Wood, J.,
(after stating the facts.) Treating the questions in the order presented in briefs of the counsel:
1. The evidence disclosed that the citizens of Fort Smith were as anxious to secure the services of an experienced wagon factory man to manage the business as they were to secure the plant itself. The proposition of Baker, as per his original telegram, was to join the organization, taking $50,000 of stock himself and the $10,000 of bonus raised by the citizens was for the purpose of inducing Baker to come to Fort Smith. Baker, it appears, had impressed the members of the Commercial Club, at least the leading spirits in the enterprise, with his superior qualifications as a wagon factory manager and expert. And they were looking for such an one to place at the head of the new enterprise. The proposition of Baker was that the $10,000 of bonus were to go to him, and he evidently received it. True, the deal, as shown by Cleveland, Speer and Baker, was for the property of the South Bend Wagon Company. It did not belong to Baker individually. All understood that. Hence Cleveland said that he took the bill of sale, because he understood that he was getting “the stuff from the South Bend Wagon Company.”
While Speer at one place in his testimony says “that he was dealing with the South Bend Wagon Company, Mr. Baker being its representative,” in another place.he says: “We were dealing with Mr. Baker. We did not know how much stock he represented. . In his statement he said he would have to have a certain amount of cash to go back and buy out the other stockholders.” And in still another portion of his testimony, on redirect examination and in explanation of his statement before, he said: “Mr. Baker is the only party we had any dealings with. We had no contract with the South Bend Wagon Company as a corporation at all unless it was represented by Mr. Baker, as the South Bend Wagon Company. Mr. Baker was the only person I knew in the contract.” So, taking his whole testimony together, we think it clear that Speer meant that he was dealing with Baker individually for the sale by him of property that belonged to the South Bend Wagon Company. In other words, Baker was to sell to the Ft. Smith Wagon Company property that he was to obtain in his individual right from the South Bend Wagon Company, the corporation.
We-think, taking all the testimony in the record on this branch of the case, that this is the correct conclusion. The bill of sale does not conflict with this view at all. For, to avoid circuity in the transfer of the title of the South Bend Wagon Company to Baker and then to the Ft. Smith Wagon Company, the bill of sale was made direct to the Ft. Smith Wagon Company from the South Bend Wagon Company. This was legal, and certainly the most direct method of making the transfer. Nor does the fact that the $40,000 received by Baker were entered upon the books of the South Bend Company and used in the usual way conflict with this view. But we are of the opinion that the testimony of Baker himself tends to support the conclusion that in making- the sale he was acting for himself individually.1 For when asked: “What was the contract?” he replied: “The contract was that I was to undertake to sell to a company to be organized here all of the movable assets of the South Bend Wagon Company, of Mishawaka, Indiana, at a stipulated price of $70,000, a flat price, and in addition to 'that sum I was to receive $10,000 as a bonus.”
The statement in His letter of January 23, 1903, towit: “It will be necessary for me to have this amount of money to liquidate the liabilities of the old company and buy out the other stockholders,” shows conclusively that it was an "individual transaction with Baker. For, if it had been a sale by the corporation, it would not have been necessary for Baker to buy out the other stockholders. This ends the controversy as to whether Baker was acting in his individual capacity or as the representative of the company, and shows that the court erred in its finding and conclusion.
The only way appellee could have successfully overcome the proof that Baker was acting Tn his individual capacity would' have been to show that he was authorized by the corporation through its stockholders and directors to make the sale for the corporation. For, in the absence of such authority, the president of a corporation has no power to enter into a contract whereby the entire corpus and business of the corporation is sold to another. 4 Thompson, Corp. § 4632; Stokes v. New Jersey Pottery Company, 46 N. J. L. 237; Hoyt v. Thompson, 5 N. Y. 320; 2 Cook on Corp. § 716, note; 10 Fnc. 927. See City Electric Street Ry. Co. v. First National Exch. Bank, 62 Ark. 33.
2. The court did not pass upon the question as to what were the terms of the contract; but, as .the proof has been fully developed on this subject, it is our duty to render such decree as the lower court should have rendered.. Both Speer and Baker agree that the inventory of December 1, 1902, was the basis of contract as to the amount of property to be delivered, and there is substantially no conflict between them that, in the final transfer, the Ft. Smith Wagon Company was to get all the assets of the Sou'h Bend Wagon Company that would be of value to the former, 'except teal estate, stock in other companies, the notes and accounts, etc. The Ft. Smith Wagon Company was to get all the machinery and material on hand at the time the transfer was actually made that would be of value to it, and the basis for the' amount of this was to be the inventory of December 1, 1902, with such changes only as would occur in the stock by reason of having run the business in the usual way from December 1, 1902, when the inventory was made, till March 16, 1903, when the actual transfer was made. As to this there is no conflict between the parties who made the contract.
But appellant contends that it was to have the assets as shown by the inventory of December 1, 1902, with any material that had been manufactured into wagons or put in altered form, and any added assets at the price as shown by the invoice of such machinery, material, etc.; while the appellee contends that the price that was to be paid for the assets at the time of the transfer was to be the flat sum of $70,000, regardless of what the invoice of the assets on hand at the time of the transfer -should show. Appellee also contends that the assets, properly inventoried and invoiced, would amount to more than $70,000; whereas appellant contends that the invoice of'the assets according to the terms of the contract on the basis of the December 1, 1903, inventory,, and the invoice of the articles on that inventory and those altered in form or added since, show that the value of the assets delivered to the appellant under the contract of sale was $67,237.37.
Upon these disputed questions of fact there is a sharp conflict in the evidence. Analysis of the evidence and discussion of the facts in detail would not be useful as a precedent. Our conclusion is that the fair preponderance of the evidence on these points is in favor of the contention of appellant.
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Wood, J.,
(after stating the facts.) Treating the questions in the order presented in briefs of the counsel:
1. The evidence disclosed that the citizens of Fort Smith were as anxious to secure the services of an experienced wagon factory man to manage the business as they were to secure the plant itself. The proposition of Baker, as per his original telegram, was to join the organization, taking $50,000 of stock himself and the $10,000 of bonus raised by the citizens was for the purpose of inducing Baker to come to Fort Smith. Baker, it appears, had impressed the members of the Commercial Club, at least the leading spirits in the enterprise, with his superior qualifications as a wagon factory manager and expert. And they were looking for such an one to place at the head of the new enterprise. The proposition of Baker was that the $10,000 of bonus were to go to him, and he evidently received it. True, the deal, as shown by Cleveland, Speer and Baker, was for the property of the South Bend Wagon Company. It did not belong to Baker individually. All understood that. Hence Cleveland said that he took the bill of sale, because he understood that he was getting “the stuff from the South Bend Wagon Company.”
While Speer at one place in his testimony says “that he was dealing with the South Bend Wagon Company, Mr. Baker being its representative,” in another place.he says: “We were dealing with Mr. Baker. We did not know how much stock he represented. . In his statement he said he would have to have a certain amount of cash to go back and buy out the other stockholders.” And in still another portion of his testimony, on redirect examination and in explanation of his statement before, he said: “Mr. Baker is the only party we had any dealings with. We had no contract with the South Bend Wagon Company as a corporation at all unless it was represented by Mr. Baker, as the South Bend Wagon Company. Mr. Baker was the only person I knew in the contract.” So, taking his whole testimony together, we think it clear that Speer meant that he was dealing with Baker individually for the sale by him of property that belonged to the South Bend Wagon Company. In other words, Baker was to sell to the Ft. Smith Wagon Company property that he was to obtain in his individual right from the South Bend Wagon Company, the corporation.
We-think, taking all the testimony in the record on this branch of the case, that this is the correct conclusion. The bill of sale does not conflict with this view at all. For, to avoid circuity in the transfer of the title of the South Bend Wagon Company to Baker and then to the Ft. Smith Wagon Company, the bill of sale was made direct to the Ft. Smith Wagon Company from the South Bend Wagon Company. This was legal, and certainly the most direct method of making the transfer. Nor does the fact that the $40,000 received by Baker were entered upon the books of the South Bend Company and used in the usual way conflict with this view. But we are of the opinion that the testimony of Baker himself tends to support the conclusion that in making- the sale he was acting for himself individually.1 For when asked: “What was the contract?” he replied: “The contract was that I was to undertake to sell to a company to be organized here all of the movable assets of the South Bend Wagon Company, of Mishawaka, Indiana, at a stipulated price of $70,000, a flat price, and in addition to 'that sum I was to receive $10,000 as a bonus.”
The statement in His letter of January 23, 1903, towit: “It will be necessary for me to have this amount of money to liquidate the liabilities of the old company and buy out the other stockholders,” shows conclusively that it was an "individual transaction with Baker. For, if it had been a sale by the corporation, it would not have been necessary for Baker to buy out the other stockholders. This ends the controversy as to whether Baker was acting in his individual capacity or as the representative of the company, and shows that the court erred in its finding and conclusion.
The only way appellee could have successfully overcome the proof that Baker was acting Tn his individual capacity would' have been to show that he was authorized by the corporation through its stockholders and directors to make the sale for the corporation. For, in the absence of such authority, the president of a corporation has no power to enter into a contract whereby the entire corpus and business of the corporation is sold to another. 4 Thompson, Corp. § 4632; Stokes v. New Jersey Pottery Company, 46 N. J. L. 237; Hoyt v. Thompson, 5 N. Y. 320; 2 Cook on Corp. § 716, note; 10 Fnc. 927. See City Electric Street Ry. Co. v. First National Exch. Bank, 62 Ark. 33.
2. The court did not pass upon the question as to what were the terms of the contract; but, as .the proof has been fully developed on this subject, it is our duty to render such decree as the lower court should have rendered.. Both Speer and Baker agree that the inventory of December 1, 1902, was the basis of contract as to the amount of property to be delivered, and there is substantially no conflict between them that, in the final transfer, the Ft. Smith Wagon Company was to get all the assets of the Sou'h Bend Wagon Company that would be of value to the former, 'except teal estate, stock in other companies, the notes and accounts, etc. The Ft. Smith Wagon Company was to get all the machinery and material on hand at the time the transfer was actually made that would be of value to it, and the basis for the' amount of this was to be the inventory of December 1, 1902, with such changes only as would occur in the stock by reason of having run the business in the usual way from December 1, 1902, when the inventory was made, till March 16, 1903, when the actual transfer was made. As to this there is no conflict between the parties who made the contract.
But appellant contends that it was to have the assets as shown by the inventory of December 1, 1902, with any material that had been manufactured into wagons or put in altered form, and any added assets at the price as shown by the invoice of such machinery, material, etc.; while the appellee contends that the price that was to be paid for the assets at the time of the transfer was to be the flat sum of $70,000, regardless of what the invoice of the assets on hand at the time of the transfer -should show. Appellee also contends that the assets, properly inventoried and invoiced, would amount to more than $70,000; whereas appellant contends that the invoice of'the assets according to the terms of the contract on the basis of the December 1, 1903, inventory,, and the invoice of the articles on that inventory and those altered in form or added since, show that the value of the assets delivered to the appellant under the contract of sale was $67,237.37.
Upon these disputed questions of fact there is a sharp conflict in the evidence. Analysis of the evidence and discussion of the facts in detail would not be useful as a precedent. Our conclusion is that the fair preponderance of the evidence on these points is in favor of the contention of appellant.
We are controlled largely in this conclusion by the letter of Speer to Baker of Januay 28, 1903, in which he says: “I think your plant ought to be invoiced to the new organization for its present intrinsic value, so that the proñts of the ñrst year will not have ■the burden of a ñctitious value to overcome.” And the letter of February 23, 1903, in which he makes the definite proposition: “That if you will invoice your material and machinery at its present value to the new organization, we will give the $10,000 bonus that our people have raised.” This undoubtedly supports appellant’s contention that the assets of the South Bend Wagon Company were to be sold at their invoiced price to appellant, and not as contended by appellee for the flat sum of $70,000.
The testimony of Cleveland, the representative of appellant who was sent “to check in” the assets purchased, and the testimony of Darland, the bookkeeper of the South Bend Wagon Company, shows that the invoice taken by them on March 16, 1903, was correct as to the assets then on hand. Cleveland says that approximately everything included in the December 1, 1902, inventory was on hand at that time; that but little had been done; that it was all there, only some of the raw material was in altered form.
Darland prepared a statement of the business that had been done, showing purchase, sales, receipts and disbursements between December 1, 1902, and March 16, 1903. This, in connection with the inventory of December 1, 1902, and invoice books, enabled them to make a complete and correct invoice of the assets on hand when the transfer was consummated. And they show from these sources that the total valuation was $67,257.37.
Baker’s testimony 'tended to show that the inventory did not include all the assets on hand, and that, even if the inventory were correct, it was not a true invoice, for the reason that there had been an advance in the value of the articles inventoried of from five to ten per cent, since the inventory of December 1, 1902. And, according to his testimony, this would more than bring the value of the assets to $70,000, even if that was to be the minimum valuation under the contract. But the testimony of Johnson, the secretary and treasurer of the Ft. Smith Wagon Company, tends to show that the invoice by Cleveland was the full value of the assets transferred. And the loss which he shows that the Ft. Smith Wagon Company sustained during the time between March 16, 1903, and January 1, 1904, when the business was operated at South Bend under the management and control of Baker, tends to corroborate his opinion. For, if there was an advance in prices, and the tendency of the market was upward, it seems unreasonable that assets, which were deemed by appellee to have been worth $70,000 or more in March, 1903, should have been worth some ten thousand less in January, 1904, unless there had been some gross mismanagement and losses that are not shown by the proof. Moreover, the invoice of March 16, 1903, taken by Cleveland and Darland, shows that sixteen and two-third per cent, was added to the valuation of the unfinished material, a.nd that twelve and one-fourth per cent, was added to the valuation of the finished stock to cover the possible advance in the price of süch material between December 1, 1902, and March 16, 1903.
The fact that the consideration in the deed was named at $80,000 and that Cleveland paid over the $40,000 knowing that the assets invoiced only $67,257.37, and the further fact that stock to the full amount of $40,000 was issued to appellee, and Mrs. Minnie Baker, at his direction long after it was known to' appellant’s executive board that the assets received only amounted to $67,257.37 — I say that these facts, unexplained, would tend strongly to support appellee’s contention that the contract price for the assets on hand at the time of the transfer was the flat sum of $70,000. But the explanation of this by Cleveland was that he paid over 'the $40,000 to Baker after he had promised to adjust the matter with the board of directors. And the members of the executive board explained that the stock was issued because Baker was the president of the corporation, and they had full, confidence in him, and expected him to bring the matter up for adjustment. This he. failed to do, and when his attention was first called to it he claimed that he did not owe anything. Finally formal demand was made upon him, and upon his refusal to pay suit was directed to be brought against him September 24, 1904. We are of the opinion that this explanation of the payment of the $40,000 and the issuance of stock without demanding further adjustment at that time is satisfactory, and that the appellant is not precluded from maintaining the suit on that account.
But the sum due should only bear interest from the date of formal demand upon him for payment, towit: September 24, 1904. The judgment, for the error indicated, is reversed, and the chancery court is directed to enter a decree for the sum of $2,742.63 with interest at six per cent, from December 24, 1904, and to declare same a lien upon stock of appellee in appellant corporation. And to order same sold unless judgment is satisfied according to the statute in such cases provided, and for further proceedings not inconsistent with this opinion.
Battle, J., dissenting.