First Trust Co. v. Miller

Maeshall, J. The orders must be affirmed. The circumstance that each of the defendants was to receive one half the stock they promised to take does not overcome the absolute joint promise to pay therefor. If the pleading required construction to reach that conclusion, and we think it does not, the one which will sustain it should be preferred to that which would defeat it. The point that no binding contract was made because the corporation could not contract by its stockholders, that it could only do so through its board of directors, is without merit. Technically speaking, a corporation cannot act contractually, except by its board of directors, or their authority; but that has so many exceptions as to be of little use in practical affairs. A corporation may be bound by its custom of doing business. It may be bound by acquiescence; it may be bound by accepting and retaining the fruits of a transaction and in other ways without any action by its board of directors. Here, according to the complaint, all directors were present and participated in making the agreement. That was a sufficient action by them to bind the corporation. Again, they and all the stockholders, with full knowledge of the facts, recognized the agreement as binding by largely carrying it out. This is sufficient to bind the corporation by acquiescence. Again, the corporation is not impeaching the transaction; it is the parties who have received and retain $83,400 of the corporate stock pursuant to the agreement, who now raise the question of invalidity. They are in no position to do that. They are bound by election and estoppel, if not by contract, independently thereof. .We see no reason why the complaint is not good for the entire cause of action the pleader purposed setting out. By the Court. — The orders are affirmed.