Moyse Real Estate Co. v. First National Bank

70 So. 821 | Miss. | 1915

Cook, P. J.,

delivered the opinion of the court..

This is an appeal from the circuit court of Forrest county by the defendant below. The declaration declares upon two promissory notes, for three thousand, five hundred dollars each, payable to H. G-. Lea, or bearer, and signed “Moyse Real Estate Company, by J. L. Moyse, President.” It is alleged that the plaintiff paid value for the notes. -Four pleas were filed by the defendant The first plea is non debet. The second plea says that the promissory notes were “without consideration, being merely given for accommodation, had no connection at all with the business of the Moyse Real Estate Company, which is a corporation, and were without authority either in law or in fact and were ultra vires of the corporation, which was not authorized to give the same, and had no power under its charter to give the same.” The third plea is non est factum. The fourth plea is practically the same as the third, and both are sworn to. Plaintiff filed a replication, properly verified, denying the averments of the second, third, and fourth pleas, and files as an exhibit the charter of the corporation.

We do not doubt that the charter of the corporation confers ample power upon the corporation to execute promissory notes. We will concede, for the purposes of this decision, that the charter does not give the power to the company to make accommodation paper, and that the evidence shows the notes sued on were in fact accommodation and without consideration. The evidence also demonstrates that the plaintiff purchased the notes in the due course of trade; and that it had no information,,, or reason to suspect, that the notes were given for the accommodation of the payee. In this state of the record we believe that the plaintiff’s right to recover is in no wise affected by the fact that the notes were without consideration. The power to execute promissory notes being conceded, we are unable to distinguish this case from a case wherein the maker of notes is a natural person.

The plaintiff assumed the burden and proved affirmatively that the notes were executed by the then president of the company, and the question for us to decide is whether the law will presume that the president had been given authority to sign same, in the absence of any evidence to the contrary. The trial court instructed the jury peremptorily to find for the plaintiff. The correctness of this instruction is challenged by the defendant. Stated concretely, the defendant, appellant here,, earnestly and ably contends that no presumption can be indulged that the president of a corporation had any inherent power to hind the corporation in contracts of this nature, and that the mere proof that the president signed the name of the corporation to the notes in this case signifies nothing, and the plaintiff has failed to successfully carry the burden imposed upon him by the law.

Counsel on both sides have shown great industry and consummate ability in the presentation of their sides of this vexed question. They have exhausted the subject. It is quite apparent, after a careful and painstaking study of the authorities, that the decisions are in irreconcilable ■conflict. No decision of this court upon the precise question has been called to our attention, and we have not been able to find anything in our books which arrays our court on the one side or the other. Thompson on Corporations, vol. 2, sec. 1457 (2d Ed.), speaking of the conflict in the authorities, has this to say:

“The effect of these divergent views, on the one hand, is to relieve the complaining party of making proof of the president’s authority, for the reason that, where he is in active conduct and management of the business, he must be presumed to have all the powers of any agent exercising like control and management, and to have authority to do what is usually and ordinarily done by such agents or managers. On the other hand, and under the other cases, the burden is cast upon the party seeking to charge the corporation upon a contract made by the president of proving his authority in some of the recognized modes, reducing the proposition to a question of fact rather than of law.”

We think that the wiser and more practical rule is expressed by the supreme court of Illinois in Lloyd & Co. v. Matthews, 223 Ill. 477, 79 N. E. 172, 7 L. R. A. (N. S.) 376, 114 Am. St. Rep. 346, viz.:

“It is contended that, even though it be conceded that George E. Lloyd & Co., by E. C. Williams, its president, signed the guaranty, still, as a matter of law, the corporation cannot be held liable without proof of special ■authority from the corporation to its .president to execute the contract of guaranty. A corporation can act only through its agents, and the president of a corporation, as the agent and corporate representative, has the power,in the ordinary course of business and in furtherance of the corporate interest, to execute contracts and to bind the company in so doing. He is, by virtue of his office, recognized as the business head of the company, and any contract pertaining to the corporate affairs, within the general powers of such officer, executed by the president •on behalf of his corporation, will, in the absence of proof to the contrary, be presumed to have been done by authority of the corporation. Atwater v. American Exch. Nat. Bank, 152 Ill. 605, 38 N. E. 1017; Bank of Minneapolis v. Griffin, 168 Ill. 314, 48 N. E. 154; Anderson v. South Chicago Brewing Co., 173 Ill. 313, 50 N. E. 655; Anderson Transfer Co. v. Fuller, 174 Ill. 221, 51 N. E. 251; Williams v. Harris, 198 Ill. 501, 64 N. E. 988. If the contract in •question had been executed by some agent who ordinarily does not have the power to sign such instruments, and the execution had been put in issue by properly verified plea, as is the case here, then it would be necessary to go beyond the mere fact of the execution of the instrument and prove the authority of the agent to execute the same; but when the contract is properly executed for the corporation by its president, and it is such a contract as the •corporation might lawfully make, the proof of the execution by the president is all that is required, in the absence of any evidence to the contrary showing that the-contract was not made by the authority of the corporation. ’ ’

Nearly all of the big business and a large part of the small business is now conducted by corporations, and if it be the law that persons dealing with the president of a corporation about matters of business clearly within the powers of the corporation to transact must deal at arm’s length, and demand that the president exhibit his credentials before entering into contracts with him, it seems to us that not only the corporation, but also those-dealing with corporations, will be seriously hampered. It-is not our purpose to hold that a president of a corporation has the inherent power to bind the corporation, but we do hold that the fact that the president of a corporation has executed a contract for his corporation is prima facie evidence that the president had the authority to bind the corporation.

If it be true that the president did not possess the authirity assumed by him in the present case, the proof of his lack of authority was in the possession of the corporation, and there would have been no difficulty in the way of its production. On the other hand, it might be very difficult and expensive for the plaintiff to have secured the-evidence to show -his authority. This corporation was-domiciled in New York City, and while there are means whereby the plaintiff might have secured affirmative-proof, yet it is conceivable that the unwilling corporation might see fit to throw many obstacles in the way. Presidents of corporations generally exercise the powers of a general agent, usually by the tacit consent of the corporation and the public rarely stops to inquire about his authority. National Bank v. Vigo Bank, 141 Ind. 352, 40 N. E. 799, 50 Am. St. Rep. 330; Patterson v. Robinson, 116 N. Y. 193, 22 N. E. 372. The acts-done by the president, pertaining to the business of the corporation, not clearly foreign to his powers, will, in the absence of proof to-the contrary, be presumed to have been authorized by the-corporation. This, we think, is a salutary rule, and imposes no hardships upon either party to the contract. The corporation selects its president, and the ordinary business man, generally speaking, assumes that the man made president is the head and front of the corporation.. If it be true that the president of any particular corporation is a mere figurehead, with no powers or duties, except as a presiding officer of the board of directors, this fact can be readily established by the corporation.

Affirmed„