Notice to him is not in law notice to the corporation." Buttrick v. Railroad, 62 N.H. 413, 418. In brief, a corporation is not affected by a director's knowledge unless the corporation moves "in the business to which the knowledge is material through the agency of such director acting either alone or as one of the board."
Knowledge of two directors is not knowledge of a board of which they are not at least a majority. Buttrick v. Railroad, 62 N.H. 413; Hilliard v. Railroad, 77 N.H. 129. In Smith v. Bank, 72 N.H. 4, this was assumed to be the law, without citation of authority.
constituted the directorate of the Commercial Brewing Company, the indorsement in blank and delivery of stock and proxies to the defendant for the purpose of ensuring the annual election of a board of directors whose votes would support and sustain him in retaining the control of the management and the direction and determination of the policies of the corporation, until an opportune time came for the corporation openly to acquire and pay for the stock, were inoperative, — even if conceded to be beneficial to the corporation, — to bind the corporation to pay for the stock on demand and tender of the certificates or to raise an implied promise binding the corporation to save the defendant harmless upon his guarantee of the purchase price to the bank, for the reason that the purchase, transfers and plan were always intentionally kept secret from the minority of the board of directors and were assented to and approved by the majority of the board acting individually and not collectively. Buttrick v. Nashua Lowell Railroad, 62 N.H. 413. National Bank v. Drake, 35 Kans. 564. Cook on Corporations, (7th ed.) § 713. The vote of the board of directors in 1912, whereby the treasurer, the defendant, was authorized and empowered to purchase the stock "now held by Henry F. Smith," was not in terms a ratification of the purchase of stock and of the plan to use it in furtherance of the policies of the defendant until an opportune time came to transfer it to the corporation; nor can the vote by implication be held to ratify and adopt the irregular action of the individual majority members of the board of 1908, because a minority of the board authorizing the purchase of the Smith stock were ignorant of, and intentionally kept in ignorance of, the purchase and the scheme and plan for the use and final disposition of the stock assented to, adopted and finally carried out by the individual members, who in 1908 as in 1912 constituted a majority of the members of the board of directors.
Such authority could be granted only "either when there is a consultation of all [directors] together and a concurrence of a majority; or where there is a regular meeting, at which all might be present, and a majority actually meet, and act by a majority vote." Parker, C. J. in Despatch Line of Packets v. Bellamy Mfg. Co., 12 N.H. 205, 227; Edgerly v. Emerson, 23 N.H. 555; Atlantic Fire Ins. Co. v. Sanders, 36 N.H. 252, 269; Tenney v. Lumber Co., 43 N.H. 343, 358; Buttrick v. Railroad, 62 N.H. 413, 418; Hamlin v. Company, 68 N.H. 292. The letter is not evidence of authority: Hilliard v. Railroad, 77 N.H. 129, 131; Westminster Bank v. Electrical Works, 73 N.H. 465, 481; Cate v. Blodgett, 70 N.H. 316; Holland v. Laconia B'ld'g c. Ass'n, 68 N.H. 480, 481; Low v. Railroad, 45 N.H. 370, 381.
Neither the president nor a director of a corporation has power by virtue of his office to bind the corporation. Holland v. Association, 68 N.H. 480; New Boston Fire Ins. Co. v. Upton, 67 N.H. 469; Wait v. Association, 66 N.H. 581; Buttrick v. Railroad, 62 N.H. 413, 418; Lyndon Mill Co. v. Institution, 63 Vt. 581. The only evidence to toll the bar of the statute rests in the statements claimed to have been made in 1906; for whatever was said and with whatever authority in 1901, no statement then made could prove a promise within six years before the bringing of the suit in 1908.
The transaction at its inception was certainly voidable if not absolutely void. Despatch Line v. Bellamy Co., 12 N.H. 205; Elliot v. Abbott 12 N.H. 549, 556; Edgerly v. Emerson, 23 N.H. 555, 567; Buttrick v. Railroad, 62 N.H. 413, 418; Hamlin v. Brass Co. 68 N.H. 292; 2 Cook Corp., ss. 712, 713. The transaction was not a sale of shares within the ordinary course of business; and even if the directors had acted as a body, or at a meeting regularly called, we deny their legal right to divest the existing stockholders of their property in such an unusual transaction as this was, looking at it in its most favorable light.
The stock of the corporation was property (Scripture v. Soapstone Co., 50 N.H. 571, 585), and it was not excepted from this authority. In the case cited and in Buttrick v. Railroad, 62 N.H. 413, there were attachments by a corporation of shares in its stock owned by its debtor. The by-laws rendered a formal assignment of the stock unnecessary.
The transfer by Crippen of his shares of stock in the Farmers' National Bank to the plaintiffs as a pledge to secure the indebtedness of Crippen, Lawrence Co., was valid as between the parties, although without registration on the books of the Farmers' National Bank, and without the knowledge of the officers of that bank. It passed Crippen's legal and equitable title to the shares of stock to the plaintiffs. Scripture v. Soapstone Co., 50 N.H. 571, 585; Buttrick v. Railroad, 62 N.H. 413; P. S., c. 149, s. 14. As Crippen's administrator had no greater rights than he had, the question of the rights of third parties without notice is not presented. The only question is whether the pledgee of stock is entitled to the dividends which accrue while he holds it as against the pledgor, and whether the pledgee can recover them of the pledgor when they are paid to him by reason of the want of a transfer on the books of the corporation.
The power invested in directors to control and manage the affairs of a corporation "is not joint and several, but joint only." Buttrick v. Railroad, 62 N.H. 413, 418. This power is conferred upon them as a board and not as individuals; and in the absence of an express or implied delegation of authority to some one or more of their number, they cannot act individually, but only as a board. When there is no limitation as to the manner in which this power shall be exercised, the proceedings of a majority of the directors within the scope of their authority are legal and valid, "either when there is a consultation of all together, and a concurrence of a majority; or where there is a regular meeting, at which all might be present, and a majority actually meet and act by a major vote."
Their power is not joint and several, but joint only, and hence, in the absence of a special or general authority conferred upon a director by his associates, or unless the corporation itself has made him a general or special agent by its course of dealing in holding him out to the world as such, he cannot by his individual action bind or affect the rights of the corporation. Butterick v. Railroad, 62 N.H. 413, 418, and authorities cited; First Nat. Bank v. Ocean Nat. Bank, 60 N.Y. 278; Abb. Tr. Ev. 32, 43, 44. The instruction to the jury was correct.