Sterling v. Trust Co.

• Decision Date: 01 March 1928
• Citation: 149 Va. 867
• Court: Virginia Supreme Court
• Parties: ROBERTA G. STERLING v. TRUST COMPANY OF NORFOLK, ADMR., ET ALS. AND TRUST COMPANY OF NORFOLK, TRUSTEE v. ROBERTA G. STERLING.

Page 867

149 Va. 867

ROBERTA G. STERLING v. TRUST COMPANY OF NORFOLK, ADMR., ET ALS. AND TRUST COMPANY OF NORFOLK, TRUSTEE v. ROBERTA G. STERLING.

Supreme Court of Virginia, Richmond.

March 1, 1928.

1. JUDICIAL SALES — Offer to Court for Purchase of Infant's Land — Construction of Statute — General Rules on the Subject of Judicial Sales Applicable. — The instant case was an offer to the court for the purchase of an infant's land under the statute. But this fact did not make the case an exception to the general rules of law upon the subject of judicial sales. In fact the statute for the sale of infant's land, being an exception to the common law, is construed strictly, and therefore imposes the duty of especial care and circumspection upon those dealing with the same.

2. JUDICIAL SALES — Sale of Infant's Land — Infant Represented by Able Counsel — Ignorance of Law — Case at Bar. — In the instant case the question at issue was the authority of the secretary-treasurer and general manager of a corporation, a garage company, to purchase the land of an infant for the corporation. The infant was represented by the trust officer of a trust company appointed special commissioner of the court to sell the lot of the infant and by the attorney for the trust company. The trust officer admitted that he knew that a corporation could not purchase real estate except by authority of its board of directors, but did not know whether he knew it "as trust officer" in this transaction or not. The attorney would not say whether he knew the law or not.

Held: That under these circumstances the court could not accept ignorance of law as an excuse for failure to require the secretary-treasurer and general manager of the corporation to produce evidence of his authority from the board of directors to purchase the property, before reporting the same, as a valid offer to the court for its acceptance.

3. APPEAL AND ERROR — Judicial Sales — Weight to be Given the Findings of Commissioner — Conclusion of Law. — The rule of law with reference to the weight to be given to the findings of a commissioner, where the evidence taken before him is conflicting, can have no application where the conclusion is entirely one of law.

4. REFERENCE — Report of Commissioner — Effect of Report — Report does not Bind Court Like Verdict of Jury. — The report of the commissioner does not bind the court like the verdict of the jury. While the court possesses the absolute power of review, it is the practice to accept the report as prima facie correct and to adopt it, unless there is dissatisfaction with the report expressed in the form of exceptions. When this is done, it is the province and duty of the court to examine the evidence and review the conclusions of its commissioner, provided the evidence on which his conclusions are based is returned with his report, or proper steps are taken to put it before the court.

5. EQUITY — Chancellor Judge of Both Law and Facts — Chancellor Presumed More Competent than Commissioner. — In suits in equity the chancellor is judge of both the law and facts, and is presumed to be more competent to pass upon the evidence and draw correct conclusions from it than the commissioner.

6. OFFICERS AND AGENTS OF PRIVATE CORPORATIONS — Power of Officers — Secretary-Treasurer and General Manager — Power to Purchase Real Estate for the Corporation — Case at Bar. — In the instant case the secretary-treasurer and general manager of a corporation, engaged in general automobile business, entered into a contract with a trust company to purchase the land of an infant. The offer was submitted to the court for confirmation and a decree of confirmation was entered. The president and largest stockholder of the corporation was out of the State at the time and on his return refused to purchase the property because the secretary-treasurer and general manager had no authority to make the offer to purchase. Thereupon the secretary-treasurer and general manager called upon the trust company, requested it to release his corporation from the offer, and agreed to pay all costs and expenses. A commissioner appointed by the court reported that the secretary-treasurer and general manager had authority to make the offer, but the court held otherwise and its decision was upheld on appeal.

7. CORPORATIONS — Authority of Secretary-Treasurer and General Manager of a Garage Company — Purchase of Real Estate. — While it might be desirable for a garage company to own property adjoining that in which its business was conducted, still the purchase of real estate for about $22,000 when the entire paid in capital of the corporation amounted to only $15,000 could not be considered within the scope of the business the secretary-treasurer and general manager of the corporation was employed to conduct, and therefore, by virtue of his office, he had no authority to bind the corporation for such purchase.

8. CORPORATIONS — Number of Incorporators — Case at Bar. — In the instant case the question at issue was whether the secretary-treasurer and general manager of a garage corporation, who was a large stockholder, had authority to bind the company to purchase the lot of an infant. The commissioner to whom the case was referred was of the opinion that as there were only three stockholders in the garage corporation and they members of the same family, that it was a corporation in name only and not in law.

Held: That the Virginia statute permits three persons only to form and conduct business as a corporation, and there is no inhibition upon their being members of the same family, nor limitation upon the amount of stock each shall severally own.

9. CORPORATIONS — Notice of Charter and Statutes. — Persons dealing with corporations are affected with notice of its charter and the statutes of the State regulating its power and duties.

10. CORPORATIONS — Powers of Board of Directors — Number of Stockholders. — Section 3789 of the Code of 1919 vests all the powers of the corporation in the president and directors as board of directors, and provides that it may consist of three persons, except common carriers.

11. CORPORATIONS — Powers of Board of Directors — Widest Powers. — The board of directors have the widest powers, all the various acts and contracts which a corporation may enter into are entered into by and through the board of directors.

12. CORPORATIONS — Powers of Board of Directors — Contracts — Bills, Notes, etc. — The board of directors make or authorize the making of the notes, bills, mortgages, deeds, sales, liens and contracts generally of the corporation.

13. CORPORATIONS — Powers of Board of Directors — Appointment and Election of Officers — Policy of Corporation. — The board of directors appoint the agents, direct the business, and govern the policy and plans of the corporation and elect the officers.

14. CORPORATIONS — Officers and Agents of Corporation — Officer Holding Several Offices in Corporation. — At common law there is no limit to the number of officer in a corporation which may be held simultaneously by the same person, provided that none of them is incompatible with any other.

15. CORPORATIONS — Powers of Board of Directors — Actions and Compromise. — The board of directors institute, prosecute, compromise or appeal suits at law and in equity which the corporation brings or has brought against it.

16. OFFICERS AND AGENTS OF PRIVATE CORPORATIONS — President — Secretary-Treasurer. — Neither the office of president nor secretary-treasurer of itself confers power to bind the corporation or control its property.

17. OFFICERS AND AGENTS OF PRIVATE CORPORATIONS — Powers — How Officer's Authority Found. — An officer's power as an agent must be sought in the organic law of the corporation, in a delegation of authority from it, directly or through its board of directors formally expressed or implied from a habit or custom of doing business.

18. OFFICERS AND AGENTS OF PRIVATE CORPORATIONS — Authority of Officer — Implied Authority — Directors Govern Policy. — When in the usual course of the business of a corporation an officer has been allowed to manage its affairs, his authority to represent the corporation may be implied from the manner in which he has been permitted by the directors to transact its business. When the agent acts in the usual course of the corporate business with apparent authority, the corporation will not be permitted to escape liability by a plea of want of authority of its agent, especially where the party so misled has furnished the corporation with services or other things. But the board of directors must direct the business and govern the policy and plans of the corporation.

19. CORPORATIONS — Contracts — Power of Principal Stockholders. — Although one person owns a majority of the stock, or all of it, or all but two shares, he does not in consequence thereof acquire the right to act for the corporation, or as the corporation, independently of the directors. One person may own all the stock, and yet the existence, relations, and business methods of the corporation continue.

20. CORPORATIONS — Contracts — Power of Principal Stockholder — Exception to Rule. — The first exception to the rule that the principal stockholder cannot act for the corporation is that corporate action may arise in other ways than by the formal action of its board of directors or meeting of stockholders or of its agents. It may arise by a long course of dealing which estops the corporation from denying the legality of that mode of dealing, or by the corporation acquiescing, or by its accepting the benefits of the transaction, or by practically all of the stockholders assenting. It may arise by passively allowing itself to be used as an instrument of wrong or illegal acts.

21. CORPORATIONS — Contracts — Power of Principal Stockholder — Exception to Rule. — The second exception to the rule that the principal stockholder cannot act for the corporation...