Court Opinion

ID: 5553261
Source: CourtListenerOpinion
Date Created: 2022-01-11 00:36:13.477229+00
Date Added: 2024-06-11T08:35:13.572328
License: Public Domain

By the Court.

McDonald, J.
delivering the opinion.
The points presented in this record may be resolved into the following : Was there an existing corporation, duly organized with power to act at the time of the execution of the alleged mortgage ? If there was such a corporation, was the instrument properly and legally executed either by the corporation itself or its legally constituted agents, in a manner to bind the corporation ? If it was not so executed, can the corporation or the claimant, under the facts of the case, take advantage of the defect, and defeat the rights of the mortgagee ?
[1.] The Madison Steam Mill Company owed its corporate existence, originally, to a declaration drawn up by certain persons as stockholders under the Act of 1547, authorizing persons to prosecute the business of manufacturing with corporate powers and privileges. It assumed the corporate name of “ The Madison Steam Mill Company.” On the 11th day of February, 1854, the Legislature passed an Act to grant corporate powers and privileges to the Madison Steam Mill Company. That Act treats the Company as an existing corporation. The first section enacts that the persons therein named, and their associates, should be known, distinguished *325and recognized as a body corporate and politic. It not only vests the Company with the property, real and personal, which they then held; but declared also that they should have, possess and enjoy all the franchises which were then held by the said Company.
Here is a recognition of the Company as a corporate body, and a confirmation to it of all the franchises which it then held. There is no repealing clause to the Act. It is an amending and confirmatory Act. The name of the Company is not changed, and many of its most important powers are to be looked for in the Act under which it derived its original corporate existence. The old charter is not annulled, except so far as-there is an irreconcilable repugnancy between that and the later Act as accepted by the Company. Every Act legally done under the old charter, is as valid and binding as it would have been had the Act of 11th February, 1854, never been passed. That Act infringes no rights which the Company or the public acquired under the Act of 1847.'
These two Acts, so far as they are consistent with each other, make the charter of the Madison Steam Mill Company. To the two Acts we must look for the faculties, powers and privileges of the Company. When the stockholders met on the 1st of May, 1854, to accept the charter of the 11th of February before, they metas the stockholders of the Madison Steam Mill Company.
[2.] The adoption of the charter of 18th February did not destroy the organization under the old Act. There is nothing in the last Act incompatible with the continuance of that organization until there was an election agreeably to the directions of the Act. The Act of 1854 does not declare when the first annual meeting of the stockholders for the election of directors, should be held. The stockholders met on the 3d of March, 1855, and authorized the President and Secretary to execute mortgages to secure debts due to persons for borrowed money, and for cotton purchased on a credit. The mortgage was executed on the 25th April, 1855. For the *326reasons assigned, we think that at the date of this mortgage, the Madison Steam Mill Company was an existing corporation, with an organization and capacity to act.
Was the mortgage legally executed, so as to bind the corporation ?
[3.] The mortgage is drawn with the manifest purpose that the name of the corporation should be signed thereto, and the corporate seal affixed.
It is.signed by the President and the Secretary, with their own names, (signed officially,) with a scroll to each name for a seal. In England the property of a corporation can be conveyed away under the common seal only. Natural persons must convey lands there, under seal, and the seal must be impressed on wax, a wafer or other impressible substance. This rule, in many of the States of this Union, has been much relaxed, and a scroll has, by Legislative enactment or judicial decision, been held to be sufficient. Our own Legislature has, in very strong language, declared that the annexation of a scroll instead of a seal on wax, wafer or other tenacious substance, shall be a sufficient execution of a sealed instrument. Cobb 274. If it shall be sufficient in the case of a natural, why not in the case of an artificial person ? The statute makes no distinction. If it be proved to be the seal, that is sufficient. But the name of the corporation is not signed; that of the President and Secretary only. A corporation executes conveyances under its corporate seal. But an artificial person cannot, like a natural person, write its name. Its corporate name being subscribed would not give the instrument greater validity. Messrs. Angel and Ames say that they “see no reason, unless the Act of incorporation expressly provides what the common seal shall be, why the substitute allowed for the private seal of an individual should not also be allowed for the seal of a corporation.” They know of no decision upon the subject. Ang. and A. on Cor. Sec. 218. “ A corporation as well as an individual person, may use and adopt ally seal. They need not say that it is *327their common seal.” Mill Dam Foundry vs. Hovey 21. Pick Rep. 428. If they adopt a seal different from their corporate seal for a special occasion, or if they have no corporate seal, the seal adopted is the corporate seal for the time and the occasion. If a corporate body choose to adopt a scroll as their common seal, why may it not do it ? It cannot, at common law, because a scroll cannot, by that laAV, be a. seal. But a scroll is made a seal by statute in this State, and there is no reason Avhy it may not be adopted by a corporation here, either as a common seal, or as a seal for a special purpose. The same kind of proof which would establish, if disputed, the authenticity of the genuine common seal in a particular instance, would equally establish the authenticity of a scroll as the corporate seal; to-Avit, that it was affixed by authenticity, express or implied, of the corporation. The vote of a competent board of directors that the corporate or other seal was directed to be used, is not necessary. It may be proved otherwise. If an agent of a corporation have authority to convey or mortgage its property, and he execute the conveyance or mortgage, and affix thereto anything that the law recognises as a seal, Avhen affixed by a natural person, it will be a good execution presumptively, by the corporation. A. and A. on Cor. Sec. 226. In England, when an Act of Parliament empoAvers the directors of a company to enter into contracts, the contracts need not be under seal. Grant on Corp. 67. In this case, however, the mortgage is under seal, and under the favor of its execution, to render it valid, it must be held to be the seal of the corporation.
If the seal was put there by the agents of the company, legally constituted for that purpose, then it is the seal of the corporation, and the mortgage is valid and binding.
The agent of a corporation aggregate, to bind the principal by deed, need not be appointed by deed. It is sufficient if he be appointed by vote. A. and A. on Corp. Sec. 224. The agents by whom the mortgage before us was executed, were appointed by a meeting of the stockholders. If they *328Rad power or authority to make the appointment, there can be no question of its validity. As a general rule, when a corporation is created by statute, or, in England, derives its charter from the Crown, and the statute or charter prescribes the mode in which contracts shall be made, that mode must be pursued. I say, this is the general rule. If the Act or charter be silent, then the rule of the common law prevails. “It was incident, at common law, to every corporation, to have a capacity to purchase and alien lands and chattels, unless they were specially restrained by their charters or by statute. Independent of positive law, all corporations have the absolute dispenendi, neither limited as to objects nor circumscribed as to quantity.” 2 Kent 281. This corporation, under its original organization, was restricted in the quantity of real and personal property which it might own, to such as was necessary for the purposes of its incorporation, or such as it might be obliged to take in the settlement of debts due to it, and it was vested with power to dipose of it Its mode of action was not prescribed. There was tú Re a President, but how and in what manner it might alien or dispose of its property is not prescribed; nor is the mode of alienation prescribed in the Act of 1854. Prior to the organization under that Act, the stockholders directed mortgages to be executed to secure debts for borrowed money and cotton purchased on a credit. There is nothing restrictive of this power in the statutes. The direction in the 3d section of the Act of 11th February, 1854, to the stockholders to elect,at an annual meeting, seven directors to manage and control the afairs of the Company, does not restrict this power. This general power of management and control confers no authority to borrow money for the use of the Company, much less to mortgage and sell its property. By the 6th section of the Act, the stockholders of the Company might, by a vote of two-thirds, authorize the directors to borrow money. This positive regulation forbids the inference that the directors had that or any analogous power un*329der the third section. If they had no such power, there was no restriction of the common law power to dispose of the property through any other instrumentality; and the President and.Secretary were the chosen agents for that purpose.
The resolution of the stockholders was, therefore, a competent authority to them to do the act. It follows, therefore, that as Jones and Foster, President and Secretary, were the legally constituted agents of the Company to make the mortgage, the seal affixed by them is presumptively the seal of the Company, and that the Company is bound by it.
[4.] We might stop here; but it seems proper to us,"to say a few words in regard to another view of this case.
At the sale of the property at which the plaintiff in error became the purchaser, notice was given publicly, that it was; sold subject to certain mortgages amounting to about $30,000. The property was worth about twenty thousand dollars. The mortgage under which this case comes up, was stated to have been foreclosed, and the others were in process of foreclosure. The judgments under which plaintiff in error became the purchaser, were of prior date to the mortgages. He purchased the entire property for the sum of one hundred and twenty-six dollars. There is no pretence that the debts secured by the mortgages were not bona fide debts due by the Company to the several creditors who held them. The Madison Steam Mill Company intended to secure the debts by mortgages. The instruments were intended as mortgages: the plaintiff in error, at the time of his purchase, had not only the notice which the law implied from their having been recorded, but he had actual notice of their existence, and that if he purchased, he would purchase subject to them. He purchased the equity of redemption only, and the amount of these mortgages is the balance of the consideration which, by his agreement, he is bound to pay if he retains the property. The mortgage creditors, under our system of foreclosure, have a legal judgment which they have a right to enforce against the mortgaged property. If there *330was a power, and that power had been defectively executed, as is insisted, equity, under the evidence in this case, would aid the creditor against the purchaser, in either executing it, or correcting it so as to give it legal effect and operation from its date.
Now that it is in a condition to be enforced at law, it would not interfere in behalf of such a purchaser to resist the plain demands of justice, and that according to his own agreement.
The claimant could not present a case in equity that a Chancellor would listen to for a moment.
He would be obiiged to allege, if he stated his case fully and truly, that he had purchased property worth $20,000 for the sum of $126; that at the time of the purchase he had notice of mortgages, to which the property was subject, toan amount equal to the value of the property, some of which had been foreclosed, and others were then in process of foreclosure; that he purchased the property subject to them, but that he had discovered the mortgages had not been so executed as to create a lien on the property, and he prayed the Court to protect his legal title. His cause would not be entertained for a moment by a Court of Chancery. It would not aid him to escape from the consequences of his own agreement fairly and openly made, with no circumstance of fraud, imposition or hardship against him, to commend him to its favor. The disparity between the value of the property and the consideration paid for it, would alone prevent a Court of Equity from giving aid to the purchaser.
According to the view we have taken of this case, the mortgagors could not have resisted the foreclosure of the mortgages, and the plaintiff in error cannot occupy a more favorable relation to the case. He purchased the property subject to them, and if he wishes to retain it, he must pay the mortgages.
Judgment affirmed.