Sargent v. Webster

Shaw, C. J. The plaintiff claims property in the goods replevied, consisting of wrought and raw silk, and paper boxes, under a conveyance from a manufacturing corporation, styled the New England Silk Company. The defendant justifies under an execution against the said company in favor of creditors of the company. It appears that the plaintiff was a creditor of the company, for advances, and was surety and indorser, to a large amount on their outstanding securities ; that after their principal building Avas burnt, they were insolvent and unable to pay their debts; and that at a meeting of the directors, March 17th 1845, they passed a vote, reciting these facts, and that the plaintiff, as their indorser, was on their paper to an amount over $12,000, and declaring that an assignment be made to him of all the property whatsoever, belonging to the company, for the payment of his indorsements, and authorizing the treasurer of the company, C. Colt, jr. to make and execute such assignment, which should be binding on the company; and that a counter bond be taken of the plaintiff, binding him to apply the proceeds of the property to the payment of such indorsed notes, and to account for such application, and pay over the balance, if any. The treasurer made and executed such assignment, in his OAvn name, and under his own seal; and the plaintiff executed the counter bond, as required. Subsequently, and before the attachment and seizure made by the defendant, the plaintiff executed and delivered to the said C. Colt, jr. a letter of attorney, with full power to take, hold and dispose of all the assigned property, for his use and in his name. Several objections were taken by the defendant to the plaintiff’s title. 1. The first is, that the deed of the treasurer, in his own name, though he had a sufficient power, Avas inoperative to [503] pass the title of the corporation; that it should have been executed in the name of the corporation, and under their seal. If a deed were necessary, in this case, to pass the property, there would be great weight in this objection; but the vote of the directors was, in effect, an agreement of transfer, when accepted by the plaintiff, and the effect of the assignment of the treasurer, who had the care and control of all the property, was little more than to hand the property over, pursuant to the vote. The power of attorney, given by the plaintiff to Colt, jr. was an acceptance of the assignment, and vested the personal property in him, without the deed. A different rule may apply to the real estate, as to which we give no opinion. When the objection is to the legal sufficiency of the execution of an instrument, although in form entire, it may be good in part and void in part, as the conveyance is sufficient in regard to one species of property, and not to another. Such was the effect of a will, executed without three witnesses, before the statute ; and by statute it was altered upon obvious considerations of policy. 2. It was objected, that the directors had no authority, by their vote, to make such conveyance, or authorize the treasurer to make it; but that it must be done by the stockholders. We think this objection is not well taken. The directors, we think, had an authority to make a conveyance of all their property provisionally, and upon condition to pay, or provide for the payment of the just debts of the corporation, with proper security that no more should be applied by the assignee, than enough to pay those debts. 3. Another objection is, that such a conveyance could not be made by the stockholders; because it would tend to give a preference, and thus be fraudulent against other creditors. Such a conveyance would now be fraudulent, if made by an individual, because it would be repugnant to the letter and spirit of the insolvent laws. But as corporations are not subject to the insolvent laws, and the law stands, in regard to them, as it did before, these provisions do not apply. Nor does it appear that the proceeding was not in furtherance of [504] the purposes of the incorporation. It was a trading corporaíon; and one of these purposes was to pay their debts, to enable them either to go on successfully again by the aid of new assessments, or to wind up and settle, upon terms most advantageous to the stockholders. 4. It is objected, that there was not a majority of the directors present, when the vote was passed; because, though three were present, out of five, yet C. Colt, jr. was not eligible as a director, because he was treasurer. We see no ground for this objection. A cashier of a bank is not competent to be a director; but it is because it is so expressly provided by statute. In ordinary cases, when there is no other express provision, a majority of the whole number of an aggregate body, who may act together, constitute a quorum, and a majority of those present decide any question. upon which they can act. 5. Another objection of the same kind is, that it does not appear that notice of the meeting was given to all the directors. But the contrary does not appear; and it would be hazardous to decide that every vote, passed by an aggregate body, is void, if it do not appear by the record that all were notified. We believe it is not usual, in corporate records, to state how the members were notified. The presumption, “ omnia rite acta” covers multitudes of defects in such cases, and throws the burden upon those, who would deny the regularity of a meeting, for want of due notice, to establish it by proof. 6. It is objected, that the president was not present at the meeting at which the vote authorizing the assignment was passed. We cannot perceive the force of this objection. “ The president and directors ” is a convenient and very common mode of designating the board of directors, in their aggregate capacity; but it does not render the presence of the president essential, unless otherwise required by the charter or by-laws. 7. But another ground, now taken by the defendant, assumes that whether the assignment were valid or not ia [505] immaterial, because even if the property was the plaintiff’s, he was a member of the corporation, whose individual property was liable to be taken to satisfy an execution against the corporation, and so the defendant was justified in taking it as his property, by force of the Rev. Sts. c. 38, § 30. In the first place, it is very clear that the plaintiff, Sargent, though a member of the corporation, had a right to deal with them as with a person and body politic. He could take security or attach property, or take any other measure that another creditor could ; and though he might be liable, in a qualified way, for the debts of the corporation, it was a special liability created by statute, and one which can be enforced only in the mode provided by statute. Peirce v. Partridge, 3 Met. 44. But we think the question, whether this property could have been seized as the property of Sargent, on an execution against the corporation, on the ground that he was a member, is not open in the present case, because it was seized as the property of the corporation, liable for its own debts, and as their property, of which no conveyance had been made, valid as against creditors. The two claims are not only different from each otnor, but they are repugnant. Taking it as the property of the corporation disaffirmed the validity of the conveyance to Sargent, and held it to be void as to them. Claiming it as Sargent’s property would have affirmed that conveyance, and precluded the attaching creditors, for whom the defendant acted, from questioning that conveyance. Yet in this suit, most of the grounds have been taken, which could be taken, to show that the plaintiff took no property, as against creditors, by that conveyance. Besides; the rights and remedies of the plaintiff would be entirely different. If taken as the property of the plaintiff upon his liability as stockholder, he would have a right of action, for reimbursement, against the corporation, and a remedy in equity for a contribution against all the other members. But if taken as the property of the corporation, the debt of the corporation would be satisfied out of their own property, and the "plaintiff would be without remedy [506] although his title was good, and the property conceded to be his by the conveyance. We have therefore not thought it necessary to consider and decide whether the plaintiff was liable as a member of the corporation. He was so liable, unless the corporation had complied with the provisions of the statute, (Rev. Sts. c. 38, §§ 17, 18, 22,) in recording and publishing a certificate, so as to take away this individual liability. Speaking for myself only, it may be proper to say, that so far as this depends on the sufficiency of the publication, as set out in the statement of facts, I should think it must fail. A publication in a small portion of the whole circulation of a newspaper, does not accomplish the purpose of public notice intended by the statute to be given. But of this we have not found it necessary to give an opinion. Judgment for the plaintiff.