The Sherman Center Town Company v. Morris

• Decision Date: 01 January 1890
• Citation: 23 P. 569,43 Kan. 282
• Parties: THE SHERMAN CENTER TOWN COMPANY v. J. R. MORRIS
• Court: Kansas Supreme Court

23 P. 569

43 Kan. 282

THE SHERMAN CENTER TOWN COMPANY v. J. R. MORRIS

Supreme Court of Kansas

January 1, 1890

Error from Sherman District Court.

THE opinion states the case. Judgment for plaintiff Morris, on May 18, 1887. The defendant Company brings the case here.

J. H Sterling, for plaintiff in error.

J. W Lewis, for defendant in error.

HORTON C. J. All the Justices concurring.

OPINION

HORTON, C. J.:

J. R. Morris recovered a judgment against the Sherman Center Town Company for $ 1,304.85, with interest and costs. This judgment is complained of by the town company. The principal grounds of defense are, that the written contract was not authorized by the board of directors of the town company, and also that it is ultra vires. The company is a corporation organized under the laws of the state for "the purchase of lands, the surveying and platting of town-sites, selling lots and other lands." The charter also provides that "the indebtedness of the company shall not exceed $ 500 at any one time." The number of directors of the company was seven, and at the time of the execution of the contract D. G. Clark was the president, and Samuel J. Gandy the secretary. The contract related to the purchase of a stock of general merchandise valued at $ 1,904.22. It was executed in the name of the company, signed by its president and secretary, with the seal of the company attached. Before this action was brought, the contract had been fully complied with on the part of the seller, and all the purchase-price paid but $ 1,304.22, the balance sued for. The case was tried before the court without a jury, and a general finding made in favor of Morris against the town company.

The rule is, that a corporation has no powers except such as are granted or necessarily implied by its charter. If we could ascertain from the testimony that the town company had not received the benefit or proceeds of the merchandise purchased by its president and secretary, we would have no hesitation in saying that the plaintiff below was not entitled to recover. It does not appear from the charter that the corporation had any authority or power to engage in buying and selling general merchandise. It appears, however, from the testimony, that, at the time the contract was executed the stock of merchandise was at Voltaire, in Sherman county. After the contract was executed and a part of the purchase-money paid, the merchandise was removed from Voltaire to Sherman Center, where the business of the town company was carried on, and where a majority of the directors of the company reside. There is testimony tending to show that the company sold the merchandise and appropriated its proceeds to its own use and benefit. The town company did not show, or offer to show, that the president and secretary of the company purchased or received the merchandise for their own use and benefit, or that they applied the proceeds to their own use and benefit. The general rule is, that where a contract executed by a corporation is ultra vires, and the corporation received the money or property paid upon such contract, the money or the value of the property may be recovered to prevent injury resulting from the application of ultra vires upon a corporate contract, if no fraud is intended or has...