Court Opinion

ID: 5513663
Source: CourtListenerOpinion
Date Created: 2022-01-10 04:26:33.155802+00
Date Added: 2024-06-11T08:34:13.839517
License: Public Domain

By the Court,

Sutherland, J.
This case comes before the court upon exceptions taken by the plaintiffs to the charge of the judge. I think the charge was substantially correct. It was incumbent upon the plaintiffs to give some evidence of the authority of Mr. Franklin to borrow money for the defendants. Such authority is not implied from his appointment as president; as such, he is merely the presiding officer of the board of directors, chosen by them from their own body, and has no more authority from the charter to bind the company by any of his acts, than any other director has ; his powers are such only as the board of directors, either by their by-laws or otherwise, think proper to confer upon him. No evidence of any such delegation of power was given. It does not appear that borrowing money in this manner was one of the ordinary powers exercised by the president, or that the company ever knew of, or ratified any of these acts, or similar transactions in relation to other companies or individuals. To hold the defendants responsible upon this evidence, would be to establish the principle that the presidents of all the incorporated companies in the state had authority, by virtue of their offices merely, without reference to the powers actually conferred upon them, to pledge the responsibility of the companies to any extent—a doctrine at war with fundamental principles, and which would be utterly subversive of the rights of all the stockholders in these public associations.
There is not a particle of evidence that the defendants ever actually received any portion of this money. It is said, however, that this fact would have appeared, if the books called for had been produced, and that the judge erred in not charging the jury that the refusal of the defendánts to pro*34duce those books, afforded presumptive or prima facie evidence 0f ^hat fac(-_ j j0 n0^ understand the rule to be, that a party has a right to infer, from the refusal of his adversary to produce books or papers which may have been called for; that if produced, they would establish the fact which he alleges they would prove. The rule is this: The party in such a case may give secondary or parol proof of the contents of such books or papers, if they are shewn or admitted to be in the possession of the opposite party ; and if such secondary evidence is imperfect, vague, and uncertain as to dates, sums, boundaries, &c. every intendment and presumption shall be against the party, who might remove all doubt by producing the higher evidence. But they must be shewn to be in his possession, and some general evidence of such parts of their contents as are applicable to the case must first be given, before any foundation is laid for any inference or intendment on account of their non-production. The cases cited by the plaintiffs’ Counsel shew this to be the true rule. 18 Johns. R. 331. 4 Burr. 2484.
The exception raised to the charge, after the jury had withdrawn, was properly excluded by the judge ; it came too late; it would not, however, have varied, the case, as it is substantially embraced in the first exception. This disposes of the bill of exceptions, and the motion for a new trial must be denied.
But there is a fundamental objection to the plaintiffs’ recovery. They have no authority by their charter to loan money exbept on bond and mortgage. Laws of 1822, -p. 54. They cannot make a valid contract of loan in any other manner ; "and therefore not only the security which may -be taken, but the contract itself is void, and cannot be the foundation of an action. Where a corporation is prohibited from discounting notes, or taking any other particular security, but have k general power given them by their charter to loan money, if they make a loan and take the prohibited sécurity, the security is void, but the contract of loan is valid, and the money may be recovered under the general counts ; but where not only the security, but the contract also is illegal, it cannot be enforced. 19 Johns. R. 1. 8 Cowen, 20. 3 Wendell, 583. It was coil-tended, however, by the counsel for the plaintiffs, that if the *35loan was illegal and unauthorized, it must be considered the act of the agents or officers of the company, and not of the company itself; and that they therefore ought to be allowed to recover back their property thus improperly disposed of. This would be a most convenient distinction .for corporations to establish ; that every violation of their charter, or assumption of unauthorized power, on the part of their officers, although with the full knowledge and approbation of the directors, is to be considered the individual act of the officers, and is not to prejudice the corporation itself. There would be no possibility of ever convicting a corporation of exceeding its powers, and thereby forfeiting its charter or incurring any other penalty, if this principle could be established. It was not pretended that this was not an ordinary business transaction on the part of the plaintiffs, conducted in the usual manner, and by the officers to whom it appropriately belonged. The witness states that the money was loaned by the plaintiffs. If it were proved, therefore, that Franklin was the authorized agent of the defendants in borrowing the money, it appears to me the plaintiffs could not recover it back.
Motion for a new trial denied.