Wright v. Carson Water Co.

By the Court, Bonnieield, J.: A petition for rehearing was filed by the appellants in which it is claimed that they introduced on the second trial testimony pertinent to the issue raised by the pleadings, showing an entirely different state of facts from that shown at the first trial, by which they contended that the case is taken out of the rule of res judicata, and they ask to be heard on the matter in argument before the court. The rehearing was granted. We held before, and still hold, that the legal questions and principles which arose and were decided on the former appeal, whether they were correctly decided or not, have become the law of this case so far as they are applicable to the facts developed on the second trial. We so held upon the overwhelming weight of authorities then cited. (39 Pac. Rep. 872.) We also held that, substantially, the same state of facts was presented on the first trial and first appeal as on the second, upon the vital question at issue by the pleadings and that this court on the former appeal had decided against the validity of the note on which this action was brought and had decided that it does not bind the respondent. We *41 still so hold. It is claimed by counsel for appellant that the record discloses an entirely different state of facts from that disclosed on the first appeal in two respects, to wit: 1. That on the first appeal the record contained evidence tending to show payment of said note, but the record on this appeal does not contain such evidence. 2. That on the first appeal the record contained a denial of H. M. Yerington, one of the trustees of the respondent, of all knowledge or information on his part of the existence of the note, or indebtedness to Wright, prior to the time he became president of the company in 1889, and that the present record shows that he had such knowledge or information in 1888. But we regard the alleged new state of facts as immaterial under the decision and ruling of this court on the former appeal, and that the same does not take the case out of the rule of res judicata. Let us inquire, then, what legal propositions or questions were then decided that are decisive of this case on this appeal notwithstanding said alleged new state of facts. It was conceded that there was no order or resolution of the board of trustees of the defendant authorizing the execution of the note in suit and that it was not the note of the company and that the note did not bind the company by reason of any express- authority given the company to execute it. Then the question was, did it become the note or become binding on the company by reason of its ratification? This question was argued and considered in all its phases by counsel of the respective parties, and by the majority and minority of the court, as appears by their respective opinions. In concluding the argument and the opinion of the majority of the court on the question of ratification, the court said: “As we understand the law to be it is this: That before an individual or corporation can be held to have ratified the unauthorized acts of his or its agents, every detail of the transaction must have been made known to the principal. If, after obtaining such knowledge, the principal fails to act, long and continued silence will be deemed an approval of the act, and such ratification relates back and is equivalent to a prior authority to make the contract.” *42 ■ !<í As'tó’thb correctness of''the'rule as aboye stated there was •ho'‘disagreement'among the members of-the'-court. But as to whether the 'knowledge and acquiescence' of the -trustees ' -individuálly and 'not- as a' board would bind their principal, 'the-Corporation, there is a Conflict between the'majority and minority opinions'of'the court'given on the former appeal. ' In the' majority opinion the-la’nguage uSed' in the case of Yellow Jacket Company v. Stevenson, 5 Nev. 224, is quoted and ' adopted by the court as applicable to 'this case, -to wit: “ It cannot, We think, b'e maintained that the knowledge' obtained unofficially' by three of the trustees, that Steven'SOn was ■: engaged in ■ extracting ore from the mine is sufficient to charge the company with such knowledge, as‘any number of trustees acting individually, and not: as a board, cannot act ■for the corporation,-so ■ any ihfoimati'oh- obtained by indi- ' - vidual‘trustees and-'not communicated to the board, should not, it Would seem, become the foundation of "a Contract binding upoii the company. 'The trustees represent the cor■pOratiori only When-‘assembled together and'-acting as a board. Such'being' the law, how can it be 'claimed that ' information communicated to them individually, not to the ■board, can be made'the foundation of an implied'contract on the patt of the corporation?” ‘ • - As ‘further authority on the same point and‘to’strengthen its position on the question last above' named, the court cited the case of' Hillyer v. Overman, 6 Nev. 55, in'which case it is held that; “ The trustees can only bind the- corporation, 'under our law, when they are'together as Aboard, acting as such.” It is manifest from-the above - quotations from the opinion of' the' court,- that it intended to hold and did 'hold in effect, that no knowledge derived by the trustees, and no information communicated to them individually; but not to them in their capacity' as a board, would be sufficient to charge their principal, the corporation, with such knowledge or information wheréby, in law, the corporation Would be deemed to have1 ratified -the unauthorized -acts of its agents' by its acquiescence, or its'‘silence, Or its delay, in repudiating such acts.'1 That su'ch Was the intent and the decision is apparent from the plain reading of - the1 opinioii above giveii itself. *43 And it seems that1 it’ was so under stood1, at the time* by‘all the ' members -of the court. ■ The- correctness* of the* decision, how-1 ever was denied by the dissenting* member of the court. In the dissenting opinion inthe-oase on the'above'rulings’of the court it-is said*: “'As1 to*'the case of Yellow Jacket Mining Company v. Stevenson, 5 Nev. 224, while it-was perhaps upon 1 the whole, correctly decided; that part of the language quoted by my associates from pages 231,'232'of thedpinion is liot law,- - nor was it so decided to’- be in 'that case': It is dictum, and the opinion shows that the judge writing it had doubts of its correctness, foi* he immediately adds (page : 232): ‘But, however this bray be, it cannot possibly be maintained that a Corporation"-can be charged with acting upon or recognizing a fact which is -known only -to a minority • of’its trustees.’ ” This is the real ground' of the decision- — that is, that it had ■not been shown that a majority of the board' knew- of the transaction, and if not; the decision- is doubtless correct upon that point, because, as the minority could not-by formal resolution either authorize the act- in the first place or ratify it afterwards, knowledge and acquiescence upon their part could not have that effect; but in the case at bar it is shown that a majority of the board knew all about the whole situation, and that the company, by reason of its’silénCé, acquiescence and laches of 'both’the* board and stockholders, is estopped to deny its liability-.*; ’Corporations should be held¡ to the same principles! of honesty-and -fair dealing that individuals are. But- as they can only-act through their agents-, if acquiescence and laches upon the part of the agent will'not constitute ratification and estoppel :by the--corporation where it would in the case of individuals, then they are-exempt from the rules applying-to others. That a corporation may ratify ■or estop itself by the knowledge and acquiescence- of1 its representatives in unauthorized acts,-'without the knowledge - being received or acted upon at a formal meeting-of the'board Or stockholders. See, in -addition to the oases already cited, Scott v. Railroad Co., 86 N. Y. 200, and others.” It -will be seen from the examination of The'¡majority •opinion its'elf that the decision on the'formei* • appeal as to ■knowledge and-ratification-was-and i-s ¡that the knowledge *44 derived, by or tbe information communicated to any number of trustees as individuals, and not to them in their official capacity as a board of trustees, cannot be the foundation of an implied contract on the part of the corporation or of the ratification by it of the unauthorized acts of its agents. That such is the decision is clear not only from the said opinion, but from the minority opinion in the case. Hence the new alleged state of facts does not avoid the rule of res judicata, for it relates to payment of the note and to knowledge received by and information communicated to a trustee individually and not to the board. The court also said in the same opinion that “ the evidence in this case is conflicting and obscure in many respects,” but it is nowhere intimated that the evidence is conflicting in relation to the fact that the board of trustees had no knowledge or information as a board of the several matters communicated to the trustees individually. If it had found that such conflict did exist in this respect it would have been unnecessary to have gone further. We are of opinion that the judgment and order appealed from must be affirmed. It is so ordered. Belknap, J.: I concur.