Stebbins v. Merritt

Bigelow, J. Both parties in the present case claim title under the Springfield Manufacturing Company; the demand-ants by virtue of a levy of an execution in their favor against the corporation; the tenants under a mortgage alleged by them to have been duly executed by the authorized agent of the company. The latter being in possession under the elder title, are entitled to hold the premises, unless the mortgage under which they claim is invalid. The whole case therefore turns on the validity of that mortgage. ■ The demandants seek to impeach it on various grounds. 1. The first and most material objection urged by the demandants is, that there is no legal and proper evidence of the authority of the agent to execute the mortgage. This objection is put upon the ground that the authority of such agent can be shown only by a vote of the corporation, duly entered on its records by the proper officer ; that under the statute in force at the time of the incorporation of said company, (St. 1808, c. 65,) a clerk, sworn to the faithful discharge of his duty, could alone keep such records, and that in the present case, the clerk of the corporation not having been sworn, the records kept by him are not the legal records of the company, and are incompetent as proof of their corporate acts. But it seems to us this argument proves too much. If it is well founded, then it follows that the omission of the clerk to take the oath of office not only disqualifies him, but also in effect disfranchises the corporation. If its proceedings and corporate acts can be proved only by its records, and if its records are inadmissible as proof, if kept by a clerk who was not sworn, then it can legally prove no acts, and is thereby incapacitated from the performance of its legitimate functions. But this cannot be so. The provision of the statute is simply that the corporation “ shall have power from time to time to choose a clerk, who shall be sworn.” It would certainly be a very forced and unreasonable construction to hold that under this provision the corporation can have no records and prove no corporate acts, unless its clerk was first sworn. We should have great doubts whether such omissions could be taken advantage of as against the corporation itself, but it is very clear, that it [32] cannot impair the rights of third parties claiming derivative interests under the votes of the corporation. In this particular, as in many others of a like character, the statute must be deemed to be directory only. It confers the power of electing a clerk, and gives the sanction of an oath as a security to the corporation for the faithful performance of his duties. Such a provision is similar in its nature to those requiring officers to be chosen on a certain day, and treasurers and cashiers to give bonds. They are intended only for the security of the corporation, and to insure its due regulation and government, and fidelity on the part of its officers, but not as essential to the validity of corporate acts or the performance of official duties They cannot be construed as conditions precedent, unless they are made so by the express terms of the statute. The breach or neglect of such provisions of law, although only directory in their character, may render officers personally liable for violation of duty, or subject a corporation to proceedings on the part of the government for a disregard of the requisitions of its charter, but it does not impair the validity of its recorded acts, so far as to affect the rights of third parties. Ang. & Am. Corp. §§ 285, 291; Bank of the United States v. Dandridge, 12 Wheat. 64, 87, 88; Hastings v. Blue Hill Turnpike Corporation, 9 Pick. 80. It follows that the records in the present case, having been verified by the oath of the clerk of the corporation at the trial, were the best evidence of the proceedings and votes of the corporation, and were admissible to prove the vote of the company, authorizing the agent to execute the mortgage, under which the tenants hold the premises. Whitman v. Granite Church, 11 Shepley, 236. 2. The next objection insisted on by the demandants is, that the meeting of the corporation on July 12, 1848, at which the vote was passed giving said authority to the agent, was not duly notified. It is admitted by the tenants, that there was no provision in the charter or by-laws regulating the mode of calling meetings of the corporation; and that, therefore, it was necessary to show a notice to each stockholder of the time and place of holding said meeting, or a waiver of such notice. [33] Wiggin v. Freewill Baptist Church, 8 Met. 301. To the proof offered by the tenants that such a notice was given to each stockholder, the demandants object on various grounds. In the first place, it is urged, that there is no proof that the persons notified included all the members of the corporation on the day of the meeting. But it appears by the records that all the individuals holding stock were so notified. On this point the records were clearly primá facie evidence, and sufficiently proved that all the stockholders were notified to attend the meeting. It is then urged that the meeting was not warned by any person or officer authorized to call it. It is true that no one was specially empowered by statute or by any by-law to call meetings; but, in the absence of any special authority for this purpose, we think it was competent for the general agent of the corporation to notify meetings, when he might deem the interests and business of the corporation required it. He was the person to whom was intrusted the management and control of its affairs. Being a trading corporation, it was essential to employ an agent in order to carry on its business, and he would best know when a special meeting of the stockholders was required by the exigencies of the corporation. It was, therefore, within the scope of his authority and duty as general agent, to summon the corporators when the condition of the business and affairs of the corporation were such as to render a meeting necessary. It is also objected that the meeting was not duly called, because one of the stockholders is alleged to have been incapable of receiving a legal notice on account of physical and mental imbecility. But it is very obvious that this objection cannot prevail. If the notice was legal, then the corporation was duly summoned. The law cannot look into the capacity of the stockholders to transact business, but can only regard the capacity of the aggregate body when duly assembled. If it were otherwise, the legal incapacity of a stockholder, such as coverture, infancy, or insanity, would operate as an effectual obstacle to a valid assembly of any aggregate corporation. The law confers the attribute of individuality on the entire [34] body constituting a corporation, and in which the individuals composing it are merged. When duly assembled, the corporation itself becomes the individual or person whose acts and proceedings the law can alone regard. If, therefore, it is legally called together, the law presumes that the individual members are competent to the transaction of business. In the present case, the notice having been given to each stockholder by a person authorized to call a meeting, the corporation was duly assembled and its acts are binding upon its own stockholders and upon third persons. Upon the same principle, ■ we are inclined to the opinion that all the stockholders being notified and present at the meeting, and no objection having been then made to the regularity of the notification, all objections on that ground have been conclusively waived. 3. The demandants also contend that the meeting of the corporation, if legally called, was illegally organized by the election, as moderator, of a person not a stockholder. No authority was cited in support of this objection, nor can we see any good reason upon which it can rest. The duty of a moderator is merely to preside and see that the proceedings are conducted in a legal and orderly manner. In doing this, he acts only as the agent of the corporation. There is nothing in the nature of the office, which requires him to be a stockholder, although from convenience the usage is to elect one of the stockholders to perform the duty. But his duties, like those of clerk, are merely ministerial, and can in no way affect the validity of the doings of the corporation or the rights of those claiming under them. 4. It is further objected, that the mortgage is invalid because it is not sealed with the corporate seal of the grantor. This would be a valid objection if it were supported by the evidence. The signature of the duly authorized agent of the corporation, executing the instrument in its behalf being proved, the seal, though mere paper and wafer without any specific stamp or mark, will be presumed to be the seal of corporation. Ang. & Am. Corp. § 226. Mill Dam Foundery v. Hovey, 21 Pick. 428. Primá facie, therefore, the deed in the present case bears [35] the common seal of the company. The evidence offered by the demandants fails to overcome this presumption. The records do not show that any seal bearing an impression was ever adopted by a vote of the corporation. The fact that a seal of a particular description had been annexed to three deeds of the corporation at different times, in the absence of any vote adopting or ratifying it, does not prove it to be the corporate seal, to the exclusion of any other mode of ensealing the instrument. The presumption, therefore, arising from the execution of the deed by the agent with a seal purporting to be the common seal of the corporation, is not overcome. 5. The remaining objection is, that the vote in terms did not empower the agent to convey the whole real and personal estate to the tenants in mortgage in preference over other creditors of the corporation. But it seems to us, that the true interpretation of the votes passed at the meeting on July 12, 1848, is that the corporation intended by them to vest full discretion in their agent to make such conveyances of the whole or any part of their estate, both real and personal, as he in his judgment might think the interests of the corporation required. The votes were without any limitation as to the kind or amount of property to be conveyed, or as to the order and purpose of the conveyances. The inference would rather be, that the mortgage to the tenants was intended to operate as a preference over other creditors from the fact that the vote seems to contemplate the assumption of new and further liabilities by the tenants in behalf of the corporation. We are, therefore, of the opinion, that the agent did not exceed his authority in executing the mortgage to the tenants. Judgment for the tenants.