Ford v. Hill

• Decision Date: 28 January 1896
• Citation: 66 N.W. 115,92 Wis. 188
• Parties: FORD ET AL. v. HILL.
• Court: Wisconsin Supreme Court

92 Wis. 188

66 N.W. 115

FORD ET AL.

v.HILL.

Supreme Court of Wisconsin.

Jan. 28, 1896.

Appeal from circuit court, Milwaukee county; D. H. Johnson, Judge.

Action by John S. Ford and others against Robert Hill. Judgment for defendant. Plaintiffs appeal. Affirmed.

The Lappen Furniture Company, a corporation, was organized in the city of Milwaukee, in December, 1892, for the purpose of carrying on a furniture business. Frank A. Lappen was president; A. T. Tanner, secretary and treasurer; and they two, with Joseph Bub, constituted the board of directors, from the time of the organization of the company up to and during all the transactions to which this action relates. The entire management of the corporation was intrusted to the president and secretary. During all the time of the existence of the corporation, they, from time to time, made notes, drafts, and other written instruments, with the knowledge of and acquiescence of the third director. In fact, the sole control and management of the corporation was, by general consent of the directors, left to the president and secretary. The articles of incorporation contained the following: “The principal duties of the president shall be to preside at the meetings of the board and of the stockholders, and to generally represent the corporation in matters of more than ordinary importance.” On the 24th day of December, 1892, Tanner, as secretary of the corporation, executed and delivered to the Wisconsin National Bank of Milwaukee, Wis., a note for $20,000, payable in four months after date; and at the same time Frank A. Lappen, president, in the name of the corporation, executed a power of attorney, in writing, though not under the seal of the corporation, authorizing judgment by confession upon the note, which power of attorney was delivered to the bank with the note. Lappen was not authorized to execute such instrument by any action of the board of directors, but he presented to defendant Robert Hill, who was president of the bank and acted in its behalf, what purported to be certified resolutions of such board giving him such authority; but in fact no such resolutions were ever adopted at any meeting of such board. Hill, acting as president of the bank, in good faith, relied upon the proofs before him, believing that Lappen had been authorized by corporate act, in the regular way, to execute the power of attorney, and, so believing, received the note and power of attorney, and, on behalf of the bank, delivered to the officers of the corporation the sum of $20,000. On the 2d day of May, 1893, the bank, for value, indorsed the note over to Hill. He, thereafter, on the 12th day of May, 1893, took judgment thereon by confession, pursuant to the power granted by the power of attorney delivered with the note as aforesaid. At the time the note was given the corporation was solvent. It then possessed assets of the value of $75,000, and was indebted in the sum of about $5,000. At the time the judgment was taken the corporation was insolvent. After the entry of judgment, plaintiffs also obtained a judgment against the corporation, and thereafter brought this action, as judgment creditors, to sequestrate the property of the corporation and wind up its affairs, making defendant Hill a party for the purpose of testing the validity of his judgment. The result in the court below was in favor of defendant, and judgment was entered accordingly, from which this appeal was taken.Turner, Bloodgood & Kemper, for appellants.

Quarles, Spence & Quarles, for respondent.

MARSHALL, J. (after stating the facts).

The question presented here, at the outset, is not whether the president of a corporation, without having been specially authorized thereunto by the board of directors, but by reason of the general and ordinary powers pertaining to his office, can bind the corporationby the execution of a power of attorney to confess a judgment. There is no controversy but that the note was taken by the bank in good faith; that it loaned the $20,000 on the faith of the note and the accompanying power of attorney, and that it supposed, and had good reason to suppose, that the president, Lappen, was duly authorized to execute such power of attorney; that the corporation received the full benefit of the money loaned, and that it was borrowed in furtherance of its regular business; that it was then solvent, having a large amount of property in excess of its liabilities; and that, if the claim under the judgment is not legal, it cannot be said that it is inequitable. In this state of the case, ought a court of equity to interfere to set aside such judgment? That is the question at the threshold of this case, and we conclude that such question must be answered in the negative. It has been held, by a long line of decisions in this state, that courts of equity will not enjoin judgments at law, on grounds showing that the judgment creditor had no right to take the same even where there was no jurisdiction in the court to enter it, if the party seeking such relief can say nothing against the justice of the judgment. When the party is so circumstanced, equity will let him contend against the judgment as best he can at law. Stokes v. Knarr, 11 Wis. 389;Crandall v. Bacon, 20 Wis. 639;Bonnell v. Gray, 36 Wis. 574;McCabe v. Sumner, 40 Wis. 386;Pirie v. Hughes, 43 Wis. 531;Rogers v. Cherrier, 75 Wis. 54, 43 N. W. 828;Marshall & Ilsley Bank v. Milwaukee Worsted Mills, 84 Wis. 23, 53 N. W. 1126;Knox v. Harshman, 133 U. S. 152, 10 Sup. Ct. 257;Walker v. Robbins, 14 How. 584.

It is said in the brief of counsel for appellant that the complaint in this case has already been before the court, and that it has been held that, if there was fraud in the entry of the judgment against the corporation, it can be properly set aside in this action; referring to Ford v. Bank, 87 Wis. 363, 58 N. W. 766. But the difficulty is, in applying what the court there said, that there is no fraud shown here on the part of the judgment creditor. The bank acted in good faith, and its assignee, Hill, as well, from the beginning to the end. Hill v. Lumber Co. (N. C.) 18 S. E. 107, and Atwater v. Bank (Ill. Sup.) 38 N. E. 1017, cited by counsel to the effect that this proceeding may be maintained because the judgment has the effect to give the judgment creditor a preference over the other creditors of the corporation, have no application here. In the jurisdiction where those cases were decided, the mere fact of insolvency of the corporation converted the property into a trust fund for the benefit of all the creditors; and for that reason it was held that the corporation could not confess the judgment, nor give any preference, but that rule does not obtain here. The mere fact of insolvency of a corporation, in this state, does not convert the corporate property into a trust fund, so as to prevent preferences. Ballin v. Bank, 89 Wis 278, 61 N. W. 1118. The case of Ford v. Bank, to which counsel refers, is authority only for the maintenance of such an...