Mercer v. Steil
| Decision Date | 14 July 1922 |
| Citation | 97 Conn. 583,117 A. 689 |
| Court | Connecticut Supreme Court |
| Parties | MERCER v. STEIL et al. |
Appeal from Superior Court, New London County; John W. Banks and Allyn L. Brown, Judges.
Suit by Frederic W. Mercer, receiver, against Frank Steil and others. From judgment for defendants, plaintiff appeals. No error.
It appears from the complaint that in April, 1919 the stockholders of the Niantic Menhadden Oil & Guano Company authorized the directors to cause to be prepared a mortgage in the sum of $100,000 covering all the real and personal property owned or thereafter acquired by the corporation, and to issue bonds secured thereby for the same amount. The directors were also authorized to negotiate the bonds by sale or hypothecation as in their judgment the interest of the corporation might require. Thereafter the directors authorized the president and treasurer to make and issue bonds in the form authorized by the stockholders, and convey by trust mortgage all the present and after-acquired property of the corporation, and to insert therein such provision as in their judgment and in the judgment of the trustees might be right and proper to give full effect to the trust and adequate security to the bonds. The president and treasurer were also authorized to execute and deliver to the National Exchange Bank of Baltimore a negotiable promissory note of the corporation for $70,000, with interest at 6 per cent and to deliver to the bank as collateral security the entire issue of bonds or an interim certificate therefor. Whereupon the interim certificate in question was prepared and signed in the following form:
" The Niantic Menhadden Oil & Guano Company, by Clarence M. Shay, President"
-the corporate seal being affixed and attested by the secretary. A form of trust mortgage was also prepared, signed, and sealed in the same form, and acknowledged by the president and by the treasurer, who deposed that they signed, sealed, and delivered the same by direction of the board of directors as their free act and deed and the free act and deed of the corporation. The interim certificate is payable to bearer and the note for $70,000 was in the form of a negotiable collateral note payable on demand, reciting the deposit of the interim certificate as collateral and authorizing the sale of the collateral security at public or private sale in case of default. The complaint further alleges the payment in two installments of $20,000 on the principal of the note, and that on and after September 1 1920, the total amount of principal due on the note was $50,000. On October 6, 1920, the president, Shay, was appointed temporary receiver of the corporation, and on October 27th the plaintiff, Mercer, was appointed and qualified as permanent receiver. Between October 6th and October 20th the bank demanded payment of the note, and on default gave notice of its intention to sell the collateral at public auction. It is then alleged that by direction of a judge of the superior court the temporary receiver notified the defendant Frank Steil, who was present at the sale on October 20th, that a receiver of the corporation had been appointed, that the balance due on the note was $50,000, that the bank had no authority from the receiver to sell the collateral, and that the interim certificate was not a valid and outstanding obligation of the corporation, and that notwithstanding such notice, the interim certificate was offered for sale and was bid in by the defendant Steil for $51,400. It is not alleged that any other reason was given to the defendant Steil for the alleged invalidity of the certificate than the fact that a receiver had been appointed, and that the bank had no authority from the receiver to sell the certificate. The principal reasons now alleged for the invalidity of the certificate and mortgage are that the pledge of the certificate for less than its face value was ultra vires of the corporation; that the directors exceeded their authority in delegating to the president and treasurer some alleged discretionary powers conferred upon them by the stockholders; and that the papers were not executed in the form prescribed by the board of directors.
The receiver claims a decree canceling and declaring the certificate void, ordering the defendant Steil to surrender the same for cancellation, enjoining the defendant Steil from transferring and negotiating the same, and settling the amount equitably due from the corporation to the defendant Steil. The trustees of the mortgage are joined as defendants, and a decree is asked ordering them to surrender the mortgage for cancellation.
The defendants demurred to this complaint for a number of reasons, which may be summed up as follows: That on the face of the complaint the certificate and mortgage were and are valid and outstanding obligations of the corporation, notwithstanding the subsequent appointment of a receiver; that by the contract of pledge and the subsequent default in the payment of the note the bank became the holder in due course of the interim certificate, with power to sell, and exercised that power in accordance with its rights as pledgee; that at the time of the sale no notice was given to the defendant Steil of any fact constituting a defect or infirmity in the certificate, mortgage or contract of sale; that there is no allegation that the sale was not made in good faith and for a fair consideration, and that it appears from the complaint that the defendant Steil is a bona fide purchaser for value.
Charles Hadlai Hull, of New London, for appellant.
E. Allan Sauerwein, Jr., of Baltimore, and Charles B. Waller, of New London, for appellees.
Two questions are raised by this appeal; whether the interim certificate for one hundred bonds of the par value of $1,000 each is a valid and outstanding obligation of the corporation, and, if so, to what extent it is enforceable in the hands of the defendant Steil.
The only respect in which it is claimed that any part of the transaction was ultra vires is that the certificate was pledged for less than its face...
To continue reading
Request your trial
-
Lee v. Jenkins Brothers
...Laundries, Inc., 1930, 111 Conn. 497, 150 A. 511; Safford v. Morris Metal Products Corp., 1922, 97 Conn. 650, 118 A. 37; Mercer v. Steil, 1922, 97 Conn. 583, 117 A. 689; Huber v. H. R. Douglas, Inc., 1919, 94 Conn. 167, 108 A. 727; Vincent v. S. Alexander's Sons Co., 1912, 85 Conn. 512, 84 ......
-
Cohen v. Holloways', Inc.
...of the law as to the necessity for authority of the act were followed.' 2 Fletcher Corporation (Perm.Ed.1969 Rev.) § 752; Mercer v. Steil, 97 Conn. 583, 588, 117 A. 689. 'In order to ratify the unauthorized act of an agent and make it effectual and obligatory upon the principal, the general......
-
In re Pratt Laundry Co.
...has been applied where the principle is a corporation and the agent is one of its officers. In Mercer, Receiver, v. Steil et al., 97 Conn. 583, at page 588, 117 A. 689, 690, Mr. Justice Beach "As to the objections to the validity of the certificate and mortgage based on the wrongful delegat......
-
Scognamiglio v. Liberty Mutual Fire Ins. Company, No. CV 02-0189085 S (CT 9/7/2005)
...under circumstances that would impute that knowledge to the claims representative or to the corporate entity. See, Mercer v. Steil, 97 Conn. 583, 588 (1922) (". . . so long as a private corporation acts within the powers conferred upon it by law . . . it is subject to the same rules of agen......