Bulkley v. Derby Fishing Co.

2 Conn. 252

• Court: Supreme Court of Connecticut
• Decided: November 15, 1817
• Status: Published

Opinion

Swift, Ch. J.

In the acts constituting banks and other corporations, regulations are made with regard to the mode in which they are to transact their business, and render their engagements obligatory. To enable them to enforce the engagements made for their benefit, they must act within the scope of their authority, and conformably to the directions of law.

In all cases, where banks, and similar corporations, conform to their charter, their acts are binding on them. So in cases where they do not conform literally to their charter, they may be liable. Suppose a banking corporation should, by a vote, agree to issue bills in a different form, or with different signatures, from those prescribed ,• they would, by their own act, be rendered liable to pay them. / If such a corporation, without a vote, should introduce a usage and practice in the transaction of their business different from that prescribed by law, they would, by the same reason, he rendered liable. For though such conduct might be improper in itself, yet the bank cannot take advantage of their own wrong to avoid their contracts, it cannot be supposed, that in general, those who dealt with them had knowledge of their deviation from the charter regulations ; and it is to be presumed, that they act according to law. If it be admitted, that banks may thus deviate, and then avoid their contracts, they would be enabled to practice the grossest frauds on the community ; especially, in a country where there is such an immense number of monied institutions as in this, and where it is practicable for very few to know the extent of their powers and regulations. | Banks, like individuals, must be liable in the character which they hold out to the world j and whatever may be the forms of their obligations, if they are according to their charter, their corporate votes, or their known usage and practice, they ought to be binding.

A corporate act is not required in all cases. It is sufficient if there be a usage and practice under such circumstances as may be presumed to be within the general knowledge, and by the consent of the company. yíNor can the stock-holders, or members of the company, be subjected to any inconvenience or damage. If any officer, vested with certain powers, should, in any instance, violate them, and attempt illegally to subject the corporation to any obligation, such corporation may instantly, on the discovery, disavow the act, and prevent a repetition. And then, as there will be neither law nor usage to sanction the transaction, it will not be binding. But1 where the corporation will suffer such practice to continue, it is to be presumed, that it is done with their consent, arid be made obligatory on them. ^ In the present case, it appears to me, that the evidence offered conduced to prove, that it was the usage and practice of this company to underwrite policies of insurance, and draw bills of exchange in the form now under consideration; and, of course, that it ought to have been admitted. Whether the evidence offered would have been sufficient to have satisfied the jury of the fact, is not now the question. We have only to decide on the relevancy; the jury must decide on the sufficiency of the testimony.

I am of opinion, that a new trial ought to be granted.

Thumhui.Ii, J . was of the same opinion. Edmond, J. dissented.

Smith, J.

dirt not agree witn the Chief Justice on the ground taken by him, but acquiesced in the result, that a ¡sew trial ought to be granted, mi the ground that the secretary hart, in his correspondence with the insured, agreed to 1 lie policy in question, as expiiciily ami as fully, as though he hart signed the policy itself ; and has! thereby afforded ail that safety to the company, which the statute contemplates. Besides, his having afterwards registered the policy, is, of Itself, a strong evidence of his approbation.

Brainakd and Goddahd, Js. concurred in the opinion given by the Chief justice.

Hosmek, J.

The evidence offered in this case, was rejected, on the ground that the policy ought to have been executed literally pursuant to the charter of incorporation,, More than a century since, the case of Rex v. Bigg, 3 V. Wms. 419. went the full length of deciding, that as against, a corporation, an authority to its agent, different from the prescriptions of its charter, might be implied. Although this decision has, on some occasions, been lost sight of; (2 Crunch 168. 2 Johns. Rep. 114.) yet it has been abund antly recognized by modern determinations, and is unquestionably established. 10 Mass. Rep. 397. 11 Mass. Rep. 94. 12 Johns. Rep. 230.

i consider it to be undoubted law, that a corporation may incur a liability different from the prescriptions of its charter. Like individuals, it is responsible in the manner in v, hick it permits its agents to hold it out to the world. The corporation should disavow the practice, or the usages of their agents in the transaction of business shall be presumed to have their sanction. An authority to contract in a particular mode may be proved by a vote of the stockholders ; and in prevention of fraud and prosecution of justice, it maybe presumed. It may be implied from their acquiescence in the usual mode of transacting the business of the corporation, and expressing no objection against it j for qui non prohibet, cum prohibere possit, jubet. What is usually done by the agents of a corporation, in the transaction of the business confided to them, it is a fair presuroplhm that the stockholders are cognizant of. Although they reside in different places, they have an interest ⅛ acquainting themselves with the proceedings of the corporation. The office where the business is done, is open ; the books of the company are subject to their inspection ; and it would be absurd to suppose them ignorant of those public facts, re-Hating to the ordinary transaction of the corporate concerns, with which mankind in general are acquainted. In short,A every transaction of the comp :n> • established by proof of direct authority from the stnrk'iohFrs, or implied from the usual modes of doing their business, which is not against, law, or a prohibition contained in their charter, is obligatory upon them.

The testimony, in my opinion, should have been admitted ; and because of its rejection, I would advise a new trial.

Gouim, J.

The question is, not whether the evidence, rejected at the trial, was sacli as would have been conclusive upon the defendants ? but whether it was admissible : And ! am clearly of opinion, that it was so.

It is lAservable, that the epmpany are not, in this case, claiming a right, through the agency of an individual, whose authority to act for them is denied, by the adverse party. It is, therefore, unnecessary to inquire, whether, in such a case, evidence, like the present, could be admitted in their favour, or not. Here, the demand is against the company, upon a contract, executed in their name, by Gillet, as president, and Wheeler, as assistant; and both of whom, it is claimed, were the company’s agents for that purpose. But to this claim it is replied, first, that by the terms of the act of incorporation, the company cannot be bound, by any contract, unless it is signed by the president, and countersigned by the secretary ; and therefore, that this policy, not being so executed, does not bind them, even admitting, that Wheeler, as assistant, was, de facto, employed as their agent for the purpose of countersigning. - -

A corporation certainly cannot, by its own act, enlarge its own, capacities, powers, or rights ; but it would be strange to say, that it cannot thus voluntarily incur liabilities. If a corporation, by a corporate act, appoints an agent, under any name or title whatever, for the purpose of making, in its own behalf, any contract, which it has a right to make : can the corporation itself impeach such a contract, made in its name, by that agent, by alleging its own want of power to make such an appointment, or to contract by such an agent 2 The present objection must, to avail the defendants, go to Oils extent. But such a doctrine is in violation of all princi-A corporate body, by transgressing the limits of its charter, may, doubtless, incur a forfeiture of its privileges an(] pOWO!.s . iM,t who ever imagined, that it could thus acquire an immunity, to the prejudice of third persons ? The clause, in which the act of incorporation prescribes the mode of signing, contains no negative words; i. e. no provision that a contract, signed in any other mode than that prescribed, shall not bind the company. It would be highly unreasonable, therefore, to construe that mode as exclusive, to the injury of strangers — especially, as the statute is not, in its nature, a public one, and third persons are, of course, neither bound, nor presumed, to know its provisions. The case ex parte Meymot, 1 Atk. 196. though not in point, contains a doctrine, which, I think, has an important bearing upon the present question. That was an application to the lord chancellor, to supersede a commission of bankruptcy, which had been taken out against the petitioner- — he being a clergyman. The application was founded upon the statute 21 Hen. by which clergymen are prohibited, under heavy penalties, from trading; and their contracts, as traders, are declared “ utterly void, and of none effect.” Lord Hard-wieke, however, dismissed the petition; and among other things observed, “ If a man, with his eyes open, will break the law, that does not make void the contract. It is, undoubtedly, very improper for a person to say, I have broke the law, and therefore, I am exempt from any remedy, a creditor may have against me.” “ I am inclined to be of opinion, that the contract shall be void, as to the parson himself only ; for it would be a most extraordinary construction of the statute, that the bargain shall be void, for his own benefit; and it would be very mischievous to construe the act in such a manner.” “ Shall the bargain be void, for the parson’s benefit ?” “ This part of the act ought to be so construed, as to make it a penalty on himself only.” This reasoning, I repeat, applies strongly, by analogy, to the question before the court. And if the petitioner, in that case, was bound by his contract, notwithstanding the strong language of the statute of 21 Hen, 8. j a fortiori, it would seem, ought the policy, in the present case, to bind the company, if Wheeler was actually their agent, for the purpose of countersigning — whether the contract was executed in the form prescribed by the act of incorporation, or not.

We come, then, to the second objection made by the defendants, via. that a corporation aggregate cannot appoint an agent, except by deed ; and that therefore, no other evidence, than that of a deed, is admissible, to prove Wheeler’s authority to countersign the policy. The first proposition is generally, though not universally true, as to express authorities ; but it applies to no other. If, then, the plaintiffs were attempting to prove a specific act of the company, expressly conferring upon Wheeler the authority, under which he is claimed to have acted ; the defendants might properly insist, that the fact could be proved in no other way, than by proof of a corporate act. But implied authorities, w hich are almost as familiar in the law, as implied promises, and which rest upon mere presumption, are always proved by circumstantial, or collateral facts j and can be proved in no other way. Usual, or frequent practice, in business, is the ordinary evidence, in such cases. The general principle is, that one person, who, by permitting another to act, ostensibly, as his agent, has given him a credit, with the public, as such, shall, in favour of third persons, be presumed to have authorized the latter to act, in that character, and be precluded from averring the contrary. This presumption is establish-1 cd by proof of usage, or practice : As, that the one has been in the habit of acting in the name and behalf of the other, and that the latter has, either by positive acts, or by acquiescence, impliedly recognized the agency. And the presumption, to be available to any purpose, necessarily embraces all legal requisites to the creation of a valid authority. Hence, a deed, a by-law, or a record, may as well be presumed, as any other fact. The Mayor of Kingston upon Hull v. Horner, Cowp. 102.

It may be objected, that the usage, in this case, not being ancient, can aiford no evidence of Wheeler’s authority. But the rule, requiring a usage to be ancient, to found a presumption, is not in pari materia. When a title, or interest, is to be presumed from possession, enjoyment, or user, lapse of time is essential. But that rule has a different object, and is founded upon different principles, from any, involved m tii* present cju< s-umi. It is designed to quiet Jong and uninterrupted possession, enjoyment, or user, by discouraging state and dormant claims ; and can have no application at all to questions like the j-yc,:rnt.

But bow, it is asked,; an tlie usage of a corporation, which is an invisible body, existing only in contemplation of law, be proved, or even known ? I answer, by the acts of its officers, or acknowledged agents, in the management of its ordinary concerns. This point was conceded by counsel, and deckled by the court, in Rex v. Bigg, 3 P. Wms. 419. j and in the case of The Mayor of Kingston upon Hull v. Horner, thi-. species of evidence was admitted to establish a claim, in fa-vour of a corporation. Now, the evidence offered in the present case, whether sufficient to prove the fact, or not, ceWaiidy conduces to prove, that Wheeler was in the habit ol countersigning contracts, as agent for the company ; that his acts, in Unit character, have been recognized, as valid, by the proper officers of that body; and that the corporation, knowing, or having, in its own books and records, the means of knowing, the fact, has acquiesced in his agency, and in the present instance, taken advantage of it, by retaining the premium note,

I am, therefore, clearly of opinion, that the evidenc* should have gone to the jury ; and that a new trial ought to he granted.

Baxifwik, J. gave no opinion, being interested in the funds of the Derby Fishing Company.

New trial to be granted.