Rabinovich v. Liberty Morocco Co.

• Decision Date: 11 February 1924
• Citation: Rabinovich v. Liberty Morocco Co., 125 A. 346, 32 Del. 426 (Del. 1924)
• Court: Supreme Court of Delaware
• Parties: MORRIS RABINOVICH, Assignee of Delaware Trust Company, v. LIBERTY MOROCCO COMPANY

125 A. 346

32 Del. 426

MORRIS RABINOVICH, Assignee of Delaware Trust Company, v. LIBERTY MOROCCO COMPANY

Supreme Court of Delaware

February 11, 1924

CASE HEARD BEFORE COURT IN BANC.

A petition presented to the Superior Court of New Castle County, at the January Term, 1924 by Charles C. Kurtz receiver of Liberty Morocco Company, contained, inter alia the following averments:

That said company gave to the Delaware Trust Company on the 17th day of November, 1921, a bond and mortgage to secure the real debt of twenty thousand dollars, and that by an instrument bearing date the 6th day of September, 1923, the Delaware Trust Company purported to assign said mortgage and its accompanying bond to Morris Rabinovich, who later foreclosed the mortgage.

That said instrument which purported to assign said mortgage and bond was not in fact an assignment in law, because it was not sealed with the seal of the Delaware Trust Company. That the sale made under the mortgage should not, therefore, be confirmed.

The case was certified by the Superior Court to the Court in Banc for an opinion of the law judges respecting the legality of said assignment.

The assignment in question is legal.

Herbert H. Ward, Sr., (of Ward, Gray & Neary) and Charles F. Curley for confirmation of sale.

Eugene E. Berl and Julian C. Walker against confirmation of sale.

PENNEWILL C. J., RICE, HARRINGTON, RICHARDS and RODNEY, J. J., sitting.

OPINION

PENNEWILL, C. J.

The only question before the Court is whether the assignment of the mortgage by Delaware Trust Company to Morris Rabinovich is, under the law of this State, valid. The seal affixed to the assignment is not the corporate seal of the company but the notarial seal of its secretary. In all other respects the assignment is admittedly legal and in regular form.

The instrument purporting to make the assignment, states that it was executed by Charles M. Curtis, vice-president of the company; that he subscribed the name of the company thereto and caused its corporate seal to be thereto affixed. The seal that was affixed is attested as the corporate seal of the Delaware Trust Company. The witnessing clause states that the assignment was sealed and delivered in the presence of Willard Hamilton, the witness thereto, who was also the Notary Public who took the acknowledgment of the assignment. It also appears that Charles M. Curtis, the vice-president of the Trust Company, the assigning party, acknowledged the assignment to be the deed of said Trust Company, that the seal thereto affixed was its corporate seal, and that his authority to so execute and acknowledge said instrument was conferred by a resolution of the board of directors of the Trust Company. So that, the concrete and only substantial question is, whether the seal used in making the assignment is in law the seal of the Delaware Trust Company.

While it does not appear from the papers filed in the case that the Delaware Trust Company had a corporate seal, it is not denied, and the Court will assume that said corporation had such a seal, and that the same had been legally adopted.

There can be no doubt, therefore, and it is not denied, that at the time the assignment was executed there were two seals available, one the corporate seal of the company and the other the notarial seal of its secretary, and that the latter seal was used by mistake or inadvertence in place of the corporate seal.

Section 2627 of the Revised Code, which provides for the assignment of specialties and suits thereon in the name of the assignee, is as follows:

"And the assignees, or endorsees, or their executors, or administrators, may, in their own name, sue for and recover the money due thereon; provided always, that all such assignments of bonds, or specialties, shall be under hand and seal, and before at least one credible witness."

Paragraph 3 of Section 2 of the General Corporation Law (22 Del. Laws c. 394) grants to corporations the right "to make and use a common seal, and alter the same at pleasure."

The party contesting the validity of the assignment contends, that the seal affixed thereto cannot be regarded as the seal of the Delaware Trust Company because it was never adopted as such by action of its board of directors; and also, that it was not in fact used as the seal of the company by the officers who executed the assignment. In this connection the distinction is sought to be made, that the seal that was used could not have been adopted as the corporate seal of the assignor because there is nothing to show that its secretary, who affixed the seal, knew he was using his notarial seal. It is argued that if he was not consciously using his notarial seal as the corporate seal there was no adoption of this seal as the seal of the corporation.

The argument of the contestant is confined to these two points, and necessarily so, because it is not questioned that whatever may have been the rule in former times, it is now the prevailing doctrine, even in states that once held otherwise, that a corporation having a corporate seal may adopt pro hac vice, for the particular transaction, any other seal, or any device bearing semblance to a seal, as its own corporate seal. Manifestly the modern doctrine is based largely on the importance of carrying out the clear intention of the corporation making the deed, and not defeating such intention by adhering to a rule that would work a hardship in many cases, when corporations are so common and corporate business so extensive. But the law does require that the seal or device, whatever it may be, shall be used and intended as the seal of the corporation, and not of the individual.

"While a corporation may alter its seal at pleasure, and may adopt as its own the private seal of an individual if it chooses so to do, nevertheless when so adopted it must be used as the seal of the corporation; if it is affixed as the seal of the individual, it cannot be treated as the seal of the corporation, and a declaration in the instrument that it is so affixed is conclusive of its character and effect." 14 Corpus Juris, § 406; 24 R. C. L. p. 692.

It is also well settled that the adoption by a corporation of some other seal for the particular transaction is ordinarily established by showing authority on the part of the officers to execute an instrument under seal on behalf of a corporation, and the fact of attaching some seal to the name of the corporation with the intent to seal on its behalf. And furthermore, that such a seal is to be deemed the proper and common seal of the corporation, in the absence of evidence to the contrary, where such intention appears on the face of the instrument. 14 Corpus Juris, §§ 405, 406; 2 Fletchers Cyc. Corporations, § 753; 7 Ruling Case Law, § 672.

When corporate officers who have been authorized by the corporation to execute a particular instrument that requires the use of the corporate seal, affix some other seal as the corporation seal, and such instrument bears on its face clear evidence of an intention to execute the same under the corporate seal of the corporation, and to adopt, as the seal of the corporation, the seal actually used as such it will be regarded prima facie as the seal and act of the corporation in the absence of evidence showing that the seal that was affixed was not intended to be the corporate seal. Bank of Middlebury v. Rutland & W. R. Co., 30 Vt. 159, 169, 171; Tenney v. East Warren Lumber Co., 43 N.H. 343; Porter v. A. & K. R. Co., 37 Me. 349; Mill Dam Foundery v. Hovey, 38 Mass. 417, 428; Reynolds' v....