Bank of Middlebury v. Rutland & Washington Railroad

30 Vt. 159

• Court: Supreme Court of Vermont
• Decided: January 15, 1858
• Status: Published

Opinion

The opinion of the court was delivered by

Redfield, Ch. J.

I. There is no good ground, we think, to question the authority of the constable in this case. The case does not show that he had been requested to give bonds by the selectmen of the town in any particular sum, or with any intelligibly defined security, as was held requisite in Bowman v. Barnard, 24 Vt. 355, to constitute the first step in rendering the office vacant for a refusal to give bonds. The most the testimony tended to show was, that he had “ been inquired of by the selectmen when he was going to give bail,” and that he was at the time of the service of the writ, acting upon the suggestion of that inquiry, having procured a bond to be drawn and signed by one surety. This, we think, had no tendency to show a definite request to give security, and until that was done there could be no refusal. But so far from a refusal in the present case, the constable seems to have been making such progress in that direction as had thus far proved satisfactory to the town.

To constitute a case of disqualification of the officer to act in his office, there must be some definite action of the authority of the town, by which the officer shall know that he is not longer allowed to act under the election, and that others learning the facts may also know that he is not allowed to act as such officer. This will require not only a definite demand of bail of the officer, but a peremptory refusal to allow him to proceed, either in the present tense or after a certain limited period of indulgence, nothing of which appears in the present case.

And even after all this is done, it by no means follows that the official acts of one so situated are necessarily void as to third persons. Certainly we ought not to allow a party who has procured one so situated to act officially, afterwards to repudiate such acts upon the ground of the incompetency of the officer to do the act which he had himself procured for his own benefit, and which he claimed as binding so long as it operated in his favor. It would certainly be of the very essence of fraud to allow the railway company in this case to take the benefit of the official authority of this person for the purpose of obtaining possession of the property, and at the same time to repudiate it for all purposes of security or accountability. But we need not pursue this part of the case; it is apparent from what has been said, that the testimony had no tendency to show the office vacated. There was, therefore, no necessity of submitting it to the jury.

II. In regard to the proof of the execution of the bond by the corporation, the American "cases differ toto cáelo from the English cases. The courts in Westminster Hall still seem reluctant to abandon the idea of a corporation being unable to enter into ordinary contracts except by their, common seal. They do indeed make some exceptions of classes of cases so indefinite as nearly to subvert the rule, but always under protest that the rule is to be most scrupulously and religiously maintained. For instance, the English courts except all that class of cases which are too insignificant to justify the use of the common seal of the corporation, such as the appointment of inferior officers and many similar acts. They also except all such acts as are of so frequent occurrence as to make it absurd to expect- any suc-li formality, as in contracts by a railway to carry passengers and freight. If the corporate seal were required to be affixed to all such contracts by authority of the directors, it would be impossible, or if it were intrusted to the proper agent, it must involve the necessity of having the common seal in the hands and under the control of every subordinate agent of the company. This shows the impracticability of the rule in so strong a light as to satisfy the English courts of the necessity of some relaxation.

In this country some of the earlier cases manifest the same reluctance to admit the power of an agent to bind the corporation by specialty, unless he had authority from the company to affix their common seal. And if this were not expressly shown, the least which would show an implied authority to so bind the company, -was supposed to be that the officer affixing the seal of the company should be shown to have had the custody of their common seal, which was presumptively made to appear by the fact that the seal was the common seal of the company. Hence the importance attached to the fact of it being the common seal of the company, in many of the cases.

But it was never supposed that if authority were shown from the corporation to attach their seal to the contract, that it was indispensable that use should be made of the ordinary common seal of the company. Any other seal would have the same effect if adopted by the company. And this is ordinarily established by showing authority to execute a contract on behalf of the company under seal, and the fact of attaching some seal to the name of the company with the intent to seal on their behalf.

So that, at present, nothing more is requisite than to show the authority of the agent to contract, on behalf of the company, in the particular form, i. e., with a seal. To this purpose it is required,

1. To show the authority of the agent to make the contract in some form. That does not seem to be questioned in the present case. The case shows the express assent of the majority of the board of directors. And the directors, in the absence of restrictions, in the charter or by-laws, have all the authority of the corporation itself in the conduct of its ordinary business. And it is not important that this authority be conferred at an assembly of the directors, unless that is the usual mode of their doing such acts. If they adopt the practice of giving a separate assent to the execution of contracts by their agents, it is of the same force as if done at a regular meeting of the board. If this were not so it would lead to very great injustice, for it is notorious that the transaction of the ordinary business of railways, banks and similar corporations in this country, is without any formal meetings or votes of the board. Hence there follows a necessity of giving effect to the acts of such corporations according to the mode in which they choose to allow them to be transacted. If this were not done, it would become impossible to dispose of such contracts with any hope of reaching the truth and justice of the rights and duties of the several parties involved. And this is certainly nothing of which the corporation can complain. It is merely holding them to such rules of action as they see fit to adopt for their own guidance and the transaction of their business. The cases are numerous where the consent of a majority of the directors, given separately, has been held binding upon the company. And if it were not so held, it would enable the majority of the business corporations of the country to escape from many contracts which require the action of the directors for their execution, whenever they choose to do so. This is, so far as I know, a universal rule in regard to the action of corporations within the scope of their charter power’s. And in numerous well considered cases in this country, where the authorized agents of the company have extended its business beyond the strict limits of those functions for which the charter was granted, the company has been held bound by the extension uxiless the corporators interfered to restrain such extension at the eax-liest moment. This rule was sanctioned by this court in Noyes v. Rutland and Burlington Railway, 27 Vt. 110. There is now, I apprehend, no ground to question that a corporation is bound by the action of a majority of the hoard of directors, expressed in the usual mode which they adopt in the transaction of the business of the hoard.

2. It must appear that the majority of the board of directors assented to the execution of a contract of the class in question, or that they subsequently adopted it. In the present case there seemg no ground to question that the majority of the directors, if they consented to the proceedings by replevin or took the benefit of it, must have expected it to be done, or to have been done upon the execution of such a contract as was executed, as the statute requires this particular form of contract.

As the jury have found under the charge, either the express consent of a majority of the directors to the adoption of the proceedings by replevin, or else the adoption of it by subsequent assent and ratification, there would seem to remain no question upon this part of the case, except as to the manner of the execution in not using the ordinary and common seal of the company.

The rule of law upon this subject originated at a time when the use of seals was more common with natural persons in the execution of contracts than at present, and when the seals of natural persons, as well as of corporations, contained devices significant of the person to whom they belonged, and when the seal itself, when affixed to an instrument, was equivalent to signing. In that state of affairs it was important that when corporations executed an instrument, it should be done by the common and ordinary seal of the company, and many of the English cases and some of the early or exceptional cases in the American books, seem to go upon the ground that a corporation cannot seal except by the use of their common seal.

But that is certainly not the established rule of the American courts. It is well settled that a corporation may adopt any seal they choose, for the time, the same as an individual. Mill Dam Foundry v. Hovey, 21 Pick. 417; Porter v. Androscoggin and Kennebec Railway, 37 Maine 349. These cases are fully in point and there are many other cases in the books. It would be strange if the majority of the board of directors who adopt, could not change the seal at will. Angell & Ames on Corp. sec. 217. This writer seems to regard this as the English rule, and there are some cases there which favor this view.

There is a numerous class of cases where the agent of a corporation has signed, as agent, and affixed an ordinary seal to his name, and the courts have regarded it as the seal of the agent and not of the corporation. In these very cases, had the agent affixed the common seal of the corporation, it would have shown an intention to use the_ seal of the company, and the courts would have held the contracts specialties, no doubt, and as such, binding upon the company. But the fact of the seal being used as the seal of the company, may appear otherwise than from the device of the seal, as it does most unquestionably in the present case, in the form of attestation. The testimony in regard to Strong’s declarations, at the time he delivered the bond, that it was properly executed by the corporation, seems to have added nothing to the fact of the delivery by him of the bond as the bond of the company, which seems not to be questioned in the case; and there seems no good ground to question that it was admissible on general principles as evidence in the action.

But with the restriction upon which it was admitted there can be no question, as it seems to us. It was only admitted as evidence against Strong.

Judgment affirmed.