Thorington v. Gould

59 Ala. 461 | Ala. | 1877

BBICKELL, C. J.—

The grant of a temporary injunction, the bill not having been verified, and without requiring bond from the complainant, payable and with condition as the statute requires, was irregular. The irregularity, is not however cause for the reversal of the final decree, if that is supported by the pleadings and proofs. It has worked no injury to the appellants, if the appellee is entitled to the perpetual injunction.

The equity of the bill rests on the well defined jurisdiction, to prevent, as well as to remove clouds on the title to real estate. If under legal process -acts are being done, or are in the course of being done, the necessary result of which, will cast a cloud on the title of the true owner, who is in possession, and without adequate legal remedy for their ^prevention, a court of equity will interfere by injunction to restrain them.—Burt v. Cassety, 12 Ala. 734; Lyon v. Hunt, 11 Ala. 295; Martin v. Hewitt, 44 Ala. 418. The motion to dismiss for want of equity, involved the admission of the truth of all facts well pleaded in the bill. Assuming the truth of these facts, the only result of the levy of the attachment, and a sale under the levy, which it was the purpose of the attachment suit to accomplish, would have been by easting a cloud on the title of the appellee, to have embarrassed him in the exercise of the trusts and powers of the assignment. The bona fides of the assignment, and its sufficiency to pass to the appellee, the legal estate in the premises, is not matter of controversy, if its execution was authorized by the proper agencies of the Mechanics’ Bank.

The point of controversy is, whether the assignment was *466authorized by the agency of the bank, having capacity to authorize it. It is properly admitted, that in the absence of legislative inhibition, the bank had capacity to make an assignment of its property, for the payment of its creditors. But the appellant insists, under the charter of the bank, the boaSd of directors had exclusive power to make, or to authorize such an assignment. That the assignnent to the appellee, was not authorized by a board of directors having any power or authority whatever—that their official term had expired before the execution of the assignment, and the charter prohibited them from exercising the power of directors after the expiration of that term.

The charter of the bank seems to contemplate that all the corporate power conferred, shall be exercised by the board of directors, elected annually by the stockholders. Annual meetings of the stockholders are authorized, but the power which the stockholders can exercise at such meeting, beyond the election of a board of directors, is not defined in express terms. The directors were to be elected for the well ordering of the affairs of the corporation, and were capable of serving when elected, until the end of the fivst Monday in January, next ensuing the time of such election, and no longer. To avoid a dissolution, it is provided by the charter, if an election of directors was not made at the time appointed, it should be lawful to make an election at such other time, as might be fixed by the by-laws of the bank. The assignment to the appellee, was authorized by the board of directors, and subsequently ratified bv the stockholders, if indeed, the fact is not, that the stockholders requested, and by requesting, authorized the directors to execute it. The evidence leaves it uncertain, whether the stockholders ratified the assign-, ment after it was made, or prior to its execution authorized it. It is not material to the validhy of the assignment whether the one fact or the other is true. A ratification would be equivalent to a prior authority. The assignment was executed on the 4th day of January, 1866. It is not a disputed fact that its execution was authorized by the board of directors, and by the board elected and serving for the year 1865. When the authority was conferred, whether in December, 1865, or in January, 1866, after their official term had expired, the evidence leaves in uncertainty and doubt. Perhaps, the just inference is, that during the progress of the war, the assets of the bank had been converted to such an extent, into the securities of the Confederate Government, that on the downfall of that government, the hopeless insol*467■vency of the bank, and its utter inability to continue business, and its corporate existence, was a recognized fact. In view of this fact, a meeting of the stockholders was convened, and determining that it was best to make an assignment of all the corporate property, for the equal benefit of the creditors of the bank, the assignment to the appellee was .authorized by the stockholders, and the board of directors •elected for 1865. The assignment being authorized and its .immediate execution contemplated, there was no necessity for an election of directors for 1866, and none was made. The whole transaction from the meeting of the stockholders, at which the resolution to make an assignment was adopted, until its execution was continuous, only such time elapsing as was necessary for a due consideration of the important step which was being taken, and proper deliberation in the preparation of the assignment. The doubt and uncertainty as to the facts arises from the loss of the minute book, in which the record of the proceedings of the meetings of the .stockholders, and of the board of directors, was kept, and the witnesses are testifying, after the lapse of six or seven years from the occurrence of the facts.

It is true, as a general proposition, that the presumptions .applicable to individuals, are applicable to corporations. The maxim, omnia presumuntur rite, et solemniter esse acta, donee probetur in contrarium, applies to corporations, and corporate action. Charters of incorporation and their accept.ance, have been presumed, when the actual corporate existence and action, is a fact of long and undisputed continuance, and the question arises collaterally.—In Bank of United States v. Dandridge, 12 Wheaton, 70, it is said, after referring to the presumptions indulged for and against natural persons; “ the same presumptions are, we think, applicable to corporations. Persons acting publicly as officers of the corporation, are to be presumed rightfully in office; acts -done by the corporation, which pre-suppose the existence of other acts to make them legally operative, are presumptive proofs of the latter.” Again, “ if officers of the corporation openly exercise a power which pre-supposes a delegated authority for the purpose, and other corporate acts show that the corporation must have contemplated the legal existence of such authority, the acts of such officers will be deemed rightful, and the delegated authority will be presumed.”—In Angelí & Ames on. Corporations, § 224, it is stated : “When the common seal of a corporation appears to be affixed to an instrument, and the signatures of the proper officers are *468proved, courts are to presume that the officers did not exceed their authority, and the sea.1 is prima facie evidence that it was affixed by proper authority. The contrary must be shown by the objecting party. The presumption of authority to affix the common seal, from the fact that it is affixed to the instrument, will not be overcome, in the case of a cashier' of a bank, by the mere fact that it is proved that there is no vote of the directors on the subject, since it often happens that the cashier or other officer of a bank exercises a large range of powers, with the tacit approval of his principals, although the nature and extent of his authority has never been defined by any direct act of the corporation.” The 8th section of the charter of the bank, expressly provides that all its contracts shall be signed by the President, and cov/ntersigned oi\ attested by the Cashier. The assignment' to the appellee is under the corporate seal, executed by persons executing as such officers in the name of the bank. It was accepted by the appellee, cotemporaneously with its execution, and he has since had possession of all the assets conveyed by it, and openly exercised all its powers and duties. Since its execution, the existence of the bank as a corporation has been merely nominal. The premises in controversy have been in the undisturbed possession of the appellee,, through his tenants, and publicly offered for sale by his-agents. The presumption indulged in favor of the validity of the assignment, from this state of facts, must prevail, and' must be overcome by the appellant, if it be conceded that-the board of directors alone could have authorized its execution, during the official term for which they were elected. Whatever of doubt and uncertainty may attend the fact, the just presumption arising from this state of facts, resolves in favor of the validity of the assignment,—that it was executed under authority from the corporate agency, having capacity to authorize its execution.

But we can not concede the invalidity of the assignment,, if the fact was clearly shown, that its execution was authorized by the board of directors elected for 1865, in January, 1866, after the expiration of their official term, successors to them not having been elected, and they continuing without dissent from the stockholders, or from the State, to exercise the functions and powers of directors. Officers coming rightfully into office, though improperly continuing in office, are generally regarded as officers defacto. The acts of officers de facto, whether public officers, or the officers of corporations public, or private, are esteemed valid, unless-*469invoked for their own protection, the public, or individuals, having rights and interests to be conserved, in all collateral proceedings. All authorities concur in recognizing as an officer defacto, a person exercising the powers and duties of the office, under color of an appointment or an election. The definition of such an officer, given by Lord ELLENBOROUGH, in King v. Bedford Level, 6 East. 368, this court has accepted and adopted, and it is probably the most accurate and expressive which could be framed. “An officer, de facto, is one who has the reputation of being the officer he assumes to be, and yet is not a good officer in point of law.”—Heath v. State, 36 Ala. 273; Williamson v. Woolf, 37 Ala. 298. Whenever the duration of an official term, is expressed by the charter of a corporation, which creates the office, the intent is of course, that on the expiration of the term, authority and duty shall cease. Beyond the expiration of that term, the officer is without right to continue in office. And if in opposition to the proper corporate authorities, he claimed an extension of his official term, and a right- to exercise the powers, discharge the duties, and take the emoluments of the office, to the exclusion of another, coming into the office, as he came into it originally, there could be no hesitation in pronouncing him a mere usurper, and trespasser. But suppose the proper authorities neglect to provide for a successor to him, and suffer him to continue in office, discharge its duties—or suppose unforeseen contingencies arise, events which can not be traced to human agency, and there can not be an election or appointment of successors, or such an election or appointment is an idle ceremony, and the corporate body suffer the corporate officers, after the expiration of their official term, to proceed in the exercise of their functions, and the discharge of their duties, who can gainsay it? Who has an interest to gainsay it? There can be no adverse interest except in the State, and in the stockholders, and if the State is passive, and the stockholders ratify, who can be heard to complain ? Shall a creditor of the corporation to ' whom all the security, to which he has a moral or equitable right is afforded by the act he denounces as ultra vives, be heard to complain ? The duty of the corporation, considering the condition to which it was reduced, and without regard to the inquiry whether the appellant was then, or subsequently became, a creditor, was to reduce its ássets to money, for the benefit of all creditors. This is the whole scope of the assignment, the validity of which the appellant ^assails. If there had been, as the appellant insists, there *470ought to have been, an election of directoi-s on the first day of Januaiy, 1866, and it was xxot competent for the directox’s elected for 1865, to have authorized and assented to such an assignment, after that day, who could complain if the board of directors of 1865, did just what the board of 1866, ought to have done, if they had been duly elected ? Too much stress is in ax’gument laid on the phrase in the chartex’, that the board of directors should be capable of serving until the end of the first Monday in Jaxxuary ensuing their election, and no longer. The phrase expresses only the implication which would have have followed from defining the duration of the official term of the directors. The terxn of office-being pi’escx’ibed, the due and lawful exercise of official powei’, would of coux’se cease with the expiration of the-term.—Ang. & Ames on Corp. § 288. The theory and pxinciple underlying the recognition of officers de facto, and supporting the validity of their official acts, is, that they ax*e wrongfully in office, exex’cising power legally appertaining only to the rightful officex’, but that their acts within, the scope of official authority and duty xnust for the protection and preservation of the xúghts and interests of third persons be supported. The corporation being insolvent, a duty resting upon it, in the performance of which all its creditors had an interest, was an appropriation of its assets for their-equal benefit. So far as the evidence discloses, no creditor had a supexior right to prefex-ence in payment. Prudence, a sound morality, and a just regard for legal obligations, required that its assets should be placed in a condition to-avoid a race of diligence between its creditors, and the tearing into fragments,” of the assets, and the dissipatioix in the costs of litigation which would have followed its insolvency.. We can conceive of no reasonable objection to the directors rightfully in office, when the matter of the assignment was-under consideration, and the necessity for it was apparent, the continuance of the existence of the baxxk not being contemplated or possible, after the expiration of their official term, yielding assent to the assignment, the stockholdersassentixig that they should, and giving them the reputation of rightful officers. The charter does not denounce as void, the acts of directors continuing in office, after the expiration of their official term. On the contrai’y, it contemplates the-occurrence of such a contingency, and provides for it by authority for the election of a rightful board, at such time as the by-laws of the bank should prescribe. It can not be supposed, that it was the legislative contemplation, if the-*471contingency occurred, tbat the bank should remain in a state of suspension, incapable of self-protection, and without authority for the well ordering of Us affairs, until an election of directors could be had. Whether the directors authorized the assignment before, or after the expiration of their official term, we have no doubt of its validity, and that it passed to the appellee the legal title to the premises in controversy, which it was the duty of the Court of Chancery, to prevent from being clouded by a sale under the levy of the attachment against the bank. Since the submission of this cause, we have been furnished with a copy of the opinion of the Supreme Court of Georgia, rendered in the case of Milliken v. Steiner, declaring the validity of the assignment to the appellee. If this cause had been in a condition, in which that decision could.have been introduced as evidence, it would have been perhaps our duty to follow it without inquiry or discussion.—Inge v. Murphy, 10 Ala. 885; Sydney v. White, 12 Ala. 728. We are gratified to have reached the same conclusions, with the court of last resort of the State in which the bank was chartered and located, and the assignment executed.

The decree of the chancellor must be affirmed.