Court Opinion

ID: 3303784
Source: CourtListenerOpinion
Date Created: 2016-07-05 17:19:16.884304+00
Date Added: 2024-06-11T12:27:26.979857
License: Public Domain

I dissent. The theory of the plaintiff in the case and of the court below in giving its judgment was, that the resolution of the stockholders and of the board of directors constituted an agreement whereby the defendant assumed the payment of the advances made by the plaintiff under the agreement. The allegation in the complaint is to the effect that by virtue of the resolutions the defendant assumed this obligation, and there is no other fact alleged upon which such assumption could have been based. I am of the opinion that this contention is unsound. The plaintiff was not a party to those resolutions, they were not made at his instance, and they do not purport to have been made for his benefit. The resolution of the stockholders was manifestly adopted for the purpose of vesting in the directors authority to make the purchase of the mines. It *Page 710 
was a mere direction or authority from the principal to the agent, and does not constitute a contract with or for the benefit of any person. The resolution of the directors does not purport to constitute a contract with anybody, and was nothing more than an expression of the intention of the directors to purchase the mines on the terms stated in the resolution, and to authorize the officers of the corporation to accept a deed accordingly. It necessarily included authority to accept the deed on more favorable terms. Neither of the resolutions were made, so far as appears, for the purpose of constituting a contract either with the grantors in the two deeds or with any other person. They authorized the making of a contract, but do not constitute the contract itself. The grantors in the deeds were not parties to the proceedings leading up to and including the passage of the resolutions, and there is no allegation or finding that they relied on the resolutions, nor in the promise therein supposed to be set forth, that the corporation would assume the repayment of the advances. The executive officers of the corporation, in the negotiation for the purchase, succeeded in obtaining, and they were authorized to obtain, the execution of deeds by the vendors, which did not bind the corporation to assume such payment. All negotiations became merged in the deeds and were superseded thereby. The recital in the deeds actually taken, that the defendant took the property subject to the contract, did not make it personally liable for the repayment of the advances. We know of no principle of law which justifies the conclusion that under the circumstances here appearing the resolutions alone can be considered as constituting a contract between the corporation and the grantors. The essential element of consent by the other contracting party is lacking. There is nothing to show that the grantors had any knowledge of the existence of the resolutions at the time they executed the deeds, or that they executed the deeds in consideration thereof or with reference thereto, and hence there could be no promise to them, on the part of the corporation, to repay the advances. Without a promise to the grantors there was nothing of which the plaintiff could take advantage, no promise made for his benefit.
In Rosborough v. Shasta R.C. Co., 22 Cal. 561, where the *Page 711 
president of a corporation had served nineteen months upon an understanding with the directors that he was to be paid the reasonable value of his services, and the directors then passed a resolution, apparently with his full knowledge, that the compensation of the president should be established at fifty dollars per month, after which he continued to serve for more than two years, the court decided that the resolution was a sufficient agreement to pay for the past as well as for the subsequent services, so as to prevent the bar of the statute of limitations. The authority of the case was apparently doubted inMcCarthy v. Mt. Tecarte L. and W. Co., 111 Cal. 341. It seems to be settled that in many cases the minutes or resolutions entered in the books of a corporation may constitute either a contract or sufficient evidence of a contract to satisfy the statute of frauds. (Cook on Corporations, sec. 714.) But we presume that no case can be found holding that such a resolution or entry constitutes a contract or evidence of a contract between the corporation and third persons who had no knowledge of it, and who did not act on the faith of it, nor in consideration of it, and were in no legal sense parties to it. The decision in Rosborough
v. Shasta R.C. Co., 22 Cal. 561, can be sustained only on the theory that, with respect to the past services, the resolution was a written memorandum of a previous oral contract, and as such sufficient to prevent the bar of the statute of limitations. The defendant in this case cannot be made liable by virtue of the resolutions.
If the purchase was made for the purpose of substituting the defendant in the place of Banta and Stephens in carrying out the agreement as an executory contract, there would be no obligation arising from it to the plaintiff to pay the advances until there had been a resale of the mines to some third person. If, on the other hand, the defendant bought the mine outright, it did not become liable to repay the advances. The recourse of the plaintiff in that case would be upon Banta and Stephens alone for the purchase money which they received, and which, according to the agreement, they were to divide with him. In either case, he has, upon the facts found, no claim against the defendant.
The finding of the court that the defendant, by virtue of the resolutions, assumed the obligation, based as it is upon *Page 712 
the mere fact of the passage of the resolutions, is in reality a conclusion of law, and can have no greater effect than the facts would justify. I think the court attributed greater force and effect to the resolutions than can be given them.
In my opinion the judgment should be reversed and the cause remanded.
Angellotti, J., concurred in the dissenting opinion.
 *Page 1