Gorder v. Plattsmouth Canning Co.

• Decision Date: 29 March 1893
• Citation: 36 Neb. 548,54 N.W. 830
• Parties: GORDER ET AL. v. PLATTSMOUTH CANNING CO. ET AL.
• Court: Nebraska Supreme Court

36 Neb. 548

54 N.W. 830

GORDER ET AL.

v.PLATTSMOUTH CANNING CO. ET AL.

Supreme Court of Nebraska.

March 29, 1893.

Syllabus by the Court.

1. Where a deed or mortgage purportng to have been executed by a corporation is signed and acknowledged in its behalf by the president and secretary thereof, with the corporate seal attached, the presumption is that it was executed by authority of such corporation, and the burden of proof is upon one who denies such authority.

2. Contracts of a corporation, which are not contrary to the express provisions of its charter, are presumed to be within its powers, and the burden is upon one denying their validity to prove the facts which render them ultra vires.

3. Evidence held to sustain the finding of the district court, that the indebtedness secured by the mortgage of the defendant corporation was not in excess of the limitation named in its charter.

4. The relation of the directors to stockholders of a corporation is of a fiduciary character, and their contracts and dealings, with respect to the corporate property, will be carefully scrutinized by the courts. Such contracts are not, however, necessarily void. Where it is clear that the transaction is in good faith on the part of the director, and beneficial to the corporation, which has, with the sanction of the stockholders, received and appropriated the consideration without offering to make restitution, it may be upheld, when assailed, even in a court of equity.

5. Evidence examined, and held to sustain the finding that the indebtedness of the defendant company to the plaintiffs, directors thereof, was contracted with the knowledge and approval of the interveners, who were stockholders, and that the execution of certain mortgages to secure such indebtedness was sanctioned by such stockholders.

6. In order to recover from stockholders of a corporation on account of a failure to give the statutory notice of its indebtedness, it must affirmatively appear that the credit was given to such corporation while it was in default of the required notice.

Appeal from district court, Cass county; Field, Judge.

Action by Fred Gorder and another against the Plattsmouth Canning Company, and William Weber and others, interveners, to foreclose mortgages on the real estate and personal property of defendant, and for an accounting between defendant and plaintiffs, who were formerly officers of defendant corporation. There was a decree in favor of plaintiffs, and the interveners appeal. Affirmed.

G. W. Covell and Beeson & Root, for appellants.

A. N. Sullivan, for appellees.

POST, J.

This is an appeal from a decree of the district court of Cass county. In the petition it is alleged that on the 25th day of November, 1887, the plaintiffs executed their joint note for $5,000 to the First National Bank of Plattsmouth, due in six months from date, and that on the 30th day of December, 1887, they executed a second note to said bank due six months after date for $4,500; that said notes were both executed for the accommodation of the defendant, the Plattsmouth Canning Company; that to secure the payment of said notes, and to indemnify plaintiffs as sureties thereon, the defendant company on the day last named executed and delivered to them a mortgage upon certain real estate in the city of Plattsmouth, also a chattel mortgage upon all of the machinery, fixtures, and other personal property of said company. The petition, after an allegation of a breach of the conditions of the mortgage, contains a prayer for an accounting and foreclosure, and for general equitable relief. The canning company filed an answer admitting all the allegations in the petition contained, except as to the amount of indebtedness claimed therein. Shortly thereafter, and before trial, the court permitted the appellants to intervene and file answer, in which they allege, in substance, that they are stockholders in said company, and that it commenced business in 1885 with a capital stock of $18,000; that by the articles of incorporation it is provided that at no time shall the indebtedness of said company exceed one half of the capital stock thereof; that the plaintiffs were elected directors of said company at its organization, and, with the exception of the plaintiff Lewis, have continued to act in such capacity; that the plaintiff Guthman has been the president of said company ever since its organization, and the plaintiffs Lewis and Gorder have been the only secretaries thereof; that at all times since the first year of the existence of said corporation, its indebtedness has been largely in excess of the limit fixed by its articles of incorporation, and that said excess of indebtedness was incurred by the plaintiffs as directors of said company, without any authority from its stockholders; that the notes and mortgages described in the petition were executed without any authority whatever, and the F. R. Gorder as president and E. B. Lewis as secretary, who pretended to execute said mortgages as grantors therein, are plaintiffs in this action; that the property described in said mortgages comprises the entire assets of said company, and that there are in addition to the amounts claimed on said notes and mortgages at least $4,000 of debts owing by said company, for which the stockholders are individually liable, because of the neglect of plaintiffs to comply with the laws in regard to corporations; that the debts owing by said corporation were all contracted while the officers thereof were in default in complying with the statutory provisions governing corporations, requiring them to publish annually a statement of all the existing debts of said corporation. The interveners pray that plaintiffs' petition be dismissed, with costs, that said mortgages and the record thereof be canceled, and for equitable relief. During the progress of the trial, by permission of court, interveners filed an amendment to their answer, setting up that they and each one of them are creditors of the defendant canning company, having advanced various sums from $25 to $300 each, by way of loans to said defendant at its request, which sums are still due and unpaid. In addition to the relief asked in their answer, they pray for a receiver of said company to take charge of its property, and convert the same into cash, to be applied, first, in payment of the general indebtedness thereof, exclusive of the amounts owing to its stockholders, and that the funds remaining be applied pro rata between the different stockholders. On the hearing before the district court there was a general finding for the plaintiffs, and a decree of foreclosure in accordance with the prayer of the petition, from which the interveners have appealed to this court.

1. The first proposition argued is that the evidence fails to show authority from the board of directors for the execution of the mortgages, or either of them. Both mortgages purport to have been executed by the Plattsmouth Canning Company, and acknowledged in behalf of said company by F. R. Guthman, president, and C. B. Lewis, secretary, and attested by the seal thereof. The genuineness of the signatures to the mortgage, as well as the official character of the signers, is specifically admitted, but we understand counsel for interveners to contend that authority for the execution of the mortgages must affirmatively appear from the record of the board of directors. To that proposition we cannot give our assent. The signatures of the officers, with the corporate seal attached, is prima facie evidence that the mortgages were executed by authority of the company, and the burden of proving want of authority is upon the interveners. Ang. & Ames on Corp. § 217; Boone, Corp. § 50; Blackshire v. Iowa Homestead Co., 39 Iowa, 624;Whitney v. Trust Co., 65 N. Y. 577;Davis v. Jenney, 1 Metc. (Mass.) 221;Insurance Co. v. Frothingham, 122 Mass. 391;Murphy v. Welch, 128 Mass. 489; Hamilton v. McLaughlin, (Mass.) 12 N. E. Rep. 424; Morris v. Keil, 20 Minn. 531, (Gil. 474;)Musser v. Johnson, 42 Mo. 74.

2. It is claimed that the mortgages are void, for the reason that they are in excess of the amount of indebtedness authorized by the articles of incorporation of the company. It is provided by article 4 that “the highest amount of indebtedness to which the corporation shall at any time subject itself shall not exceed one half of the amount of its capital stock issued.” It appears from the bill of exceptions that $5,000 of the indebtedness represented by the mortgages was incurred on the 18th day of August, 1885, on which day the plaintiffs executed their joint note to the First National Bank of Plattsmouth, for the accommodation of the company, the note of like amount described in the mortgages being a renewal thereof. At that time the amount of stock issued does not appear, although it is alleged in the answer that the capital stock in February, 1885, was $18,000, nor is the amount of the company's indebtedness apparent from the record. It appears also from the minutes of a meeting of stockholders held ...