Intermountain Association of Credit Men v. N. H. Hallstrom Coal Company
| Decision Date | 18 May 1933 |
| Docket Number | 5895 |
| Citation | 53 Idaho 151,22 P.2d 686 |
| Parties | INTERMOUNTAIN ASSOCIATION OF CREDIT MEN, a Corporation, Respondent, v. N. H. HALLSTROM COAL COMPANY, a Corporation, Appellant |
| Court | Idaho Supreme Court |
CORPORATIONS-OFFICERS REPRESENTATIONS OF-APPEAL AND ERROR-CONFLICTING EVIDENCE-FINDINGS, WHEN NOT DISTURBED.
1. Corporation held bound by its president's payments on personal account from corporation's fund and estopped to rely on his lack of authority to do so as against assignee of account.
2. Evidence as to corporation president's authority to use corporation's funds to make payments on personal account held sufficient to support judgment for plaintiff in assignee's action against corporation on such account.
3. Lower court's findings and judgment on substantially conflicting evidence will not be disturbed.
APPEAL from the District Court of the Ninth Judicial District, for Madison County. Hon. C. J. Taylor, Judge.
Action by Intermountain Association of Credit Men against N. H Hallstrom Coal Company to recover on a merchandise account assigned to it. Judgment for plaintiff. Modified, and so modified, affirmed.
Judgment affirmed, with costs to respondent.
W. A Ricks, for Appellant.
Directors or other corporate officers have no authority to use corporate funds to pay their private debts; and it is immaterial that a majority of the directors knew of such use and consented thereto, since a contract which directors have no power to make cannot be ratified by them. A corporate agent cannot use its funds to pay his private debts. Every person dealing with an officer of a corporation who assumes to act for it in matters in which the interests of the corporation and the officer are adverse is put upon inquiry as to the authority of the officer. (American Bonding Co. v. Laigle Stave & Lumber Co., 111 Ark. 151, 163 S.W. 167; 3 Fletcher's Cyc. Corp., sec. 1911, p. 3098, sec. 1929, p. 3122, note 2; 4 Fletcher's Cyc. Corp., sec. 2512, p. 3756; Dixie Industrial Co. v. Bank of Wetumpka, 207 Ala. 293, 92 So. 786.)
B. W. Davis for Respondent.
The N. H. Hallstrom Coal Company, a corporation, having allowed its president and manager, as well as its treasurer, to pay the debt of the president with corporation checks without any objection, is estopped to question their authority. (Sections 254, 237, 70 and 71, Anderson on Limitations of the Corporate Entity; Kansas City So. Ry. Co. v. Guardian Trust Co., 240 U.S. 166, 36 S.Ct. 334, 60 L.Ed. 579; Pettengill v. Blackman, 30 Idaho 241, 164 P. 358.)
The district court saw and heard the witnesses and was in position to determine the facts. There is ample evidence to support the findings and the judgment should not be disturbed. (Delap v. Lawson, 33 Idaho 95, 190 P. 262; Wolf v. Eagleson, 29 Idaho 177, 157 P. 1122.)
This is an action to recover on a merchandise account assigned to respondent. The Knight Fuel Company, hereinafter called the Fuel Company, is engaged in the business of selling and shipping coal, apparently as a wholesaler, with headquarters at Salt Lake City. For a number of years prior to April 13, 1931, N. H. Hallstrom was engaged in the coal business at Rexburg, Idaho, as a local dealer. During that period the Fuel Company made numerous shipments to Hallstrom. April 13, 1931, Hallstrom, together with his two daughters, Lucy H. Chase and Pearl Wright, incorporated the coal business theretofore operated by the father N. H. Hallstrom. The business was incorporated under the name of the N. H. Hallstrom Coal Company, with N. H. Hallstrom president and Lucy H. Chase, secretary-treasurer. Lucy H. Chase held three shares, Pearl Wright one share and the father one share. Before incorporation, Hallstrom had transferred his property to his children, and at the time of incorporation Hallstrom had a large number of accounts due him totaling about $ 7,000 (some of which were later collected), and owed the Fuel Company several thousand dollars. After incorporation, the father continued to manage and conduct the business as before, using the same equipment, office phone and home phone numbers, and in the same location. April 29, 1931, N. H. Hallstrom wrote advising the Fuel Company, among other things, that "we, 2 of my daughters and myself, have just incorporated the business," inclosed a check for $ 1,000, and directed that it be credited to his personal account, which was done. June 27, 1931, Hallstrom mailed another check for $ 500, with instructions to credit the check to his personal account, which was done, and on September 10, 1931, Hallstrom mailed another check for $ 400, which was also credited to his personal account. All three checks, the check for $ 1,000 dated April 29, 1931, the check dated June 27, 1931, for $ 500, and the check dated September 10, 1931, for $ 400, were made out on printed blank forms very evidently used before incorporation by N. H. Hallstrom, the words: "Coal Co." being added with pen and ink to the name: "N. H. Hallstrom." And in his correspondence with the Fuel Company, except in two instances, Hallstrom used the printed letter-heads also very evidently used by him before incorporation, those two instances being a letter dated April 29, 1931, and a letter dated September 10, 1931, when the words: "Coal Co." were added with pen and ink to the name: "N. H. Hallstrom," but in every instance disclosed by the record, all of the letters written to the Fuel Company, making remittances or ordering coal, including the letters of April 29, 1931, and September 10, 1931, Hallstrom signed his name and not the name of the corporation.
May 21, 1931, the Fuel Company wrote N. H. Hallstrom insisting upon substantial remittances for application to the coal account as it stood at the date of incorporation and to help meet pay-rolls. May 25, 1931, the Fuel Company again wrote Hallstrom, stating the exact amount due it for coal shipped during the months of November and December, 1930, making a special appeal for a substantial payment, and, receiving no response, June 22, 1931, the Fuel Company again wrote Hallstrom stating the balance due on the old coal account, and insisting upon a substantial remittance to apply to that balance. June 27, 1931, Hallstrom mailed the above-mentioned check for $ 500, stating, among other things, that he had nearly $ 7,000 out, that he could not get any money, but that he hoped to get some towards fall. July 21, 1931, and again August 27, 1931, the Fuel Company wrote Hallstrom urging him to mail remittances for application to the old coal account, and on September 10, 1931, Hallstrom mailed a check for $ 400, above referred to, saying that he wished it was ten times as much, and that he would send in some more as soon as he could get it.
In the latter part of October, 1931, L. E. Adams, general sales agent of the Fuel Company, went to Rexburg, Idaho, saw Mrs Lucy H. Chase, daughter of N. H. Hallstrom, and secretary-treasurer of the N. H. Hallstrom Coal Company, objected to the transfer of Hallstrom's property to his children, and insisted that the old coal account be either paid or secured, which the children refused to do. However, the N. H. Hallstrom Coal Company gave Adams a check for $ 400, dated October 23, 1931, made payable to the Fuel Company. That check was made out on the same form and signed in the same manner as the other checks. There was a conflict in the evidence as to whether that check was given to apply on the old coal account or in payment for coal ordered from a fuel company salesman named Garff just shortly before Adams went to Rexburg. However, the court gave appellant credit for the check. On the trial of the case, the Hallstrom Coal Company pleaded payment, claiming credit on the corporation coal account, not only for the October, 1931, check for $ 400, but also for the June, 1931, check for $ 500, as well as the September, 1931, check for $ 400, contending that the father, N. H. Hallstrom, could not pay his personal debt to the Fuel Company with appellant's funds. The case was tried to the court, sitting without a jury, judgment being entered in favor of the respondent and against the appellant for the sum of $...
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