Duke v. Maekham

• Decision Date: 24 March 1890
• Citation: 10 S.E. 1017,105 N.C. 131
• Court: North Carolina Supreme Court
• Parties: Duke v. Maekham, Sheriff.

10 S.E. 1017

(105 N.C. 131)

Duke

v.Maekham, Sheriff.

Supreme Court of North Carolina.

March 24, 1890.

Corporations—Execution op Mortgage—Ratification.

1. The assent of a majority of stockholders expressed elsewhere than at a meeting of the stockholders, as where the assent of each is given separately and at different times to a person who goes round to them privately, does not bind the company. An agency to execute a mortgage given in this manner gives no validity to the mortgage. It is not the corporation's act, which can only be authorized in the mode required by law.

2. The use by the company of money raised by such mortgage would not of itself be a ratification. If the company ratify the mortgage, it would not validate it as to other creditors, if the mortgage is invalid when registered.

3. When a mortgage by a corporation is signed by the president, secretary, and two stockholders, and duly witnessed, but there is no common seal attached, and the probate recites that it is "acknowledged by the secretary, who also proves the execution by the president and two stock-holders, " such probate is insufficient, and does not authorize registration, and is ineffectual to pass title as against creditors.

(Syllabus by the Court.)

This was a civil action tried at January term, 1890, of the superior court of Durham county, before Aumfield, Judge, and a jury.

The plaintiff offers as a witness Paschall Lunsford, who testifies that he is register of deeds of Durham county, and there appears upon the books in his office a mortgage registered and recorded by him on November 15, 1888, purporting to be executed by the Durham Sash, Door & Blind Company to Washington Duke, the plaintiff. Plaintiff offers the mortgage in evidence. Defendant objects. Objection overruled, and exception by defendant. L. W. Grissom, a witness for the plaintiff, testifies that he was secretary and treasurer of the Durham Sash, Door & Blind Manufact uring Company on November 15, 1888. He signed the mortgage of that date as secretary and treasurer. There is no record in the minutes kept by him of the proceedings of the board of directors, or the meetings of stockholders in regard to this mortgage, or authority to make it. He kept in a book (produced in court) the proceedings of the board of directors of the corporation, and of the stockholders; the resolutions and orders of said boards. The corporation had a president, vice-president, and board of directors. The stockholders, officers, and directors lived in the town of Durham. Before this mortgage was executed he went round and saw the stockholders separately in regard to executing it. He did not see all of the stockholders or directors. He saw a majority of them. They had no meeting, but each one he saw authorized him to execute the mortgage. The plaintiff requested the president and two stockholders to sign the mortgage. This was done, and Duke signed the note for $3,000, and he got the money from the Baleigh National Bank. The money was used in the business of the corporation. He said nothing more to the stockholders or directors. The directors were stockholders. The note has never been paid. It sometimes happened that they could not get a meeting of the board of directors. They did not attend the meetings regularly. The mortgage was delivered to W. Duke immediately. W. A. Willerson, a witness for the plaintiff, testified, that he was a stockholder and director of the Durham Sash, Door & Blind Company, November 4, 1888. He signed the mortgage to Mr. Duke. He did not know anything about the authority by which it was executed, except what the witness Grissom had told hm. The mortgage was made to raise money to meet expenses of the concern. Defendant renewed his objection to the mortgage, and requested the court to exclude it. The court overruled defendant's objection, and admitted the mortgage. De-fendant excepted. Defendant introduced in evidence sundry executions issued from the superior court of Durham county, which executions were admitted by plaintiff as set forth in his answer. Defendant introduced the judgment docket of the superior court of Durham showing the docketed judgments upon which the executions were issued. The defendant, being sworn as a witness in his own behalf, testified that he was sheriff of Durham county, and as such, and by virtue of sundry executions issued to him against the Durham Sash, Door & Blind Company, he levied on September 4, 1889, and September 5, 6, and 7, 1889, in the morning, on the property described in his levy; it being the property described in the mortgage to plaintiff. Defendant requested the court to charge the jury that the plaintiff could not recover the property included in the mortgage of November 15, 1888, because the mortgage had been executed without authority of the corporation, and was not the act of the corporation; because it had not been executed by an agent duly authorized thereto; and because, if the act of the corporation, it had not been properly registered, the probate being insufficient and void.

The court declined to so charge. Defendant excepted.

The court charged the jury that no demand was necessary; that the mortgage was valid, and the plaintiff entitled to recover all the property except the material mentioned therein; that the description of this property was too vague. Defendant excepted, and appealed.

J. S. Manning and F. L. Fuller, for appellant. JR. B. Boone and W. A. Guthrie, for appellee.

Clark, J., (after stating the facts as above.) This was a claim and delivery proceeding brought against defendant, who as sheriff of Durham county had taken possession of certain personal property of a corporation, the Durham Sash, Door & Blind Manufacturing Company, by virtue of executions in his hands, and had advertised the same for sale. The plaintiff claims the property by virtue of the mortgage of November 15, 1888, given to indemnify him against loss as surety to said company upon a note to the bank, which would fall due November 15, 1889. The conclusion of the mortgage and the probate are in the following words: "In witness whereof the Durham Sash, Door and Blind Manufacturing Company sign by the names of president, secretary, and treasurer and two stockholders, and...