Court Opinion

ID: 3291686
Source: CourtListenerOpinion
Date Created: 2016-07-05 17:07:46.873928+00
Date Added: 2024-06-11T12:17:10.366834
License: Public Domain

I concur in the affirmance of that part of the judgment only by which it was ordered "that the plaintiff take nothing as to the items of the claim sued upon subsequent to the 2nd day of May, 1925". As to the conclusion reached by my associates regarding the remainder of the judgment of the lower court, I dissent.
First, I cannot agree that by its own minute record of a purported transaction which allegedly has occurred between the corporation and some other party, the corporation may in any manner support its cause of action. To my mind, such evidence is but self-serving, hearsay and incompetent.
Secondly, although I agree that ordinarily speaking, a director of a corporation legally should be regarded as a trustee for the corporation and the stockholders thereof, and consequently, in accordance with the well-established rule, may not, on behalf of the corporation, enter into binding contractual relations between it and himself; nevertheless, from a consideration of the authorities, I am convinced that such a contract is not void abinitio, but, to the contrary, is merely voidable. In other words, any contract between the corporation and one of its directors, however irregular and unenforceable in its inception, which contract, had it been entered into between the corporation and a third person would have been valid, either by subsequent acts of omission or of commission on the part of the corporation, may become as binding as though originally it was not properly or legally subject to any adverse criticism or objection. And just such a situation was present in the instant case. Acting upon an assumedly voidable contract, with not only constructive notice of all the facts relating thereto, but as well with *Page 584 
full actual knowledge of all of them, a new board of directors of the corporation, of which neither of the defendants was a member, not only completely ratified the original contract, but in addition thereto adopted it and continued it in force.
Thirdly, without a recitation of the pertinent facts which existed in connection with the point, I am clearly of the opinion that each of the stockholders of the corporation, as well as the corporation itself, was estopped from denying the legality of the contract.
A petition for a rehearing of this cause was denied by the District Court of Appeal on May 13, 1932, and an application by appellant to have the cause heard in the Supreme Court, after judgment in the District Court of Appeal, was denied by the Supreme Court on June 13, 1932.