Blanchard v. Kaull

By the Court, Rhodes, J.: The two appeals will be considered together, as the first is taken from the judgment and the second from the order denying the defendant’s motion for a new trial, in the same action. The action was brought upon four promissory notes, all of which are in the same form, and were executed in the same manner, but differ only in the amounts and the payees. One of the notes is as follows: “13,590 50.] “ Twelve months after date, we, as Trustees of the Amador and Nevada Wagon Road Company, promise to pay to Louis Nikolaus, or order, the sum of three thousand five hundred and ninety dollars and fifty cents, in gold coin of the United States of America, with interest thereon at the rate of two per cent per month from date until paid, the interest to be paid at the expiration of every two months. And if said interest is not paid at the expiration of every two months, the interest then due shall be added to the principal and draw interest at the rate of two per cent per [449] month until paid. For (value) received, this 3d day of December, A. D. 1863. (Signed) “JOHN M. KAULL, “LOUIS NIKOLAUS, “J. TULLOCK, “ Trustees of the Amador and Nevada Wagon Road Co.” The Court gave judgment against Kaull, Nikolaus, and Tullock, as the makers of the notes. It is alleged in the complaint, that the defendants were partners, under the name and style of the Amador and Nevada Wagon Road Company, and as such were interested in the construction of a certain wagon road; and that they, as partners under said name and style, “ and by their duly authorized trustees and agents, John M. Kaull, Louis Nikolaus, and J. Tullock, three of said partners, defendants, and who were duly authorized to act for and in the name of said company,” made and delivered the promissory notes to the respective payees. The defendants denied that they were partners, and alleged that the Amador and Nevada Wagon Road Company was a corporation, duly organized under the laws of this State, etc., and that the notes were made and delivered as the notes of the corporation. The plaintiffs failed to prove that the defendants were partners; and the defendants, whose names are signed to the notes, failed to prove that they were authorized by the Amador and Nevada Wagon Road Company to make the notes. The Court, as has been remarked, found that Kaull, Nikolaus, and Tullock made and delivered the notes in their individual capacity; and on that finding the principal question in the case arises. The notes do not on their face purport to be their notes. In the body of the notes, the makers are described as the Trustees of the Amador and Nevada Wagon Road Company, and to the signatures there is appended the same designa [450] tion. Persons, when intending to bind themselves personally, do not insert such terms in the contract; but they are such as parties may well employ when they are acting as agents, or in some other fiduciary capacity. The complaint, after alleging that all the defendants were partners, under the name and firm of the Amador and Eevada Wagon Boad Company, avers that the defendants, by said name and style, by their duly authorized trustees and agents, Kaull, Eikolaus, and Tulloek, made and delivered the notes, and that amounts to an averment that those persons acted as such trustees and agents in the execution and delivery of the notes, and there is no allegation that those persons made or delivered them as their individual notes. The notes purport to be the notes of the Amador and Eevada Wagon Eoad Company, and this is, in some measure, strengthened by the mortgage, which is annexed to the complaint, and which was executed to secure the payment of the notes. The mortgagor is described as “the Amador and Eevada Wagon Eoad Company—a corporation duly incorporated;” and it is signed by Kaul, Eikolaus, and Tulloek, “ Trustees of the Amador and Eevada Wagon Eoad Company.” As the notes do not purport to be the notes of Kaull, Eikolaus, and Tulloek, as they do not personally promise to pay the sums therein mentioned, Hall v. Crandall, 29 Cal. 567, and Lander v. Castro, 43 Cal. 497, are express authority that those defendants are not personally liable in a suit on the notes. One of the plaintiff’s propositions is that the defendants were not a corporation, but a joint stock company or a partnership. The question whether the corporation was duly organized, or was claiming in good faith to be a corporation, and was doing business as such, need not be inquired into, for if it be admitted that it was duly organized, no authority from the corporation to its Trustees to execute promissory notes is shown. It was not proven that the defendants con [451] stitutecl either a partnership or a joint stock company. A partnership or a joint stock company is not necessarily the result of an abortive attempt to organize a corporation. A further position is, that as the notes were made before the final organization of the corporation, the defendants are personally liable on the notes, by virtue of the sixth section of the Act for the formation of plank and turnpike road companies. The Act denominates companies which may be formed under its provisions “joint stock companies,” but the powers, rights, and liability of those companies, as pro • vided for in the Act, show that they are, in truth, corporations. The section above referred to is as follows: “Until the final organization of the company, as hereinafter provided, the members thereof shall be jointly and severally liable for all debts contracted prior to such final organization.” The complaint is not framed on the theory of that section. It is not alleged that the defendants commenced the formation of a company under that Act, and that before the final organization thereof, debts were contracted which still remain unpaid:, etc. And had the plaintiffs proceeded under that section, and shown that they were entitled to a recovery, they could not have recovered on the notes as the contracts of the members, for the provision is not that the members shall be liable on the contracts entered into by the agents of the company, but that they shall be liable for the debts contracted prior to the final organization of the company. if or is the complaint sufficient to entitle the plaintiffs to a recovery against the Trustees, under the provisions of the nineteenth section, as it does not contain the necessary allegations to show that they became individually liable. The record does not clearly show whether the Court below held the Trustees personally responsible on the notes, by reason of the provisions of either of those, sections of the statute, or because of their having acted, as is alleged in the complaint, on behalf of a partnership of which they were [452] members; but be that as it tiiay, we are satisfied from the evidence—and on that point there is no conflict—that the notes were made and delivered as the notes of the Amador and Nevada Wagon Road Company, and that the Trustees assumed that the company was a corporation, and intended to bind the same, and not themselves personally. The proposition that the Trustees are individually liable on the notes, because they had not competent authority to make and deliver them as the notes of the Amador and Nevada Wagon Road Company, cannot be sustained without overthrowing Hall v. Crandall and Lander v. Castro, supra. The other positions of the plaintiffs need not be noticed, as they depend on those which have already been discussed. J udgment and order reversed, and cause remanded for a new trial.