Court Opinion

ID: 6434836
Source: CourtListenerOpinion
Date Created: 2022-06-25 12:11:33.288422+00
Date Added: 2024-06-11T15:52:20.751530
License: Public Domain

De Courcy, J.
The twelve promissory notes in suit were signed or indorsed “The Buena Vista Fruit Co. Frank E. Morris, Acting Treasurer.” This company is a voluntary association under a declaration of trust, dated December 27, 1907; and the defendants are all the residents of Massachusetts who were shareholders when the obligations sued on were contracted. The company received the proceeds of the notes; and the plaintiff purchased them for value and before maturity.
It was decided in Frost v. Thompson, 219 Mass. 360, (which was a suit to recover on a promissory note of this same company,) that the Buena Vista Fruit Company is a partnership and not a trust. It is now contended, especially on behalf of forty-one of the defendants who were not either officers or original subscribers, that the authority of the treasurer or acting treasurer to sign or *384indorse promissory notes in the name of the company arises out •of the provisions of the by-laws only, and that they are not bound by those by-laws.
It is true that the certificates of shares, while referring to the declaration of trust, make no reference to the by-laws; but the former was filed in the office of the city clerk, and with the Secretary of State, and the originals or copies of both the declaration and by-laws have always been on file in the office of the organization. The declaration expressly provides in Article X that “The Trustees shall have power to employ such attorneys, agents, clerks and a treasurer, and to fix the duties to be performed by them . . . as they may deem expedient.” Among the powers and duties they prescribed for the treasurer, by one of the “by-laws,” was that of making, signing and indorsing promissory notes in the name and behalf of the company. Dunning, the treasurer, became assistant manager of the plantations in Cuba in January, 1911, and manager in 1913, and has been there a considerable part of the time. This rendered it necessary to have an acting treasurer in Boston, and Morris was duly elected as such in January, 1911, and was authorized to sign all notes and other obligations in the name of the company. The trustees further voted “That said Frank E. Morris, while in said capacity as Acting Treasurer, succeed to all the duties of the Treasurer as defined by the Declaration of Trust and By-Laws of the Company.”
Since that time Morris is the person who has signed all contracts, notes, checks and other obligations of the company, and indorsed all checks and notes. The auditor finds that: “During the year from July 1, 1914, to July 1, 1915, Mr. Morris indorsed in this way for deposit from six to ten checks each week and drew twenty or twenty-five checks each week. All notes of the organization were signed or indorsed in the same way, and from January 30, 1911, to July 1, 1915, Mr. Morris as Acting Treasurer had signed and indorsed notes to the amount of two or three hundred thousand dollars. All these checks and notes, with the exception of the notes in suit, have been met by The Buena Vista Fruit Company, except in a few instances where funds were not available, and The Buena Vista Fruit Company has paid notes indorsed as are the notes in suit by Mr. Morris *385as Acting Treasurer.” The officers and some of the other shareholders knew that notes of the company had been signed or indorsed by the acting treasurer, and “an examination of the books would have disclosed the facts, and even casual attention to the affairs of the organization would have disclosed how its business was being carried on.” These facts warrant a finding that the company was bound by the acts of the acting treasurer in signing and indorsing these promissory notes, not only by virtue of the express authority given to him under the declaration of trust and by-laws, but also by reason of his course of conduct carried on with the knowledge and implied assent of those managing the business of the company, who held him out to the public as having authority to sign and indorse notes in behalf of the company. Merchants’ National Bank of Gardner v. Citizens’ Gas Light Co. of Quincy, 159 Mass. 505. Hartford v. Massachusetts Bowling Alleys, Inc. 229 Mass. 30. Produce Exchange Trust Co. v. Bieberbach, 176 Mass. 577, 581, 582.
It may be that many of these defendants were misled by the appearance and language of the certificate of “non-assessable” “shares of stock” issued by the officers of the company, that they assumed that the company was a corporation, and did not fully realize that they were associating themselves as members of a partnership. But, as the auditor finds, “none of these defendants except the officers paid any attention whatever to the conduct of the business of the organization.” They voluntarily adopted the partnership form of association; and their rights and obligations as shareholders are those defined by the established rules of law applicable to ordinary partnerships. Williams v. Milton, 215 Mass. 1. Frost v. Thompson, supra. Priestley v. Treasurer & Receiver General, 230 Mass. 452.

Exceptions overruled.