Wheeling Ice & Storage Co. v. Conner
| Decision Date | 11 December 1906 |
| Parties | WHEELING ICE & STORAGE CO. v. CONNER et al. |
| Court | West Virginia Supreme Court |
Submitted June 13, 1906.
Syllabus by the Court.
Conner purchased in his own name the tangible property of Crystal Manufactured Ice Company for $10,300, and paid in cash from the funds of Wheeling Ice & Storage Company, a corporation of which said Conner was secretary, and made his eight negotiable notes of $1,000 each and one note of $1,300 for the residue of purchase money payable to the order of John W Walter, who indorsed the same. Conner then indorsed on said notes the name "Wheeling Ice & Storage Co. by C. W Conner, Secretary" and delivered the notes to McKinley and Bowles who negotiated some of them and retained some. Wheeling Ice & Storage Company filed its bill against all the parties interested, alleging that McKinley and Bowles fraudulently and unlawfully conspired with Conner to sell to him, said Conner, said property at the said sum of $10,300 to be paid for by the plaintiff company, without the authority of its board of directors and without the knowledge or consent of any member of the board except said Conner, and praying a cancellation of said fraudulent indorsement of said notes, and that McKinley, Bowles, Crystal Manufactured Ice Company, and C. W. Conner be required to repay to it the $1,000 paid in cash and interest. Upon demurrer to the bill the court overruled the demurrer. Held, bill not multifarious, and court did not err in overruling the demurrer.
It cannot be presumed that Conner had the power, by reason of his official position, to bind his corporation as an accommodation indorser of his own promissory notes. Such a transaction would not be within the scope of his general powers, and one who accepts an indorsement of that character if a contest arises, must prove actual authority before he can recover.
There are no presumptions in favor of such a delegation of power. The very form of the paper itself carries notice to a purchaser of a possible want of power to make the indorsement and is sufficient to put him on his guard. And, if he fails to avail himself of the notice and obtain the information thus suggested to him it is his own fault, and, as against an innocent party, he must bear the loss.
Tower v. Whip, 44 S.E. 179, 53 W.Va. 158, Syl. pt. 3, 63 L.R.A. 937, and Bank v. Johns, 22 W.Va. 520, 46 Am.Rep. 50, Syl., approved.
Appeal from Circuit Court, Ohio County.
Bill by the Wheeling Ice & Storage Company against C. W. Conner and others. Decree for complainant, and defendants J. C. McKinley and others appeal. Affirmed.
Henry M. Russell and Hubbard & Hubbard, for appellants.
Erskine & Allison, for appellee.
MCWHORTER, P.
The Wheeling Ice & Storage Company, a corporation, for a number of years was conducting in the City of Wheeling the business of manufacturing and selling ice. It seems there were but few stockholders in the corporation and the business was conducted and managed principally by one C. W. Conner, who was secretary and the manager of the concern and seemed to be the general superintendent. The Crystal Manufactured Ice Company, Nick Kuhn Ice Company and the Martin's Ferry Ice & Supply Company were other small corporations doing a like business. The said Crystal Company having its principal place of business in the city of Wheeling and the other two in towns opposite the city of Wheeling, but both of them doing business within the city. J. C. McKinley, being interested in the Crystal Manufactured Ice Company, together with H. G. Bowles undertook to get control of the said Nick Kuhn Ice Company and the Martin's Ferry Ice & Supply Company for the purpose of consolidating the three companies and to remove the competition which existed in the business. A plan was suggested by which said three companies should sell out their business and property to the Wheeling Ice & Storage Company, giving it the control of the trade of all four companies. On the 26th of August, 1902, the Crystal Manufactured Ice Company sold and assigned all of its tangible property to C. W. Conner, at the same time McKinley and Bowles transferred to Conner a sufficient amount of the stock of the Nick Kuhn Ice Company and Martin's Ferry Ice & Supply Company to give him the controlling interest in said two companies. In consideration of these transfers Conner gave to McKinley and Bowles, some to each of them, nine notes, eight of them being for $1,000 each and the one for $1,300, and, in order to secure the notes, he obtained the indorsement of John W. Walter as an accommodation indorser, and in addition said Conner indorsed the name of Wheeling Ice & Storage Company upon all of the notes. The notes were negotiable and signed by C. W. Conner as maker, made payable to John W. Walter, and indorsed by him, and then by the Wheeling Ice & Storage Company, by C. W. Conner, secretary. In addition to these notes aggregating $9,300 $1,000 was to be paid in cash which was paid to McKinley by Conner out of the money of the Wheeling Ice & Storage Company on the 22d of September, 1902. At the time of making the notes Conner executed to Nelson C. Hubbard, trustee, a deed of trust on all the property transferred by the Crystal Manufactured Ice Company to the said Conner enumerating all the property, horses, ice wagons, supply wagons, harness, ice books, etc., and a contract made by the said party with McKinley by which the said Conner received all the rights of McKinley accruing under an agreement made by him with the Schmulbach Brewing Company on the 6th day of November, 1901, which said agreement provided for the furnishing of ice by said brewing company to McKinley; also 80 shares of the capital stock of the Nick Kuhn Ice Company of the par value of $100 per share fully paid up and 15 shares of the capital stock of the Martin's Ferry Ice & Supply Company of the par value of $100 per share on each of which shares the sum of $50 remained unpaid; in trust to secure the holders of the said several notes of $9,300 with their interest and any renewal or extension of said indebtedness in whole or in part. While four of the notes for $1,000 each were made payable on or before 60 days from their date, the others of like amount and the one of $1,300 were payable on or before one year from date. It was provided in the deed of trust that, upon default being made upon the payment of any one of said notes, all of said indebtedness remaining unpaid should be taken and deemed to be due, and the holder of any of said notes should require the trustee to proceed to sell the property so conveyed for one-third of the purchase money or so much more as the purchaser might elect to pay in cash on the day of sale, and the residue in two equal payments in one and two months from the day of sale with interest.
At the March rules, 1903, the Wheeling Ice & Storage Company filed its bill in the circuit court of Ohio county against C. W Conner, J. C. McKinley, H. G. Bowles, Crystal Manufactured Ice Company, Nick Kuhn Ice Company, Martin's Ferry Ice & Supply Company, Wheeling Title & Trust Company, L. F. Stifel, trustee, W. C. Stifel and L. F. Stifel, executors of the will of C. E. Stifel, deceased, John W. Walter, and Nelson C. Hubbard alleging that on or before August 26, 1902, the defendant J. C. McKinley, acting with due authority for himself and his then partner, the said H. G. Bowles, and also for the Crystal Manufactured Ice Company, fraudulently and unlawfully conspired to and with the defendant C. W. Conner to sell to him, the said Conner, said property named in the bill for the price of $10,300 to be paid for by the said Wheeling Ice & Storage Company without the authority or consent of any member of the board except the said Conner; that, in pursuance of such conspiracy, the said Crystal Manufactured Ice Company on the 26th day of August, 1902, executed and delivered to said Conner a bill of sale of all its physical assets, and, in furtherance of said conspiracy, the said McKinley assigned and transferred to said Conner the said ice contract with Schmulbach Brewing Company; and, in further pursuance of said conspiracy, the said Bowles on the same day executed a blank assignment of a certificate for 40 shares of the capital stock of the Nick Kuhn Ice Company that had been issued to him and delivered the same to the said Conner and the said McKinley executed a blank assignment of a certificate for 40 shares of the capital stock of the said last-named ice company that had been issued to him and delivered the same to Conner, which 80 shares of stock constituted a majority of the capital stock of that company, and on the same day said McKinley and Bowles each assigned in blank and delivered to the said Conner his certificate for five shares of the capital stock of the defendant Martin's Ferry Ice & Supply Company, and they also then caused to be signed in blank and delivered to said Conner a third similar certificate of five shares, which three certificates were issued by that company on that date, on account of each of which shares of the last-mentioned capital stock $50 remained unpaid, the par value thereof being $100 per share; and in further pursuance of said conspiracy the said Conner on the said 26th of August executed and delivered to said McKinley and Bowles the said nine negotiable notes payable to Walter and indorsed by him, and before delivery of said notes to the said McKinley and Bowles the said Conner, without authority of the board of directors or of the plaintiff, fraudulently and unlawfully indorsed the name of the plaintiff corporation on each of said negotiable notes, intending thereby to pledge the credit of plaintiff as indorser of each of said notes, but that indorsements of the plaintiff's...
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