Peterborough R. R. v. Nashua & L. R. R.

Foster, J. The defendants by accepting the lease of the plaintiffs, occupying the plaintiffs’ railroad as a tenant, paying the rental agreed upon for several years, and deriving all the advantages [389] contemplated by the agreement of May 6, 1872, are estopped as against the plaintiffs to deny the authority of their agents in making and executing the agreement, or to question the regularity of their own proceedings in the transaction. “ The same presumptions are applicable to corporations as are continually made in relation to private persons.” Hilliard v. Goold, 34 N. H. 230, 239; Sherman v. Fitch, 98 Mass. 59. No suggestion is made that the persons who entered into this contract with the plaintiffs were not proper agents or officers of the defendant corporation to do this business ; nor is it claimed that the meeting of the board of directors of the defendant corporation, of August 24, 1875, was ilLegal. The subject-matter of the contract, also, was such as both parties could legally act upon. Laws of 1869, c. 76. “If officers of a corporation openly exercise a power which presupposes a delegated authority for the purpose, and other corporate acts show that the corporation must have contemplated the legal existence of such authority, the acts of such officers will be deemed rightful, and the delegated authority will be presumed.” Bank v. Dandridge, 12 Wheat. 64, 70; Lyndeborough Glass Co. v. Mass. Glass Co., 111 Mass. 315; M'Laughlin v. Detroit & M. R. R. Co., 8 Mich. 100; Olcott v. Tioga R. R. Co., 27 N. Y. 564; Glidden v. Unity, 33 N. H. 571; Ang. & Ames Corp., s. 304; Potter Corp., s. 155. It therefore becomes unnecessary to consider the various objections taken by the defendants at the trial, because by their own acts of ratification they are estopped to deny their liability. By the terms of the agreement of September 16, 1873, it appears that the defendant corporation agreed to loan to the plaintiff corporation $150,000, for which the latter were to give their promissory note, payable on the 1st day of January, 1875, and to transfer as collateral security 1,500 shares of their capital stock, the par value of which was $100. The balance due on the note the defendants seek to have allowed in set-off in ifiis action. But the plaintiffs claim that there was no consideration for the note, although the agreement would seem to leave no room for doubt on that point. As we understand it, the plaintiffs’ position is this: It is provided in the written agreement that if the note is not paid prior to January 1,1875, the defendants are to have the right after that time of selling the stock at less than par. But s. 8, c. 184, Gen. St., provides that “ No corporation shall sell or dispose of any of the shares of its capital stock at a price less than the par value thereof, except in the case of sales of shares at auction for non-payment of assessments.” Therefore, the plaintiffs contend, the contract in this respect being prohibited should be so construed as to avoid the illegal part of it; that is, it should be held that there was an absolute sale of the 1,500 shares, and a payment for the same, on which theory the note would be without consideration. But it .is admitted that the transfer of the stock was intended [390] as collateral security for the plaintiffs’ note. Assume that nothing was said in the agreement as to the price for which the pledgee might sell the stock, it could not be claimed that he was bound by this statutory prohibition, and could not dispose of the stock for less than par. If the stock was pledged, then the pledgee could not be the agent of the pledgeor, and so only authorized to do what his principal might do, because it was his primary object to get his own money back again, and not to work for the interests of the pledgeor, or to represent him in any respect. The statute does not say that no sale of stock shall be made below par; but it is only the corporation that is thus prohibited. A person to whom the corporation has sold stock may dispose of it as he sees fit, for more or less than par. And in the absence of any express prohibition applying to a pledgee or mortgagee, we see no reason why he should not be allowed to sell his stock at the best price he can get, although that may be for less than its par value. The set-off was therefore properly allowed, and there should be Judgment for the defendants. Clark, J., did not sit: the others concurred.