St. Clair v. Rutledge

92 N.W. 234, 115 Wis. 583, 1902 Wisc. LEXIS 251

• Court: Wisconsin Supreme Court
• Decided: November 11, 1902
• Status: Published

Opinion

Maeshall, J.

Was the act of the president of the Peerless-Iron & Land Company, in attempting to extend respondent’s privilege to cut and remove the timber, ultra vires? That is the-sole question for decision. It is useless to spend time endeavoring to test the matter by the law respecting what a president of a corporation cannot do by virtue of his office; that it gives-him no right to make contracts binding on his company; that authority to that end in fact can only be conferred upon him by the articles of organization or some by-law or resolution passed by the board of directors, and that all persons dealing with a corporation are bound to take notice of the limitation-upon its authority and notice of its articles of organization and by-laws. If the evidence warrants the finding that Bowen, for years prior to the making of the extension, was held out by the corporation as its general agent, and as having authority to do such acts as the one in question, it is bound thereby to the same extent as- if authority were conferred in the most formal manner. That an artificial person is estopped from denying that its agents possess all the authority which it gives them the appearance of, the same as a natural person, is just as well established as the principle-that the president of a corporation is not, ex officio, its general -agent or possessed of authority to make contracts binding upon it. Ford v. Hill, 92 Wis. 194, 66 N. W. 115; McElroy v. Minnesota P. H. Co. 96 Wis. 317, 71 N. W. 652; Senour Mfg. Co. v. Clarke, 96 Wis. 469, 472, 71 N. W. 883; Northwestern Fuel Co. v. Lee, 102 Wis. 426, 78 N. W. 584; Interior W. W. Co. v. Prasser, 108 Wis. 557, 84 N. W. 833; Bullen v. Milwaukee T. Co. 109 Wis. 41, 85 N. W. 115. If such were not the case the way would be open to- easily invoke the salutary rule of law regarding ex officio powers of corporate officers to perpetrate fraud. A general agent in fact of a corporation may be and commonly is its president, and when such is the case his official position is by no means a limitation upon his powers as such agent. Ceeder v. Loud & Sons L. Co. 86 Mich. 541, 49 N. W. 575. As bas often been .said, intolerable mischief would result from requiring every •person, at bis peril, in dealing with the president of a corporation in a matter outside the scope of bis duties as such, to .first examine its records. The business world is not subject to any such dangers. The application of the doctrine of •estoppel by courts bas kept pace with the rapid development of corporate enterprise, SO1 that, while ancient rules regarding limits upon powers of officers of corporations have not been abrogated, they are conclusively presumed to have been complied with or compliance to* have been waived by the corporation, where justice so requires. Prof. Thompson, in his work on Corporations (vol. 4, §§ 4623, 4624), after reviewing a multitude of instances where the power of the president of a corporation was held to have been exceeded, used this language:

“After such a list of negations upon the powers of the president of a business corporation, the inquiry will arise whether there are any legal grounds upon which persons dealing with such bodies through their chief officers are protected.”

To that he suggests that a careful scrutiny of the various ■applications of tire rule limiting the power of the president of a corporation will show that they are, as a whole, consistent with natural justice; that whenever such rule is invoked to perpetrate a wrong, there are many countervailing rules upon ■some of which the person threatened with injustice may generally securely plant himself. He mentions the following as well established:

(1) “A corporation is estopped from denying, in the particular instance, that its president had the powers which it has customarily allowed him to exercise in the face of the public,” finder which a person, dealing with a corporation through its president, proves-the latter’s authority by proving that tire corporation held him out to the public as possessing the powers which he exercised in the given case, whereby it has become estopped as against an innocent person, from denying that he rightfully exercised those rights.’ (2) A corporation cannot enjoy the benefits of a transaction and repudiate its responsibilities. Such enjoyment is deemed a ratification. (3) The presence of the corporate seal upon a paper purporting to be a corporate act, prima facie shows that the active agent of the corporation, in _ executing the paper, was duly authorized in the matter. (4) Proof of the authority of the president to act for his company in the particular transaction may be shown by an oral vote of the board of directors not made a matter of .record, or otherwise by parol, and often equally well by circumstantial evidence.

Certainly, as this court has held on many occasions, the idea that every time a person deals with the officer of a corporation or person assuming to act in its behalf, he must( under all circumstances take his chances on whether such officer or person has been specially authorized in regard to the matter, has m> place in the law in o-ur day. Proof of apparent authority of a corporate officer to contract in its behalf prima facie establishes actual authority so to do, and mere want of authority in fact will not relieve a corporation from the burden of a contract made in reasonable reliance upon such appearance of authority. What will sufficiently evidence apparent authority of the president of a corporation to make a contract in its name must be considered with, reference to the character of the business involved, common knowledge of the manner in which corporate business is usually carried on, and many other circumstances, — significant among them the fact that it has come to pass that the president of a business corporation almost universally exercises the powers of a general agent for his company. One takés the obligation of a corporation, executed by its president in the regular course of business, not knowing any person in the transaction except such president, without a thought 'of any necessity of making an inquiry as to whether lie Ras been specially authorized in the matter or possesses power in. tbe premises under any general law of the company. Presidents of corporations well-nigh universally exercise the power-of a general agent, either" by special or general authority regularly conferred, or by the tacit consent of the corporation, given by its governing board of directors., the public not knowing or stopping in business transactions to inquire how it was conferred. We are safe in saying that the circumstances where such is not the case are rare exceptions to the-general course of corporate business. Such being the case, as. a matter of common knowledge, if a corporation permits its president, for any considerable length of time, to so act, and. its board of directors customarily omits to hold meetings for the purpose of directing the affairs of the corporation, apparently leaving its business affairs wholly to he looked after-by its president, and specially, or by not acting affirmatively one way or the other, ratifies his acts, his. authority to1 do the-things which, by such conduct, he is apparently authorized to do is just as binding upon the corporation as if the power-were conferred in the most formal manner.

Applying what has been said to the evidence in this case, it is far too strong in support of the findings of fact, that Bowen, as president of the Peerless Iron & Land Company, had apparent authority to -extend respondent’s time to- cut and remove timber, to warrant us in saying that such findings are against the clear preponderance of the evidence. The evidence is substantially without dispute that the board of directors did not hold regular meetings for the purpose of directing the affairs of the corporation; that only two meetings were held from the time of the sale to respondent in-1893 till the extension was given in 1896. That strongly indicates that the whole business of the conrpany was, by common consent, left with the president, as is often the case, particularly with small corporations. No special authority.was given to Bowen to make the sale in 1893, yet the sale was treated as valid, and without any knowledge coming to respondent of any action of the hoard of directors in the matter till long after the extension was granted. After such sale the business of the corporation was generally neglected by the board 'of directors. Eo provision was made even to pay its taxes. The lands were allowed to go to tax sale and tax deed, except in so far as respondent obligated himself, as part of the consideration for the timber, to pay the same. Bowen testified, in effect, that for years prior to the extension he was the only person that paid any particular attention to the corporate business; that he conducted it during such period substantially the same as if it were his own, reporting what he did to the members of the company whenever he could get them together, and otherwise to them in an individual way as he had opportunity to do so; and that his administration, at all times, appeared to meet with approval; that after the sale to respondent in 1893 and the appropriation of the money received thereon, partly to pay taxes upon the company’s land and partly for division among its stockholders, he was-unable to secure from the stockholders or directors any attention in particular to the company’s business; that it did not thereafter receive any money, or pay out any money, or do any considerable amount of business, and none of consequence except what was done by himself. That is the effect, of his evidence.

We will not further refer to the evidence in detail in an effort to carefully weigh it and demonstrate that it supports, the findings complained of. It is sufficient to say that .we-are unable to discover that they are wrong under the rules-, governing the subject. There are many cases in the books, where a corporation has been held estopped to deny that its president possessed the authority of a general agent, where the evidence on .the subject was not nearly so strong as in this case, as will be found by an examination of the cases to which we have referred. The custom being general, as we have said, for presidents of corporations, especially corporations having but little business to transact, to act in the capacity of general agents, to make contracts, to buy and sell property and to generally do the corporate business, evidence less strong is required to charge one with holding out its president as having such authority than is required to charge a natural person to the same effect.

It seems that the case is ruled by numerous decisions of this court we have cited, both as to the law and the facts. The gist of those decisions is that whenever the president of a corporation is found from day to day in general charge of the company’s affairs, it is conclusively presumed, as to innocent third persons, that he possesses all the powers ordinarily incident to the position of a general agent, and such other powers as he in fact has customarily exercised for such a period of time as to charge the governing board of the company with knowledge thereof, and which appearance of .power they have taken no reasonable means to protect the public from being imposed upon by. The doctrine of estoppel stands guard, so to speak, over the application of the doctrine limiting the powers of the president of a corporation, pre>-venting, where the latter doctrine would otherwise lead to, injustice. Both doctrines are given effect in the adininstration of the law for justice, but not to enable a corporation, or those operating in its shadow, to perpetrate a fraud.

In disposing of this case we give no significance to the circumstance that Bowen did not add the title of his office to the corporate signature he affixed to the extension. That was a mere oversight. That he executed the instrument as president of the corporation there is no question. Nor do we give any significance to the fact that.the paper was not executed under the seal of the corporation or signed by its secretary. "It was a mere waiver of the right to forfeit the ownership of property, tbe title to which passed to-respondent under the instrument of October 12, 1893. It was not a conveyance of real property. It was not a writing required by law to be executed under seal or to be signed by the secretary of the •company. Therefore the absence of the corporate seal and the signature of the secretary from it is of no importance. Ford v. Hill, 92 Wis. 194, 66 N. W. 115.

Neither do we give any significance to the fact, if it be a fact, that the sale of pine timber or the extension of time to cut timber from the lands was not by itself, strictly speaking, within the ordinary scope of the business of a general agent •of the corporation. The payment of the taxes on the corporate property and obtaining the necessary money to that end was within such scope, and it abundantly appears that in 1893 the company had no other way of securing money for-that purpose than by selling its pine timber; and in 1896, when the extension was given, it had no more appropriate way of providing for the payment of taxes upon its lands than by granting the extension as a condition thereof, as was done to the extent of one half of such taxes. Moreover, if we were to hold that the giving of the extension in consideration of the payment of taxes was not within the scope of Bowen’s authority as a general agent of the corporation, under the circumstances it would seem that the recognition of his authority to sell the timber by the formal act of the board of directors ratifying the sale, and the broad general grant of power given to him in addition to such ratification, to sell the timber on the land, included power to grant an. extension of the right to remove timber sold and paid fox, in consideration of the payment of taxes on the land, which payment was necessary to preserve to the company the timber not sold, and the land also, though in our general discussion of the case we have given controlling effect to the facts found by the court, that the corporation, by the manner in which it permitted its president to represent it, held him out as possessing authority to sell its timber and to make suck contracts in regard thereto» as the one in question.

By the Court. — The judgment is affirmed.