption of the indebtedness. We are confirmed in this interpretation of the holding in the Woods case by the long line of decisions of this court and of the Court of Appeals holding that one who deals with the agent of a corporation must at his peril ascertain the extent of the agent's authority.
In Extension Gold Mining and Milling Co. v. Skinner,
"Hence, the individual action of Fair, although a member of the board, did not bind the company. As secretary and treasurer he had no authority to enter into the contract in question. His declarations were not competent to prove that he was authorized to make such contract.Union Mining Co. v. Rocky Mt. Bank,
"* * * The burden of proof was upon the plaintiffs to establish that the contract made with Fair was binding upon the company. The evidence upon their part not only failed to prove such a contract, but, on the whole, established affirmatively that the company was not bound by the original contract, and that it was not ratified."
In the case of Conqueror Gold Mining and Milling Co.v. Ashton,
The following cases recognize the principle of law set *238
forth in the foregoing quotations: Montrose Land andInvestment Co. v. Greeley National Bank,
[3] The extent of an agent's authority, if express, is to be measured by the power delegated to him by the board of directors; and if implied is to be measured by his prior acts which have been ratified or approved or their benefits accepted by his principal. No evidence of express authority to assume the indebtedness appears in this record, and there are no facts in evidence from which such authority could be implied. Neither does it appear that the company had brought home to it knowledge of the transaction concerning either the deed or lease until about August 17, 1932, when, through its attorney, it disavowed the act of its secretary and treasurer and offered to surrender all benefits it had received. Under such circumstances it is not estopped to deny the assumed authority of its secretary and treasurer to act in the premises. Its disavowal of the whole transaction distinguishes this case from that of Woods Inv. Co. v. Palmer,supra.
In view of our determination that plaintiff's evidence was insufficient to establish a case justifying a judgment against the company, it is not necessary to pass upon other assignments of error. The judgment against plaintiff in error is reversed.
MR. CHIEF JUSTICE BUTLER and MR. JUSTICE HILLIARD concur. *239