Louisville, N. A. & C. Ry. Co. v. Carson

Me. Presiding Justice Shepaed delivered the opinion of the Court. ’ John B. Carson, Yan H. Higgins and Henry J. Furber sued the appellant for rent due under a certain lease, dated April 25, 1886, and made by said Carson and one Cooper,-to the appellant, for a term of five years from May first, 1887, of certain rooms in the building known as the Adams Express Building, in Chicago, to be occupied by appellant for its general offices. The lease was signed by the lessors, Cooper and Carson, and by the lessee, the appellant, by its corporate name, “ by John B. Carson, Yice-Prest. and G-enT Mgr.” The interest of Cooper, one of the lessors, was subse-. quently transferred to the appellees, Higgins and Furber, and the other lessor, Carson, having died, his executors have been substituted in his place on the record. The said John B. Carson, one of the lessors, was the same person who executed the lease on behalf of the lessee, the appellant, as its vice-president and general manager, and he was also, at the time he executed the lease, a director of the appellant company. Possession of the demised premises was taken by the appellant at about the date of the lease and retained for a period of three years, and until May 1,1890, when appellant vacated and moved out, having paid rent up to that date. The cause was tried by the court without a jury, and judgment rendered in favor of the plaintiffs for the full amount of rent claimed under the terms of the lease. On appeal to this court it is contended that the lease was absolutely void, and that no recovery under it could be had, because John B. Carson, a director and executive officer of appellant, made it for the appellant with himself, as owner of the premises.' Although such contracts will be strictly scrutinized by the courts, and will be set aside at the suit of the corporation, in the absence of ratification by acquiescence or otherwise, they are not absolutely void, where, in the making of them, the corporation is represented by other authorized agents. There is in this case no pretense of unfairness, unreasonableness or imposition, and there is evidence that is not disputed, that in the transaction leading up to the making of the lease the appellant was represented by its other agents, its president and members of its executive committee and board of directors. Mr. Carson testified that the appellant removed its headquarters to Chicago in 1884, and leased rooms on the fifth floor of the Adams Express Building for such purposes, and continued to occupy that floor until the spring of 1887, when, needing more room, and after consultation with the president of the appellant company and Mr. Astor, Mr. Hitt and Mr. Ehrhardt, who were directors of the company, he was instructed to finish and partition off the ninth floor, being the premises covered by the lease in question, of the same building, for the uses of the company, said ninth floor being then in an unfinished condition, and that in properly preparing said floor, the owners of the building expended from fifteen to twenty thousand dollars; that after its completion the same gentlemen visited and went over the offices and approved of everything he had done; that as soon as the premises were ready for occupancy the company moved into them and occupied the same for three years or a little over, with full knowledge and approval of every member of the board of directors. At that time Mr. Dowd, the president, Mr. Astor, Mr. Hitt, and three other directors, comprised the executive committee of the board of directors. There is no contradiction of the testimony of Mr. Carson, and it finds corroboration in the fact that the' rental as paid was charged on the books of the company, and that in the annual reports of the company the location of its offices was named. It is also further corroborated by the testimony of Elihu Boot, one of the directors of the company, during the period named, who testified: “ I do not remember whether the directors took any formal action by way of approving the lease, except that I know it was authorized by the president and well understood by the members of the board;” that he and Mr. Dowd, the president, and quite a number of the directors visited Chicago for the purpose of examining the premises in the latter part of 1888 or early in 1887, and that Mr. Dowd told him of his intention to make the lease, and that he assented to it; that the members of the board approved and consented to the occupancy of the rooms, and to the payment of the rent therefor, as provided by the lease, and that it was a matter of common notoriety that Mr. John B. Carson was one of the owners of the building; that the directors knew as a matter of fact of the lease and of the occupation under it, and that he knew of the intention to make it before it was made, and knew ot the making of it at the time it was made. The truth of this evidence is in no way disputed or attacked. It ivould seem, therefore, that the bargain itself, as distinguished from the written lease, was the act not so much of Carson in his capacity as a director and officer, as of other directors and officers of the corporation, and one that was plainly within their power as directors and officers to perform. And we think that the necessary implication from such acts of the other officers and directors of the appellant corporation is that Carson was authorized to do whatever was necessary and reasonable, to secure to the corporation the premises in question. It is said in Morawetz on Corporations, Sec. 527: “ There is no necessary impropriety in a contract between a director and a corporation, if the latter is represented by other agents. On the contrary, such contracts are, in many instances, the natural result of circumstances, and are justified by the approved usages of business men.” And it is further said in the same connection : “ An agent may even represent the corporation in making a contract with himself personally, provided he act under immediate instructions from some other superior agent, or from the board of directors.” We think the evidence is as plain as it can reasonably be expected to be in the absence of an express recorded vote of the board of directors, which was not necessary, that Carson had the authority of the board of directors, and the president of the corporation, to lease the rooms in question from himself. The mere status, alone, of Carson, as owner of the demised premises on the one hand, and as director and officer of the corporation on the other hand, did not forbid him from contracting with himself, with the knowledge and authority of the other officers and directors of the corporation. Such a lease as was made was one that the corporation could enter into with perfect propriety. These, or some other offices, were necessary to the corporation for the transaction of its business. The mere fact that it was executed by an officer with himself did not avoid it ab-initio. If the corporation, acting-under different formalities and through other agents, could have made the lease a valid one, we see no reason for treating it, as made, as absolutely invalid. Bar v. R. R. Co., 125 N. Y. 263. At the most, we regard the lease as but voidable, and not as void. 2 Pomeroy’s Eq. Juris., Sec. 1077. And being voidable only, it was subject to ratification. Although “ a confirmation of a void thing avails nothing ” (Comyn’s Dig. D. 1), and “ so if a lease be absolutely void, acceptance of rent afterward does not amount to a confirmation ” (Ibid. A.), yet, in “every case where a lease is only voidable ” (Ibid. A.), “ by a confirmation, express, or in fact, a voidable estate shall be confirmed.” (Ibid. A.) Wurster v. Reitzinger, 5 Ill. App. 112. The written lease in question was in the possession of the proper officers of the appellant during the entire three years that it occupied the premises; the stipulated rent was paid, monthly, under it, and such payments entered on the books of appellant; the lease was known and authorized by the president and all the directors, and all the business offices of the corporation in Chicago, were located in the leased premises for full three years, and nothing was said or done to avoid or repudiate it. Such circumstances of positive acts and . acquiescence, make the presumption of ratification very strong, and are ample evidence of ratification in fact. A corporation, like an individual, may be bound by a ratification evidenced by its acts, and such ratification need not be in writing, even though it be of an act done without authority. Oregon Ry. Co. v. Oregon R. & N. Co., 28 Fed. Rep. 505; Am. Ins. Co. v. Oakley, 9 Paige’s Ch. 496; Wood v. Whelen, 93 Ill. 153; Howe v. Keeler, 27 Conn. 538; Keeley v. R. R. Co., 141 Mass. 496. Our conclusion, therefore, is, that the judgment of the Circuit Court should be aifirmed. There may be an additional reason for precluding the appellant from urging that the lease was a void one, and, therefore, not its contract. The plea of non assumpsit, which was the only plea filed, was not verified. It is said in Stevenson v. Farnsworth, 2 Gil. 715: “ If his plea is not verified by affidavit, he is precluded on the trial from controverting the execution of the instrument. The pleas of non est factwn and non assumpsit, may, however, be pleaded as formerly. The statute does not change the mode of pleading, but the rule of evidence only. Under these pleas the defendant may still insist on' any legal defense that he could have done at common law, except merely denying or disproving the execution of the instrument declared on.” The actual signing of the lease in the name of the appellant, by Mr. Carson, as vice-president and general manager, is conceded. If, therefore, the appellant wished to deny the authority of Carson, or in other words, wished to deny that the instrument so executed was the act or instrument of. the appellant, it is not easy to see why its plea should not have been verified as required by the statute. Section 34, Chap. 110, entitled Practice (Hurd’s Rev. Stat. 1891), provides that no person shall be permitted to deny, on trial, the execution of any instrument in writing, whether sealed or not, upon which an action may have been brought, unless the person so denying the same shall, if defendant, verify his plea by affidavit. The allegation of the declaration is that the plaintiffs demised to the defendant certain premises, “and by the same instrument the said defendant agreed and covenanted to yield and pay therefor * * * as rent for said premises,” etc. If appellant had not so agreed, or, in other words, if the act of Carson in executing the lease in the name of the appellant was not the execution of the lease by appellant, should it not have denied the execution by a verified plea ? R. R. Co. v. Neill, 16 Ill. 269; Home Flax Co. v. Beebe, 48 Ill. 138; United Workmen v. Zuhlke, 129 Ill. 298; Supreme Lodge v. Zuhlke, 30 Ill. App. 98; Wurster v. Reitzinger, 5 Ill. App. 112; Delahay v. Clement, 2 Scam. 575; Dwight v. Newell, 15 Ill. 333; Gaddy v. McCleave, 59 Ill. 182. But this question not having been raised or argued in the cause as presented to ns, we need not decide it, the other reasons given being sufficient to require an affirmance of the judgment. Affirmed. Mb. Justice Gaby. The plea of non assumpsit not being verified, I think no defense which, expressly or by implication, denied that the instrument sued on was executed by the railway company, was admissible. Supreme Lodge v. Zuhlke, 30 Ill. App. 98. And therefore all discussion of other matter is irrelevant. Mb. Justice Wateeman. A director of a corporation may, where other agents act for the company, make a contract with it; but a director can not at the same time act for the corporation and for himself; it is essential to the making of a contract that there be a meeting of minds. . When a contract is reduced to writing it expresses the agreement of the parties; if such agreement appear on the face of the instrument to be between a corporation and an officer thereof, and the execution is by such officer on the one part and the corporation acting only through and by the same officer, as the party of the second part, such writing, as an agreement, or memorandum evidence of a contract, is a nullity; at the most it can be considered but a proposition made by the officer to the corporation; and where the contract is of such a nature that it must be in writing, as a conveyance of lands, the writing above described can not, by a mere parol ratification by the company, acting through directors or agents, be made a binding and effectual instrument, because such writing is not the act or deed of the company. An officer of a company can not, acting for and in its fiame, convey its lands to himself; a deed upon its face appearing to be so made is void; it is not the writing or deed of the company. Clafflin v. Farmers & Citizens Bank, 25 N. Y. 293; Mechera on Agency, Sec. 68; Neuendorf v. World Nut. Life Ins. Co., 69 N. Y. 389.