Case ID: scl_45/html/0386-01.html
Source: Caselaw Access Project
Author: {"author": "O’Neall, ,J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The Bivingsville Cotton Manufacturing Company vs. S. Bobo.
    
      Confession of Judgment — Partners— Corporation — ■ Ratification.
    
    A judgment confessed by one partner in the name of the firm may be ratified by the other partner so as to make it valid, and the same rule applies to a corporation where the charter makes the corporators liable as partners.
    The evidence examined and held sufficient to shew the ratification of such a judgment.
    BEFORE WARD LAW, J., AT SPARTANBURG, SPRING TERM, 1858.
    The report of bis Honor, tbe presiding Judge, is as follows:
    “At the fall term, 1856, a motion was submitted to set aside a judgment, so far as the Bivingsville Cotton Manufacturing Company was concerned, which had been entered in the case of Simpson Bobo vs. The Bivingsville Gotton Manuf ac-tu/ring Company and E. O. Leitner. The motion was refused, and upon the hearing of an appeal from the refusal, an order was made in the Court of Appeals at December term, 1857, in the following words, viz.: ‘ In this case, the Court think that the facts are not ascertained so as to enable them to pass properly on the motion to set aside the judgment: It is therefore ordered that the case be remanded to the Circuit Court, and that the defendant, or the person moving in that behalf, on entering into a consent rule to be liable for the costs, have leave to make up an issue to try the fact, whether the Bivingsville Cotton Manufacturing Company either confessed tbe judgment, or, by subsequent ratification, confirmed tbe judgment confessed by one of tbe corporators.’
    “ Upon tbe suggestion of tbe Bivingsville Cotton Manufacturing Company, tbe issue thus directed was made up, and a full trial of it was now bad.
    “ It appeared that various stockholders were, in 1838, (8 Stat. 463,) incorporated under tbe name of tbe Bivingsville Cotton Manufacturing Company, and that to tbe company were given all tbe usual powers of a corporate body, under tbe peculiar proviso, that nothing herein contáined, or hereby provided, shall, in any manner, exempt tbe said members from all liabilities pertaining to general partners’:—
    “That tbe company was organized, and transacted its business through a President, Directors, Agent and Clerk, until 1846, when, by purchase of shares, two brothers, George Leitner and E. C. Leitner, became owners of all the stock, and tbe only members of tbe company:
    “That on tbe 15th of April, 1846, articles of agreement between E. C. Leitner and George Leitner were signed and sealed, of which tbe following is a copy:
    
      Ul Articles of Agreement between E. G. Leitner and George Leitner.
    
    “ ‘ This Indenture, made and entered into between E. C. Leitner on tbe one part and George Leitner on the other, sbewetb that tbe said E. C. Leitner and George Leitner have purchased tbe property belonging to tbe Bivingsville Cotton Manufacturing Company, situate on Lawson’s Pork in tbe State and district aforesaid; and that between them it is agreed that they pay for, and own and possess said property in equal proportions, sharing between themselves all tbe profits, and all tbe losses or expenses incident or in any wise appertaining to tbe management and tbe operation of said property; and it is further agreed upon, that on or before the 1st day of next January, tbe said E. C. Leitner is to take charge of tbe property, and manage its operations in person, and make out regular quarterly statements exhibiting the true state of the operations of the property, for mutual inspection, and free the said George Leitner from any labor or trouble on account of its 'management; for which the said E. C. Leitner is to receive as compensation one thousand five hundred dollars per annum, to be paid and charged as expenses upon the establishment, which amount is to be the extent of his compensation until the property is paid for.
    “ 'Witness our hands and seals, April 15, 1846.
    ‘“E. 0. LEITNER, [l.s.]
    “‘GEO. LEITNER. [l.s.]
    “ ‘ The above is a true copy of the agreement in my hands. ‘“GEO. LEITNER.’
    “ That on the 1st day of January, 1847, E. 0. Leitner took charge of the factory at Bivingsville, and of all the property of the company, and continued to manage the same in person until 1855, when he appointed an agent to manage in his stead: — during all this time, he lived with his family near to or at Bivingsville, and treated the business and property of the company as if they were his own — amongst other things, buying and selling slaves of the company, buying parcels of land which were used in connexion with the large tract of thirteen or fourteen hundred acres on which the factory was situated, erecting new machinery, engaging in new enterprises, intermingling his separate property with that of the company, giving notes in the name of the company, and by word and act holding himself out as the representative of the company with unlimited power:—
    “That during the same time, George Leitner resided in Fairfield District, at a considerable distance from Bivingsville, and in the latter portion of the time owned a plantation in Florida — twice, or oftener, be visited bis brother at Bivings-ville, but took no control of affairs there, and in conversation said, ‘ My brother does as he pleases here — the business is under his control, and he manages as he thinks proper—
    • “ That in November, 1853, E. C. Leitner, for himself and the Bivingsville Cotton Manufacturing Company, signed the confession of judgment now in question, in favor of Simpson Bobo, from the record of which the following abstract is taken:
    “ Simpson Bobo vs. The Bivingsville Cotton Manufacturing Company and B. C. Leitner.
    
    “ Writ in assumpsit, dated January 20,1854, never entered in the Sheriff’s office.
    “ Declaration in assumpsit — Bill of particulars, money had and received, six thousand dollars.
    
      “Indorsed on declaration — “We confess judgment to S. Bobo [in] this case for six thousand dollars, and consent that execution issue instanter.
    ' Bivingsville Cotton Manufacturing CoMpany, ' per E. C. Leitner.
    ‘E. C. Leitner.’
    ‘Nov. 17, 1853:
    
    “ ‘ This confession is to indemnify S. Bobo in being security for the defendant to Jane Poole for two thousand dollars — to secure plaintiff in the purchase money for the stock in the Bivingsville company, and the stock of D. Dantzler, represented by plaintiff as administrator. S. BOBO.
    ‘Nov. 17, 1853.’
    
      Judgment signed January 26, 1854. Fi.fa. lodged the same day.
    
      “ That in June, 1853, another confession, in like form, was made in the case of S. Bobo and B. B. Foster vs. The Bivingsville Manufacturing Company and E. C. Leitner, for fourteen thousand dollars, upon a note, intended to indemnify the plaintiffs against indorsements to be made by them; on which confession, judgment was entered October 7, 1858, and fi.fa. lodged March 31, 1855:—
    
      “ That E. 0. Leitner left, the country clandestinely in April, 1855, and soon afterwards George Leitner was at Bivings-ville, and then, or shortly before, notes given by him to the company for balances of accounts were in the hands of the agent appointed by E. 0. Leitner:—
    “ That under various writs of fi. fa. against the Bivings-ville Manufacturing Company, and against E. C. Leitner, the sheriff of Spartanburg district, in July, 1855, December, 1855, and some intervening days, sold of the property of these defendants in execution, (not knowing often to which of them particular articles belonged,) lands, negroes, live stock, &c., to the amount of forty-four thousand dollars or thereabouts, most of which is yet in the hands of the sheriff; or of the Commissioner in Equity; the execution in the case to which this issue relates being one of the oldest, but there being many junior executions, more than sufficient to exhaust the proceeds of sale, independent of this case; and the two confessions above mentioned being the only two which were ever made, or which ever professed to have been made, by or for the Bivingsville Gotton Manufacturing Company:
    “ That in April, 1856, a bill in equity was filed by the Bivingsville Cotton Manufacturing Company, complainant, against Simpson Bobo and B. B. Poster, defendants, praying that the judgment for fourteen thousand dollars, above mentioned, should be set aside ; and after answer filed, a decree was, upon the reading of the bill and answer, made at June, 1856, setting' aside that judgment: ‘ each party to pay his own costs,' having been in the handwriting of the Chancellor, added to tbe decretal order drawn, by Mr. Sullivan, tbe complainant’s solicitor:—
    “ That nothing in those proceedings in equity was said about tbe confession for six thousand dollars now in question, and before tbe motion made in this case in November, 1856, G-eorge Leitner had removed with his family and property to the State of Florida.
    ■“ In the course of the testimony, the defendant in issue was permitted to read every thing that was on the declaration, which was part of the record adduced by the plaintiff; and the defendant was restrained from going into proof of his suretyship to Miss Poole, and of sales of stock to the Bivingsville Cotton Manufacturing Company, upon the ground that the issue made involved not the fairness of the consideration for the judgment, but only the legal validy of the act of confession.
    “ The bill in equity above-mentioned was held to be competent but very feeble evidence for the defendant of what was stated therein. The answer was held to be evidence of nothing but its own existence. Upon the statement made that it contained .the defendant’s consent to the setting aside of the judgment of fourteen thousand dollars, that portion of it was read by the defendant; another portion, said to be of contrary import, was then read by the plaintiff; and the result was, that the equity proceedings served no purpose but to show action by this plaintiff upon a kindred Subject, whilst he was silent as to the judgment now in question.
    “ I endeavored to make the jury understand the questions upon which their response was desired, and to leave to their judgment the evidence, direct and circumstantial, bearing upon these questions, so that the verdict might be the unbased decision of the fact which the Court of Appeals desired to be ascertained. What should be the ultimate effect of the finding, I did not feel myself called on to determine upon the trial of this issue. To have held that a corporation could neither confess a judgment itself, nor by subsequent ratification confirm a judgment confessed by one of its corporators, would have been to refuse a trial of the issue that had been ordered. But what would amount to a valid confession by a corporation, and what to a sufficient confirmation of an invalid one, seemed necessary to be considered ; and upon these heads the wide range of the argument demanded some instructions.
    “ I presented the Bivingsville Cotton Manufacturing Company in two lights: as an ordinary corporation, and as an extraordinary corporation under its peculiar charter ; its two members as corporators, and as partners.
    “ I spoke of a confession of judgment as ,an act of the highest solemnity and force.
    “ I held that a corporation might confess judgment either before or after action brought, by a suitable writing under its common seal, affixed by the appropriate keeper of the seal; and that, perhaps, in the absence of a seal, a duly authorized agent might make a valid confession in an action previously brought. But I expressed the opinion that under the 42d section of the Act of 1785, (7 Stat. 232,) there could not, before action brought, be any valid confession made by attorney or agent, no matter how fully authorized; and of course that, before action brought, there could be no confession by a coi’poration without its common seal; nor any binding upon all the members of a partnership, without the signature of every partner.
    “ I took for granted, what the order for the issue implied, that a confession invalid of itself, might be confirmed by subsequent ratification; and I held that a ratification might be referred to any previous period when a gift of authority would have availed; and that this confession, whether the two members of the company were regarded as corporators or as partners, although it may have been invalid when it was signed might have been confirmed by the ratification of tbe corporation or of the partnership, made after action brought; and that under the circumstances, such ratification made by George Leitner would be sufficient to confirm it, in either view.
    
      “ To constitute ratification, I held that the person ratifying must know and understand the act to be confirmed, and must plainly assent to and adopt it. Of the evidence of ratification, I left the jury to judge, holding that circumstances, if they convinced, might serve as well as direct testimony. The articles of agreement between the, brothers, I did not consider as conclusive inter sese, if their subsequent acts, or the acts of one of them known to and approved by the other, showed an alteration of their agreement; much less should it, as I held, be conclusive and unchangeable as to third persons, whether their indenture was regarded as a letter of instructions from a corporation to its agent, or as articles of partnership between partners.
    
      “ To meet such views in the Court of Appeals as I thought must have suggested the alternative question, whether the corporation confessed the judgment, I directed the jury (notwithstanding the opinion I had expressed as to the necessity of the common seal, in a confession by a corporation before action brought,) to inquire whether E. 0. Leitner at the time of making the confession, did in fact have authority from George Leitner to do that act, either as corporator or as partner. I think that on this head I was not so fortunate as to render my distinctions altogether intelligible to the jury. They returned a verdict which I had put into form as nearly as possible in the words they had written.
    
      “ The- verdict as signed reads thus:
    “We find that the Bivingsville Cotton Manufacturing Company did not confess the judgment in question, but that the same was confessed by E. 0. Leitner duly authorized by his partner, George Leitner.
    “We find that the said Company did, by subsequent ratification, confirm the said judgment confessed by one of tbe corporators.
    B. E. KILGORE, Foreman
    
    The plaintiff apppealed and now moved this Court, for a new trial on the grounds:
    1. Because there was no proof of authority, on the part of E. C. Leitner, to confess the judgment in question, nor was there any proof of subsequent ratification or confirmation.
    2. Because the verdict is not in conformity with the issue directed.
    3. Because no authority that could have been given E. C. Leitner, before suit, to confess judgment, would render the judgment valid, either in his character as agent or partner.
    4. Because one partner of a corporation could not ratify a void or voidable judgment confessed by another partner, so as to bind the corporation.
    5. Because it is respectfully submitted that his Honor erred in his charge to the jury, in the following particulars: 1st. In saying that a corporation, with the right to sue and be sued, in their corporate name, could confess a judgment. 2d. By instructing them that a subsequent ratification would confirm a voidable judgment, and that this was not void but voidable; and that such confession could be made by an agent duly authorized. 3d. That the authority to confess, or the ratification, might be implied, although the authority of E. C. Leitner, under the covenant between him and his brother, to act as agent, did not authorise him to confess; and that the original agreement might be considered as altered or enlarged, by the manner in which the agent managed tbe business of tbe company; and 4th. In not telling tbe jury that tbe facts and circumstances proved could not, in law, amount to an authority to confess or establish a subsequent ratification.
    6. Because there was no proof that George Leitner bad any knowledge of tbe confession, or ever did an act or said a word, after it came to bis knowledge, in confirmation of tbe same.
    7. Because bis Honor erred in receiving evidence to vary or contradict tbe written contract between tbe partners, and also in permitting portions of the bill and answer of defendant, in tbe case of tbe Plaintiff vs. Simpson Bolo and B. B. Foster, to be read in evidence, as well as tbe endorsement on tbe confession of judgment, inconsistent with tbe bill of particulars filed therewith.
    8. Because tbe verdict is not sufficient in law to establish tbe judgment in question.
    Sullivan, for appellant.
    No authority that could have been given E. C. Leitner, either in his character as agent or partner, before suit brought, to confess judgment, would render tbe judgment valid. Mills & Go. vs. Bichson & Mills, 6 Eich. 487; 7 Stat. 232; Banldn & Birch vs. Lawrence & Johnson, 4 Eich. 267. A corporation must necessarily act through an agent, and such agent no more than the agent of an individual, could confess a valid judgment before suit brought. A void act cannot be ratified. 26 Wend. 192; McCullough vs. Moss, 5 Denio, 567. It was incompetent to receive evidence to vary or contradict the written covenant which gave no authority to confess judgment. Delafield vs. State of Illinois, 26 Wend. 192, S. C. 2 Hill, 159. When an agency is constituted by a written instrument, the power of tbe agent cannot be enlarged by evidence of usage. E. C. Leinter bad no authority to confess the judgment. Angelí & Ames on Corporations, 314; Matter of Waterbury and others, 8 Paige, 380; McCullough vs. Moss, 5 Denio, 567; Farmers’ Banlc vs; McKee, 2 Barr, 318; Savage Manufacturing Co., vs. Worthington, 1 Gill, 284; Harwood vs. Sumes, 9 Alb. 659; Chitty on Bills, 31; The Bank of Hamburg vs. Johnson, 3 Bich. 42; Havens vs. Hussey, 5 Paige, 30; 4 Eng. C. L. B. 426.
    
      Feed, Thompson, contra,
    cited 7 Cra. 305; 1 Har. & J. 426; Ang. & A. 265; 2 Kent, 282; 6 Porter, 166; 1 Peters, 264; 7 Bich. 525; 5 Hill, N. Y., 296; 1 Chit, on Bills, 31, note 1; 1 Johns. Cas. 110; 2 Johns. Gas. 424.
   The opinion of the Court was delivered by

O’Neall, ,J.

The Act of 1838, (8 Stat. 463,) the Charter of the Bivingsville Manufacturing Company, made the corpo-rators, partners, with the privilege of using á corporatemame. Planters’ Bank of Fairfield vs. The Bivingsville Cotton Manufacturing Company, 10 Rich. 95. The finding of the jury, “that the Bivingsville Cotton Manufacturing Company did not confess the judgment in question, but that the same was confessed by E. C. Leitner, duly authorized by his partner, George Leitner,” was therefore right enough: and it may be at once conceded, that the confession under the authority of Mills & Co. vs. Dickson & Mills, 6 Bich. 487, would not, standing by itself, bind the firm. But the jury further found, that “ the company (that is the partner, George Leitner,) did, by subsequent ratification, confirm the said judgment confessed by one of the corporators;” and the questions are, could such judgment be ratified? and if so, then are the 'facts sufficient to establish that conclusion ?

1. It must be kept constantly in mind, that this is really nothing more than a question between co-partners using a corporate name. George Leitner and E. C. Leitner were the sole members. E. 0. Leitner made the confession, and it, as his act, was sufficient to bind him. Can George Leitner, the other partner, and thus the company, be bound by ratification ? The whole difficulty about the corporation being bound is, that the confession was not under the seal of the corporation. In the case of partners, the general rule very clearly is, that the firm cannot be bound by any instrument under seal, executed by one in the name of the firm; but to that rule are the exceptions, that if made in the presence and by the assent of the partners; or if after execution, it be ratified by the absent partner or partners, it will bind the firm. Fleming vs. Dunbar, 2 Hill, 532; Fant vs. West, 10 Rich. 149. These cases fully show, that the ratification may be established by admissions or circumstances, which create a belief, that the absent partner or partners knew of the deed, and intended to be bound by it. Taking this to be law, I think that a judgment confessed by one partner or corporator, may bind the other, if the circumstances create a belief, that he knew and intended to be bound by the confession.

2. The jury have found the ratification, and I think very properly. In the first place, the debt was the debt of the company, money borrowed for the corporation from Miss Poole, and the purchase of the shares of Dantzler and Bobo, in the company. E. 0. Leitner, by the express authority of his brother George, was the entire manager of the company, buying and selling as he pleased. The judgment was confessed November, 1853 — and the motion submitted to set it aside was Pali Term, (November). 1856. Three full years passed, and the defendant, George, made no question. The shares of Dantzler and Bobo, to the amount of four thousand dollars, in the Bivingsville Cotton Manufacturing Company, were acquired by the credit secured in this confession. The whole property, real and personal, of the Bivingsville Manufacturing Company was sold by tbe sheriff, and the money in bis bands arises from that source. This fact would, against an infant, constitute an implied ratification; and certainly against George Leitner, who is of full age, and very cognizant of bis rights, it ought to have as muclPeffect. Looking to all the facts which I have set out, I think the verdict was well warranted. The motion for a new trial and to set aside the judgment is dismissed.

Wardlaw, WhitNer, Gloyer and MüNro, JJ., concurred.

Motion dismissed.