23 Utah 548 | Utah | 1901
Lead Opinion
(after stating the facts). — 1. The appellant claims that the deed of conveyance by the corporation to Beal to secure the payment of the borrowed money was void, because not authorized by resolution in a meeting of the board; that the corporation did not borrow or authorize the board to borrow it, or ratify their acts; that the certificate of acknowledgment thereto was not made and sworn to in compliance with section 1989, Eevised Statutes 1898; that the deed was not filed for record until within thirty days prior to the filing of the petition in bankruptcy, and that the corporate seal was not attached to the deed — all of which rendered the deed void as to the appellant. Section 1989, Eevised Statutes 1898, reads
As between the parties, and' all persons who had actual notice of it, a deed does not require acknowledgment to render it valid. Section 1975. Under section 2001, failure to record a deed will render it void only as against subsequent purchasers in good faith and for a valuable consideration. Hunter v. Watson, 12 Cal. 363, 73 Am. Dec. 543. A deed without any sufficient certificate of acknowledgment, if good as against a bankrupt, is good as against his assignee or trustee. Branden, Bankr., pp. 436, 435; In re Kansas City Stone & Marble Mfg. Co., 9 N. B. R. 76, Fed. Cas. No. 7,610; 1 Encyc. Pl. and Prac., 514, 515. A trustee in bankruptcy represents the bankrupt estate and the creditors. The acknowledgment was not sufficient, under the statute, to admit it of record, nor was its acknowledgment and record, as such, notice to the appellant, or to subsequent purchasers in good faith, or to third persons, under sections 2001, 1975. But under section 1975, it was binding between the parties without such proof of acknowledgment or record, and on all other persons who had actual notice. Under section 2001, it was void as against subsequent purchasers in good faith for a valuable consideration. Hunter v. Watson, 12 Cal. 363, 73 Am. Dec. 543. The record shows that the deed was signed, imperfectly acknowledged by the bankrupt, and delivered as security for the prior loan in question. As such, it was admissible in evidence, when properly proved. Devl. Deeds, sec. 1136; Gray v. Ulrich, 8 Kan. 112; Rev. St. 1898, sec. 1975.
2. The fact that the corporation kept no books of record of their meetings was a gross neglect of duty, but.it would be a
3. The objection was made that parol evidence was not admissible to prove the acts of the corporation in the absence of a record of its acts. The general rule is that a party is bound to produce the best evidence, and if the corporation has, by its own carelessness or neglect, prevented a party dealing with it from producing record evidence of its acts, it is his right to resort to such dther oral evidence as can be legitimately produced to establish it.
4. It does not appear that any seal was attached to the deed, or that the corporation had a seal. In this State the absence of a seal from such an instrument does not invalidate a conveyance. The statute does not require the use of a seal by a private corporation. Sections 323, 1976, Rev. St. Utah 1898; Wood v. Wheeler, 93 Ill. 153; 2 Cook, Corp. (3 Ed.), sec. 810.
5. The directors of a private corporation can only bind it when they speak through its board of directors. Their unauthorized acts are void unless they are directly or impliedly adopted or ratified by the corporation. The authority to borrow the money from or through Beal on September 7, or to the giving of the deed to secure it on December 28, was not granted by a formal resolution of the board of directors at a regular or special meeting, properly convened, at which a record was kept of its proceedings, as should have been done; but authority was given the president and secretary and treasurer, at an informal meeting held on the seventh of September, at the company’s store, to borrow $1,000 in money, and secure its payment by deed of the property in question. That money was borrowed from Beal on the present promise of the officers to secure its payment by deed to the property, which was not ex
As we have seen, at the time when the assignment was made the assignee and trustee in bankruptcy had full notice that the Beal deed covered the property assigned. ImrnedL ately after the $1,000 was borrowed from Beal, on the seventh of September, it was deposited in the bank to the credit of the corporation. It was immediately taken, received, and used by the corporation, and by its officers and directors, with full knowledge that it was acquired from Beal upon the promise by the officers to secure its payment by deed to the real estate in question. Such money was used by the corporation to pay its debts and erect buildings on the corporate property. It was borrowed in good faith, and loaned by Beal without any intent to hinder, delay, or defraud any creditor of the corporation, or to secure any preference over any creditor, more than four months prior to the time of filing the petition in bankruptcy. When the deed was finally executed, on December 28, all the officers and directors had a full knowledge of what was being and had been done, and consented thereto, and retained the money borrowed, and from thence hitherto have never offered to return the same. As a general rule, a private
6. It is also very zealously insisted by tbe able counsel for tbe appellant that tbe mortgage deed was given at a time when tbe corporation was insolvent, with intent to create a preference in favor of tbe respondent, and within four months from tbe time of tbe filing of tbe petition in bankruptcy, and that, therefore, tbe deed was void under tbe provisions of section 3 of tbe Bankrupt Act of 1898, and that no legal ratification could occur. Tbe record shows that tbe $1,000 was obtained September 7, and that tbe $800 was obtained October 29. Tbe latter sum was received within four months from tbe time of filing tbe petition in bankruptcy, on February 13, 1899. Tbe respondent had made frequent requests for a delivery of tbe deed after be bad paid over tbe $1,000, but through tbe neglect or oversight of the officers, and without any intent to de
7. The above rule will not extend to cover the $800 borrowed from the respondent on October 29, 1898. The corporation could not ratify this act of the directors until after the money was obtained. This money was obtained within the four months fixed by the bankruptcy act prior to February 13, 1899. While it is true that ratification relates back to the inception of the transaction, and has a complete retroactive effect, and a ratified act is to be treated as if originally authorized by the principal — that is, by relation of law the act of one is given the effect of the act of another — yet the law will not permit a wrong by making valid an invalid act or defeat the rights of others. In other words, the law-will not permit a ratification of the acts of an agent which will defeat the intervening rights of third parties. Therefore the above doctrine will not apply to third parties, strangers to the transaction, or, in this case, to the bankrupt estate or other creditors. The act of ratification, to relate, must take place at a time and under circumstances by which the ratifying party might himself have lawfully done the act which he ratifies. The twenty-eighth day of December was within the period fixed by the bankruptcy act wherein the corporation could do no act in fraud of the rights of its creditors or assigns, and the ratification by the corporation at that time of the acts of its officers, in borrowing the $800 on October 29, and in giving the deed to secure its payment, would be within the prohibitory provision of the bankruptcy act, and, if permitted, would defeat the intervening rights of the trustee in bankruptcy, and the creditors he represents, for whose benefit the ratification claimed will not be permitted to relate so as to bind the ap
Errors are assigned upon other questions, but as they are not discussed in the brief of counsel, and are necessarily subordinate to the questions passed upon, we have refrained from a discussion of them. The judgment of the district court should be modified in accordance with this opinion, and as modified affirmed; costs of both courts to be equally divided between both parties.
Rehearing
ON REHEARING.
On the former hearing of this case, this court held that $1,000 was obtained from Beal, the respondent, on the seventh day of September, and that' $800 was thereafter obtained from him on the twenty-ninth day of October, 1898, for the benefit of the bankrupt corporation; that the latter sum, having been obtained within four months from the time of the filing of the petition in bankruptcy, should be rejected, under the provisions of the bankrupt act. In the respondent’s brief it was stated that the petition in bankruptcy was filed February 13, 1899, and this daté was inadvertently taken by this court as the date of the filing of said petition. Upon a rehearing of the case, we find that such petition in bankruptcy was not filed until the fourteenth day of March, 1899, being more than four months after the $800 was obtained by Beal for the corporation, and therefore the reason given in the former opinion for the rejection of the $800 claim is not well founded, and for that reason a rehearing was granted. Upon further examination, we find that on