Narragansett Bank v. Atlantic Silk Co.

44 Mass. 282

Opinion

Shaw, C. J.

The first of these cases was assumpsit on a bill of exchange, drawn on the company at four months’ date, and accepted by Samuel B. Tuck, treasurer. This company was incorporated as a manufacturing corporation by St. 1836, c. 108. The defendants contended, that in order to recover against the defendant corporation it was incumbent on the plaintiffs to prove that the company had complied with the provisions of the Rev. Sts. c. 38, §§ 4, 9, and c. 44, § 3, regulating the organization of manufacturing corporations. These provisions require them to choose a clerk and treasurer ; that the clerk shall be sworn, and shall keep a record of votes ; that the capital stock shall be divided into shares ; that the first meeting shall be called by a prescribed form of notice, &c. The court are of opinion, that this argument of the defendants proceeds upon an erroneous view of the law ; especially in cases, where a party, who is a stranger, and not presumed to have access to the books, and to have notice of the proceedings of a corporation, is proceeding to recover against a company acting as a corporation. Many of the requisitions of the statutes referred to are directory to the corporation, its officers and members, and are not conditions precedent to the existence and capacity of the corporation to contract.

But were it necessary to prove the regular organization of the corporation, the objection would come with an ill grace from the defendants, and under the circumstances must be deemed unten able. It is the duty of such corporations to keep records; the primary and only regular evidence of their organization is legally presumed to be in their records, and the defendants decline producing those records, on notice, without assigning any reason. The maxim of law is, that all things shall be presumed to have been rightly and correctly done, until the contrary is proved. This maxim is stated and explained, and many instances given of its application to corporations, and to acts and doings of their members, officers and agents, in Bank of U. States v. Dandridge, 12 Wheat. 70. As the corporation could not proceed lawfully, until duly organized, and as they did proceed to act as a corporation, this presumption has its effect. The defendants have the records, which prove such organization, if it took place, and withhold them. This maxim, under these circumstances, would go far to establish the actual and regular organization of the defendant corporation.

But the court are of opinion, that in an action against a corporation, it is not incumbent on the plaintiff to prove that the defendants have complied with the requisitions of the statutes, where they are not in terms, or by necessary or reasonable implication, conditions precedent to their existence, or capacity to do particular acts. It has been held that the existence of a corporation, and of course its organization, may be proved by reputation, and by its actual use, for a length of time, ot the powers and privileges of a corporation. Dillingham v. Snow, 5 Mass. 547. Stockbridge v. West Stockbridge, 12 Mass. 400. In regard to manufacturing corporations, which are of more recent origin in this Commonwealth, it is in general sufficient to give in evidence the act of incorporation duly authenticated,

Footnotes

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* and the actual use of the powers and privileges of an incorporated company, under the name designated in the act of incorporation. Bank of U. States v. Dandridge, 12 Wheat. 64. Utica Ins. Co. v. Tillman, 1 Wend. 555. Utica Ins. Co. v. Cadwell, 3 Wend. 296. Fire Department of New York v. Kip, 10 Wend. 266. These were cases in which the corporation, whose organization was in question, were plaintiffs. The rule applies á fortiori to the case of a plaintiff seeking to enforce an obligation against a corporation.

And we think it highly necessary to the purposes óf justice, that the law should be so held ; otherwise a company might avail themselves of the powers and privileges of a corporation, without subjecting themselves to its duties and obligations, and might set up their own neglect of duty, or wilful non-compliance with the requisitions of law, to discharge themselves of such obligations. Nor would this be the whole extent of the wrong done by such construction, in regard to manufacturing eorpora lions. It has been the policy of this Commonwealth to give a qualified remedy against tl^e individual members of manufacturing corporations, as collateral security to their debts and obligations. But any construction, which would destroy or impair the obligation of the corporation, would, to the same extent, take from creditors their remedy against the members.

As to the evidence in regard to the fact of acting as a corporation, it is stated hereafter in reference to the other case.

In this first case, it was further objected on the part of the defendants, that it was incumbent on the plaintiffs to satisfy the jury that the draft was so accepted as to bind the company, and also that the treasurer had authority for that purpose. The evidence was left to the jury with instructions which, in our judgment, were sufficiently favorable to the defendants.

It is to be borne in mind, that this corporation was, by ita constitution, a trading company ; that, as such, they had authority in their corporate capacity, to make, accept and indorse bills of exchange. In the absence of all proof to the contrary, it may be presumed that this authority has, by the votes or by-laws of the company, been vested in some officer or agent, to be exercised as the exigencies of the company may require. The law requires every such company to choose a treasurer, as the title imports, to keep the money and manage the pecuniary concerns of the company ; and if one acts as such treasurer, and is so held out, without protest or remonstrance by the company, the presumption is, that he has been duly elected and authorized to do the acts usually done by a treasurer ; as the cashier of a bank is presumed to have been elected and qualified, by the fact of his openly acting as such. And this presumption is greatly strengthened by the fact, that the books, which would ordinarily contain the evidence of such votes, are withheld by the defendants. When, therefore, it appears that a manufacturing corporation has gone into operation ; that one of their number has held himself out as treasurer, and acted as such ; it is competent for the jury to presume, and, in the absence of all rebutting proof, it would be their duty to find, that such person had been chosen treasurer, and, as such, had authority to accept a bill of exchange in behalf of such corporation.

The court are of opinion, therefore, that there is no sufficient ground for setting aside the verdict, in the case in which the Narragansett Bank are plaintiffs.

The other is an action upon an implied assumpsit, for goods sold and delivered, and services done and performed ; being a claim of payment for machinery for the manufacture of silk, made and furnished by the plaintiff on the request of William H. Gardner, one of the members, and professing to act as the president of the co-poration, which consisted, as is shown by the evidence, of tb se members. It was objected that no positive evidence was offered of a specific authority conferred on Gardner to contract for machinery ; and that it did not necessarily result from his office as president. The judge instructed the jury, that the burden of proof was upon the plaintiff to prove that the president had authority to bind the company by his contracts for machinery ; that, in the absence of the records and books of the company, such authority might be proved by circumstances ; that it would be sufficient to show either a previous authority,or a subsequent ratification by receiving, accepting and using the machinery so delivered by the plaintiff; and that there was evidence competent and proper for the consideration of the jury, from which they might infer that fact. If there was any evidence proper to go to the jury, we think these instructions were right, and sufficiently favorable to the defendants.

Most of the considerations stated in the former case are applicable to this. The same presumptions arise, from the acts of the company, and the persons and members professing to act and holding themselves out as officers ; and from the unwarrantable Withholding of the books of the corporation, after notice to produce them. The act of incorporation being shown, there was rviéence tending to prove that the company went into operative, established a factory, and erected machinery ; that the ptaintifí" furnished machinery, which was afterwards found in their factory; that no evidence was shown of an authority, given to any other agent than the president, to order or procure machinery ; and that said Gardner, as such president, did in fact order it, and it was made and delivered in pursuance of such order. We are of opinion that this evidence was properly left to the jury ; that there was evidence to prove both previous authority and subsequent ratification ; and we can perceive no ground on which the verdict for the plaintiff, on this evidence, can be set aside. |

An objection was made, that instead of giving notice to the company to produce their books, the plaintiff should have issued a subpoena duces tecum to the clerk of the company to bring them in. But we are of opinion that notice was rightly given to the defendants, and that a duces tecum would not have been the regular course. The corporation have the legal custody and control of their records, and the clerk is their servant, and subject to their orders. The case cited in support of the objection, The King v. Stoke Golding, 1 Barn. & Ald. 173, furnishes no authority in support of it; but, as far as it goes, is an authority the other way. The appointment of an overseer was there to be proved by the instrument of appointment, or commission, given to him by the parish vestry, and not by a vote. And the ground, on which it was held that the overseer should have been called to produce the appointment, was, that the regular and primary evidence of the appointment was in the custody of the overseer, and not of the respondent parish. Had it been otherwise, the notice to the respondent parish would have b'en suf« ficient.

Judgment on the verdicts for the respective plaintiffs.

Acts of incorporation are now deemed public acts ; Rev. Sts. c. 2, § 3; and printed copies of them, published under the authority of the government, are to be admitted as sufficient evidence thereof, in all courts of law, &c. Rev. Sts, c. 94, § 58.