Yellow Jacket Silver Mining Co. v. Stevenson

By the Court,- Lewis, C. J.: In the month of January, a.d. 1868, John B. Winters, the President of the Yellow Jacket Mining Company, executed in the name of the respondent an instrument whereby the appellant was given the privilege of entering upon a certain designated portion of respondent’s mining ground, with the privilege of mining and appropriating to his own use all mineral-bearing rock which might be found therein, for the sum of two dollars per ton for all ore so mined and taken by him. Under this instrument, which by its terms was to continue during his pleasure, the appellant entered upon, mined, and extracted a large quantity of ore, and was so engaged when this suit was instituted for the purpose of enjoining him from further entering upon, mining, or taking ores. The proceeding is founded upon the assumption that Winters was not authorized to execute the instrument or lease referred to on behalf of the company, and hence it is not holden upon or bound by it. The evidence undoubtedly sustained this position. Winters, himself, testified that he had no authority to execute such an instrument on behalf of the company, or to lease any portion of the mine, and the by-laws introduced show that such power is vested only in the Boai’d of Trustees, which it is admitted never delegated it to him. Not possessing the authority to act for the company in the execution of such instrument, it could not be bound by it; for it is — 229 — an axiom of the law of agency that the principal is only bound by such acts of the agent as are within the scope of his authority. But it is argued for appellant, that a corporation, like a natural person, may ratify an unauthorized act of its agent; and in this case the respondent ratified the instrument executed by Winters. That it might have been adopted or ratified by the company and thereby become its own act, and binding upon it, there is no doubt; (that it was done however in this^ase is not established to our satisfaction. ] A principal is only held to (ratify the unauthorized act of an agent when he does so 'expressly) or, (with full knowledge of the transaction, accepts or receives some advantage from it) ortwhen within a reasonable time after such knowledge he fails to repudiate it.') Although the principal received advantage from such act he will not be held to ratify it, unless he accept it with full knowledge of all the material facts of the transaction. “ No doctrine,” say the Supreme Court of the United States, “ is better settled, both upon principle and authority, than this, that the ratification of an act of an agent previously unauthorized must, in order to bind the principal, be with a full knowledge of all the material facts. If the material facts be either suppressed or unknown the ratification is treated as invalid because founded in mistake or fraud.” ( Owings v. Hull, 9 Pet. 629.) So where it is sought to charge a corporation with the ratification of an unauthorized act of an agent by reason of its acceptance of some benefit or advantage from it, it should appear that such benefit was accepted with full knowledge of the character of the act. (Angelí and Ames on Corp., § 304.) The evidence in this case, however, is clear and positive that the Board of Trustees which was the authorized agent of the corporation knew nothing of the terms, nor even of the existence of the lease in question. The money paid by the appellant was reported by the Superintendent to the Board as received for ores sold. Nothing seems ever to have appeared in his reports from which it could even have been inferred that the money paid by, or due from, Stevenson to the company was for the use or rental of any portion of the mine. How then can it be held that the acceptance of money by the Board reported to it as being for ores sold was a ratification — 230 — of tbe lease executed to the appellant ? Tim company did not know of such lease, nor were there any such circumstances connected with the acceptance of the money as to place it upon inquiry, or to charge it with presumptive notice of its existence. If, then, it be the law that there must be a full knowledge of all the material facts before the acceptance of profit or advantage by the 'principal will be held to constitute a ratification, surely the respondent here cannot be held upon the lease in question, for it knew nothing of the material facts respecting it. If it were shown that the Board knew of the lease, the acceptance of payment from Stevenson for the ore extracted would doubtless be sufficient to establish a ratification; but the contrary being shown, it would manifestly he opposed to the well-settled rules of law to hold such acceptance to be a ratification. ' But it fe further claimed that if the lease were void and there were no ratification, still the acceptance of rent from Stevenson constituted him a tenant at will of that portion of the mine from which he was extracting ore, and therefore entitled him to notice to quit, which was not given. The fallacy of this argument is, that it assumes the corporation accepted the payment made by Stevenson as rent, when nothing of the kind is shown. True, the money was paid, but as stated before, it was reported to the Board as money received for ore sold, and not as rent for the use or occupation of any portion of the mine. It is not shown that the Board of Trustees had any knowledge that he had such use or occupation. The acceptance of money as rent, knowing it to be such, would undoubtedly create the relation of landlord and tenant as completely as an express contract, because the payment by the tenant would be a direct recognition and acknowledgment of the landlord’s title, and the acceptance by the latter of such payment knowing it to be paid as rent, would be as perfect a recognition of the tenant’s right to occupy as an express assent or permission; consequently it has been held, and very justly too, that the acceptance of rent, knowing it to be paid as such, creates the relation of landlord and tenant. But the acceptance of money by the owner of land — not knowing it to be paid as rent, or believing it to be paid for something else — cannot be held an assent to the use or occupation, nor create — 231 — such relation. (Doe v. Crago, 6 Manning, G & S. 90.) Not knowing of such occupation, an assent to it could not, with any degree of consistency, be presumed to be given. Here, there is no evidence that the Board of Trustees, as such, knew of Stevenson’s occupation; and the acceptance of the money, paid by him, could not raise a presumption of such knowledge: because it was returned as for ores sold, and as such it appears to have been accepted by the company. Were it returned as rent and so accepted, a tenancy would be created — for that fact alone would be a sufficient notification to the company that Stevenson was occupying a portion of the mine, and the acceptance of the rent would be a sufficient assent to such occupancy. But the law does not force contracts upon persons by presumptions unnatural or improbable. Legal presumptions are natural and rational inferences drawn from known or admitted facts. As for example: if one accepts rent from another in possession of his property, knowing it to be paid as rent, the natural presumption is that he assents to the possession — and such is the presumption of the law; but it would not be rational or natural to infer an assent to such possession if the money were accepted, the owner not knowing it was paid as rent; nor do we think the law raises it in such a ease. Perhaps, if it were shown that money was paid by one occupying premises, as rent, and that it was accepted by the owner, with nothing further appearing, it might be presumed that the owner knew it to be intended as rent, and so accepted it; but where, as in this case, it is shown, in connection with the proof of payment, that it was reported to be for something other than rent, and so received, such presumption cannot be indulged. It cannot, we think, be maintained that the knowledge obtained unofficially by three of the trustees, that Stevenson ivas 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 information obtained by individual trustees and not communicated to the Board, should not, it would seem, become the foundation of a contract binding upon the company. The trustees represent the corporation, only when assembled together and acting as a Board. — 232 — (Laws 1864-5, 360, Secs. 5 and 7. See also, Gashwiler v. Willis, 33 Cal. 11.) Such being the law, how can it be claimed that information communicated to them individually, but not to the Board, can be made the foundation of an implied contract on the part of the corporation ? But, however this may 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. As it requires a concurrent action of a majority to execute an express contract on its behalf, the. action of, or information communicated to, any number less than a majority, cannot become the basis of a contract binding upon the company. In this case the three trustees, who knew that Stevenson was extracting ore from the mine, might be deemed to assent to it — still, unless they constitute a majority of the members of the Board, their action or implied assent could no more bind the corporation than an express contract entered into by any one of them alone could. The record here does not show that three were a majority of the Board of Trustees of the plaintiff — a fact necessary to be shown by the defendant, before he could claim the corporation to be bound by their act, or be chargeable with information obtained by them. So, even if it were admitted that the act of a majority of the trustees, not acting as a Board, could bind the corporation, still, as it is not shown in this case, that a majority did so act, or have knowledge of Steven-so&s possession, the result here would be unchanged. The authorities referred to in support of the proposition, that one entering under a void lease is to be deemed a tenant at will, and so entitled to notice to quit, have no pertinency to the facts of this case. When an owner allows one to enter upon his property, under a lease rendered void by reason of some informality, undoubtedly a tenancy at will may thereby be created — because, although the lease intended to be executed be nugatory, still the entry and taking of possession are by the permission of the owner; and in such case the tenancy is created by the acts of the respective parties, irrespective of the lease attempted to be executed. The case is, however, very different where there is not only a void lease, but the entry upon the premises is also unauthorized. As for example: if a stranger to the owner should, on his behalf and in his name, make — 233 — a lease of his property, and the lessee should enter into possession under it, he could certainly not be held a tenant at will, and entitled to notice to quit from the owner. But the President of the plaintiff had no more authority to lease any portion of its mine than jf he were an entire stranger. Not having the authority to lease, it follows he had no authority to place any person in possession of the mine, or any portion of it, as a tenant — for such possession can only be derived from one having the right or authority to lease— hence, not only was the lease executed by Winters void, but any possession given to, or right of tenancy attempted to be conferred upon, Stevenson, by him, was'entirely unwarranted. There could, therefore, be no tenancy at will created by means of the possession so obtained. If Winters had the authority to lease and did so, placing the defendant in possession, and the lease, by reason of some informality, proved to be void, doubtless, Stevenson would in such case be held a tenant at will: but Winters having no such authority, Stevenson could acquire none of the rights of. tenancy from him — for as an agent, Winters could no more bind his principal by giving a possession which would create a tenancy, than by executing a written lease of the premises. The appellant having failed to establish the relation of landlord and tenant between himself and the respondent, and this being the only ground relied on, the order of the lower Court against him must be affirmed.