Kentucky Tobacco Ass'n v. Halladay & Co.

Court of Appeals of Kentucky

Kentucky Tobacco Ass'n v. Halladay & Co.

7 Ky. Op. 724, 1874 Ky. LEXIS 303

DecidedJune 10, 1874

StatusPublished

This text of 7 Ky. Op. 724 (Kentucky Tobacco Ass'n v. Halladay & Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Kentucky Tobacco Ass'n v. Halladay & Co., 7 Ky. Op. 724, 1874 Ky. LEXIS 303 (Ky. Ct. App. 1874).

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Opinion

Opinion by

Judge Pryor :

The affidavit filed by the appellant, although contradicting statements of the existence of facts important to the defense, was not such as authorized the court below, for the reasons therein given, to sustain the motion for a new trial. If the appellant was surprised at the disclosures made by the appellee with reference to the contract, a motion should have been made, at the time, to set aside the swearing of the jury and continue the cause; the appellant saw proper to speculate upon the chances of a verdict in its favor, and now complains because the court refused to grant a new trial upon what might have been proven at the time by the exercise of even ordinary diligence. We are satisfied, however, that the ends of justice require that this dase should be reversed. There is ho authority shown by any corporate act of the board of directors or otherwise, to make the contract upon which the right of recovery in the action is based. The appellees’ own proof shows that the contract was made with Taylor in the absence of any power conferred by the law organizing the association, and with reference to property that did not necessarily pertain to its legitimate business. The president, secretary and manager were empowered to transact the ordinary or usual business of the corporation in the absence of any action by the directors, but not to purchase patents or speculate in machinery without the consent of the board. The contract is alleged to have been made with the president and secretary; that is, the president and secretary, without the consent of the directors, constitute two out of three of the parties who make this purchase. [726]*726They purchased their individual property, in the name of the corporation, making themselves vendors and vendees without the sanction, so far as this record shows, of the corporate body, when, indeed, it was their duty to protect. It is true that the real plaintiff in the action swears that be became interested in the contract after it was made. This is doubtless true, but if so, the facts should have been alleged in his petition. There was no objection made or exception taken as to the manner in which the action was instituted, or upon the question of variance between the contract as alleged and the proof; and( but for the want of authority in these parties to make any such contract, these objections could not now be relied on in this court, and are only alluded to, in order that the pleadings may be amended upon the return of the cause. If the presses were really for the corporation, and applied to its uses, the law would imply a contract to pay what they were reasonably worth. The fact that nine of the presses had been received by the company is competent evidence upon the question as to whether the remaining eleven were so purchased and used; but Taylor and Halladay had no power to make contracts with each other, in reference to the property, without the authority of the directors. Unless such authority is shown, the appellees are entitled to recover, in the event the presses were applied to the uses of the corporation, only their real value. Members of a corporation can not separately and individually give their covenant in such manner? as to oblige themselves as a collective body. There must be a corporate meeting with corporate action, by vote or otherwise, to constitute a binding contract. Angelí & Ames, on Corporations, page 231. It is true that corporations may contract by an agent, or in the names provided by the act of incorporation; but the agent has no power to buy from himself; nor is such a contract binding unless ratified by corporate action. It may be shown, however, that a contract was made with no ’entry thereof, by reason of neglect or otherwise, on the books in which the proceedings of the corporation are kept, or that the property claimed to have been sold was appropriated to the uses of the corporation; and in the absence of any contract the value of the property alone can be recovered. The bill of evidence constitutes a part of the record. The bill was tendered, and the court, of its own motion, postponed the filing; when the exceptions are tendered, the provisions of the code must be regarded as complied with when the continuance or postponement of the filing is [727]*727attributed, as in this case, to the action of the court alone. The judgment of the court below is reversed and cause remanded with directions to award the appellant a new trial and for further proceedings consistent with this opinion. The parties should be allowed to amend their pleadings.

Clemmons & Willis, for appellant. W. Mix, for appellees.

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Opinion by

Judge Pryor :

The affidavit filed by the appellant, although contradicting statements of the existence of facts important to the defense, was not such as authorized the court below, for the reasons therein given, to sustain the motion for a new trial. If the appellant was surprised at the disclosures made by the appellee with reference to the contract, a motion should have been made, at the time, to set aside the swearing of the jury and continue the cause; the appellant saw proper to speculate upon the chances of a verdict in its favor, and now complains because the court refused to grant a new trial upon what might have been proven at the time by the exercise of even ordinary diligence. We are satisfied, however, that the ends of justice require that this dase should be reversed. There is ho authority shown by any corporate act of the board of directors or otherwise, to make the contract upon which the right of recovery in the action is based. The appellees’ own proof shows that the contract was made with Taylor in the absence of any power conferred by the law organizing the association, and with reference to property that did not necessarily pertain to its legitimate business. The president, secretary and manager were empowered to transact the ordinary or usual business of the corporation in the absence of any action by the directors, but not to purchase patents or speculate in machinery without the consent of the board. The contract is alleged to have been made with the president and secretary; that is, the president and secretary, without the consent of the directors, constitute two out of three of the parties who make this purchase. [726]*726They purchased their individual property, in the name of the corporation, making themselves vendors and vendees without the sanction, so far as this record shows, of the corporate body, when, indeed, it was their duty to protect. It is true that the real plaintiff in the action swears that be became interested in the contract after it was made. This is doubtless true, but if so, the facts should have been alleged in his petition. There was no objection made or exception taken as to the manner in which the action was instituted, or upon the question of variance between the contract as alleged and the proof; and( but for the want of authority in these parties to make any such contract, these objections could not now be relied on in this court, and are only alluded to, in order that the pleadings may be amended upon the return of the cause. If the presses were really for the corporation, and applied to its uses, the law would imply a contract to pay what they were reasonably worth. The fact that nine of the presses had been received by the company is competent evidence upon the question as to whether the remaining eleven were so purchased and used; but Taylor and Halladay had no power to make contracts with each other, in reference to the property, without the authority of the directors. Unless such authority is shown, the appellees are entitled to recover, in the event the presses were applied to the uses of the corporation, only their real value. Members of a corporation can not separately and individually give their covenant in such manner? as to oblige themselves as a collective body. There must be a corporate meeting with corporate action, by vote or otherwise, to constitute a binding contract. Angelí & Ames, on Corporations, page 231. It is true that corporations may contract by an agent, or in the names provided by the act of incorporation; but the agent has no power to buy from himself; nor is such a contract binding unless ratified by corporate action. It may be shown, however, that a contract was made with no ’entry thereof, by reason of neglect or otherwise, on the books in which the proceedings of the corporation are kept, or that the property claimed to have been sold was appropriated to the uses of the corporation; and in the absence of any contract the value of the property alone can be recovered. The bill of evidence constitutes a part of the record. The bill was tendered, and the court, of its own motion, postponed the filing; when the exceptions are tendered, the provisions of the code must be regarded as complied with when the continuance or postponement of the filing is [727]*727attributed, as in this case, to the action of the court alone. The judgment of the court below is reversed and cause remanded with directions to award the appellant a new trial and for further proceedings consistent with this opinion. The parties should be allowed to amend their pleadings.

Clemmons & Willis, for appellant. W. Mix, for appellees.

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7 Ky. Op. 724, 1874 Ky. LEXIS 303, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kentucky-tobacco-assn-v-halladay-co-kyctapp-1874.