Durham v. Carbon Coal & Mining Co.

22 Kan. 232

• Court: Supreme Court of Kansas
• Decided: January 15, 1879
• Status: Published

Opinion

The opinion of the court was delivered by

Brewer, J.:

This was an action to recover money claimed-to be due on a contract for the sale of land. That a contract-was entered into, is undisputed; but the defendant denies-that it was its contract — that it ever authorized such a contract in the first instance, or ratified it after it was made.. The contract, which was in writing, purported to sell a certain quarter-section of land to defendant for $7,500, to be paid as follows: $500 cash, $500 in sixty days, $1,500 in six months, $2,500 in eighteen, and $2,500 in thirty months from date. By the terms of the contract, the possession of said premises was given to the defendant; but, in consideration that the defendant should not be required to pay interest on the deferred payments, defendant agreed that one LeRoy D. Stone, the tenant (and son-in-law) of the plaintiff,, should continue to occupy, for farming purposes only, so much of said premises as he then cultivated, until March 1, 1877, the defendant “reserving to itself at all times the right to enter-said land for the purpose of mining the same.” The parties to said contract were named therein as Jeremiah B. Durham-on the one part, and the Carbon Coal and Mining Company on the other part, and the contract closed and was signed in. the following form, to wit:

“ In witness whereof, the said parties to these presents have hereunto set their hands and seals. . Dated the day and year first above written.

J. B. Durham. [Seal.]

Carbon Coal and Mining Company,

By T). F. Blandin, President„

By T. J. Peter.”

This contract was acknowledged before H. C. Williams, a notary public of Shawnee county.

The contention of the defendant is, that the president could not bind the company by a contract of purchase; that if he could, he could not delegate the power to a third party; and that the company never ratified this unauthorized contract.

kf&jtfwSen1 courtpreme 2'Jarty?iik?ws good against 3 Agent of corSmonyoisuch agent. The case was tried by the court without a jury. No findings of fact or conclusions of law were asked for or made. There was a general finding and judgment in favor of the defendant. The whole evidence is preserved, and the question is, whether upon such evidence the plaintiff was entitled to a judgment. We need only advert to the oft-repeated ..ruling of this court, that all presumptions are in favor of the judgment, and that all doubtful questions of fact are solved by the decision of the trial court. So that the question is not whether upon the testimony a jury might be warranted in a verdict for the plaintiff, but whether such testimony compels a decision in his favor. In this case the defendant offered no testimony. It rested its case upon the evidence offered by the plaintiff. A part of this evidence was in deposition or other writing, and a part was the oral testimony of defendant’s officers. If a case rested wholly in written evidence, whether document or deposition, it would come before us for examination in about the same attiAide as before the trial court, and questions of fact might be fully and correctly examined and determined by this court. And where testimony is drawn from the lips of a party or his agents, no wrong will ordinarily be done such party if the testimony so given be accepted as true. A party’s admissions are good against him; so is his testimony. And wh'ere a party, like the defendant here, acts only through agents, the testimony of those agents while still in its employ as to acts done by them as agents, especially when they are largely interested as owners or stockholders, partakes something of the nature of personal admission or testimony. And further, when upon the record there appears no conflicting testimony, and it is apparent that it was accepted as true by the trial court, this court may properly act upon the same understanding, and inquire whether the law was by the judgment correctly applied to the facts. (Rumsey v. Schmitz, 14 Kas. 547.) In this case there is very little conflicting testimony. Much of it is in deposition or other writing, and most of it comes from the lips of defendant’s agents and employés. Evidently, about the facts there was little doubt or dispute, and the real question was and is, whether upon those facts the plaintiff was entitled to recover.

Conceding that the mere execution of this instrument did not make a binding contract through want of authority in Peter to bind the defendant, still we think upon all the facts the court should have found that the defendant was liable. The agreement was one which the defendant could unquestionably have enforced against the plaintiff. Even though made on the part of the defendant by an entire stranger, the defendant could at once have accepted the benefit of the contract, and the plaintiff could not then have pleaded the original want of authority in the stranger; and any conduct which as against an individual would establish acceptance, will also as against the corporation. The old idea that a corporation would be bound only by a contract under seal, has long since been done away with. The vast amount of business now being transacted by such organizations, has compelled the application of more liberal rules. And now, no corporation any more than an individual can experiment with a contract, take possession of the property contracted for, test its value, and then repudiate on the ground that no separate agent acting in the premises had full power to bind the corporation by the purchase.

In Green’s Brice’s Ultra Vires, 463, will be found the following language:

“It must also be remembered that the tendency of modern judicial interpretation and legislation has been to waive needless formalities, and that consequently at the present many agreements are held binding on corporate bodies, even without, ratification, which a few years since would, from technical reasons, not have been so.”

And on page 379, is this:

“Within certain limits, it would also seem that corporations by acting upon, without expressly ‘ratifying’ a contract — not necessarily relating to a subject essential to their existence — which does not bind them for want of sealing, may so far adopt it as to reader themselves liable to an action either for use and enjoyment or upon the common counts,the nature and extent of their liability being estimated by a reference to the terms of the invalid agreement. It may, perhaps, be considered that the corporation has thereby actually ratified the agreement in question, but it would probably be the simpler and more reasonable explanation to say that the corporation by so acting is estopped from subsequently repudiating and denying the transaction.”

Now it appears in this case that Peter was largely interested as a stockholder in the defendant corporation; that he had been instrumental in securing other lands for the defendant'; that Blandin was president and a director, (the board of directors consisting of five members, two of whom were non-residents of the state, and seldom present); that Peter and Blandin consulted together, and decided that it was advisable for the corporation to purchase this land, and in pursuance thereof Peter sought the plaintiff and persuaded him to enter into the contract; that the negotiations therefor were had in the office of the defendant; that the contract was made in the name of the defendant, and was executed by one assuming to have authority to bind the defendant; that the sum of $500, the cash payment, was at the time made by Peter, by giving his individual check, and that this sum thus advanced was returned to him by the check of the treasurer, also a director, under instructions from the president, and the amount allowed by the board in their settlement with the treasurer; that the defendant took possession of the land, and sent employés thereon to prospect for coal, sinking several prospect-holes therefor; that the vein not proving as thick as was expected, about a month thereafter Peter sent to plaintiff an open letter, by the hands of the president, in which he, admitting the purchase, states that it was made on account of representations as to the coal which had proved untrue, and that therefore the land was not wanted, and urges an arrangement of the matter in a Christian spirit; that after the sending of this letter, the company continued for a short time its work on the farm, and that there never has been any express disaffirmance by the directors of this purchase. It also appears that at the next annual meeting after this controversy, the by-laws of the corporation were amended by adding this provision: “And all purchases and leases of real estate by the officers of this company shall be approved by the board of directors before the same shall be binding upon this company;” and thereupon the board proceeded to formally approve several contracts made by Peter and assigned to the company, and some by whom made does not appear.

„ , contractionstruea. In the light of these facts, can it be doubted that the corporation accepted this contract? "We think not. Take the matter of payment: A contract is made in which it is named as a party purchasing a certain tract of land; it is made by its principal stockholder upon consultation j£g executive officer. Upon the face of the paper it is entitled to the deed, and is obligated for the price. In the absence of the officers, the stockholder advances the fh’st payment of $500. The president directs the treasurer to refund this money, and the treasurer does so. Both the president and treasurer are directors, and the two are a majority of the resident directors. The • treasurer reports his action to the board, and his action is approved. What is approved? — a donation of $500 of corporate money, or a first payment on the contract? Can directors give away corporate funds? Would not that be a clear violation of official duty? Otherwise than as a first payment on and acceptance of the contract, this appropriation of $500 to Peter was as clear a wrong upon the corporation as an embezzlement of like amount by the treasurer or other officer. No such imputation of wrong should be made. Again, the appropriation did not purport to be a donation. The president did not direct the treasurer to make a donation to Peter, neither did the treasurer intend a donation. Each knew that Peter had advanced money for the corporation, and each intended a reimbursement of that money. In so reimbursing they ratified the act and the whole act, and when the board approved, they •approved it as a whole. This act of the board was either a gross perversion and misappropriation of corporate funds, or a recognition of the act of Peter as an act of the corporation. It will not do to say that the corporation may accept in part and reject in part. Like any other principal, it accepts or ■rejects in toto. Neither was there anything to indicate an •attempt to accept a part and reject the rest. The appropriation, was not accompanied by any disaffirmance of the act. It may be conceded that a corporation, like an individual, may ■compensate a third party for losses in doing an unauthorized .act, without assuming responsibility for the act. It was within the power of the corporation to pay Peter $500 without ratifying the contract or assuming the liability which he had attempted to incur for it. But it must do something to evince such an intention — it must show that it repudiates his act while it compensates him for his loss. If it simply return to him the money he has assumed to advance for it, it implies an assumption of the act. Here the return was made without •any limitation or qualification, and evidently the first thought was to avoid the contract, not on the ground that it was not the contract of the corporation, but on the ground of the •misrepresentations of the vendor.

Again, take the matter of possession. Delivery of pos•session has been said to be sufficient part performance to take a parol contract for the sale of lands out of the statute of frauds. (Edwards v. Fry, 9 Kas. 423.) And this is upon the •ground that the entry into possessipn is, unless supported by the contract, a trespass subjecting the party entering to an action for damages. In like manner the entry into posses•sion and sinking of prospect-holes is consistent only with an acceptance of the contract. In any other light, it was a flagrant trespass. It implied an intent to commit a gross invasion upon the righ'ts of Durham; an invasion which unless withstood, might ripen into a title by the mere lapse of time. It either entered under the contract or committed a trespass. 'The inference from the act is, that it intended the former Tather than the latter. Just as when a lease is prepared and signed by the lessor, if the lessee with full knowledge thereupon enters and takes possession of the premises, the law implies an acceptance of the lease, and that he is bound by its terms; and the burden is on him to show the contrary,, and that he entered in defiance of the lease and in disregard of the lessor’s rights. Taking possession is prima facie an acceptance of any right to enter which is shown to exist, and when a party may rightfully enter and does enter, the implication will be that the entry was rightful and not wrongful. In the case of London, &c., Rly. Co. v. Winter, 1 Cr. & Ph. 57, the entering into possession of land and constructing-a railroad over it was adjudged an acceptance of a contract for its purchase, and avoided the necessity of any inquiry into the power of the agent to make it. In Shaver v. B. R. & M. Co., 10 Cal. 396, the manager of a mining company purchased in the name of the corporation a house to be used as an office for the corporation and a boarding-house for it& laborers. He took possession, and subsequently several meetings of the trustees were held in the house. At one of these-meetings a resolution was offered and rejected, declaring the contract legal and binding. No other vote or action of the-trustees was shown. In a suit for the balance of the purchase-money, it was held that if the authority of the manager to make the purchase were doubtful, the acts stated amounted to a ratification. The court remarked that “the-entry of the resolution was a very singular mode of repudiating a contract. It would have been more in accordance with correct notions of propriety and justice if a resolution, refusing to accept a contract had been passed, accompanied .by an offer to cancel the deed, which had not been recorded,, and return the property of which they were in possession.” See also, Moss v. Averell, 10 N. Y. 449; Church v. Sterling, 16 Conn. 388; Chicago B. Soc. v. Crowell, 65 Ill. 453; Wilson v. W. H. H., &c., Co., 2 DeG. J. & S. 475; 34 L. J. Ch. 241; Crook v. Corporation of Seaford, L. R. 6 Ch. 551.

Again, take the failure to disaffirm the contract. It was-made in the name of the corporation, and knowledge of its-terms was possessed by a majority of the resident directors, yet there is no disaffirmance of the act of Peter. Indeed, the only thing attempted was rescission, and not disaffirmance; and rescission implies an existing contract to be rescinded. It is the duty of a principal, when aware that one is assuming as agent to contract in his' behalf, to deny the power and disown the act, and a failure to do this will often work an affirmance of the power and a ratification of the act. In Kelsey v. National Bank, 69 Pa. St. 426, upon a robbery of the bank, the cashier, with the concurrence of a minority of the directors, offered a reward. The majority of the directors resided in the city, became aware of what had been done, and took no steps to disavow the act, and it was held that the bank was liable. (Reuter v. Electric Tel. Co., 6 El. & Bl. 341, Q, B.; 26 L. J. Q. B. 46; Bredin v. Dubarry, 14 S. & R. 30; Gordon v. Preston, 1 Watts, 387; Browning v. G. C. M. Co., 5 H. & N. 856; 29 L. J. Ex. 399.)

We might extend this opinion, noticing other matters in the conduct of the corporation, but they would be simply in the same line of thought. We are clearly of the opinion that the testimony shows an acceptance of the contract, and that therefore the district court erred in its findings for the defendant. See further, upon the questions in this case, Howe v. Keeler, 27 Conn. 538; Krider v. Western College, 31 Iowa, 547; Ins. Co. v. De Wolf, 8 Pick. 56; E. Rld. Co. v. Benedict, 5 Gray, 561; Olcott v. Tioga Rld. Co., 27 N. Y. 546; Phosphate of Lime Co. v. Green, L. R. 7 C. P. 43; Moss v. Rossie Lead Co., 5 Hill, 137; Green’s Brice’s Ultra Vires, chapters 3 and 6.

The judgment of the district court will be reversed, and the case remanded with instructions to grant a new trial.

All the Justices concurring.