Case ID: ohio-law-abs_2/html/0614-02.html
Source: Caselaw Access Project
Author: {"author": "ROBERTS, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

No. 632
    HUGHES v. CLEVE. TRUCKING CO. et
    Ohio Appeals, 8th Dist., Cuyahoga County
    No. 5158.
    Decided June 9, 1924
    313. CORPORATIONS — 1. Powers other other than discretionary may be delegated by board of directors.
    2. Acts of executive committee which involve discretionary action are void.
    3. Directors must expressly confer all delegated powers.
    4. The unauthorized acts of executive committee in giving note of corporation do not bind corporation.
   ROBERTS, J.

Epitomized Opinion

Published Only in Ohio Law Abstract

This was an action on a promissory note and for the foreclosure of a chattel mortgage. The Cleveland Trucking & Carting Co. gave its note to the plaintiff, Hughes, for back rent due to plaintiff on a certain building occupied by the defendant company. The note was signed by the president and secretary of the carting company without the knowledge or authority of the board of directors and at the time the note was given the plaintiff had knowedge that the board of directors had not acted upon the matter jn any respect. In support of the officers’ conduct it was claimed that the board of directors had really ceased to function and that the business was left in the hands of an executive committee previously appointed and that the president and secretary constituted a majority of that committee. An appeal was prosecuted from the decision of the lower court. In rendering a judgment for the defendant the Court of Appeals held::

1. The board of directors of a corporation has authority to delegate power to a committee or agent, concerning the management of the company over matters which do not involve the exercising of discretion or judgment.

2. If the executive committee had authority to act in the matter, the settling of the dispute between the corporation and the plaintiff involved discretion which the directors could not delegate.

3. All powers or duties delegated by a board of directors must be expressly conferred and cannot be presumed.

3. As the evidence showed that the acts of the executive committee were unauthorized and were not the acts of the corporation itself, the corporation was not bound and therefore the note and mortgage did not constitute a legal obligation against it.

Attorneys — Wm. H. Lugher and W. S. Han-non, for Hughes; Stanley & Horwitz, for Trucking & Carting Co. et; all of Cleveland.