Estate v. Hoffman

• Decision Date: 04 January 1910
• Citation: Estate v. Hoffman, 124 S.W. 535, 146 Mo.App. 510 (Mo. App. 1910)
• Parties: TYLER ESTATE, Respondent, v. T. G. HOFFMAN, Interpleader, Appellant
• Court: Missouri Court of Appeals

124 S.W. 535

146 Mo.App. 510

TYLER ESTATE, Respondent, v. T. G. HOFFMAN, Interpleader, Appellant

Court of Appeals of Missouri, St. Louis

January 4, 1910

Appeal from St. Louis City Circuit Court.--Hon. Virgil Rule, Judge.

REVERSED AND REMANDED.

Defendant the Brooks Publishing Company, was heretofore a corporation doing business in the city of St. Louis, to-wit, publishing "syndicate matter for magazines," and its customers were the publishers of magazines. J. W. Brooks was the promoter of the company and its president. The evidence tends to show he really had full control of the business of the company and managed it without interference by other officers or the directors. One director said: "He practically was the whole company himself; that really is the whole thing in a nutshell." In fact, prior to the transactions in controversy, there had been no meeting of the board of directors for about seven months, or later than March 12 1907. The company's offices were in the building in St Louis known as the Granite Building and belonging to the Tyler estate, the plaintiff corporation. On the fourth or fifth of October, 1907, the interpleader, T. G. Hoffman whose office was in the same building, lent the Brooks Publishing Company $ 170 or $ 175, the amount being in dispute. The money was borrowed by Mr. Brooks as president of the company, but the testimony goes to show in the name of the company and for its benefit, and the money was used to discharge the company's obligations. The note given for the loan was dated October 5, 1907, fell due fifteen days after date, and contained a promise to pay the interpleader $ 175, for value received, at eight per cent per annum from date, compounded if not paid annually. The note was signed by the Brooks Publishing Company, by J. W. Brooks, President. On the same day, October 5, 1907, the Brooks Publishing Company, by J. W. Brooks, President, executed and delivered to Hoffman a chattel mortgage on certain personal property, to-wit: a filing case, three desks, two graphophones, one shaving machine, one library table, two flat-top desks, six office chairs, and two typewriters. This mortgage recited the execution of the note and purported to be given to secure it. The mortgage was duly filed in the recorder's office, so as to impart notice of a lien on the property described in it. Circumstances are in evidence from which respondent claims the conclusion may be drawn that the amount advanced by Hoffman on the loan was only $ 170, the note being made for $ 175 to cover interest or a bonus, and, therefore, the note was usurious and the mortgage given to secure it invalid against an attaching creditor. [R. S. 1899, sec. 3710; Marx v. Hart, 166 Mo. 503, 523.] On the contrary the testimony of Brooks and Hoffman went to prove $ 175 was advanced by Hoffman, five dollars being handed to Brooks to pay an urgent creditor on October 4, and a check for the balance the next day. About a week after this loan, Brooks borrowed fifty dollars more of Hoffman, for which he gave no note, but handed Hoffman a check of the Brooks Publishing Company for $ 52.50. The evidence would support different inferences as to whether this money was borrowed personally by Brooks, or in behalf of the publishing company; and also would support different inferences as to whether usurious interest was charged. No mortgage was given to secure it, but in a few days after it was made, Brooks fell into difficulty about the rent of the offices occupied by the publishing company, and Hoffman's second loan having matured, Brooks carried to Hoffman's office two graphophones, the shaving machine and an Oliver typewriter, leaving them there in pledge for said loan. A little later the Tyler estate brought suit for rent and attached the Brooks Publishing Company's office furniture, including the property covered by the mortgage and the pledge to Hoffman, and said property having been seized under the writ of attachment, Hoffman filed an interplea claiming title to it under the mortgage and pledge. His claim was resisted by the Tyler estate on two grounds, as regards his mortgage, to-wit, that the loan secured was tainted with usury and the mortgage invalid as said; and that the instrument had been executed by Brooks as president of the corporation without authority from the directors. As to the title the interpleader held to part of the property by virtue of the contract of pledge, the attaching creditor asserted that the loan was likewise tainted with usury and the lien was invalid under the statute, and also that the money was lent to Brooks personally and not to the corporation. The case between the interpleader and respondent was tried before the court without a jury, and the court, after giving six declarations of law at the request of the interpleader, found the issues on the interplea in favor of respondent. We transcribe two of the declarations to indicate the theory of law declared:

"The court declares the law to be that if the court, sitting as a jury, believes and finds from the evidence that the officers, directors and stockholders of the Brooks Publishing Company enacted the by-law offered in evidence, and intended and interpreted the same to give to the president the right to execute notes, pledges, mortgages and otherwise deal with the credit and assets of the corporation, and permitted and assented to his continued exercise of such right, then . . . the creation of the debt and the execution of the mortgage and the creation of the pledge, if you find there was a pledge, involved in this suit, was legal and binding on the Brooks Publishing Company and on the plaintiff in this case.

"The court declares the law to be that if the court, sitting as a jury, believes and finds from the evidence that the defendant, the Brooks Publishing Company, constituted Jas. W. Brooks its chief business representative or agent, and permitted him, without objection, to exercise the full powers of the corporation in making contracts and business deals, contracting debts and obligations, borrowing money, and discounting or pledging its contracts, and that it was the usage of the company to permit said Brooks to do these things without the previous consent or authorization of the board of directors, or any formal ratification thereafter, then it impliedly authorized him, said Brooks, to make the debt and mortgage and to create the pledge, if you find there was a pledge, in controversy in this suit between plaintiff and T. G. Hoffman, the interpleader."

An appeal was taken by the interpleader.

Judgment reversed and cause remanded.

Hugh D McCorkle for appellant.

(1) The attaching creditor, plaintiff, here stands in the shoes of the defendant, the Brooks Publishing Co., and, in the absence of any issue of fraudulent transfer of assets, it has no greater rights to the property attached than does the defendant. If the mortgage is valid as against the Brooks Publishing Co., it is, in the absence of such fraud, valid as against plaintiff. As there is no contention here that the mortgage was voluntary or made to defraud the creditors of defendant, plaintiff's rights against interpleader are no greater than defendant's. (2) If a custom or usage of the defendant company existed permitting (and thereby impliedly authorizing its president to transact the business of the company in any way he deemed best, including the borrowing of money, the pledging, sale, or assignment of its advertising and other contracts, and generally doing whatever he deemed necessary to meet the exigencies of the business of the company, it would be as effective to establish the authority of the president to make this mortgage, as a by-law or resolution of the board of directors. Bank v. Coal Co., 86 Mo. 12; Sparks v. Trans. Co., 104 Mo 541; Roe v. Bank, 167 Mo. 406; State v. Silva, 130 Mo. 440; Moore v. Mfg. Co., 113 Mo. 98; State to use v. Heckart, 49 Mo.App. 280; Bambrick v. Campbell, 37 Mo.App. 460; Conover v. Ins. Co., 1 N.Y. 290; Daugherty v. Hunter, 54 Pa. 380; Merrell v. Consumers C. Co., 114 N.Y. 216; Bank v. Bank, 107 Mo. 133; Donham v. Hahn, 127 Mo. 439; Libby v. Bank, 99 Ill. 622; Bank v. Bank, 157 Ind. 10. (3) It follows that evidence tending to establish the existence of such a custom or usage of the company was entirely competent, and its rejection was error. (4) By general custom, of which our courts take judicial notice (Bambrick v. Campbell, 37 Mo.App. 460), presidents of corporations exercise certain general powers, and when he performs an act the presumption will be indulged that the act is legally done and binding upon the corporation. So far is this presumption indulged that proof of the proper execution of such an instrument by that officer will make a prima-facie case of authority to execute it. Bank v. Bank, 141 Ind. 352. (5) And if it is further shown that the president has been for a considerable period of time customarily exercising the broad powers of a general agent or manager of the corporation, and doing things on his own responsibility that are usually done in other corporations by the board of directors, or under authority of their resolutions, then any action done by him within the apparent scope of the authority thus customarily exercised and arrogated by him, will be binding upon the corporation. Kirkpatrick v. Eastern M. & E. Co., 135 F. 146; Wire Co. v. Steel Co., 164 Ill. 149; Bank v. Bank, 141 Ind. 352. (6) If after the execution of the mortgage by the president of the Brooks Publishing Co., knowledge of same had been communicated to the other officers and directors of the corporation in the only way possible where board meetings by the directors had been entirely abandoned, and these officers and directors acquiesced in the same and took no steps...