Hyde v. Larkin

Ellison, J.

The facts necessary to be stated to an understanding of the contested point in this case are, that the Star Coal and Mining Company was a domestic corporation engaged in mining and selling coal. That defendant Larkin owed the company an account for coal, the sum of five hundred and sixty dollars. That the corporation had a president and general manager who borrowed a sum of money of plaintiff and, as security therefor, assigned to him the account against defendant. That the money so borrowed of plaintiff was used by the president in paying hands engaged in the service of the corporation.

It appears that the board of directory never authorized the money to be borrowed or the assignment of the account. It does not appear that they knew that the money was borrowed, or that the account was assigned. It does not appear that it was the usage, or that it was customary for the president to borrow money, or assign the accounts of the company, nor does it appear that he ever did so, save in this instance.

Under this state of facts the question is, did the assignment transfer the title to the account to the plaintiff ?

If it did so, it must be by reason of the power and authority of the president and general manager nirtute officii, to assign the choses in action or assets of a corporation of this character. In order that the act of officers or agents may bind a corporation, when not expressly authorized, the act “must be such as is in the line of their duty or agency.” Winsor v. Bank, 18 Mo. App. 665.

The corporation is bound “for all such acts of the agent as are usually performed in that particular class of business.” Morawetz on P. Cor., sec. 587. The authority of some agents, such as cashiers and tellers of banks, is fixed by general custom, of which the courts will take judicial notice. In other instances, the scope of the agent’s authority is determined either by the terms of the appointment, by the nature of the company’s business, and by the practice which has been acquiesced in by the company. Morawetz on P. Cor., sec. 590. In Hazelton Coal Co. v. Megargel, 4 Barr. 324, Chief Justice Gibson, after stating that there was no proof of any special authority, says: “And what is the authority of the president of a company incorporated, not for purposes of banking or any object connected with currency, but for mining and marketing coal? The powers of such an officer are much more restricted than the operations of a banking one.” In the case of the New York Iron Mine v. Bank, 39 Mich. 651, it was insisted by counsel that the general agent of a mining corporation as a mattter of law, by virtue of his appointment, had authority to bind it by commercial paper and that the court should take notice of his authority as it would of the authority of a bank cashier ; but the court held that issuing promissory notes is not a power necessarily incident to the conduct of the business of mining. That it was a power so susceptible of abuse that the law wisely left it to be conferred or not, as the directory might determine. I am firmly persuaded that the president, general agent or manager of a mining corporation cannot, by virtue of his office merely, assign the assets of the corporation. He must have some warrant from the charter, the directory or the custom and usage of the corporation. It is certainly the safer and more conservative rule, and commends itself to sound reason. If it were not so, such officer might act in disregard of the board of director's and might by the mere power inherent in his office, transfer the entire assets of the corporation. The proposition is supported by the weight of authority. Whitewell v. Warner, 29 Vt. 425; The Chicago & N. W. Railroad v. James, 22 Wis. 194, 198; Stow v. Wise, 7 Conn. 214; Sherman v. Fitch, 98 Mass. 59; Lydeborough Glass Co. v. Mass. Glass Co., 111 Mass. 315; Kraft v. Freeman Printing Co., 87 N. Y. 628; Asher v. Sutton, 31 Kan. 286; Walworth v. Farmers’ L. & T. Co., 14 Wis. 325; Hoyt v. Thompson, 1 Selden, 320; Despatch Line of Packets v. Mfg. Co., 12 N. H. 205, 228.

“It is true” as is stated in Winsor v. Lafayette Co. Bank, supra, “ that a corporation may by a course of conduct with its officers and the public give them authority, and confer upon them powers, they would not have as such officers, but for the usages of the corporation.”

In this case there is no proof of any thing of this nature. Many of the authorities cited by plaintiff have reference to banking corporations and as such I do not consider them applicable to the case at bar. As has been stated implied powers delegated to a bank cashier are exceptional. It results in part at least, “from the universal necessities of commerce.” Ringling v. Kohn, 6 Mo. App. 333.

The case of McKernan v. Lenzen, 56 Cal. 61, has been urged as authority directly in point. Most of the legal propositions advanced in that case are very generally recognized as sound, though some of them are liable to be misunderstood and may, perhaps, be reasonably interpreted as running counter to established rules.

We cannot assume that assigning the choses in action, or transferring the assets of the Star Coal and Mining Company, was in the line of the duty of the president and manager of the company, or that such acts are usually performed by the general managers of such corporations. Such power or authority does not belong to the president and manager of such a corporation, mrtute officii.

The cases cited from this state have been examined and are not [considered as trenching on the views presented.

, We find no evidence of ratification by the corporation. There could be no ratification without knowledge and it does not appear that the board knew the account was assigned or even that the money used in paying the hands was borrowed.

The judgment, with the concurrence of the other judges is reversed and the cause remanded.