Moyse Real Estate Co. v. First Nat. Bank of Commerce

• Decision Date: 21 February 1916
• Docket Number: 17246
• Citation: 110 Miss. 620,70 So. 821
• Court: Mississippi Supreme Court
• Parties: MOYSE REAL ESTATE CO. v. FIRST NATIONAL BANK OF COMMERCE

70 So. 821

110 Miss. 620

MOYSE REAL ESTATE CO. v. FIRST NATIONAL BANK OF COMMERCE

No. 17246

Supreme Court of Mississippi

February 21, 1916

APPEAL from the circuit court of Forest county. HON. P. B. JOHNSON Judge.

Suit by the First National Bank of Commerce against the Moyse Real Estate Company. From a judgment for plaintiff, defendant appeals.

The facts are fully stated in the opinion of the court.

Affirmed.

Will A Parsons, for appellant.

Of course we are well acquainted with the doctrine announced in the cases referred to by appellee upon this proposition of estoppel. We take it that where an officer is authorized by the corporation to execute negotiable paper in the name of the corporation and he does so, then the same rule would apply to that paper as would apply to the paper of an individual and the paper would be good in the hands of a bona fide purchaser for value even though it was given without consideration or was voidable in the hands of the original party or parties taking with notice for any other reason. For instance in this case if the evidence had shown that J. L Moyse had authority to issue negotiable paper in the name of the defendant company then the fact that the paper he issued was ultra vires or without consideration or merely accommodation would not be available against the paper in the hands of bona fide purchasers for value. But the plaintiff asks this court to go further than that and to hold that the defendant is estopped without any showing that the president was authorized to execute negotiable paper for the corporation at all.

Appellee by its position says: It is true these notes are accommodation papers, ultra vires, not executed in the course of the business of the corporation, the corporation got no benefit therefrom and all of that but you must pay them. Why? Because they are made payable to bearer. And they call upon the court to estop the corporation by the act of its president in making these notes payable to bearer without any showing that the president had any authority to execute negotiable papers for the corporation. We submit that, in order to estop the corporation by the act of the president it must be shown that the president was authorized to act either in that particular case or generally or that he was held out to the world as having such authority or that the corporation knowingly received the fruits of the act or knowingly retained the same. In other words the actual authority must be shown or some conduct or custom of business acquiesced in by the board of directors that would make it inequitable for the corporation to deny the authority of the president. This is supported by numerous authorities referred to in my brief.

The power of the president of a corporation to execute negotiable paper is not presumed in cases in which the execution of the paper is denied under oath.

The position assumed by the appellee in its brief is the contra of the above statement of the law, but appellee makes no distinction as to whether or not the authority of the president is put in issue in the pleadings. Of course, there is a great deal of difference between attacking the execution of an instrument collaterally or by a plea of general issue and there is a difference also between instruments under seal and those not under seal and the rules of evidence applicable depend a great deal on the condition of the pleadings. For instance in one case referred to by the appellee the case of Kennedy v. Knight, 94 Am. Dec. 543, the note sued on was not given by the corporation but to the corporation and was transferred by the corporation to a third party who brought suit. The transfer was under seal and the corporation was asserting no claim to the note. There are a great many cases that hold that where an instrument is under the common seal of the corporation that the purpose of the seal is for the authentication of the instrument and that the presence of the seal on the instrument is some proof of authority. There is a line of decisions from the supreme court of Illinois that by the language of the opinions appear to support this contention but the facts of this case are not at all in the line with the facts of any of the cases from that state. For instance in the case of Lloyd & Company v. Matthews, largely quoted in appellee's brief, L. R. A. (N. S.), Vol. 7 page 380, at top of page the court says: "But since the guarantee sued on was placed on the note of appellant and the note was discounted--for its benefit and the proceeds thereof were remitted to appellant--the plainest principles of justice require that the company should be held bound by the act of its president without any proof of authority beyond that which must be presumed from the fact that the president, in good faith and in the regular course of corporate business and for the benefit of the corporation, executed the instrument sued on." How different from the case we are now presenting.

Appellee refers to some cases outside of the state of Illinois, which he claims supports his contention. The first of these is the National Bank of Terre Haute v. Vigo County, decided by the supreme court of the state of Indiana in 40 N.E. 800. We contend that this case does not support his contention. In this case the court says: "The president of a corporation by virtue of his office, merely has very little authority to act for the corporation. His powers depend upon the nature of the company's business and the authority given him by the board of directors may invest him with authority to act as the chief officer of the company. This may be done by resolution or by acquiescence in the course of dealings and manner of transacting the business of the corporation." Referring to Martin v. Webb, 110 U.S. 7: Railroad Company v. Bastian, 15 Md. 494; Dougherty v. Hunter, 54 Pa. St. 380; Stokes v. Bottery Co., 49 N. J. Law 240; Railroad Company v. McVeigh, 98 Ind. 319. It is true that this opinion goes on further down and says:

"Where a contract is made by the president in the name of the corporation, in the usual course of business, which the directors had the power to authorize him to make or to ratify when made, the presumption is that the contract is binding on the corporation, until it is shown that the same was not ratified or authorized." But this principle does not apply in this case as the notes in this case were not executed in the usual course of business. But if it did support the contention of the appellee then it no longer does so for it is squarely overruled by the case of Elkhart v. Turner, 170 Ind. 455, which is directly on all fours with the case we are now presenting to this court and from which I will take occasion to quote in support of my position a little later in this brief.

The next case referred to by appellee is the case of the Eureka Iron Works v. Bresnahan, 27 N.W. 524. This case does not support their contention but holds that a mortgage executed by a corporation by the president and secretary with the knowledge of all the directors and stockholders of the corporation assembled together where the mortgage was drafted and executed in their presence is binding upon the corporation. This not only does not support the contention of the appellee but it is decided by the supreme court of Michigan; the supreme court of that state later rendered an opinion in the case of Gould & Co., 134 Michigan 517, in which the court in a case directly in point squarely sustains appellant's contention. Bacon v. Mississippi Fire Insurance Co., 31 Miss. 116.

We are also referred to the case of Paterson v. Robinson, 22 N.E. 372, decided by the supreme court of New York, as sustaining the contention of appellee. This case rested upon a long course of dealings between the parties and does not hold that in a suit upon a promissory note executed by the president in the name of the corporation, where the authority of the president and the execution of the note is specially denied and put in issue it is only necessary to show that the president is president and signed the note. Of this case the supreme court of Michigan says in the case referred to above (the Gould v. Gould & Company): "We are cited to the case of Paterson v. Robinson, 116 New York 193, 22 N.E. 372, in which language is used sustaining the ruling of the circuit judge in the present case, but from the examination we have been able to give the subject, that case would appear to stand alone and for an understanding of the New York Rule should be compared with Columbia Bank v. Gospel Tabernacle Church, 127 N.Y. 361.

There is no case in New York that I have been able to find that holds that where negotiable paper is executed in the name of the corporation by its president and the execution of the paper and the authority of the president is specially denied that no proof of the authority of the president other than that he was president and signed the note is required to bind the corporation. There are several cases that hold the opposite of this decided by the supreme court of that state. See the cases from New York referred to in my original brief and see also Bangs v. National Macaroni Company, 15 App.Div. (New York Reports), page 524, decided in 1897; Beltal v. Grand Music Company, 57 N.Y.S. 746; Life & Insurance Company v. Mechanical Fire Insurance Company, 7 Wendals (New. York) 31; Rockerfellow v. Lamarro, 89 N.Y.S. 1; Peoples Bank of City of New York v. Roman Catholic Church N. E., 17 S.W. 411.

The case of Merrill v. Hurley, 6 S.D. does not sustain the position of appellee and not only so but the supreme court of South Dakota in the case of Des Moines M. & S. Co. v Tilford M. Co. et al., 9 S.D. 542, decided sometime later, held that there is no implied power in the president...