Court Opinion

ID: 5501683
Source: CourtListenerOpinion
Date Created: 2022-01-10 03:00:39.235239+00
Date Added: 2024-06-11T08:33:57.146490
License: Public Domain

Landon, J.
I concur with the presiding justice. It might have been found as a fact that the defendant had for a short time the practical control of the corporation, and did then abuse his temporary power by converting its funds to his own use under the guise of a loan, colorably secured by inadequate collaterals. The corporation subsequently did try to mitigate its loss by'selling these collaterals. But this was no ratification of the transaction. An individual, competent to contract, may be beguiled and cheated, and subsequently ratify the voidable contract he was thus induced to make. But in this case, when the defendant took the money, he did not beguile or deceive the corporation. He effaced its power and will and capacity to act for itself. He held its hands, and spoiled its treasury. Such a transaction cannot be ratified, since it never could have been originally authorized. After applying the proceeds of the collaterals, the balance unsatisfied represents the damages sustained by the corporation from defendant’s wrong; and, upon the case assumed, plaintiff ought to recover these damages.
Statement of facts by Mayiiam, J., dissenting:
This action was prosecuted to recover $10,000 for the alleged wrongful conversion by the defendant of certain moneys belonging to the plaintiff. The complaint alleged the incorporation of the plaintiff under the act authorizing the formation of corporations for manufacturing, mining, mechanical, and chemical purposes, and that the defendant was a trustee and stockholder in such corporation, and charged that in violation of his duty as such trustee and stockholder, and without lawful authority therefor, the defendant took, received, fraudulently misapplied, and converted to his own use, the money of the plaintiff, in the aggregate, to the amount of $7,150. The answer admits the existence of the corporation, and that defendant was a trustee and stockholder in the same, and alleges that the plaintiff loaned the money specified in the complaint to the defendant, took and held his notes for the same, with 1,200 shares of stock in the company belonging to *549the defendant as collateral to such loan, and that the defendant had paid the interest and part of the principal on such loan, and that, before the commencement of the action, plaintiff had called such loan, and advertised and sold the stock held as collateral to such loan, and had received and retained the proceeds of the sums realized on such sale. The evidence discloses that the defendant held a majority of all of the stock of the company, and was at the time of the alleged taking of the money the president of the company, •and a member of the board of trustees; that before the receipt of the money by the defendant the board of trustees, by resolution, authorized the treasurer to loan the moneys of the corporation held in bank on good security. After this resolution, which was July 23, 1886, the treasurer, on July 24, 1886, loaned to the defendant $6,000, taking his note, payable on demand, and on .return of the collaterals, and at the same time received as collateral to such loan 1,000 shares of the capital stock of this company, and on the 19th day •of August the treasurer, upon like note and 200 shares of the capital stock, made another loan to the defendant of $2,150. The money was drawn by the defendant on the check of the treasurer for the amount of these loans. For the conversion of the money represented by these transactions, this action was brought. Upon these undisputed facts the trial judge dismissed the complaint.