American Stores Corp. v. Atkins

Sims, J., after making the foregoing statement, delivered the following opinion of the court. Of the questions presented by the assignments of error, which are all based on the above mentioned defenses, we will first consider the following, namely: [1] 1. Did the learned chancellor below err in holding that the certificate of deposit for $1,425.00, issued by the Bank of Victoria to John H. Atkins, was for the proceeds of sale of 150 shares of stock belonging to said Atkins and by him sold to J. W. Fowlkes; and that this certificate was therefore the property of said Atkins when it was issued; and that the latter thereafter indorsed and transferred this certificate to the appellee, Mrs. Atkins, who used the transfer of the same to the appellant, together with seventy-five dollars in cash, to make up the amount she lent to the appellant, for which — 229 — the note was given, the payment of which was secured by the chattel mortgage which is sought to be enforced in this cause? The question must be answered in the negative. There is no serious controversy over the correctness of any part of this holding except the holding that the certificate mentioned was, as claimed by the appellee, for the proceeds of the sale of 150 shares of stock belonging to John H. Atkins—the claim of the appellant being that this certificate was for the proceeds of the sale of 150 shares of stock belonging to appellant. On this subject there is a sharp conflict in the evidence, but we think that it clearly appears from a preponderance of the evidence that the facts were in accordance with the claim of the appellee. According to the preponderance of the evidence, John H. Atkins, with the knowledge and assent of the appellant corporation, at the same time that he was acting as stock sales agent for the corporation, also from time to time sold stock of the corporation belonging to himself; and on one and the same day said Atkins sold 150 shares of his own stock to one Fowlkes at a certain price and 150 shares of the appellant’s treasury stock to one Yates at a. different and higher price—being the sales price fixed by appellant. That, in accordance with the usual method of handling such transactions for appellant, which mbthod was approved by it, said Atkins deposited the net proceeds of the sale of such 150 shares of stock belonging to appellant, which was the sum of $1,781.25, in the Bank of Victoria, taking its certificate of deposit therefor payable to himself or order, and promptly transferred and delivered. such certificate of deposit to appellant, and such proceeds of sale were accordingly received and accepted by appellant. That on the same day said Atkins deposited in the same bank — 230 — the net proceeds of the sale of the 150 shares of stock belonging to himself, which was the said snm of $1,425.00, taking the above mentioned certificate of deposit therefor payable to himself or order, which certificate he subsequently endorsed and delivered to his wife, the appellee, from whom it subsequently passed, along with seventy-five dollars in cash, to' appellant, making up the $1,500.00 loan to the latter, which was the consideration for the note in her favor, the payment of which was secured by the chattel mortgage, all as above set forth. The confusion and this litigation arose from the following circumstances: It appears from the evidence that by mistake said Atkins endorsed on the back and delivered to Yates a certificate for 150 shares of the stock owned by and standing in the name of himself (Atkins), instead of to Fowlkes, as he intended to do. About four months afterwards this certificate was transmitted. to the appellant corporation, with request that it transfer that stock to the name of Yates and issue him a certificate therefor. This the corporation at first failed to do, but finally (after what delay does not appear in evidence) did issue such new certificate to Yates. The stub of the stock book, however, from opposite which this certificate was issued, is left blank, so that it does not appear therefrom on what date it was issued or whether this was an original issue of treasury stock of appellant, or a transfer of Atkins stock; but other exhibits in evidence tend to show that this was not an original issue of stock, so that it seems that this was a transfer of the stock from Atkins to Yates. And the stub of the stock book from opposite which the certificate was issued of 150 shares of stock to Fowlkes shows its date, that this certificate was issued a few days after the aforesaid stock sale to Fowlkes, and leaves blank the line on which entry should have been made of the — 231 — original issue, if it was not a transfer of stock; so that it seems that this was an original issue of treasury stock of the appellant. Just what direction was given or request was made for the issue of this certificate of stock does not appear in evidence. However, the result of all this seems merely to have been that, while 150 shares of the treasury stock of appellant was issued to Fowlkes instead of to Yates, and 150 shares of the stock of Atkins was transferred to Yates instead of to Fowlkes, as it . should have been, still, the appellant company was in no way injuriously affected thereby, nor Fowlkes nor Yates. When this had all occurred the stock of the appellant corporation outstanding was precisely the same as it would have been if the aforesaid errors had not occurred. It had issued a certificate for 150 shares of its treasury stock, for which it had received the price it asked therefor, viz., $1,781.25, and the 150 shares of stock formerly held by Atkins was held by some one else. There was no difference in the value to the holders of the respective 150 shares of stock. It was, in effect, a mere exchange of the same amount of the same stock between the holders of such stock, however brought about. And it does not appear in evidence that it made any difference to appellant whatever who the particular individuals were who acquired the respective certificates of stock as the result of the aforesaid exchange. The other facts in question are so clearly established by the evidence that no detailed mention of the evidence establishing them will be made. 2. The assignments of error also present the question whether the court below erred in holding that the transfer of the certificate of deposit aforesaid to the appellee, Mrs. Atkins, from her husband was not fraudulent, but — 232 — valid and supported by the consideration of money due to her from her husband. Among others which we need not mention, there are two reasons why we are of opinion that there was no error in such holding. [2, 3] First: The answer, even if treated as a cross-bill, does not allege that the transfer of the certificate of deposit was fraudulent if it in truth represented the proceeds from the sale of stock owned by the husband; or, certainly, does not so allege with that clearness which is required to constitute a sufficient allegation of fraud. Hence, as we have found, as aforesaid, that the certificate of deposit did in truth represent the proceeds of sale mentioned, the question just stated does not arise in the case. Secondly: The allegation in the answer of the insolvency of the husband is not sustained by the proof. The burden of proof to sustain that allegation was, of course, upon the appellant. The only evidence on that subject which we find in the record is the following question and answer in the deposition of the president of the appellant corporation, namely: “Q. Mr. Dickinson, do you know whether Mr. John H. Atkins has any property or assets other than what he has turned over to his wife? “A. Not that I know of.” There is no evidence whatever showing that the witness would have known that the husband had other property, or assets, although that were the fact. [4] Moreover, there is a conflict in the evidence upon the allegation in the answer that the husband was indebted to appellant at the time he made the transfer of the certificate of deposit aforesaid to his wife, the appellee; and in our opinion the evidence does not clearly establish the fact that any such indebtedness — 233 — existed at that time. That being so, the transfer of the certificate was valid as a gift, even if it was not supported by a valuable consideration consisting of indebtedness of the husband to the wife; and for this reason, it is unnecessary to refer to the numerous decisions cited in argument before us for appellant upon the subject of the well settled rule as to the proof of valuable consideration moving from the wdfe and of an express promise from the husband to pay, which a wife must furnish in order to sustain a debt which is asserted by her as supporting a transfer of property to her from an insolvent husband; and for the same reason it is unnecessary for us to consider whether the evidence supports the holding of the court below that the transfer to the wife in question was supported by the consideration of money owing to her from the husband. [5] The only other question which remains for our decision is the following: 3. Did the court below err in not holding that the chattel mortgage was not binding upon the appellant, for the reason that there was no direct'evidence that there was any resolution of the board of directors, or other authority binding upon the appellant, which authorized the president and the secretary and treasuerer to execute the chattel mortgage sought to be enforced in this suit? The question must be answered in the negative. The officers mentioned were the appropriate officers to execute the -writing in question. The execution of the writing was in the usual and proper form, with the corporate seal of the appellant affixed. The appellee lent the money in good faith. The appellant received and accepted the benefit of it and delivered to appellee the writing aforesaid which purported to secure the repayment of the money. It is well settled that, under such circumstances, the production of such a writing — 234 — in evidence, so executéd, proves itself as having been executed upon such authority that it will be deemed to be a writing executed by the corporation, in the absence of evidence to the contrary. As said in 10 Cyc. p. 1003-c: [6] “* * * where the officer or agent is the appropriate officer or agent to execute .a contract or to do an act of a particular kind in behalf of the corporation, the law presumes a precedent authorization, regularly and rightfully made; and it is not necessary to produce evidence of such authority from the records of the corporation. * * * “* * It follows from this principle that where a mortgage is given by a corporation to secure a debt which it has the power to contract, the mortgagor advancing the money in good faith is not bound to look beyond the mortgage for the authority for its execution.” In Idem, p. 1198, this is said: “2. On principles elsewhere considered an authorization by the directors to the ministerial officers of the corporation to execute even so important an instrument as a mortgage of its properties need not be shown by any formal resolution of their board, but the presence of the corporate seal upon the instrument with the signature of the proper officers, generally the president and the secretary, is presumptive evidence that the proper precedent authority had been given.” See also to same effect, Merchants’ Bank v. Goddin, 76 Va. 503; Fidelity, etc., Co. v. Shenandoah, etc., R. Co., 32 W. Va. 244, 9 S. E. 180; Ruffner v. Welton Coal Co., 36 W. Va. 244, 15 S. E. 48; Deepwater Council v. Renick, 59 W. Va. 343, 53 S. E. 552. The decree under review will be affirmed. Affirmed.