Fay v. Noble

Shaw, C. J.

This was an action of replevin for about seventy-two tons of pig iron. The plaintiffs claimed title under an alleged mortgage of the property made to them by the West Boston Iron Company, by then officers, 25th September, 1848, whilst the property was on shipboard from New Jersey to Boston, consigned to the West Boston Iron Company. The defendants, denying the validity of such mortgage, claimed under a mortgage or assignment made by the same company to them, in November, 1848. The question, therefore, to be tried, was upon the regularity and validity of the plaintiffs’ prior title. There has been some misunderstanding of this report, partly arising from the brief manner in which it is reported, but more especially because, after a large mass of evidence was in, the course of the trial was changed, by the admission of evidence, by the consent of the defendants, which had previously been offered by the plaintiffs, objected to by the defendants, and ruled inadmissible by the court. It is necessary, therefore, to consider these different species of evidence, and the time and stage of the cause, at which the different rulings were made, in order to understand them.

To establish their title, the plaintiffs offered a note, purporting to be made by the officers of the West Boston Iron Company, and certain documents relied on, as a mortgage and conditional transfer of the iron in question, to secure the payment of that note.

It appears by the report that there was evidence tending to show that application was made to the plaintiffs, by Leonard Fuller, purporting to act for the West Boston Ron Company, for a loan of $2,000; that a note for that sum was made, as the promise of the West Boston Ron Company, by Dodd, treasurer of said company, payable to Leonard Fuller, by him indorsed, and signed as “ approved ” by said Fuller, as one of the directors; that, to secure this loan, Dodd, the treasurer, delivered to the plaintiffs a bill of lading of one hundred *14tons of iron, shipped on board the brig Rio Grande, bound to Boston, and consigned to the West Boston Iron Company, with an indorsement thereon of same date with the note, “ Please deliver the within to Messrs. Fay 5c Farwell,” (the plaintiffs,) and signed J. M. Dodd, treasurer. Also, an indorsement on the policy of insurance, requesting the underwriters, in case of loss, to pay to Fay 5c Farwell, dated 25th September, 1848, and signed J. M. Dodd, treasurer, and agreed to by Joseph Balch, president of the insurance company.

It then became necessary to show that the persons, thus acting as agents and officers of the corporation, one as agent and director, and one as treasurer, were duly constituted such officers, and had power to bind the corporation. The plaintiffs then proposed to inquire of Fuller as to the capacity in which he acted for said West Boston Iron Company, and the nature and extent of his powers, to which the defendants objected, on the ground that the West Boston Iron Company being a corporation, it was to be presumed, until the contrary was shown, that they kept records of their proceedings, and that such records would form the best evidence of the appointment of the officers of the corporation, and the nature of their powers and duties.

Whereupon the plaintiffs produced a book purporting to be their records, and Fuller verified them as the only records kept by the corporation, until the reorganization in November, 1848. It was objected to, and much evidence was offered to the court to show the manner in which the book produced was prepared and kept, whereupon it was rejected as not being competent evidence of a record. It was then ruled, that, as there was no evidence of any record kept by this corporation, parol evidence was admissible to prove the agency of the persons who made the contract, under which the plaintiffs claimed

Much evidence was then given to prove the mode in which the business of the company was done by Fuller and the other persons acting as officers. Perhaps it might have rendered the report more intelligible, if this evidence had been *15more fully reported. Upon this evidence, independently of any records or by-laws, and before the agreement afterwards made, it was proposed to rule and instruct the jury to the following effect:

That if there was an act of incorporation passed, and the persons named in it met and accepted it, and proceeded to act under it, in the absence of any records, it was competent for third persons to prove their doings by parol evidence; and if the proof showed that Leonard Fuller was appointed general agent, J. M. Dodd, treasurer, and Gavett and others, directors, then, as to the rights of third persons, the doings of such agents and officers were to be considered as the doings of the corporation; that if a note was given by the treasurer of the company, approved by a director, payable to Fuller or order, and indorsed by him, it was primâ facie the note of the corporation; that by the bill of lading conveying the iron to the company, they were primâ facie owners of it, and the indorsement of that bill of lading by the treasurer, given simultaneously with a bill of sale by Fuller, as agent, both given to secure the note of the company, would vest the property primâ facie in the plaintiffs.

This proposed instruction in matter of law was announced with a view of submitting the whole of the parol evidence to the jury, to determine as they should find the facts upon the evidence.

It does not appear by the report, that this proposed direction, upon the evidence as it stood, was objected to, and no question has been raised upon it on the present argument.

But the report further shows, that after this announcement, before going to the jury, the parties came to an agreement: the defendants withdrew their objection to the book purporting to be the records, and it was agreed by the parties, that the book testified of by Fuller, Moore, and Dodd, did state all the doings of the company, in its corporate capacity, as far as it purports to go in point of time, and might be read as evidence on both sides, whether strictly a record or not.

From the book thus given in evidence as a record, it appeared, that after the act of incorporation, a meeting was *16duly called and held, the act was accepted, the company was organized and held meetings, chose officers and made by-laws. The character of the inquiry, or rather the evidence on which it should proceed, was thus changed, and the question was, how the powers of these officers were conferred, limited, or qualified by the votes and by-laws of this company thus admitted. The subsequent rulings and decisions were obviously made in reference to these votes and by-laws.

The counsel for the defendants, having read the by-laws, contended that the powers of the officers, as thereby conferred, were limited and restricted to special duties therein enumerated, and did not warrant the acts relied on in the present case; the argument was founded on that part of the by-law, which provided, that the agent should have power to purchase stock, to contract for work and materials for the use and benefit of the corporation; and these being specially enumerated, excluded others. But it appeared by the same by-laws, that no power was conferred on any one, in terms, to make sales, to borrow money, and none upon the treasurer, even to pay or receive money.

The counsel for the defendants also contended that the corporation had not by its by-laws, or in any other way, authorized Fuller, as its general agent, to hire money or pledge its property, nor had they conferred any such authority on its treasurer.

It was in reference to these claims, on the effect and operation of the by-laws, as being sufficient to alter and vary the instructions before proposed to be given, that the succeeding rulings were made. They related to a manufacturing and trading corporation under the laws of Massachusetts, and of course are to be limited to such corporations, and have no application to corporations of a different constitution and character.

The instructions proposed to be given in regard to these claims, and in reference to the grounds of law before stated, were these:

That persons trading and dealing with such a corporation are not bound by the special limitations of the authority of *17its officers; that, as against third persons, such officers shall be taken to have the authority which their designations imply: the treasurer to do acts relating to the finances, the secretary to keep records, the agent to superintend and manage the business for which it is chartered; and that such acts are binding on the company, without express authority, and that they are not limited to special and enumerated powers contained in the by-laws. Also, that the power of the agent and treasurer to pledge the goods of the company, as security for a debt of the company, does not depend upon the law governing the power of a factor to pledge goods consigned to him, but upon the law of principal and agent, and that of a corporation and its officers; and that the agent, as such, had a right to pledge the property of the corporation for a loan of money for their use; that such acts are binding on the corporation, and are not limited to the special and enumerated powers contained in the by-laws. ■

On this announcement, it appears that both parties consented that a verdict should be taken for the plaintiffs, subject to the opinion of the whole court, as to the correctness of these rulings.

This course is, perhaps, to be regretted, because such opinions expressed á priori, and in general terms, almost necessarily assume the form of abstract propositions, and are less qualified and restricted than they would be when explained, illustrated, and applied to actual facts in evidence. It seems, from the argument, that the counsel for the respective parties did not understand them alike. Taken in reference to the subject-matter, and to the questions raised and discussed, the whole court are of opinion that they were correct.

The term “limitation of the authority of officers,” in the first paragraph, manifestly means that supposed limitation contended for, arising from the enumerating of certain powers, and omitting others; it could not mean express limitation by vote or by-law, because there was no such express limitation, nor was any suggested. If it is understood and taken in connection with the evidence, we are of opinion, that as a general rule, it is correct. The point mainly relied on was, that be*18cause two powers were enumerated as conferred on the agent, to wit, to purchase stock and to contract for work and materials, although general words were added, to superintend the business, yet all other powers were negatived or withheld. But we think the officers so situated are not by such enumeration restricted from the exercise of the ordinary powers, which their designations imply; more especially, as the by-law gave only one authority to the treasurer, to wit, to sign all notes given for the purchase of stock and on contracts for labor; and the application of such a rule would take away all power from the treasurer to pay or receive money, or perform the ordinary functions which his designation as the treasurer of a manufacturing and trading corporation would ordinarily hold out to the world. It is a rule applicable to thud persons trading and dealing with such a corporation, and not presumed to be conusant of the special provisions of their by-laws.

The other part of the direction, to wit, that the agent and treasurer, by their concurrent act, had a right to pledge the property of the corporation, if it stood as an absolute and unqualified proposition, applicable to all corporations, would certainly be more doubtful, and we should hesitate before laying down such a proposition. But applied to the subject-matter, with its proper qualifications, the proposition was this: that as a trading corporation, the company had power to raise money, by loan, as necessarily incident to their power to purchase stock and materials, and to purchase it to the best advantage; that as incident to the power of purchasing, was that of giving security, and as such, of pledging the purchased stock or raw material, the property of the company ; that as a corporation must necessarily act by officers and agents, such officers and agents are not in the character of mere factors; that by the concurrent act of the general agent and treasurer, the one to give a note for a loan, and thus charge the company with a debt, and the other, by bill of sale and indorsement of the bill of lading, to transfer a right of property in the iron belonging to the company, for the security of such note; that they were not restrained by the limited enumeration of powers, both of the treasurer and *19agent, as expressed in the by-laws, but that by their concurrent act, they could give a conditional transfer, by means of which the property would vest in the mortgagees.

Such being the effect of the instructions, the court are of opinion that they were right, and that the plaintiffs are entitled to Judgment on the verdict.