Case ID: ky_58/html/0054-01.html
Source: Caselaw Access Project
Author: {"author": "JUDGE SIMPSON", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

CASE 13 — PETITION ORDINARY
    JUNE 14.
    Shelbyville Trustees vs. Shelbyville & Eminence Turnpike Company.
    ArrEAL FROM SHELBY CIRCUIT COURT.
    1. It is not necessary, in an action on a contract made by the defendant, to allege that the defendant had authority to make it. This authority is impliedly admitted by the execution of the contract; and if the defendant labors under any disability, as infancy, or marriage, the fact must be relied on by way of defense. So, in an action against the trustees of a town upon a subscription of stock — the presumption being that the act was regular and legal, inasmuch as they were acting under official responsibility. (Louisville vs. Hyatt, $c., 2 B. Monroe, 177.)
    2. The failure of the plaintiff (turnpike company) to issue certificates of stock to the defendant (trustees of a town) for the first installment of the subscription of stock paid, is no defense to an action for the balance of stock subscribed.
    3. Trustees of a town, having authorized their chairman to subscribe for stock in a turnpike company, by an order, a copy of which, certified by their clerk, having been copied into the book for the subscription of stock, have no right, in defense to an action for the amount of stock subscribed by him, to rely upon the fact that their agent exceeded his authority, or that the copy of the order so certified was incorrect, unless they allege and show that the company had knowledge of those facts at the time the subscription was made.
    This suit was brought by the appellees against appellants to recover the last installment of stock to the turnpike company subscribed by the chairman of the board of trustees, under their order, upon the books of the company. A demurrer to the petition having been overruled, and demurrers to the answer and amended answer sustained, judgment was rendered against appellants for $250, tbe amount of said installment, from which • they have appealed.
    .Brown and Whitaker for appellants—
    The chairman is not the general agent of the board of trustees, but acted under special authority, which was not pursued. A general agent acting under written instructions must conform to them.
    The trustees had no authority to make the subscription under the act of incorporation. If made under a special act, it should be pleaded and averred that the act was complied with.
    T. B. and J. B. Cochran on same side—
    The trustees had not power to make the subscription. Their chairman is not their general agent, but was their special agent in making the subscription, and exceeded his authority, and therefore his act did not bind the trustees. (1 Parsons, 39, 51, 52, 96, 41, 49, note ee; 2 Kent, 620, 621; 5 J. J. Marshall, 267; 4 Mon., 41; 6 Mon., 575.) Where a general agent has written instructions, known to the party dealing with him, the instructions must be strictly followed, (1 Parsons, 51, 52, 96.) The order of the board of trustees was known to the appellees to be on the records of the trustees, and it was their duty to have known its terms.
    J. M. and W. C. Bullooic for appellees—
    It was not necessary to aver that the board of trustees, had authority to make the subscription, (Higdon’s heirs vs. Higdon’s dev., 6 J. J. Mar., 51.) The paper sued on is of itself presumptive evidence of such authority, and that it is not is matter of defense, {Stephens’ Pleading.) The board authorized the subscription to be made, which is prima facie evidence of their authority. {Bank U. S. vs. Dandridge, 12 Wheaton, 64.) Acts of incorporation need not be pleaded, {Revised Statutes, 452,) but may still be relied on.
    As corporations must act by agents, they are bound by the acts of such agents, whenever acting within the scope and legitimate purposes of their creation, (Taylor, &c., vs. Williams, 17 B. Mon., 495.) If the chairman exceeded his authority, the board have recognized the validity of the subscription by paying the first installment and claiming certificates of stock, and are bound to execute the whole contract. (Head, &c., vs. Providence Ins. Co., Condensed Rep. U. S., vol. 1, 376; 1 Parsons on Contracts, 45.)
    T. J. Timoop on same side—
    The doctrine that a corporation can only bind Itself by writing under its corporate seal, has been overruled by repeated decisions. (Waller vs. Bank Ky., 3 J. J. Mar., 201; Com. Bank, N. Orleans vs. Newport Man. Co., 1 B. Mon., 14.)
    The appellants are bound by the act of their chairman, if he exceeded his authority, unless it can be shown that the party dealing with him as agent knew that he was transcending his authority. (Morrison vs. Taylor, 6 Mon., 85 ; Allen vs. Sykes, 5 J. J. Mar., 614.) This rule applies with peculiar force to public functionaries, acting openly for the local public, and under official responsibility. (Louisville City vs. Hyatt, ¿yc., 2 B. Mon., 180-1.)
    As to the right of the corporation to subscribe stock in roads, see Sess. Acts, 1849-50,^. 482.
   JUDGE SIMPSON

delivered the opinion of the court:

The first question in this case involves the sufficiency of the plaintifFs’ petition, which is objected to on the ground that it does not contain an averment that the trustees of the town of Shelbyville had power to subscribe for the stock, for the nonpayment of which the action was brought.

This objection does not, as supposed, raise the question whether the defendants were authorized, independent of any statutory provision on the subject, to make the contract on which the action is brought; for if, in any state of case, or under any circumstances, they were authorized to make it, the presumption is, inasmuch as they were acting under official responsibility, that their act was regular and legal. (The city of Louisville vs. Hyatt and others, 2 B. Mon., 177.) More especially should this presumption be allowed to prevail in a case in which they alone are the defendants. The act of making the contract was of itself an assertion of authority on their part to make it, and is at least prima facie evidence, as against them, of the existence of such authority. It is not necessary, in an action on a contract made by the defendant, to allege that the defendant had authority to make it. This is impliedly admitted by the execution of the contract; and if the defendant labors under any disability, such as infancy, or marriage, if a female, the fact must be set up and relied upon by way of defense.

The defendants were authorized, by the act of 1849-50, to make such a contract, upon being authorized to do it by a vote of the citizens of Shelbyville. Having made the contract, the presumption is that they had the authority to make it; and, indeed, by the act of making it, they virtually asserted that they had such authority. No averment on the subject was, therefore, necessary on the part of the plaintiffs.

The sufficiency of the answer of the defendants is the next question to be considered.

The failure therein relied upon of the plaintiffs to issue a certificate of stock to the defendants, for the first installment of the subscription of stock which had been paid, did not justify the latter in refusing to pay the balance of their subscription. The answer did not contain any allegation that a certificate of stock had been demanded or refused; and even if the plaintiffs had refused to issue a certificate until the whole subscription was paid, such a refusal would not have constituted any defense to the action.

The other ground of defense relied upon in the answer was equally untenable. The chairman was the general agent of the board of trustees. He was authorized by the order of the board to make the subscription. A certified copy of the order was entered in the book for the subscription of stock, and the subscription made in conformity with the copy of the order thus certified. The defendants have no right to rely .upon the fact that their agent exceeded his authority in making the subscription in the manner it was made by him, unless they allege and show that the plaintiffs had knowledge of that fact at the time the contract was made. The plaintiffs had a right to presume that the copy of the order of the board, which was presented at the time the stock was subscribed, was correct. It was signed by the chairman, and certified to be a true copy by the clerk of the board. It purported to confer on the chairman of thé board an authority to subscribe for the stock on the terms the subscription was made. It would, therefore, be obviously unjust to permit the defendants to assail the contract thus made, upon the ground that the copy of the order of the board thus certified by their own clerk, and acted on by their own chairman, was incorrect, without showing, at the same time, that the plaintiffs were apprised of the fact. The answer does not contain any such allegation, and therefore the demurrer to it was properly sustained.

Wherefore, the judgment is affirmed.