Rahm v. King Wrought-Iron Bridge Manufactory

[282] The opinion of the court was delivered by Brewer, J.: Plaintiff in error, plaintiff below, brought his action upon two promissory notes. The case was tried by the district court without a jury. No special findings of fact were made, but only a general finding for defendant. But a single question really is presented, and that is, whether upon the testimony the' plaintiff was entitled to a judgment. For, while counsel speak of error in the admission of certain books of the defendant, yet, as not a line out of the books was read in evidence, and no reference made to them after their admission, it seems hardly necessary to inquire whether the court ruled correctly in admitting them. Upon the facts then, was the plaintiff entitled to judgment? And the question, it must be remembered, is, not whether upon the testimony a judgment in favor of the plaintiff could be sustained, but whether upon that testimony the judgment must have been for him. In other words, cannot the finding in favor of the defendant be sustained? Turning to the record, these things appear: One note was as follows — and the other was in form similar: King Iron-Bridge Manufactory and Iron Works, $4,915.57. Topeka, Nov. 9th, 1872. • Pour months after date, we promise to pay to the order of A. J. Baker, forty-nine hundred and fifteen and 57-100 dollars, for value received, without defalcation. T) n,r o ' a > TT n T. B. MlLLS, V. P. B. M. Smith, Sec y K. B. Co. ’ Indorsed: “A. J. Baker,” “Coleman, Rahm & Co.” [283] statement of facts. [282] The president of the company during the fall of 1872 was Zenas King, who was absent from the state. Messrs. Mills and Smith were respectively vice-president and secretary, and apparently the active managers of the affairs of the corporation, superintending the construction of the buildings, making contracts, signing notes, drafts and checks. The “ Iola Bridge Company,” a corporation located and doing business in Iola, had been engaged in the same business as the Topeka Bridge Company (defendant herein) was purposing to engage in, [283] an(l for which buildings were being erected and other preparations made. The debt for which these notes were given was a debt due from the Iola Bridge Co. to Coleman, Rahm & Co. for iron. T. B. Mills, the vice-president of the Topeka Bridge Co., was president of the Iola company. The Topeka Bridge Co. bought of the Iola company all its assets, except the real estate, and in consideration thereof assumed the payment of certain specific indebtedness. These notes were not a part of the indebtedness thus assumed, although the draft hereinafter referred to was. These notes were taken by Mr. Rahm, of Coleman, Rahm & Co., who was at Topeka to settle the claim against the Iola company, and he took these notes in payment. They- were drawn to the order of A. J. Baker, to enable him to indorse them, as at his instance in the first place the debt was created. Whether “Francis Rahm,” the plaintiff, is the “Mr. Rahm” of Coleman, Rahm & Co., does not appear. Neither was there any evidence to show when the notes were indorsed to plaintiff. The indebtedness of the Iola company to Coleman, ■ Rahm & Co. was nearly $5,000 in.excess of the amount of these notes. For this amount, at the same time, a ninety-day draft was drawn on Daniel M. Adams, who at that time had no official connection with the defendant, but who some sixty days thereafter, and before the maturity of the draft, became its vice-president and .treasurer. Adams paid the draft, and was credited with the amount in his settlement with the company as its treasurer. There was nothing upon the face of the draft to show on whose account it was drawn. It was signed “ T. B. Mills, President,” and directed to “ Daniel M. Adams, Topeka, Kansas.” Mr. Mills was, as we have seen, president of the Iola company. He testified in his deposition that it was drawn by him as vice-president of the Topeka company. There was testimony tending to show that some $45,000 of the indebtedness of the Iola company assumed by the Topeka company was fictitious, and running to the officers of the Topeka company. No express authority from the board of directors to Messrs. Mills and Smith to execute [284] these notes was shown, and no formal ratification of the act. The testimony is conflicting as to whether any knowledge of the transaction was communicated to or possessed by the directors or any of them until the presentation of the first note for payment. 1. Powers of managing officers of corporations. 2. Assumption of debts creditors. 3 Transfer of note-before and after maturity. This comprises, we think, all the material portions of the testimony; and upon this we remark, in support of the ruling of the district court, that Messrs. Mills and Smith had no authority from the company to bind it to the payment of the debts of another and different corporation. Even if it were conceded that they had all the powers of general managers, still those powers did not extend to the assumption of another company’s debts. Though they might bind the corporation to any debt within the scope of its ordinary business, yet beyond that they were powei’less. Again, while under the contract between the Iola company and the Topeka company by which the latter purchased a part of the assets of the former under an agreement to pay therefor certain of its debts, those creditors whose debts were thus assumed might maintain an action against the Topeka company directly, yet none of the other creditors of the Iola company could. And it mattex’S not that a portion of the indebtedness that the Topka company assumed to pay was fictitious. Whatever effect that might have upon the validity of the sale, as against the creditors of the Iola company, or upon gax’nishee proceedings instituted by such creditors, yet it does not give the right to sxxch creditors to jump over the Iola company and institute an action directly against the Topeka company. And thirdly, as thei’e is no evidence of the time of the indorsements, or that they were made before the maturity of the notes, and this fact is put in issue by the pleadings, the exact facts in reference to the giving of the notes may shown in evidence, and are as competent for a defense to an action by this plaintiff' as to one by the payee. It seems scarcely necessary to enlarge upon these propositions. They are sufficient to support the judgment. [285] We do not wish to be understood as saying that there was no testimony upon which, if uncontradicted, or unqualified, a judgment in favor of the plaintiff could have been supported ; but we do hold, that upon the facts as above stated there is enough to uphold the judgment for the defendant, and it must be affirmed. All the Justices concurring.