Auerbach v. Le Sueur Mill Co.
| Decision Date | 29 September 1881 |
| Citation | 28 Minn. 291 |
| Parties | MAURICE AUERBACH and others <I>vs.</I> LE SUEUR MILL COMPANY. |
| Court | Minnesota Supreme Court |
Bangs & Emery and S. & O. Kipp, for appellant.
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Warner & Severance, for respondents.
This action was tried before the court, Macdonald, J., without a jury, who filed his decision awarding judgment in favor of the plaintiff. The defendants moved for a new trial, and from the order refusing the same appealed to this court. Numerous exceptions were taken at the trial to the rulings of the court in respect to the evidence, but none of the questions thus raised are important in the determination of this case; for, whether such exceptions were well taken or not, the decision must be sustained upon facts found by the court below from evidence which was clearly not subject to objection, and the rulings of the court in respect to which exceptions are alleged here could not have affected the result.
These facts are as follows: The defendant is a private corporation, organized in 1874, pursuant to the provisions of Gen. St. 1866, c. 34, title 2, for the purpose of building and operating a steam flouring-mill. One of the original articles of incorporation provided that "the highest amount of indebtedness or liability to which said corporation shall be subject shall not exceed $5,000." In 1875, the corporation made to one Stewart its promissory not for $9,000, and secured the payment of the same by a mortgage upon its mill property. On the 11th day of May, 1877, the mortgage was foreclosed by a sale made on that day, and the mortgaged property was purchased on such foreclosure sale by the mortgagee, for the amount of the mortgage debt, which then exceeded $11,000. No redemption was made from this sale. On April 6, 1877, the defendant also executed to one M. Doran its promissory note for $6,000, payable on demand, a considerable part of which remained unpaid on the 6th day of May, 1878. On the 6th day of May, 1878, the defendant made to M. Doran its promissory note, signed by its president and secretary, and with its corporate seal affixed, for the sum of $3,694.60, payable to M. Doran & Co., or bearer, on demand, with interest. On this note this action was brought, the same having been, before maturity, transferred to the plaintiff for a valuable consideration and in good faith, as is found by the court below. (The findings of fact, as presented in the record in this court, state that the transfer to plaintiff was after maturity, but this is clearly a clerical error, for one of the conclusions of law found by the court is that the defendant is estopped "by reason of said plaintiffs being bona-fide purchasers thereof for value paid before maturity;" and in its opinion filed in the case, the court recites its finding as being that the note was sold before maturity; and such, too, seems to be the force of the evidence, and so both parties treat it in the argument before this court.) Doran was a stockholder and director of the corporation during all of the period covered by these transactions. The ordinary financial business of the defendant in buying grain and selling foreign consignments of flour was largely done through M. Doran & Co., which was a banking copartnership, and of which said Doran was a member. The consideration of the note upon which the action was brought was a balance in favor of M. Doran & Co., found due them upon settlement of a current account of such business.
Upon these facts arise the legal questions whether the instrument sued upon is a negotiable instrument; and whether, if so, the plaintiff, as a bona-fide holder before maturity, is entitled to recover upon it, notwithstanding the fact that the corporation, in incurring the debt evidenced by it, exceeded its authority as to the extent of the indebtedness it might contract. It has already been determined by this court, in Sullivan v. Murphy, 23 Minn. 6, that corporations organized under the general law above referred to, and under which this defendant was incorporated, are, by implication, at least, authorized to incur debts in the ordinary transaction of their business, and that they may evidence such debts by their promissory notes. See, also, Chaska Co. v. Board Sup'rs of Carver Co., 6 Minn. 130 (204;) 1 Daniel Neg. Inst. §§ 381-382. In the case of this defendant the power to create debts is also plainly to be inferred from the express limitation upon that power contained in its articles. The conclusion is that this defendant had power to create debts, and to give its negotiable promissory notes therefor.
The instrument sued upon is a negotiable promissory note in form, unless the affixing of the corporate seal affects its negotiable character. Such is not the effect of the seal of a corporation upon such paper, under the provisions of our statute, (Gen. St. 1878, c. 23, § 9,) which reads: "Bonds and other obligations, under seal, for payment of money, payable to the bearer, or to some person designated or bearer, or payable to order, issued by any corporation or joint-stock company, shall be negotiable in the same manner and to the same extent as promissory notes."
Where a private corporation has authority to issue negotiable securities, such instruments, when issued, possess the legal character ordinarily attaching...
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