This case has been here twice before. First it came up on demurrer to the bill, and the demurrer was overruled. Smith v. Bank, 69 N.H. 254. A trial upon the merits followed, verdict for the plaintiff, exceptions to this court, and the exceptions were overruled. Smith v. Bank, 70 N.H. 187. The case was then in order for judgment for the plaintiffs; but as the validity of the trust contract, out of which the rights and obligations of the parties arise, was admitted at the former trial, the sole question there being whether the defendants as trustees had exercised due care in the performance of the duties imposed by it, certain shareholders of the defendant corporation moved for leave to intervene and contest the validity of the contract, claiming (1) that it was not authorized by the charter of the corporation, and (2) that it was not authorized by the corporation. The motion was granted, and there was a jury trial of the questions of fact involved. The jury found for the plaintiffs, — that the contract was authorized by the corporation, — and the case is now here for the third time upon exceptions. The substantial questions presented for our consideration are: First, was the contract ultra vires of the defendants' charter? Second, if not, was the evidence that its execution was authorized by the corporation sufficient to warrant the court in leaving that question to the jury?
1. Was the contract ultra vires? The charter expressly confers upon the defendants "all the powers and privileges . . . of a loan, trust, and guarantee company," including power to act "as a trustee for persons, firms, corporations, or estates of deceased persons." Laws 1887, c. 280, s. 1. In view of such general and comprehensive terms of authorization, there would seem to be no room for doubt that the trust contract in question is within the letter of the charter. But it is urged with much earnestness and ability that the contract constituted the defendants guarantors of the actual worth of the collateral deposited with them, and in effect required them to make examination and appraisal, in the West, of each piece of property behind the collateral deposited, and constant re-examination and reappraisal, to guard against subsequent depreciation; that even then the actual worth of the property would be subject to so many contingencies that the assets of the defendants would be in continual jeopardy; and that the legislature could not have intended to authorize a guaranty so hazardous. Without considering the authority of the court to declare a *Page 8 contract of guaranty ultra vires of a charter conferring in general terms all the powers and privileges of a guaranty company, upon the ground that the particular contract is so hazardous in nature the legislature could not have contemplated it, it is sufficient for the purposes of the present case to say that the contract in question imposed upon the defendants no guaranty obligation, but only the ordinary duty of a trustee to exercise reasonable care in the discharge of the trust they had undertaken. Smith v. Bank, 70 N.H. 187. This much the defendants expressly assumed with reference to the plaintiffs, when, in the language of the trust contract, they accepted "said trust," and covenanted "with said company, and with all parties who shall become in any wise interested, that they will faithfully discharge all the duties herein imposed upon them." While reasonable care as to keeping on hand securities of the kind and value provided for by the trust contract might not require the defendants to have somebody constantly in the West, appraising and reappraising the property upon which their value depended, as has been suggested, it would require the defendants, as provided by the contract, to act according "to the best of their judgment," and, as charged by the court at the trial, to exercise such care as men of average prudence, under precisely the same circumstances, would have used. Knowlton v. Bradley, 17 N.H. 458; Kimball v. Reding, 31 N.H. 352; Raynes v. Raynes, 54 N.H. 201, 202, 210; Mattocks v. Moulton, 84 Me. 545, 551; State v. Washburn, 67 Conn. 187, 188; Speakman v. Tatem, 48 N.J. Eq. 136, 148,149; Gilbert v. Kolb, 85 Md. 627, 634; Lew. Tr. 243; 1 Per. Tr., s. 401; Und. Tr. 253, 256; 2 Pom. Eq. Jur., s. 1067. We can hardly be expected to declare a contract ultra vires merely because it is of such a nature that failure to exercise the ordinary care required of every trustee, and for that matter of everybody, may subject the trustee to an indemnity payment wholly disproportionate to his compensation. In the present case, it is more reasonable to suppose that the legislature assumed that the defendants would protect themselves against the possibility of heavy loss from peculiarly difficult and hazardous trust undertakings, by not accepting them, than that they intended to exclude such undertakings from the general authority conferred. The conclusion is that the contract was within the terms of the charter.
2. Was the contract authorized by the corporation? It was not necessary to show a formal vote of the directors authorizing Briggs and Elliott to execute the contract. As between a corporation and innocent third parties who have dealt with its agents, authority may sometimes be inferred from a course of dealing. Hilliard *Page 9 v. Gould, 34 N.H. 230, 239; Holland v. Association, 68 N.H. 480; Williams v. McKay, 40 N.J. Eq. 189; U.S. Bank v. Dandridge, 12 Wheat. 64; Martin v. Webb, 110 U.S. 7, 8; Pittsburg etc. R'y v. Bridge Co., 131 U.S. 371, 382,383; G. V. B. Co. v. Bank, 95 Fed. Rep. 23, 34; Colorado Springs Co. v. Company, 97 Fed. Rep. 843; Salem Iron Co. v. Iron Mines, 112 Fed. Rep. 239. Evidence of the witness Healey and others, as to the way and manner in which the directors had commonly permitted Elliott and Briggs to act for the company in matters generally, was sufficient to warrant the jury in finding that they authorized this particular contract, it being a contract in pursuance of the objects for which the defendants were incorporated and within the express terms of their charter. But prior authority, neither express nor implied, was necessary to give validity to the contract. Subsequent knowledge and assent may be equivalent to previous authority. Libby v. Land Co., 68 N.H. 444; Pittsburg etc. R'y v. Bridge Co.,131 U.S. 371; 6 Thomp. Corp., s. 5285. And it is not necessary that knowledge should be actual, or that assent should be formal, to effect such a result. If the directors, in the exercise of ordinary care, ought to have known of the execution of the contract by Briggs and Elliott, it is in law as if they knew. Martin v. Webb, 110 U.S. 7; Salem Iron Co. v. Iron Mines, 112 Fed. Rep. 239, 243; Hanover Bank v. Company, 148 N.Y. 612, 623; Corn Exch. Bank v. Company, 163 N.Y. 332; Williams v. McKay, 40 N.J. Eq. 189; 3 Thomp. Corp., s. 4108; 4 Ib., ss. 4894, 5190, 5224, 5285, 5308. Knowing, their assent might be shown by silence and acquiescence, as well as by formal vote of ratification. Libby v. Land Co., 68 N.H. 444, 445; Pittsburg etc. R'y v. Bridge Co., 131 U.S. 371; 4 Thomp. Corp., ss. 5285, 5286, 5298.
The evidence tended to show that the contract was executed by Briggs and Elliott, as president and treasurer respectively of the corporation, and kept among its papers without any fraud or concealment; that the securities deposited pursuant to the contract were kept in the defendants' vaults; that an account was kept of the transactions under the contract, in a book opened expressly for the purpose and also kept in the defendants' vaults with the other books; that during the year immediately following the execution of the trust agreement, the certificates of deposit to which the contract related were being countersigned and issued from day to day, in the defendants' office, by the defendants' agents, without pretence of fraud or concealment; that compensation was twice received for services under the contract, and entered upon the defendants' cash book; that the books and accounts of the defendants were examined and audited by committees especially appointed for the purpose by the directors and stockholders of the defendant corporation. Briggs testified, in effect, that the board of directors *Page 10 were informed from time to time of the general course of the business; that he was perfectly satisfied in his own mind that some of the directors knew about the contract; that he had not said it was not submitted to the directors. Elliott testified, in effect, that he had the making of the contract in charge for the bank and the executive committee; that at the meetings of the board of directors they went over the business of the bank in general; that he made no concealment of the making and execution of this agreement, as far as the directors were concerned; and that he thought some of the directors knew about it, or might have known about it. We think these facts and circumstances quite sufficient to warrant a finding of knowledge, actual or constructive, on the part of the directors as a board; and their silence and acquiescence for nearly ten years leave no doubt of their assent.
3. The defendants' motions for nonsuit and verdict, and to set the verdict aside, were properly denied.
4. The questions submitted to the jury, as to whether the defendants gave reason to believe that Briggs and Elliott had authority to make the contract, and whether the defendants had knowledge of the contract, were warranted by the evidence, and the court properly refused to modify them as requested by the defendants.
5. The requests for instructions, to which the defendants have given attention in brief or argument, were properly refused. They called for abstract statements of law not applicable to the issues before the jury and misleading as applied to those issues.
6. The fact that the particular contract was executed by Briggs and Elliott might be considered, with other executive acts performed by them without special or formal authorization, as bearing on the question of implied authority arising from a course of conduct or dealing. The charge in this particular was therefore unexceptionable.
7. Upon the question of implied authority from a course of dealing, much that is relevant may be said and done at directors' meetings which may not be of record. That such matters may be legitimate subjects of inquiry, upon such an issue as between the corporation and third parties, cannot be doubted. So far as the directors were allowed to testify concerning matters which were actually of record, the error would not seem to be material, in view of the fact that the records were put in evidence by the plaintiffs.
8. The fact that the amount received by the defendants, as compensation for their services as trustees, was no more than sufficient to pay the clerical work, was irrelevant and properly excluded.
Exceptions overruled.
BINGHAM, J., did not sit: the others concurred. *Page 11