England v. Dearborn
| Decision Date | 08 May 1886 |
| Parties | ENGLAND v. DEARBORN. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
C.W. Bartlett, for defendant.
L.M Child, for plaintiff.
The plaintiff, whose representatives, after his death, prosecute the action, claims title as mortgagee of the property sold by the defendant. The mortgage purports to have been given by the Chelsea Iron Foundry Company, and is signed: "W.H ENGLAND, as Pres. of Chelsea Iron Foundry Co." The company was a corporation organized under the laws of the state of New York, and William H. England was its president and treasurer. "There was parol evidence tending to show that William H. England was the general manager of the company's business," but "there was no evidence of any ratification, by the board of directors, of the transactions concerning the mortgage, or any knowledge of it by anybody connected with the board of directors, except William H. England," and "it appeared that the property included in the description of the said mortgage was all the property that the corporation had, except the book of accounts." The charter of the company was not put in evidence, nor does it appear that there were any by-laws, and the nature of the corporation is not known, unless it be inferred that it was a manufacturing corporation. William H England owned 98 shares, his wife one share, and Charles H. Whitman one share, which constituted the whole capital stock of the company. "There were two directors, said William H. England and said Whitman." The corporation was organized in the early part of 1883, and there were never but two meetings of the board of directors, both being near the time of the organization of the corporation, and before actual business operations were commenced.
That William H. England owned nearly all the shares of the stock of the corporation is immaterial. As a stockholder, he had no more authority to mortgage the property of the corporation than any other stockholder. He cannot, as a stockholder, enjoy the exemption from personal liability which incorporation affords, and retain all the power over the property of the corporation which he has over his own property. It does not appear that William H. England ever executed any other mortgage of the property of the corporation. There is no evidence of original authority given to him to make the mortgage, or of any ratification of the mortgage by the corporation or its directors, or of any acquiescence in it, or knowledge of it, by any other officer of the corporation; and the corporation has received and retained no property or advantage from the mortgage, for it was given by him to his father, as an indemnity against a pre-existing liability.
If, on the evidence in this case, this mortgage can be held valid it must be on the ground that, prima facie, the person who is the president, treasurer, and general manager of every corporation, or of every manufacturing corporation, has authority to mortgage all its personal chattels for a debt of the corporation. No cases have gone so far as this. Authority to make a mortgage need not be given by a formal vote, and may be inferred from the manner in which the business is conducted, with the knowledge and acquiescence of the corporation or its officers, (Sherman v. Fitch, 98 Mass. 59;) but there is nothing in this case from which previous authority or subsequent...
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