Lawrence v. Montgomery Gas Co.

• Decision Date: 24 March 1921
• Docket Number: 4181.
• Citation: 106 S.E. 890,88 W.Va. 352
• Parties: LAWRENCE ET AL. v. MONTGOMERY GAS CO. ET AL.
• Court: West Virginia Supreme Court

106 S.E. 890

88 W.Va. 352

LAWRENCE ET AL. v. MONTGOMERY GAS CO. ET AL.

No. 4181.

Supreme Court of Appeals of West Virginia.

March 24, 1921

Submitted March 8, 1921.

Rehearing Denied May 10, 1921.

Syllabus by the Court.

Corporate action can not be lawfully expressed or made binding by less than a quorum of directors or stockholders acting jointly in a meeting thereof regularly called and after due notice as provided by law or by-law of the corporation.

Where an attorney appears in a cause and files an answer or other pleading, being an officer of the court, he is presumed to have authority, and that what he does in relation thereto has been done with authority duly conferred.

The authority of the president or other officer of a corporation to transact the ordinary business of the corporation will not imply liability upon the corporation for extraordinary contracts, as the sale and disposition of a material part of its plant or other property owned and employed by it in the conduct of its business.

To estop a corporation by its conduct from denying the authority of its officers or agents, the one seeking to enforce the estoppel must have been misled thereby to his injury.

Appeal from Circuit Court, Kanawha County.

Suit by A. C. Lawrence and others against the Montgomery Gas Company and others. Decree for complainants, and defendants appeal. Reversed and remanded.

L. B O'Neal, of Montgomery, Davis & Davis, of Charleston Williams, Scott & Lovett, of Huntington, and Koontz & Hurlbutt, of Charleston, for appellants.

W. E R. Byrne, Fred O. Blue, Maynard F. Stiles, and C.J. Van Fleet, all of Charleston, for appellees.

MILLER J.

On a former appeal in this cause from a decree appointing a special receiver of the property, an alleged contract which plaintiffs sought to have specifically performed, and upon questions certified to us by the circuit court on the sufficiency of defendants' answers, exceptions to which were interposed by plaintiffs, we were of opinion, on the prima facie case then presented, to affirm the decree below appointing the special receiver and to remand the cause for further proceedings. 84 W.Va. 382, 99 S.E. 496.

The basis of our former decision, as will appear from the opinion then delivered and the mandate therewith certified to the circuit court, was that although the answers denied the authority of the officers and directors of the defendant company to enter into the contract in writing with plaintiffs and to execute and deliver in escrow a deed to them for the property sued for, the same being signed, acknowledged and sealed by and on behalf of defendant company by Henderson, its president, swearing that he was thereunto duly authorized, the burden was thereby cast upon the Montgomery Gas Company, regardless of its denial of want of authority of its officers and directors in the premises, to prove such want of authority.

The present appeal is by the Montgomery Gas Company, the Columbian Carbon Company, a subsequent purchaser of the property, and O. J. Henderson and some thirty-eight others, officers, directors and stockholders of the Montgomery Gas Company, from a decree below pronounced on July 20, 1920, specifically executing said contract and setting aside the subsequent deed for the property to the Columbian Carbon Company, pronounced upon full hearing upon bill, answers, replications, and depositions and proofs taken, the evidence principally relating to the main issue of alleged want of authority of the officers and directors who undertook to enter into said contract of sale and to execute and deliver said deed, and also upon the theory of an alleged holding out by said company of its officers and directors as being clothed with such authority estopping them from denying the same.

While the result of our former decision was to place the burden upon the defendants to show want of authority in the officers and directors in the premises, we now perceive that the fact of such lack of authority for want of corporate action being established, the burden would be recast upon plaintiffs to show such holding out or ratification of the unauthorized act as would bind and conclude the principal.

The facts and circumstances attending the entering into said contract and the execution, whether or not, strictly speaking, in escrow of the deed, and what occurred subsequently, with slight colorings in their favor, not affecting the merits of the case, are very clearly stated by appellants' counsel as follows:

"On July 5, 1918, Kennedy appeared in the town of Montgomery and proposed to O. J. Henderson, H. Lane, J. F. Burgess and D. C. Smallridge, four of the nine members of the board, to buy from the company the Burke lot and well for Twenty Thousand ($20,000) Dollars. The board was not in session and was not convened, but as a result of this negotiation, and on the evening of the 25th of July, a written contract was prepared and signed by these four gentlemen in the name of the Montgomery Gas Company (but not under corporate seal), whereby the Montgomery Gas Company agreed to sell Lawrence and Kennedy the Burke lot and well for $20,000, $10,000 to be paid on the signing and delivery of the proper deed, and $10,000 within sixty (60) days thereafter, with interest, to be secured by endorsement approved by seller, this contract providing that the deed was to be delivered as soon as could be prepared. To this contract they affixed the name of the Montgomery Gas Company by O. J. Henderson, Pres., D. C. Smallridge, Secy.-Treas. and director, by H. Lane, director, and by J. F. Burgess, director. On the following morning, Kennedy having remained in Montgomery, there still having been no meeting of the board called or held, the signature of S. S. Wallace, a director, was added, Wallace not being present when any of the others signed, and only one of the parties who had already signed, viz.: H. Lane, being present when Wallace signed, in the store of Lane. Kennedy, at the time of negotiating the contract, stated that the money was on deposit in Kanawha Valley Bank and would be paid as soon as the deed was presented. This was proven by defendants and Kennedy did not testify.

During the day of July 26, Henderson procured to be drawn a deed, by which the Montgomery Gas Company purported to convey the Burke lot and well to the plaintiffs, and the seal of the company was attached to the deed; it was acknowledged by Henderson in form required of corporations, and Henderson, on the following day, July 27th, brought the deed to Charleston to the Kanawha Valley Bank, to which place plaintiffs had directed him to come with the deed and receive the consideration, the cash and note. No arrangements had been made at the bank for the payment of the money or the receipt of the deed, and Henderson went to the office of plaintiff Lawrence, where Lawrence examined the deed, with his attorney, approved it and requested Henderson to meet him at said bank in the afternoon of that day. At the appointed hour Henderson went to the bank, where he found the money had not been deposited. Later on the same day Lawrence and Henderson went together to the bank, and finding its cashier not there, Lawrence told Henderson that immediately upon the return of the cashier the money would be deposited. Henderson left the deed with the bank with directions to the latter to collect the $10,000 and note as called for and deliver the deed, Lawrence promising immediate payment of the money and assuring that it had been arranged for. Henderson then left the city. The plaintiffs did not make the cash payment or execute the note on July 27th, as they had agreed to do (July 28th being Sunday), or on July 29th.

On July 30, 1918, Henderson, Lane, Burgess and Smallridge in Montgomery, learning by 'phone from Kanawha Valley Bank that the deed had not been taken up, called in L. Burke O'Neal, an attorney, and directed him to send to plaintiffs a letter advising them that the contract of July 25th was canceled and the deed withdrawn, since the same was to have been an immediate one, was not a time option, and time was of the essence thereof, and the plaintiffs had wholly refused to comply on their part by passing the consideration and taking up the deed at the time and in the manner agreed upon. This action, like all prior acts of these four gentlemen touching the purported sale to plaintiffs, was taken by them as individuals, no meeting of the board having been held. On the morning of July 30th, about 10:30 or 11:00 o'clock,...