Alabama Fidelity & Casualty Co. v. Jefferson County Savings Bank

73 So. 918, 198 Ala. 557, 1916 Ala. LEXIS 262

• Court: Supreme Court of Alabama
• Decided: November 16, 1916
• Status: Published

Opinions

ANDERSON, C. J.—

(1, 2) It was formerly supposed that a corporation could not enter into a contract except by attaching the corporate seal to the contract itself, but the modern rule is that the corporate seal need not be attached to a corporate contract unless a similar contract, when made by an individual, would require a seal. — 3 Cook on Corporations, § 722. This rule applies to the method of executing the contract; that is, if the contract must be under seal, it must have the seal of the corporation attached in the execution of same, but does not necessarily mean that the officer or agent of the corporation, who executes the contract, can only derive his right or authority to do so under a sealed instrument, and in this respect there seems to be a distinction between the method of delegating authority to an agent between an individual and a corporation. An individual in delegating to another the authority to execute instruments must do so by an instrument of similar importance and dignity as characterized, the instrument to be executed, but not necessarily so with a corporation.

“It is a general rule of law applicable to natural persons that, whenever the act of agency is required to be done in the name of the principal under seal, the authority to do the act must be conferred by an instrument under seal. Such was formerly the doctrine in regard to the authority of agents of corporations. But in modern times this ancient rule has been wholly discarded, in this country, and it is now well settled that an agent of a corporation may be appointed — certainly by vote — without the use of a seal, whatever may be the purpose of the agency.”—Fitch v. Lewiston, etc., Co., 80 Me. 34, 12 Atl. 732; Bank v. Patterson, 7 Cranch, 299, 3 L. Ed. 351; Fleckner v. Bank, 8 Wheat. 338, 5 L. Ed. 631; Despatch Line Co. v. Mfg. Co., 12 N. H. 231, 37 Am. Dec. 2 3; Ang. & A. Corp, §§ 282, 283.

A corporation can only act through agents. If De Bows’ authority to execute a sealed instrument could have come only by a sealed instrument, who was there to give him such authority ? The agent of the corporation executing the power of attorney, if the contention of the appellant is sound, must himself have been authorized by a writing under seal. It is a common practice for officers and agents of a corporation to execute instruments under seal and of the most solemn character without any other or further authority for doing so than a simple resolution of the board of directors of the corporation. We do not overlook the authorities cited and relied upon by appellant’s counsel, but not one of them hold that the delegation of the authority to the ■agent to execute a sealed instrument for a corporation must be under seal. They simply hold that the execution of the instrument, if required to be under seal, must be under the seal of the corporation, or that the delegation of the authority by an individual must be under seal; but none of them hold that a corporation cannot delegate the authority except by an instrument under seal, and, as above noted, the law recognizes a distinction in this respect between individuals and corporations.

(3) As the delegation of the authority need not necessarily be by a sealed writing, a ratification of an agent’s act in signing a bond need not be by a sealed writing, though we do not wish to be understood as holding that every valid ratification must be of the same character and solemnity as would be essential to the original authorization.

(4, 5) It may be conceded that the authority to De Bow and Webb jointly to make bonds for the appellant company did not authorize them to do so singly. It may also be questionable as to whether or not authority was shown giving Martin and Forbes the power to authorize De Bow to make bonds for the company, yet the evidence shows that the appellant company ratified the execution of the bond in question, and this was done after the withdrawal of the authority from De Bow and Webb of October 23d, and the recordation of same on the 29th. De Bow testified that he remitted to the company the premium upon the bond and a copy within a few days after the execution, and it appears that the company waited over a month before attempting to dis-affirm the transaction or attempting to restore the status quo. This testimony of De Bow was not disputed, and no excuse was shown for a failure to disaffirm the execution of the bond promptly upon the receipt of a copy of same and the premium. Appellant did introduce a general statement by De Bow to it, covering the- business of the past, and which was sent in just a few days before it attempted to repudiate the transaction in question, but this statement is not at all incompatible with the testimony of De Bow, that he sent in the premium and copy of the bond within five days after the execution of same, and the appellant did not deny the receipt of same. Indeed, it seems that the appellant waited several weeks before attempting to disaffirm the execution of the bond, and did not attempt to restore the premium until March 1st, practically two months after the receipt of same. A corporation which accepts the benefit of a contract made by an officer without authority is estopped from denying the authority of such agent or officer if the contract is one within the charter powers of the corporation.—Pittsburg R. R. Co. v. Keokuk, 131 U. S. 371, 9 Sup. Ct. 770, 33 L. Ed. 157; Ala. R. R. Co. v. Kidd, 29 Ala. 221; Cook on Corporations, § 720.

(6) Of course, the acceptance of the consideration of an unauthorized contract, without knowledge of the terms of the contract or of the account upon which it is predicated, is not itself a ratification of the contract, but the proof in the case at bar shows that the appellant had full notice of the bond, and that the premium of $20, retained by it for two months, was collected for the making of said bond by it through De Bow, who was its agent, whether he did or did not have express authority to execute said bond for this appellant.

(7) There are but few objections to the evidence relating to the ratification features, and in them there was no reversible error. The other objections related to an effort to establish original authority in the agent De Bow, and as we hold the appellant liable upon a ratification, rather than on an original authorization, the rulings were harmless, if errroneous.

The judgment of the circuit court is affirmed.

Affirmed.

Mayfield, Somerville, and Thomas, JJ., concur.