Salt Lake evening Democrat. [volume] (Salt Lake City, Utah) 1885-1887, 1885-07-24
April SS4, the defendant company fled

April, 8S4, the defendant company filed
bill to reform the lease. loy
In the annual reports of the trustees of
the defendant company to the stockhold-
ers for the year 1882 and 1883, the lease
was expressly referred to and the in
come from the leased line reported.
Assuming the stockholders to have
been persons OF ordinary intelligence and
to have used reasonable diligence with
respect to matters in which they were
personally interested, the reasonable in
ference is from the foregoing evidence
that they knew of the lease within short
time after it was made. Without evil
dence of concealment it may be inferred
the stockholders knew of the lease before
the next annual meeting after its eXecu-
ton. Self-interest prompts prudent men
to enquire about their own important af-
fairs. The law presumes the stock
holders understood the franchise which
they owned-the extent of its powers
and the necessity of notice to
them OF meeting to authorize
the lease, and if they had no notice they
knew that within reasonable time after
the acceptance of the lease it became the
duty of stockholders intending to ques-
! ton it because of insufficient notice of
the meeting at which it was authorized,
to elect, to avoid and to take the neces-
sary steps to that end. The defendant
company was in possession under the
lease, claiming and receiving its benefits
almost twenty months. The court finds
that the stockholders by their acquies-
cence in the lease and their recognition
of it at their annual and special meetings
waived any objection because Of the want
| of power from them to make it and rati-
fed it against such objection.
1t appears from the evidence that the
| defendant company had nine directors,
| six of whom were present, at the meet
| ing which adopted the lease; that VIM.
| A. Bell, one of the six, was also a
| stakeholder and was director and stock
holder in the Utah company, but did not
sit as such in the latter board. Notwith-
! standing a majority of defendant COM
| pany's directors, without Bell, voted to
adopt the lease defendants counsel insist
the fact of the participation in the meeting
rendered the lease fraudulent in law and
therefore voidable. Directors are, re-
garded as trustees of the stockholders and
| if, when so acting, they enter into a con-
tract on behalf of their corporation in
which they have a pecuniary interest,
such contract is voidable at the option of
| the company Nor should they act as
the agent or trustee of two parties in
negotiating an making a contract
| between them unless all parties
interested being Sm juris content.
In the first case their duties would con-
| a. ~ with 4hoi,. rlarCn,,o1 into
the latter their duties would be divided
opinion that the lease is voidable at the
option of the Colorado company.
But, conceding this, counsel for the
plaintiffs urge that the evidence shows a
ratification. The ratification of the lease
is voidable because of insufficient notice
of the stockholders meeting at which it
was authorized, and must be regarded as
ratification OF the action of that meeting
also, and thereafter the directors posses
sed the authority to make a valid lease.
And if the board accepted one voidable
because the individual interests of one of
the defendants was at variance with his
duties as such director and because his
duties were conflicting; without the par
ticipation and cooperation of a disquali-
fed director the board could ratifv such
lease.
If an agent authorized to do lawful
act does it imperfectly and it is voidable
he may make it right while the power to
do the act remains in him. 1t appears
from the evidence that Bell, the disquali-
fed director, retired from the Board in
the fall OF the year 1882, and competent
Board thereafter acquiesced in the lease
till the spring of disappearing the road
and at various meetings referring to the
lease and recognizing it as valid. In the
observance of evidence of concealment it
is a reasonable inference that defendants
company's Board knew that Bell was a
director of and owned stock in the Utah
company-the law does not presume ig-
norance, concealment or fraud, under
such circumstances. All parties are pre-
sumed to know the law
As business men the directors of the
Colorado company would enquire as to
the authority of the Utah company to
make the lease and the action and quail
fication of its directors, and who they
were before occupying and operating the
road under it, expanding large sums of
money and executing a mortgage on the
leasehold interest The Court is of the
opinion that the lease in question was
ratified by the directors of the Colorado
company. They were authorized to make
lawful lease but made voidable one,
and afterwards, while they possessed the
power, made it valid by ratification. In
addition to the evidence of ratification by
the directors, is that of ratification by the
stockholders above referred to.
The Covrt is of the opinion that the
acquiescence and action of the stockhold-
ers and directors of the defenpant COM
pany made the lease in question valid and
binding on the parties. These views
render it unnecessary to decide other
points discussed by counsel in their argu-
ments. An examination of the numerous
cases cited on the argument, would ex-
tend this opinion to great length. The
weight Of authority appears to support
toe views above expressed.
The prayer OF the original complaint is
grrnted, and that of the cross-complaint
is denied. A decree will be entered ac-
cordingly. c. F. ZANE, Judge.
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