McElroy v. Minnesota Percheron Horse Co., 96 Wis. 317

McElroy v. Minnesota Percheron Horse Co.

96 Wis. 317 | Wis. | 1897

ivra t?.rtta T.T., J.

The first question that requires consideration is, Was the contract of employment, made with plaintiffs, to negotiate an exchange of the corporate property in Pipe-stone county, Minnesota, for Chicago real estate, ult/ra vires? That must be answered in the negative. The articles of organization expressly provide, among the purposes of the corporation, that of dealing in real estate in town and country. Such purpose is made very prominent in the articles, and seems to have been one of the principal purposes of the organization. But if such were not the case, the con*321tract of agency having been fully executed on the part of plaintiffs, the doctrine of ultra vires cannot be invoked by the corporation to avoid performance of its part. John V. Farwell Co. v. Wolf ante, p. 10. This subject has been recently, in the case cited, so exhaustively discussed, and the principles governing it laid down, by this court, that further •discussion of the matter at this time appears to be unnecessary.

If the trial court did not nonsuit plaintiffs upon the theory that the doctrine of ultra vires applied, then we assume the learned circuit judge held thatthe president of the •corporation was incapable of binding it because no special ■authority was given him so to do by the board of directors. If it were the law that the president of a trading corporation could not bind it without special author^ in that regard, intolerable mischiefs would result, for no person could then safely act in business matters with such an organization without first investigating the corporate records in respect to the authority delegated to its agent. When the law is rightly understood and administered, it does not sanction any such difficulties in business operations. A corporation may so conduct its affairs as to confer by implication, ■upon its president, powers much beyond those strictly incident to his office, even to the extent of exercising the entire powers of the corporation, which, by the articles, are vested •solely in the board of directors. The powers of the president of a corporation, or any other officer thereof, do not depend solely upon the title of the office or the actual delegation of power, but upon the' appearances with which the ■officer is clothed by the corporation; that is to say, it is the ^apparent power of the officer, not the actually delegated power, which governs. The law is well settled that, within the scope of his apparent power, the president of a corporation, by his acts, binds such corporation the same as if he were the agent of a natural person. This doctrine has been *322extended, from necessity, to give adequate protection to innocent persons dealing with corporate organizations through their officers and agents. As said by Prof. Thompson, in his late work on Corporations: “Few of the supposed dangers attending such dealings in fact exist.” In §§ 4623,4624 he lays down four well-established rules or principles that a person dealing with the president of a corporation may invoke for his protection when the corporation attempts to-repudiate the acts of such president: (1) That the corporation is estopped from claiming in the particular instance that its president had not the powers which it has customarily allowed him to exercise in the face of the public. (2) That, if the corporation has received the benefit or fruits of the transaction, it is estopped from repudiating it, and is assumed to have ratified it. (3) In case the contract is evidenced by a sealed instrument, the principle that the presence of the corporate seal carries with it a presumption of actual authority on the part of the president and secretary to execute the contract. Such presumption, however, is re-buttable. (4) That proof of the authority of the president may be inferred from circumstances; it need not necessarily be established by the record. The first, second, and fourth of the above-mentioned principles were applied by this court in Ford v. Hill, 92 Wis. 188, where a corporation was held estopped from repudiating the act of its president in executing a judgment note, upon the ground, among others, that it was within the scope of his apparent authority as exercised for a considerable length of time.

Such principles here apply to the undisputed facts. George M. Paine was substantially the corporation. He owned all the stock, except six shares obviously kept in the names of others to render them eligible to hold offices. No one but Paine appears to have had any substantial pecuniary interest in the organization. The board of directors was made-up of himself, his son Nathan Paine, who lived with him,. *323bis son-in-law Charles Nevitt, a resident of the same place, T. M. Brown, an employee on the Minnesota farm, and H. M. Bogart, a relative living in Minneapolis. The corporation affairs, for about five years, bad been conducted by George M. Paine and by his predecessor in office without any objections or proceedings whatever by stockholders or directors, so far as' appears from the records. No election of directors by stockholders was had during that time, and no meeting whatever held, except one a few months before .the making of the contract, at which the only business transacted was to fill the places of several directors who had resigned, which was done by election by those who remained. Eor two years and more negotiations had been going on for a sale of the property through plaintiffs’ Chicago agency, all conducted by Paine or his predecessor, as substantially the only persons interested. The whole course of the corporation had been such as to lead the public, ahd particularly plaintiffs, to regard the president of the corporation as having full power to act in its behalf as its general agent, and to do all that such an agent might properly be authorized to do. Such was the apparent scope of the powers of George M. Paine at the time of the making of the contract in question. To such a state of facts the doctrine of estoppel, upon which all the aforesaid rules are founded, applies ,to protect the plaintiffs from the injustice of allowing the corporation to repudiate the act of its president, with whom they dealt upon the faith of appearances for which the corporation was responsible.

It follows from the foregoing that the nonsuit was improperly granted, and that the judgment of the circuit court should be reversed for that reason, and a new trial granted.

By the Court.— So ordered.