Court Opinion

ID: 9793443
Source: CourtListenerOpinion
Date Created: 2023-08-31 02:47:42.852928+00
Date Added: 2024-06-11T08:05:02.491032
License: Public Domain

Mr. Justice Hall
dissenting:
I respectfully dissent from the majority opinion. I refer to the plaintiff in error as the Loan Co. and to the defendant in error as the Insurance Co.
The record is very brief. The Loan Co. admits that it received a deposit of $10,000.00 from the Insurance Co., which at the time the deposit was made was known as the “International Fire Insurance Company,” and for answer to the demand by the Insurance Co. the Loan Co. states that said $10,000.00 was paid to the Insurance Co. “by delivery of said sum to Larry Schwab, The President, General Manager, and duly authorized agent of said International Indemnity Insurance Company.”
The majority opinion states that:
“ * * * The decisive issue in the case is therefore whether Schwab possessed authority to collect the proceeds of this account or debt owed to his principal and thus to discharge the obligation * * *.”
The majority opinion finds that Schwab was possessed of such authority; the finding that such authority existed is predicated on facts which are alleged to appear in the record. I am not in entire accord as to some of the deductions made by the majority as to the force and effect of certain testimony.
*56Bearing in mind that Schwab and the Insurance Co. are two separate and distinct legal entities, now let us see what evidence there is of Schwab’s authority to discharge the debt.
1. The majority, in finding Schwab had authority to withdraw the deposit, apparently attach some significance to the fact that he had created the account. It does not follow that one having authority to make deposits has authority to make withdrawals.
“ * * * a mandate [by a principal] to deposit money in a bank does not imply a power to draw it out * * —2 C.J.S. 1288 §108.
2. The majority opinion, in speaking of Schwab and his wife, states: “There were no * * * other shareholders.” The only evidence in the record with reference to this matter is found in the deposition of Schwab, which deposition was offered in evidence by the Loan Co. The whole of the testimony touching such question is as follows:
“6. Who were the stockholders in said insurance corporation throughout January, 1956? Answer: There were no other stockholders in January, 1956, other than my wife and myself.
“7. Approximately what proportion of the total issued stock of said insurance corporation was held by you and your wife during January, 1956? Answer: All but those shares necessary to keep the company a corporation.” (Emphasis supplied).
Ownership of stock does not establish any semblance of agency. That relationship is one existing between a corporation and its stockholders. Stockholders as such have no authority to act for or in behalf of the corporation or to bind it in any respect.
3. It is stated in the majority opinion that Schwab was president and treasurer, that his wife was vice-president and secretary. It is a fair inference that officers have some powers; they have such powers (as officers) as are provided in the bylaws, and of course that *57covers the .power to do those things necessary and incidental to carrying out the general powers expressly granted. We have no bylaws of the Insurance Co. before us; consequently there is no evidence as to what, if any, powers any officer possessed.
4. Next it is said that:
“There were no board members [directors] other than the Schwabs [husband and wife].”
The only evidence in the record on that question is found in the deposition of Schwab.
“4. Who were the Directors of said insurance corporation throughout January, 1956? Answer: In January of 1956, Irene G. Schwab and Lawrence M. Schwab were the sole directors of the International Indemnity Insurance Company.
“5. Were there any officers of said insurance corporation at any time during January, 1956, other than you and your said wife? Answer: There were no other active directors of the International Indemnity Insurance Company, other than my wife and myself.” (Emphasis supplied).
Directors, as such, are not agents of the corporation; there is no relationship of principal and agent. A director, provided for by charter or bylaw, is without authority other than to act as a member of the board in the management and operations of the corporation — alone he has no authority to bind the corporation; no two, acting individually, have any such authority. The board functioning as a board does have the responsibility and the power of running the affairs of the corporation.
In 19 C.J.S. 85, §745, it is said:
“According to the general rule, usually recognized, the directors possess authority to act only as a board at a regularly assembled meeting; the individual and separate action or assent of directors does not bind the board or corporation, nor is it the act of the board or of the corporation. * * *.”
In the case before us, it does not appear that directors *58ever met, nor how many made up the board. C.R.S. ’53, 72-1-43, sets forth how the business of an insurance company shall be conducted:
“The business of insurance companies heretofore or hereafter incorporated under the laws of this state shall be managed by a board of directors consisting of such number of directors, not less than three, as may be prescribed by the articles of incorporation or any amendment thereof, * * *. Such directors shall be nominated and elected in the manner prescribed by the bylaws of the company not inconsistent with the laws of this state.”
5. It is next stated by the majority that Schwab was the president and treasurer. As such officer he was not an agent; there was no relationship of principal and agent.
In 19 C.J.S. 97, §752, it is said:
“Aside from his position as presiding officer of the board of directors and of the stockholders when convened in general meeting, the president of a corporation has, by virtue of his office merely, no greater power than that of any director. Whatever authority he has must be expressly conferred on him by statute, charter, or by by-law or the board of directors or be implied from express powers granted, usage or custom, or the nature of the company’s business. * *
The fact that Schwab’s wife was a stockholder, director and officer cannot serve to enlarge upon the powers of Schwab.
6. Next it is said that Schwab “was the general manager of the company.” The only evidence in the record touching on this question is found in the deposition of Schwab.
“2. Please state what person, during January, 1956, was in active management and control of the affairs and business of said insurance corporation. Answer: I was active in the management and controller of the affairs of *59the business of said corporation as of January, 1956.” (Emphasis supplied).
I question whether such statement supports an assertion that he was the general manager. However, let us assume that he was the general manager.; holding such position in itself does not clothe him with authority to surrender corporate assets in return for a check made payable to himself. I am of the opinion that a manager, limited or general, is an agent; he acts in behalf of the corporation, his principal; he may be a director as well as manager. The manager gets his authority from the board of directors; the directors get their authority and have their duties fixed by statute, charter or bylaws. Whatever managerial powers Schwab may have had were necessarily conferred upon him by the board of directors; there is nothing in the record to indicate the extent of the powers conferred, if any.
7. It is stated in the majority opinion that Schwab said:
“I had complete and absolute authority of the corporation to cash this said certificate in that I had the authority of my wife and myself.”
This is a forceful inadmissible conclusion of law of Schwab which, if accepted, constitutes an ajudication of the matters involved and renders further consideration by the court a waste of time and energy. Significantly there is nothing in the records to indicate the source of this power. In any event, this statement cannot serve as proof of agency or the scope of the power. It is well established that such may not be proven by the testimony of the agent. Typical of dozens of pronouncements of this court is the following statement from Commercial Ins. Co. v. Rinn, 100 Colo. 76, 65 P. (2d) 705:
“ * * * Of course no assumption and no declaration of alleged agents, standing alone, can bind the principal. Lester v. Snyder, 12 Colo. App. 351, 356, 55 Pac. 613. Franklin says Connors represented the company. Rinn says Connors was its ‘agent’ and ‘general agent’ and that *60Alexander was its ‘general attorney.’ These statements are mere conclusions. Stuart & Co. v. Asher, 15 Colo. App. 403, 406, 62 Pac. 1051; 90 A.L.R. 756. * *
8. What other evidence was there of Schwab’s authority? When he made the deposit, he apparently signed a form of application prepared and furnished by the Loan Co. It states it is an application of International Fire Insurance Company” for membership, etc. Following the application are four lines, each preceded by the word “Signature,” and opposite each following the word “Office” is a blank line. On the top line appears the signature “Larry J. Schwab”; on the reverse of this card is a form of resolution to be signed by the secretary of the corporation in which the secretary, among other things, certifies as follows:
“IT IS HEREBY CERTIFIED that the above named officers have been duly elected to the offices set opposite their respective names, that they hold such offices at this time, that their true signatures appear on the reverse hereof, and that the above resolution is not a violation of our articles of association or by-laws and was duly adopted at a meeting of the board held on the............day of ...................., 19.........”
In the center of this card are four lines for the insertion of names, and opposite each line is the word “Office” and another line. The signature of Larry J. Schwab appears on the top line — nothing more. The secretary of the corporation did not sign nor did any other person sign the above certificate.
On an account card kept by the company showing the deposit in the name “International Indemnity Insurance Company,” also showing dividends and withdrawal of $10,000.00, appears the signature “Larry Schwab.” On the reverse side of the certificate of deposit there is a form for transferring the account and membership. The name “Larry J. Schwab, Pr.” appears in the line designated as the place for inserting the name of the assignee. The portion provided for execution by the Insurance Co., *61payee and assignor, remains blank. How can it be said that signing one’s name four times is proof of any authority? All such signing could well be without any authority. Doing an act is no proof of authority to do it.
. 9. Apparently the majority consider as some evidence of authority to cash the certificate and take a check in his own name the fact that the Loan Co. was notified of a change in name of the depositor, and the majority opinion states:
“This change was requested by Larry Schwab and the change made on the ledger card of the defendant.”
I do not believe the record supports the statement that this request was made by Larry Schwab. Defendant’s Exhibit F is a letter written on printed stationery of International Indemnity Insurance Company; it is dated August 2, 1955, directed to the Loan Co., requests the change, and is signed:
“International Indemnity Insurance Company, Larry Schwab, President.”
I doubt if that can with propriety be called a request of Larry Schwab. Apparently the Loan Co. took the same view of the request as I do, for in response to this request it directed a letter (Exh. G) dated August 4, 1955, not to Larry Schwab, but to:
“International Indemnity Insurance Company,
901 Sherman Street,
Denver, Colorado Gentlemen: ”
10. It cannot be contended that Schwab was clothed with apparent authority. The record discloses that none of the Loan Company’s witnesses had any recollection of ever seeing Schwab, though they opined that he must have been in their place of business.
I fail to find in the record or in the opinion any facts to prove that Schwab was an agent or officer empowered to surrender this certificate in exchange for a check payable to himself personally. A debt is discharged by payment made to the creditor. The Loan Co. did not *62even purport to pay the Insurance Co. In addition it was guilty of a violation of its own bylaws, bylaws pursuant to which the deposit was received, bylaws made an integral part of its certificate, bylaws defining the rights and duties of the parties and upon which each was entitled to rely.
Article 6 of the bylaws of the Loan Co. (Exh. H) provides:
“6. Withdrawals — The association shall have the right to pay the withdrawal value of its savings accounts at any time upon application therefor and to pay the holders thereof the withdrawal value thereof. Upon receipt of a written request from any holder of a savings account of the association for the withdrawal from such account of all or any part of the withdrawal value thereof, * * (Emphasis supplied.)
Clearly this bylaw, a part of the contract, contemplated a written request from the holder — the Insurance Co. — before making any payment. It had no written request from the holder or any other person.
The following statement from 2 Am. Jur. 80, §98, is particularly applicable to the fact situation as evidenced by this record:
“Every agency is subject to the legal limitation that it cannot be used for the benefit of the agent himself, or of any person other than the principal, in the absence of an agreement that it may be so used. This is a rule of law of which all persons must take notice. Whenever it appears that the interests of an agent and those of his principal are necessarily in opposition in a particular transaction, strangers dealing with the agent are charged with notice of his want of authority to bind the principal by his acts. * *
The judgment of the trial court should be affirmed.
Mr. Justice Frantz joins in this dissenting opinion.