Republic Bank Note Co. v. N.W. Pennsylvania Railroad Co.

• Decision Date: 18 July 1916
• Docket Number: 64-1916
• Citation: 65 Pa.Super. 72
• Parties: Republic Bank Note Company v. Northwestern Pennsylvania Railroad Co., Appellant
• Court: Pennsylvania Superior Court

65 Pa.Super. 72

Republic Bank Note Company v. Northwestern Pennsylvania Railroad Co., Appellant

No. 64-1916

Superior Court of Pennsylvania

July 18, 1916

Argued April 11, 1916

Rehearing Denied 65 Pa.Super. 72 at 77.

Appeal by defendant, from judgment of C.P. Crawford Co.-1912, No 119, on verdict for plaintiff in case of Republic Bank Note Company v. N.W. Pennsylvania Railroad Company.

Assumpsit for engraved certificates of stock and bonds, sold and delivered. Before Prather, P. J.

The facts are stated in the opinion of the Superior Court.

Verdict and judgment for plaintiff for $ 758.85. Defendant appealed.

Error assigned, among others, was in refusing judgment for defendant n. o. v.

Reversed.

Frank J. Thomas, with him C. K. Fauver, for appellant, cited Farquhar v. Brown, 132 Mass. 340; Mundorff v. School Directors, 4 Pennypacker 103; Peers v. Board of Education, 72 Ill. 508; Campbell v. Day, 90 Ill. 263; United States v. Driscoll, 96 U.S. 421.

A. Leo Weil, of Weil & Thorp, with him George F. Davenport, for appellee, cited: Commonwealth v. Central Passenger Ry. Co., 52 Pa. 506; Commonwealth v. Mann Co., 150 Pa. 64; P. S. & N. R. R. Co. v. K. & S. R. R. Co., 233 Pa. 71.

Before Orlady, P. J., Henderson, Kephart, Trexler and Williams, JJ.

OPINION

KEPHART, J.

This is an action for furnishing lithographed certificates of stocks and bonds to the defendant. The agreement between the bondholders committee and Gaston, the purchaser, required this committee to furnish permanent certificates of stocks and bonds, and the testimony of the members of the committee indicate that they so regarded it. Temporary certificates were used in transferring the new company to the purchaser, but this would not relieve the committee from furnishing certificates of a negotiable character required by the agreement, and the correspondence indicates that these certificates were to be followed by permanent ones. The kind was not in dispute, as the certificates in controversy were satisfactory. The agreement covered the submission of their form and kind to the purchaser and anything that transpired between the attorneys and the purchaser would not fix liability on the defendant, or relieve the committee from completing their contract.

The committee, in transferring the property of the railway companies, was to organize, through foreclosure proceedings on mortgages, a new corporation to which this property was to be transferred. The new corporation was to be free from all debts " of any nature or character whatsoever," except those specifically mentioned in the agreement. The members of the committee were also members of the board of directors of the new company. Each body had the same legal advisers. Each had the power to incur this debt. The difficulty now comes from the dual relationship occupied by these individuals, the personnel of the directors of the new company having since changed.

The order for the certificates was given by one of the attorneys as he states, in behalf of the defendant. The court below says " it is not contended that defendant company by any corporate action expressly ordered this printing." The evidence not only bears out this suggestion but fails to show any corporate authority. At the first meeting of February 24th, the question of securing these certificates was discussed. Frasher and others testified fully as to what their understanding was of the meeting, and Thorpe states that he ordered the certificates in February following this meeting. The certificate of organization required by the Act of April 8, 1861, and its several supplements, was filed in the office of the secretary of the Commonwealth March 1st following. It is certain that the defendant did not become vested with the corporate rights and franchises of the defunct street railway charters until that date and the new corporate body, this defendant, did not exist until after that date: Pgh., Cin. & St. L. Ry. Co. v. Fierst, 96 Pa. 144; Parks v. Penna. Clay Co., 60 Pa.Super. 567. The facts before us bring the case clearly within the principles set forth in these decisions There is no evidence of operation, possession or other acts to fix liability on the new company for the lithographing ordered before March 1st. After that date there was some discussion among the members of the board as to this work, but not at any meeting duly called for that purpose. They were merely informal discussions. The directors cannot separately or jointly, outside of meetings duly called, bind the company unless authorized by the by-laws or resolutions of the board of directors: Gaynor v. Williamsport, Etc., Railroad, 189 Pa. 5, 41 A. 978. The court below was correct in holding that no authority proceeded from the company. The directors could, of course, ratify the contract. " Ratification implies knowledge of the material facts, and to be effective must be made by persons having the power to perform the act which is the subject of ratification. In the absence of evidence that the facts were communicated to the party, or that he had knowledge of them and assented to the acts alleged to have been done for him, the question of ratification should not be submitted...