17 Nev. 166 | Nev. | 1882
By the Court,
Appellant is a corporation owning a water ditch for irrigating purposes.
Respondent is a corporation and supplies water to the citizens of Reno.
This action was brought to recover one thousand one hundred and thirty-eight dollars and sixty-five cents upon a check signed by B. F. Leete, as president, and A. H. Manning, as secretary, of the Reno Water Company, and upon an account stated for that amount.
It appears that in 1875 a contract was made between the parties to this suit, whereby the plaintiff agreed to furnish a certain quantity of water to the defendant, and, in consideration thereof, the defendant agreed to keep a portion of plaintiff’s ditch in repair.
At the trial the court ruled out the evidence offered by the defendant to show that the contract had been performed, and that there was nothing due to' plaintiff thereon, upon the ground that tlie account stated was conclusive between the parties. .
Plaintiff obtained a verdict, and the court granted a new-trial, upon the ground that the evidence was insufficient to sustain the verdict. The appeal is taken from 'this order.
There are several questions presented as' to whether or not the court' erred in admitting evidence and giving certain instructions; but the real question touching the merits of this controversy is, whether the persons who stated the account and drew the check were officers of the Eeno Water Company and had authority to act for and bind the corporation.
In March, 1876, B. F. Leete, A. H. Manning and three others were regularly elected trustees of the Eeno Water Company. It is not affirmatively shown that they ever qualified by taking and subscribing the official oath required by law (1 Comp. L. 8393); but, for the purposes of this decision, that fact may be treated as immaterial. Leete was elected president and Manning was elected secretary.
In April, 1876, the trustees and other stockholders sold the stock of the corporation to George B. Hill. At the time of the sale the trustees informed Hill that there was some little indebtedness against the corporation, which they.wanted to meet and adjust and pay from the funds on hand in the treasury of the company.” On the twenty-first of April, 1876, they met in their official capacity as trustees and transacted this business, and then delivered to Hill all the real and personal property of the corporation, and he took actual possession thereof, and, through his agents, continued openly to use and manage the same in his own right until 1879, when he
Leete and Manning, subsequent to the sale of their stock to Hill, became, and at the time of the allowance of the account and drawing of the cheek in question, were trustees of the Orr Water Ditch Company. The controlling question is not, as argued by appellant’s counsel, whether the Reno Water Company, as a corporation, was dissolved by the inaction of its trustees; but whether the persons claiming to be trustees were officers either de jure or de facto.
We see no difficulty in disposing of these questions. The law in relation thereto is well settled.
When the trustees sold and delivered all their stock to Hill, they ceased to be officers de jure, because they were no longer stockholders in the corporation. (2 Comp. L. 3393; State ex rel. Rankin v. Leete, 16 Nev. 242; Bartholomew v. Bentley, 1 Ohio St. 42.)
The reasons for the rule, which invokes the protection of the law in sustaining the acts of de facto officers in order that the ends of justice may be attained, do not exist in this case.
We had occasion in State ex rel. Corey v. Curtis, 9 Nev. 325, to carefully examine the questions relating to officers de facto, and we then said that “the principle of sustaining the acts of persons as officers de facto is designed as a shield for the protection of the public and of third persons, who are not cognizant'of the true state of the facts, and are not required by law to inquire into the title of one who is found exercising the duties of a public office. In order to protect third persons transacting business with such officers under such circumstances as to induce them to believe that they are dealing with legal officers, the law has reached out its strong arm to a dangerous extent, upon the principle that, although not officers dejure, they were officers in fact whose acts public policy required should be considered valid. Such a principle certainly ought
“The defacto rule,” said the court of appeals of Missouri, ' ‘ is based upon public policy. It is adopted as a necessity to preserve the rights of third persons and the organization of society. The doctrine is that where the citizen, being not at fault, trusts in his dealings to non-legal authorities in whom all believe, his rights are not to be destroyed.” (Conway v. City of St. Louis, 9 Mo. App. 490.)
This principle is conclusive against the right of appellant to recover and sustains the action of the court in granting a new trial. From April 21, 1876, until June 14, 1879, the elected trustees of the Reno Water Company owned no stock and did not pretend to act as trustees. The public was not deceived. The plaintiff was not misled. It was not induced to believe, from any pretended act of the trustees, that it was “dealing with legal officers.” The fact of the sale and delivery of the property of the corporation to Hill in 1876, and his possession and exclusive management and control thereof was continuous, open and notorious. The plaintiff had actual knowledge of the facts. The mere fact that the persons who had been elected trustees three years after they had disposed of their interests, met and allowed the account and drew the check in question, is not sufficient to bring the case within the rule applicable to de facto,officers, and the proceedings which were instituted by Hill to remove the trustees, after the acts in question were performed, were inadmissible as evidence and ought to have been excluded at the trial. (State ex rel. Corey v. Curtis, 9 Nev. 340, and authorities there cited.)
The persons who drew the cheek and allowed the account were not, after the twenty-first of April, 1876, until the doing of the acts in question in 1879, holding office as trustees under any degree of notoriety; they were not in the exercise of any continuous official acts; they were not in the possession of the property of the corporation or pretending in any manner to control or manage the same, and during all this time they did
The act of allowing the account and of drawing the check was a fraud upon the Reno Water Company which did not mislead or deceive the Orr Water Ditch Company, and it is not in a position to invoke the protection of the law in its behalf, and it is apparent that in equity and good conscience it ought not to recover in this action upon the counts relied upon at the trial.
The order of the district court granting a new trial is affirmed.
