Court Opinion

ID: 7159081
Source: CourtListenerOpinion
Date Created: 2022-07-24 16:14:37.105563+00
Date Added: 2024-06-11T16:15:19.325986
License: Public Domain

Bullard J.,

delivered the opinion of the court.
The plaintiffs allege that they, or their assignor, purchased certain lots in the city of New-Orleans, at a public sale by the defendants; but that difficulties having arisen in relation to the sale, it was agreed that the property should be sold again; that no liability should attach to the first purchasers; that they, should relinquish their rights to the property and that it should be sold again, and the proceeds applied to the payment of the just debts of the company; and that the surplus, if any, should be paid over to those who had purchased at the first sale and relinquished, each purchaser-being entitled to the full profit made on his lot, provided the assets of the company should be sufficient to pay all its debts, independent of such profits. They allege that the second sale produced a large profit over and above all the debts of the corporation, and that they have a right to claim the profit made on the re-sale of their lots respectively, and they pray for judgment against the corporation of five thousand two hundred and fifty dollars, in favor of one of the plaintiffs, and of eight hundred and fifty dollars in favor of the other.
The defendants in this action allege, that the first sale spoken of in the petition was illegal, and made without sufficient authority, and that the agreement stated in the petition was not made in a manner and form to bind the . corporation; and if so made, was founded in error and without consideration, and is not obligatory. N
Judgment having been rendered in favor of the defendants, the plaintiffs appealed.
We have not thought it necessary to inquire in this case, whether the sale of the 9th and 12th of December, was valid or not. The plaintiffs appear to have renounced all claim under it, and the obligatory force of the contract which they ' *402how seek to enforce, does not in our opinion depend upon the question' whether they acquired a good title under the first sale. The sole question, therefore, which presents itself for oul’ solution is, whether the contract in question was entered into in such a manner and with such forms as to be obligatory on the corporation. When we say that we need not inquire into the validity of the first sale, we in substance overrule that part of the defence, which sets up a want of consi.deration for the new contract; because, whether valid and binding, or not, it is certain that the first sale formed the subject of controversy, and the contract now in question may be regarded as of the nature of a transaction between the parties, by which litigation was avoided.
The question then is, whether there is evidence before us to show that the corporation ever gave its assent to this .contract, so as to bind it and every person who composes it, so far as its interests are concerned.’
It may be remarked in the first place, that the agreement in question does not purport to have been made by the president and directors of the corporation, in the ordinary range of their official duties, and assuming to represent the corporation by virtue of the powers confided to them by the charter. On the contrary, it appears to have eminaled from the stockholders themselves. At a meeting of the stockholders, at which a majority does not appear to have been present, either in number of persons or amount of stock, it \yas resolved, that the president and directors be authorised and instructed to cause the property of the company to be sold by the sheriff, under Mr. Millaudon’s mortgage, agreeably to the arrangements made by the committee at the City Bank, and that the proceeds be appropriated to pay the debts of the company, and that the arrangement made by the committee with the purchasers of the property, at the sales on the 9th and 12th of December, be confirmed. At the same meeting, it was resolved, that the stockholders who are not represented at this meeting, be called upon to give their assent or dissent to the foregoing resolution, and that a committee of two be appointed for that purpose.
Corporations are intellectual fre0mSthe persona who compose them, and are creatures of the itT 0niyh accor-<lins to their o_r-gamzation, in theformorman-by theh-'charters and the laws of the land.
The estates and rights of a corporation belong* to the whole body, and none of the individuals who compose it, can dispose of any part of them. The act of the majority of the cor-porators legally expressed, is the act of the whole, and no contract is binding on the corporation which is not binding on every member of it.
But the will or assent of a majority of ths fceu separately, meeting, Ts net regarded as the will of the corporation itself,
*403It appears to us quite obvious, that the doings of this meeting, by themselves, did not render the arrangement proposed by the committee, obligatory on the corporation; because, a majority was not present, even supposing the meeting to have been preceded by proper notices to the corporators to attend.
At the next meeting, at which it appears from the minutes there was not a majority present, the committee reported that they had called upon a large majority of the stockholders who had signed in the affirmative; that all the persons who had voted in the negative, except Messrs. Lawson and Rice, had requested their names to be placed on the affirmative list, and that a number of stockholders whom the committee had not been able to see, had expressed a ... „ , . ,T , ■ wish to sign in favor of the resolutions. Nothing more was done at this meeting than to receive the report of the committee, who furnished a list of those who had signed in the . ’ . , affirmative, and of those who had refused their assent, and the adoption of the report by a majority of the stockholders present. These proceedings form the basis of the subsequent. 1 ..... . . transactions, and the inquiry is, whether they furnish evidence of the assent of the corporation to the contract alleged by the plaintiffs.
Corporations are creatures of the law, or as the code expresses it, intellectual beings, different and distinct from all the person's who compose them. They can act only according to their organization, and in the form pointed out by their charters, or the laws of the land. The estates and rights of a corporation (says the code, article 427) belong so completely to the body, that none of the individuals who compose it can dispose of any part of them. A subsequent article (435) declares that in corporations, the act of the majority is considered as the act of the whole.
We assume it as an undoubted corollary, from these principles, that no contract can be binding on a corporation which is not binding on every member of it, on the ground that the assent of the corporation must be given in such a way as to bind th6 whole. Where the code speaks of the *404act of the majority being the act of the whole, it must be understood to mean, when applied to such a corporation as this, the will of the majority legally expressed; and if any meaning is to be given to the. general principle first declared, that the corporation is distinct from all the persons composing it, it must follow that the will of a majority of the corporators, taken separately, is not to be regarded as the will of the corporation itself. We know of only two ways in ... ,r . , . J ■ h ■ wnich such a corporation as the one now under consideration can act’ 40 w*t: e^^er trough its president and directors, or at a meeting of the stockholders duly convoked. The act by which the defendants were incorporated does little more ^nn give corporation a name, and a legal capacity. It provides for the appointment of directors, but is silent as to the manner in which the corporators are to be convoked, and ^ow they are to vote, whether per capita or according to the amount of shares held by each. In these respects their pfo-codings and the validity of their acts, must be judged of accorchng to the principles of law, applicable to corporations in general. If the two minority meetings be laid out of view as void, the whole rests upon the assent expressed by a maj01'ity the stockholders not in a meeting of stockholders, but by each one separately and at different times, and evidenced, not by the minutes of their corporate proceedings, hut hy a separate paper in the possession of a committee, We cannot see in this any legal evidence of the consent of . , ... , . the corporation, either according to its charter or the 'general principles of law.
assmt'orTma5 jority of stock-building-eompa-eci "in relation to a certain eérning'the cor-a°r meeting of stockholders,but parateiy and^t andereevídenced not by the mi-porate proceed-separate'4 pape? m the possession HeU, that the nuii0Indvoid"as containing- no legal evidence the consent of eitoer according to its charter or the generalprin-cipies of law.
. , It is, therefore, ordered, adjudged and decreed, that the judgment, of the District Court be affirmed, with costs.