State ex rel. Schroeder v. Perkins

GOODE, J. In the view we take of this case, there is only one point which need be considered; the validity of the deed of trust executed in the name of the Canmann-Voelkers Fish Company to Kelly. The court instructed the jury to find the issues for the plaintiff as to any of the goods which they might believe from the evidence never belonged to said company, nor came into the possession of the relators through it; and inasmuch as the jury returned a verdict for defendants, it must be taken for granted they found all the goods in question originally belonged to that company. Any infirmity in the title of relators to the property, if it belonged in the first place to the Canmann-Voelkers Fish Company, necessarily arose out of the invalidity of the deed of trust; either on account of the mode or the purpose of its execution, and the knowledge of one or more of the relators of the invalidating fact. A close study of the evidence has led us to the conclusion that the deed of trust was voidable, [609] because unauthorized by the board of directors of the Canmann-Yoelkers Eish Company; of which circumstance at least one of the relators had actual knowledge and that, therefore, there can be no recovery in this action. The deed was made by L1. P. Canmann, president of said company, without express authority from the directory. Directors can not act by proxy, and so Canmann’s wife could not lawfully represent Yoelkers by virtue of the alleged letter or power of attorney, which she held. Perry v. Tuskaloosa, etc., Co., 93 Ala. 364; Craig Medicine Co. v. Bank, 59 Hun. 561; In re Portugese Consolidated Copper Mines, L. R. 42 Chan. Div. 160; McLaren v. Fisken, 28 Grant (Can.) 352; Att’y-General v. Scott, 1 Vesey (Sr.) 412. Besides, there was no regularly called meeting, as it was shown the third director, O. G. Canmann, was neither notified, nor an effort made to notify him. The president of a corporation does not possess power to execute such an instrument as an incident of his office — virtute officii. Hyde v. Larkin, 35 Mo. App. 365; Ferguson & Wheeler v. Trans. Co., 79 Mo. App. 352; Degnan v. Thoroughman, decided by this court but not yet reported; State ex rel. v. Rubber Mfg. Co., 149 Mo. 181. We will inquire whether it was valid on any other legal principle. This case and others like it, where the want of authority from the directors is affirmatively proven, are to be distinguished from those in which it is presumed, prima facie, the chief officer of a company was authorized to execute any deed or contract purporting to be a corporate act performed by him until the contrary is shown. Winscott v. Investment Co., 63 Mo. App. 357; Missouri Fire Clay Works v. Ellison, 30 Mo. App. 67; Bambrick v. Campbell, 37 Mo. App. 460; Musser v. Johnson, 42 Mo. 74; Hall v. Bank, 145 Mo. 418. Sometimes a contract of a corporation, not expressly sanctioned by its board of directors, is good because of a custom [610] or usage of the company permitting, and thereby impliedly authorizing, such acts to be done by the president. State v. Heckart, 49 Mo. App. 280; First Nat’l Bank v. N. Mo. Coal Co., 86 Mo. 125. But no such custom of the Canmann-Voelkers Eish Company was shown in support of the deed. So far as appears, that was the first act of the kind its president ever attempted. The security stands, then, unsupported by an implied authority. The remaining method of validating an irregular corporate act or contract, namely, by subsequent ratification by the directors or stockholders, is invoked by the appellant, the position being taken that the deed of trust was ratified by the acquiescence of the directors after they had knowledge of it. The claim is not put forward that they directly and formally acted on the matter at a board meeting. The contention is there was an inferential ratification because they made no protest and became purchasers at the trustee’s sale. But it has been ruled that for unauthorized acts of this character to be made binding and valid, they must be ratified by the directors afterwards in the same manner they are required to be ordered beforehand. It was said by our Supreme Court, in a case similar to this one: “The members of a board severally could not ratify the assignment, because they could not in the first place have made it in their individual capacity, but only as a board; and not otherwise could they ratify it so as to affect this plaintiff.” Calumet Paper Co. v. Haskell Show Printing Co., 144 Mo. 331. Perhaps a less formal assent by the directors may suffice to bind the corporation itself; especially if it accepts benefits under the irregular contract. But this is the case of a corporate creditor endeavoring to charge property claimed to have been transferred by an act invalid when done, and on the strength of the decision above cited, we hold the deed of trust in question was never ratified by the directors of the Canmann-Voelkers Eish Company. Such being [611] the ease, and inasmuch as it was otherwise unwarranted, there being neither express ñor, implied authority for it, it remained voidable at the instance of the company’s creditors, on account of the infirmity in its execution. One of the relators, L. P. Canmann, had actual knowledge of the facts, as he executed the instrument himself. The goods afterwards sold by virtue of its provisions, by the trustee,' were mostly purchased by Charles Voelkers and O. G. Canmann, and were put into the Canmann Eish Company by them to pay up its capital stock; nearly the whole of which was owned by Voelkers and L. P. Canmann. If the goods in controversy came from the Canmann-Voelkers Eish Company, they were therefore included in those thus used to pay for stock in the second company. Both Voelkers and O. G. Canmann knew when they bought these goods, of the defective execution of the instrument under which they purchased, for both were directors of the other company when it was made. It thus conclusively appears that if this merchandise originally belonged to the Canmann-Voelkers Eish Company, it was acquired by the last-named persons at the deed of trust sale with knowledge of the infirmity in the trustee’s title, and taken by the Canmann-Eish Company from them with notice; because L. P. Canmann and Voelkers were two of its stockholders and directors. Heisel also held a small interest equal to the amount for which he was secured in the deed of trust. It was purchased from the last-named company by the relators, of whom one was L. P. Canmann. Where, then, is there an ignorant or innocent grantee through whom these relators could claim to have acquired a bona fide title ? Relators were in partnership at the time they bought out the Canmann company, and the knowledge of L. P. Canmann concerning the deed of trust, is imputed to all the others. Hall v. Goodnight, 138 Mo. 576; Burritt v. Dickinson, 8 Cal. 113; Bigelow v. Henniger, 33 Kas. 362; [612] Baugher’s Excrs. v. Duphorn, 9 Gill. 314; Watson v. Wells, 5 Conn. 468; Herbert v. Odlin, 40 N. H. 267. No evidence appears in the record tending to show the indebtedness in favor of the directors of the Canmann-Voelkers Fish Company, which was secured by the deed of trust, was bona fide, nor to overcome the presumption that said deed was prima facie fraudulent. Schufeldt v. Smith, 131 Mo. 280. The burden of showing it to be honest was on those claiming under it, of whom one was the relator, Canmann. This was directly ruled in an identical case. State ex rel. v. Rubber Mfg. Co., 149 Mo., supra. We think, therefore, on the undisputed testimony, the merchandise was subject to process at the instance of creditors of the Canmann-Voelkers Eish Company, in the hands of this relator, if it ever belonged to said company; and any error which the court may have committed in the instructions in regard to the deed of trust or the admission of testimony, could not have affected the result detrimentally to the rights of the appellants. The judgment is therefore affirmed. All concur.