Court Opinion

ID: 7165034
Source: CourtListenerOpinion
Date Created: 2022-07-24 16:20:09.797898+00
Date Added: 2024-06-11T16:15:30.784214
License: Public Domain

PROVOSTY, J.
The defendant bank discounted the ndte of the Aarons-Mendelsohn Company, Limited, the corporation whereof plaintiff is the liquidating commissioner, and received from said corporation, in pledge to secure the note, certain promissory notes and warehouse receipts. The corporation was represented in the transaction by its secretary, wbo alone signed the note and the act of pledge, although the charter required that the notes of the corporation should he signed by the president and countersigned by the secretary. That charter provision, however, had been uniformly ignored in the business of the corporation, which was purely mercantile, and had been conducted like that of a partnership by the president and the secretary, holders of 198 of the 200 shares of stock. The date of the pledge was April, 1895. In the July following, at the suit of a creditor, the charter of the corporation was forfeited, and the plaintiff appointed liquidating commissioner. The present suit was filed in July, 1898, 12 months after plaintiff’s appointment, and 6 after the bank had converted into cash the last piece of the pledged property, and credited the proceeds.
The suit is to recover a moneyed judgment for the aggregate amount of the pledged notes and the estimated value of the pledged property. The allegations are that the pledge is invalid, and that the bank is not entitled to the pledged property or its proceeds, but that the plaintiff is entitled to same for the benefit of the creditors of the defunct, insolvent corporation.
The petition strangely omits to allege the conversion of the pledged property into money, and that omission was made the basis of an exception of no cause of action. The ex-*741eeption was overruled. It should have been sustained, at least to the extent of requiring plaintiff to amend. But the defect has now been doubly cured — first, by allegations of the answer; and, secondly, by evidence, received without objection, showing the conversion.
Another exception is to the capacity of the plaintiff to stand in judgment in the suit. The Aarons-Mendelsohn Company, Limited, it is said, was not a corporation; no list or statement of the original subscriptions of its stock having been recorded as required by section G8C of the Revised Statutes.
To this plaintiff replies that the defendant, having dealt with the corporation, is estopped from contesting its corporate existence.
Plainly, the defendant bank, having received the pledged property from Aarons-Mendelsohn Company, Limited, as a corporation, cannot deny the corporate character of that company for the purpose of holding onto the property. 10 Cyc. 244. And for so deciding it is in no wise necessary to overrule Workingmen’s Bank v. Converse, 29 La. Ann. 369, and Hincks v. Converse, 37 La. Ann. 488, but only to distinguish it, as was done in the cases of Latiolais v. Citizens’ Bank, 33 La. Ann. 1445, and Homestead Co. v. Linigan, 46 La. Ann. 1118, 15 South. 369, and probably others. The two last-named cases were suits against stockholders, but the principle is the same. The plea of nul tiel coi-poration is not allowed when equity forbids. Williams v. Hewitt, 47 La. Ann. 1076, 1083, 1084, 17 South. 496, 49 Am. St. Rep. 394.
The grounds assigned by plaintiff for the invalidity of the pledge, are:
First, that the note for the security of which the pledge was made is null and void, it not having been signed by the president of the corporation as required by the charter, and that, the principal obligation being null, the pledge, the accessory obligation, is also null;
Second, that the act of pledge did not describe or identify the warehouse receipts as-required by article 3159, Civ. Code; and,
Third, that the warehouse receipts were not marked, “For hypothecation,” as required by Act 72, p. 113, of 1876, § 2.
The first of these grounds is clearly unteiiable. A corporation which has received the consideration of a contract is not allowed to-defend against an action on the contract on the ground that the provisions of its charter-prescribing the form of the contract were not complied with by the officer acting for the corporation in the execution of the contraet. A. & E. E. of L. (2d Ed.) vol. 7, p. 761, note 1, in fine; (1st Ed.) vol. 4, p. 228, note; 8 Cyc. 54.
There is also a line of decisions to the effect that a note or a contract which has been executed by a mercantile corporation in the manner in which it usually executes its notes or contracts, and in regular cotu'se of business, will be held binding on the corporation, notwithstanding any informality in its execution resulting from noncompliance with the requirements of the charter of the corporation. Martin v. Webb, 110 U. S. 7, 3 Sup. Ct. 428, 28 L. Ed. 49; Cox v. Robinson, 82: Fed. 277, 27 C. C. A. 120; Armstrong v. Chemical Bank, 83 Fed. 556, 27 C. C. A. 601 First Nat. Bank v. G. V. B. Min. Co. (C. C.) 89 Fed. 439.
“A provision in the governing instrument of a corporation that a particular officer shall! sign the name of the corporation to particular instruments — for example, to promissory notes —does not prevent the directors from authorizing any other corporate officer to perform the function.” 10 Cyc. 1001.
Plaintiff’s learned counsel makes a point ■on the circumstance that, the corporation being insolvent, the plaintiff is the representative, not of the corporation, but of the creditors, and the informalities must be eonsidfered as being urged by the creditors, or, ini other words, by third persons, and not by the corporation itself. Conceding this, we *744fail to see what difference it can make. There is not any the less an obligation to return the money received from the bank, and there is not any the less a note executed with the presumed authorization of the board of directors, and either of these obligations is sufficient to support the pledge. We fail to see that the fact that the note was discounted makes any difference in the case.
The second ground of nullity — that the act of pledge did not describe the warehouse receipts — is without merit. The law governing the matter is article 3158, whose requirement as to description is that the act of pledge shall mention “the species and nature of the thing given in pledge.” This requirement was entirely satisfied by the recital that the thing pledged was “warehouse receipts for 30 Cases-Bales Leaf Tobacco.” This was a mention of “the species and nature of the thing given in pledge.” Article 3159, prescribing the manner of executing acts of pledge to banks, has reference only to the authenticity of the acts, not to their validity, so that, if the description contained, in this act of pledge did not measure up to the requirements of that article, the validity of the pledge would not be affected, but only the authenticity of the act evidencing it.
The clear distinction between this case and that of Pierson, Administrator, v. Metropolitan Bank, 106 La. 298, 30 South. 885, is that in that case the pledged receipts did not describe the property. Here, for all that appears, the receipts may have contained a perfect description of the property. The one receipt that is in the record does so. It identifies the packages by the mark and the number of each. So true is this that the complaint is not, as it was in the Pierson Case, that the receipts do not identify the packages, but that the act of pledge does not identify the receipts. The receipts were actually delivered into the possession of the pledgee, than which no better identification could he desired. In fact, the mere delivery was sufficient, without other formality whatever. Act 157 of 1900, p. 239.
The third ground of nullity, that the receipts were not marked, “For hypothecation,” as required by Act 72 of 1876, p. 113, § 2, is inapplicable to the facts of the case. The warehouse receipts to which that act has reference are those “issued under the provisions of this act.” The receipts involved in the instant case were not “issued under ‘ the provisions of this act,” but were United States bonded warehouse receipts. They were not statutory instruments regulated by said act, but mere ordinary warehouse receipts, regulated by commercial law, and not needing to conform to said act in order to be susceptible of being pledged.
Judgment affirmed.