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the records of the proceedings of the board of trustees showing or tending to show that the officers of the company were authorized or instructed to renew the note. But it is not denied but what the company owed the money at the date of the renewal in 1879, and courts have usually held that a contract entered into by a corporation or its officers may not be within the scope of the powers conferred upon it by its charter or by-laws, yet if the corporation receives the benefit therefrom in money it will not be allowed to deny the indebtedness on the ground that its officers were not empowered to make the contract. Union Gold Min. Co. v. Rocky Mt. Nat. Bank, 2 Colo. 260; Bradley v. Ballard, 55 Ill. 413, 419; Arms Co. v. Barlow, 63 N. Y. 69. There is also an increase in the rate of interest mentioned in the note of 1879 over that of 1875. In the resolution passed by the board of trustees on the 2d day of August, 1875, authorizing the executing of the note of that date, the rate of interest was fixed at 14 per cent. per month. By the one made in 1879, without any authority whatever, interest was provided to be paid at the rate of 11⁄2 per cent. per month. The renewal of the note of 1886 does not come within either of the above-mentioned rules in this: there was no order or resolution of the board of trustees, nor a majority thereof, authorizing the president and secretary to execute the note. The renewal of the note must be considered in connection with the powers and duties of the officers who renewed the same, the circumstances under which it was renewed, and the benefits derived therefrom by the corporation. The evidence in the case, as it now stands, is such as to show that the president of the company has made use of his official position to secure to himself the use of money, by issuing what purported to be the company's note, without the knowledge or consent of the board of trustees or the stockholders of the Carson Water Company. Mr. Helm and Mr. Yernigton testified that in 1881 the corporation borrowed a large sum of money to pay off the outstanding indebtedness of the company, including the $2,000 due Mr. Wright on the 1879 note. Mr. Helm testified that he had the check to pay the Wright note, and went to the bank of Wells, Fargo & Co. with Mr. Wright to pay it, and while there had the conversation with Mr. Wright as testified to above; and, if the same is to be taken as true, Helm induced Wright to let him retain the money that had been intrusted to Helm by the company to pay off the Wright note of 1879, which Helm says he did use for his individual benefit in paying off his own debts with some, and purchased stock with the balance. The corporation not owing Wright at the time of the renewal of the note of 1886, and Mr. Helm instructing the secretary to charge the interest thereafter paid on the Wright note to his individual account, supports the statev.34P.no.4-25

ment of Helm; and the fact that the secre tary drew the checks thereafter "payable to the order of S. C. Wright on account of A. Helm" was a notice to Wright, and he should have inquired into the cause of the change of payment of interest from the name of the company to that of A. Helm if the statement of A. Helm was not correct. In answer to a question asked Helm, "Who was present when this conversation took place between yourself and Mr. Wright in the bank?" he answered: "Nobody was present. I took pains not to say anything when anybody was around, as I didn't care to expose my condition at that time." The invalidity of the note of 1886 springs-First, from issuing the same without being authorized so to do by the board of trustees; second, the corporation was not indebted to Wright at the time of the giving of the note, and the same was given without any consideration being received by the corporation. It was not sufficient in this action for the plaintiff to say, "I supposed it was all right, and the officers had authority to renew the note." Persons dealing with corporations are chargeable with notice of the extent of the agent's powers, and Wright was bound to know that Helm and Richards could not act beyond the powers vested in them by the board of trustees, and the by-laws. Mechem, Ag. § 276; 1 Pars. Cont. 40-42; Smith v. Association, 12 Daly, 305; Mining Co. v. Fraser, (Colo. App.) 29 Pac. Rep. 668; Owings v. Hull, 9 Pet. 628. The action of Helm in drawing up the note of 1886, and signing the same as president of the Carson Water Company, and inducing the secretary to sign the same, giving as his reason for such request that there was to be a reduction in the rate of interest, was in excess of their powers. Instead of acting for the corporation, they executed a note purporting to be a valid obligation to the company, when in fact it was to secure the individual indebtedness of its president for money which the corporation had intrusted to him to pay its debts, and which he testifies he was permitted to retain to his own use, with the knowledge and consent of the debtor, Wright. Under such circumstances, at the time of the giving of the note of 1886, Helm was acting for himself, and he was not, with respect to the transaction, an agent at all; and the corporation is not, as to that matter, bound by his acts, nor is it chargeable with his knowledge.

In the case of Frenkel v. Hudson, 82 Ala. 162, 2 South. Rep. 758, Somerville, J., in speaking of the general rule that the knowledge of the agent must be imputed to the principal, said: "It has no application, however, to a case where the agent acts for himself, in his own interest, and adversely to that of his principal. His adversary char acter and antagonistic interests take him out of the operation of the general rule, for

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two reasons: First, that he will very likely, in such case, act for himself, rather than for his principal; and, secondly, he will not be likely to communicate to the principal a fact which he is interested in concealing. would be both unjust and unreasonable to impute notice by mere construction under such circumstances, and such is the established rule of law upon this subject." Mechem, Ag. § 723; Ang. & A. Corp. §§ 308, 309. It is a cardinal principle in the law of agency that the powers of the agent are to be exercised for the benefit of the principal, and not for the agent or third parties, and a person dealing with one whom they know to be an agent, and to be exercising his authority for his own benefit, acquires no rights against the principal in the transaction. Such transactions are usually spoken of by the courts as fraudulent, because circumstances known to both parties make the contract or agreement absolutely void. Mechem, Ag. §§ 797, 798. It is a well-settled rule in equity that, when the relationship of principal and agent exists, the agent will not be permitted to make use of his position for his own personal interests. This rule is strict in its requirements, and inflexible in its operation. It extends to all transactions where the agent's personal interests may be brought into conflict with his acts in the fiduciary capacity; and it is immaterial as to whether there was fraud, or as to whether the transaction was entered into with the best of intentions. When the possibility of a conflict exists, there is the danger to be guarded against by the absoluteness of the rule. It is a violation of duty for any officer of a corporation to enter into a contract with himself, or to so manage the affairs of the company as to enrich himself at the expense of the stockholders. Pomeroy, in his work on Equity Jurisprudence, (volume 2, § 959,) says: "The underlying thought is that an agent should not unite his personal and his representative characters in the same transaction; and equity will not permit him to be exposed to the temptation, or brought into a situation where his own personal interest conflicts with the interest of his principal, and with the duties which he owes to his principal." See, also, sections 1050, 1051, and notes therein referred to. 1 Beach, Priv. Corp. §§ 236, 240, et seq.; Pickett v. School Dist., 25 Wis. 553. In the case of People v. Township Board of Overyssel, 11 Mich. 225, the court said: "So careful is the law in guarding against the abuse of fiduciary relations, that it will not permit an agent to act for himself and his principal in the same transaction, as to buy of himself, as agent, the property of his principal, or the like. such transactions are void, as it respects his principal, unless ratified by him with full knowledge of all the circumstances." 2 field, Briefs, § 193. A corporate body can only act by agents, and the directors or trus

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tees of a corporation occupy a position of the highest trust and confidence. The utmost good faith is required in the exercise of the powers conferred upon them. They have no right, under any circumstances, to use their official position for their own benefit or profit, or for the benefit of any one except the corporation. This is one of the reasons given why an officer has no right nor authority to vote upon or represent the corporation in a transaction in which he is personally interested in obtaining an advantage at the expense of the other stockholders. Therefore, if the testimony of Helm be true, the company did not owe Wright any money in 1886, when the note was given, but Helm did; and, if such was the case, then the information given by Helm to Richards, upon requesting him to sign the note, as the interest was to be reduced, was misleading, and not in accordance with the facts in the case. Under such circumstances, the signing of the note cannot be deemed a corporate act, for the acts of officers of corporations are to be tested by the principles of the law of agency; and no agent whatsoever can bind the corporation if such agent fails to act in accordance with the purposes and objects of the corporation, and within the scope of his authority. don Mill Co. v. Lyndon Literary & Biblical Inst., (Vt.) 22 Atl. Rep. 576; Reynolds & Henry Const. Co. v. Police Jury, (La.) 11 South. Rep. 238; Miner v. Ice Co., (Mich.) 53 N. W. Rep. 222; Johnson v. Signal Co., (N. Y. App.) 29 N. E. Rep. 966; Ang. & A. Corp. 291; Dispatch Line of Packets v. Bellamy Manuf'g Co., 12 N. H. 231; Hoffman v. Insurance Co., 92 U. S. 164; Nelligan v. Campbell, (Sup.) 20 N. Y. Supp. 234; Field, Corp. § 271.

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In the case of Coal Co. v. Lotspeich, (Ky.) 20 S. W. Rep. 378, the president of the company entered into a contract with one of the stockholders to deliver to him a quantity of coal, the pay therefor to be applied on the payment of the individual indebtedness of the president to the stockholders. In an action by the plaintiff to enforce the contract and be permitted to apply the price of the coal on the debt, in passing upon this question the court said: "The pleadings do not present the question of fraud by way of defense, but nevertheless, in construing a contract made between officers of a corporation, by which a corporate liability is attempted to be created to the one officer or the other, that construction should be placed on its terms most favorable to the corporation; and particularly when the great weight of the evidence, and in fact all of it, shows that corporate property was being used, by reason of this contract, to pay an individual debt of one director to the other." In the case of Hardin v. Construction Co., 78 Iowa, 729, 43 N. W. Rep. 543, the board of directors authorized the officers of the company to execute a note for $9,000, and a chattel mort

gage upon the rolling stock of the company to secure the payment of the same. The officers executed the note and mortgage and stipulated therein for attorney's fees in case of suit for the collection of the same. The plaintiffs commenced suit to foreclose the mortgage. The district court refused to allow attorney's fees, and the plaintiffs appealed. In passing on this question, the supreme court said: "This was an explicit direction to execute a note for $9,000 and interest, and no more. The company did not, by any official action, authorize the execution of a note in any amount exceeding said sum in any event. We think the court correctly held that the measure of liability was $9,000 and interest." Pacific R. M. Co. v. Dayton S. & G. R. Ry. Co., 7 Sawy. 61, 5 Fed. Rep. 852. In the case of New York Iron Mine v. Negaunee Bank, 39 Mich. 648, Judge Cooley, in speaking of the powers of corporations and agents to borrow money by issuing notes, at page 651 says: "It is not disputed by the defense that the corporation, as such, had power to make the notes in suit. The question was whether it had in any manner delegated that power to Wetmore. We cannot agree with the plaintiff that the mere appointment of a general agent confers any such power." In McCullough v. Moss, 5 Denio, 567, the subject received careful attention, and it was held that the president and secretary of a mining company, without being authorized by the board of directors so to do, could not bind the corporation by a note made in its name. Murray v. East India Co., 5 Barn. & Ald. 204; Benedict v. Lansing, 5 Denio, 283; and The Floyd Acceptances, 7 Wall. 666,—are authorities in support of the view. The plaintiff, then, cannot rest its case on the implied authority of the general agent. The issuing of promissory notes is not a power necessarily incident to the conduct of the business of mining, and it is so susceptible of abuse to the injury, and, indeed, to the utter destruction, of a corporation, that it is wisely left by the law to be conferred or or not, as the prudence of the board of directors may determine." Judge McCrary, in charging the jury in the case of Foster

of authority; but a corporation must act by way of agents, and the authority of the agent who acts for it is not presumed. It may, however, be shown, either by showing an express authority,-as, for example, a resolution of the board of trustees authorizing a certain party to execute a note on be half of the corporation,-or by a provision of the constitution or by-laws of the corporation authorizing a certain officer to execute promissory notes. It might be shown in that way, but I believe it is not claimed that there is anything of this kind here. It may also be shown by the course of dealings of the corporations, and by facts and circumstances which are sufficient, in the judgment of the jury, to show that the party who executed the note had the authority. If it was the custom of this corporation to permit the treasurer to execute its promissory notes, and if he was in the habit of doing so, with the knowledge of the trustees or of the corporation, which means, of course, the trustees, they had, by recognizing that custom, and acting upon it, themselves become bound by it, and especially if they received the benefits of transactions of this sort, which they permitted the treasurer to enter into. It is only, therefore, necessary for you, in considering this branch of the defense, to inquire whether the evidence here establishes the fact that Mr. Penn, the treasurer, was in the habit of acting for and on behalf of the corporation in executing promissory notes and other instruments of like character, and whether the corporation was aware of that fact, and made no objections to it. If you find this to be so, then you will come to the conclusion that the note was executed by the corporation, and you will proceed then to the other question; that is, whether the corporation was indebted to Mrs. Foster in the amount of money for which this note was given." In the case at bar it was necessary for the plaintiffs to prove that the president and secretary were authorized by the board of trustees to renew the note in 1886, or that it had been the custom of the company to transact business in that way, and that the trustees were knowing to the fact, and acquiesced in such

v. Mining Co., 17 Fed. Rep. 130, said: “Up- | procedure. It was also a question of fact to on the first question,-as to whether this is the note of the defendant corporation,— that is to be determined upon the question whether the person who executed the note on behalf of the corporation, Mr. Penn, the treasurer of the company, was authorized to execute such an instrument. The law upon this subject is that the authority is not presumed from the mere fact that the person assumed the right to give a note in the name of the corporation. A corporation is an artificial person, which must act within certain limits. It differs from a natural person. If an individual gives his note, it is not necessary to prove anything in the way

be determined from the evidence as to whether the Carson Water Company owed S. C. Wright the sum of $2,000 when the note of 1886 was executed, or was it the individual indebtedness of A. Helm? If the president and secretary of the Carson Water Company did not have the power to borrow money and execute a note in the first instance without being authorized so to do by the board of trustees,-which we think they did not, they did not possess the power to renew the same without authority from the board so to do; for when the adoption of any particular form or mode is necessary to confer authority upon agents of corporations in

the first instance, there can be no ratification except in the same manner, or it should be made to appear that the company was in the habit of issuing promissory notes without such authorization. In order to hold the corporation responsible upon the note of 1886, it was necessary to show that the officers had authority to renew the same, or that the company had at that time the use of the money. Middlesex County Bank v. Hirsch Bros. Veneer Manuf'g Co., (City Ct. N. Y.) 4 N. Y. Supp. 385.

Plaintiffs contend that the action of the president and secretary in executing the note of 1886 has been ratified by the defendant by reason of its having paid the interest becoming due each month from 1886 until 1889. We do not think that the evidence supports the plaintiffs' contention. Mr. Helm, the president, and Mr. Richards, the secretary, testified that the interest was paid by Helm from 1881 until the payment of interest was discontinued, in 1889. True it is that it was paid by company's check, but always on account of A. Helm; and, as we understand the evidence, the amounts were charged against Helm's private account on the books of the company. Mr. Helm says: "No member of the company knew anything about this transaction with Wright except myself." Mr. Richards says: "I knew nothing about the giving of the note of 1886, or why it was given, except as Helm told me it was to secure a reduction in the rate of interest; and at Helm's request I signed it." Mr. Yernigton testified "that he was a trustee of the company from 1877 until 1889, when he was elected president. He was the owner of two-thirds of the stock, and never knew of the existence of the note until after his election as president in 1889. As soon as he heard of the existence of the note, he sent for Helm, the former president, and Richards, the secretary, and, after being informed by them as to how the note of 1886 was executed, he went and saw Mr. Wright, and informed him that it was not the company's note, and that the company would not pay it, and instructed Richards, the secretary, not to pay any more interest on the note." There is no testimony in the transcript from which we could infer that the corporation had the use of or received any benefit from the Wright money after 1881. Under these circumstances, the making of the note of 1886 should not be held to be a corporate act. Craft v. Railroad Co., 150 Mass. 208, 22 N. E. Rep. 920; First Nat. Bank of Middletown v. Council Bluffs City Water Works Co, (Sup.) 9 N. Y. Supp. 860; Bohn v. Brewery Co., (Com. Pl. N. Y.) Id. 514; Wahlig v. Manufacturing Co., (City Ct. N. Y.) Id. 739; Westervelt v. Radde, 55 How. Pr. 370.

With regard to the question of ratification, it is to be observed that this is not 4 case, as presented to us, in which the officers of a corporation have exceeded the powers delegated to them by the corporate body in entering into an unauthorized contract. When the proceeds of such unauthorized act have come into the defendant's treasury, and had been used in the regular course of its business, with the knowledge of the trustees or stockholders, under such circumstances, very slight evidence would be sufficient to establish the company's liability. But when it is made to appear that such unauthorized contract was entered into by two of the three trustees, without the knowledge or consent of the third, and in fact one of the two who signed the note not knowing the facts connected with such renewal, and, as appears from the evidence, not for the benefit of the corporation, but for the individual benefit of one of the two who signed the note, the property of the third, or that of the other stockholders, if there are any, ought not to be held liable on the void contract, without it is made clear that the third acquiesced in the proceedings, and ratified the acts of the other two, after having been fully advised as to all the material facts in the case, and given an opportunity to act. The evidence, in our judgment, is insufficient to show a subsequent ratification, either express or implied. The president and secretary certainly were not competent to ratify their own unauthorized acts. Hotchin v. Kent, 8 Mich. 527; Dabney v. Stevens, 40 How. Pr. 344; Story, Ag. § 243; Howell v. MeCrie, 36 Kan. 652, 14 Pac. Rep. 257; Combs v. Scott, 12 Allen, 496; Mallory v. Mallory Wheeler Co., 61 Conn 141, 23 Atl. Rep. 708; Dispatch Line of Packets v. Bellamy Manuf'g Co., 12 N. H. 232; Lyndon Mill Co. v. Lyndon Literary & Biblical Inst., (Vt.) 22 Atl. Rep. 577 Owings v. Hull, 9 Pet. 629; Bohm v. Brewery Co., (Com. Pl. N. Y.) 9 N. Y. Supp. 515; Murray v. Lumber Co., 143 Mass. 250, 9 N. E. Rep. 634; Fitzhugh v. Land Co., 81 Tex. 310, 16 S. W. Rep. 1078; Institution v. Slack, 6 Cush. 411.

The plaintiffs argue that by reason of the fact that the secretary made out statements showing the indebtedness of the company, in which the claim of Wright was included, was sufficient notice from which the stockholders could have informed themselves as to this claim; and, they not having done so, the company is now bound by the acts of the officers who signed the note. Mr. Richards testified that he did make out statements of the company's affairs in gross. How many or how often such statements were made out he does not state, but he does say that he never made out and submitted to the board of trustees an itemized

statement, prior to 1889, and that the Wright note was never mentioned at any of the meetings of the board, to his knowledge. We do not think that statements made out in the manner in which it is said they were were sufficient to impart knowledge to the stockholders as to who the creditors or debtAs we underors of the company were. stand the law to be, it is this: That before an individual or corporation can be held to have ratified the unauthorized acts of his or its agents, every detail of the transaction must have been made known to the principal. If, after obtaining such knowledge, the principal fails to act, long and continued silence will be deemed an approval of the act, and such ratification relates back and is equivalent to a prior authority to make the contract. 1 Daniel, Neg. Inst. §§ 316319; Stark Bank v. United States Pottery Co., 34 Vt. 146; Story, Ag. § 239; Bank v. Jones, 18 Tex. 816; Smith v. Tracy, 36 N. Y. 82; French v. O'Brien, 52 How. Pr. 398; In the case Combs v. Scott, 12 Allen, 497. of Mining Co. v. Stevenson, 5 Nev. 228, Lewis, C. J., speaking for the court, said: "So, where it is sought to charge a corporation with the ratification of an unauthorized act of an agent by reason of its acceptance of some benefit or advantage from it, it should appear that such benefit was accepted with full knowledge of the character of the act. The evidence in this case, however, is clear and positive that the board of trustees, which was the authorized agent of the corporation, knew nothing of the terms, nor even of the existence, of the lease in question. The money paid by the appellants was reported by the superintendent to the board as received for ores sold. Nothing seems ever to have appeared in his reports from which it could even have been inferred that the money paid by or due from Stevenson to the company was for the use or rental of any portion of the mine. How, then, can it be held that the acceptance of money by the board, reported to it as being for ores sold, was a ratification of the lease executed to the appellant? The company did not know of such lease, nor were there any such circumstances connected with the acceptance of the money as to place it upon inquiry, or to charge it with presumptive notice of its existence. If, then, it be the law that there must be a full knowledge of all the material facts before the acceptance of profit or advantage by the principal will be held to constitute a ratification, surely the respondent here cannot be held upon the lease in question, for it knew nothing of the material facts respecting it. If it were shown that the board knew of the lease, the acceptance of payment from Stevenson for the ore extracted would doubtless be sufficient to establish a ratification; but, the contrary being shown, it would manifestly be opposed to the well-settled rules of

law to hold such acceptance to be a ratification. * * It cannot, we think, be maintained that the knowledge obtained unofficially by three of the trustees that Stevenson was engaged in extracting ore from the mine is sufficient to charge the company with such knowledge. As any number of trustees, acting individually and not as a board, cannot act for the corporation, so any information obtained by individual trustees, and not communicated to the board, should not, it would seem, become the foundation of a contract binding upon the company. The trustees represent the corporation only when assembled together and acting as a board. Such being the law, how can it be claimed that information communicated to them individually, but not to the board, can be made the foundation of an implied contract on the part of the corporation?" Hillyer v. Mining Co., 6 Nev.

55.

It is to the interest of the public that there should be a speedy termination of a lawsuit; but there is another principle of public policy that should not be lost sight of, and that is that no man should be deprived of his property to pay another's debts without it clearly appears that he has placed himself in that position wherein the law says, "You have assumed the responsibility, and you cannot be released therefrom." The evidence in this case is conflicting and obscure in many particulars. The motion for a new trial was made upon the ground, among others, that the findings of fact were contrary to, and not supported by, the evidence, and that the judgment was contrary to law. It does not appear on what ground the motion was granted. The granting or refusal of a motion for a new trial on the ground of the insufficiency of the evidence to support the findings is addressed to the sound discretion of the judge who presided at the trial of the case in the lower court, and on an appeal from such order, where the court below, in the exercise of a sound discretion, grants a new trial on conflicting evidence, appellate courts have always refused to disturb the order. Kellenberger v. The Railway Co., (Cal.) 33 Pac. Rep. 90. order of the district court in granting the new trial is affirmed.

BELKNAP, J., concurs.

For the pur

BIGELOW, J., (dissenting.) pose of clearing away the cloud of dust that seems to envelop this case, I propose to first ascertain what the case is, and what the issues were that were to be tried in the district court. The complaint alleges that on December 1, 1886, the defendant made, executed, and delivered to the plaintiffs a certain promissory note, which, at the commencement of the action, was, with a portion of the interest, due and unpaid, and for

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