Summary
In Gashwiler et al. v. T. N. Willis et al., 33 Cal. 11, 91 Am. Dec. 607, cited by appellant, and the basis for the text in 7 R. C. L. 668, § 670, that "the mere recital in an instrument executed by a corporate agent of his authority to act, is no evidence whatever of its existence," the question presented was whether or not a deed executed "by S. S. Turner, T. N. Willis and James J. Hodges, Trustees of said corporation," was the act of the corporation.
Summary of this case from Sheffield Chamber of Commerce v. HatchOpinion
[Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] Rehearing Denied 33 Cal. 11 at 24.
Appeal from the District Court, Fifth Judicial District, Tuolumne County.
The defendants were the stockholders of the corporation. The plaintiffs averred in their complaint that on or about the 23d day of September, 1865, they entered into negotiations with the corporation and with the stockholders for the purchase of a gold bearing quartz mine in Tuolumne County, known as the Rawhide Ranch Gold and Silver Mining Company's Claim, and that the defendants represented that they had full power to sell the same, subject only to a trust deed executed by the corporation to Danford N. Barney, of the City of New York, in June, 1865, by which said Barney was authorized at any time between the first day of May and the first day of October, 1865, to sell the mine, according to certain written instructions referred to in the trust deed.
The plaintiffs further averred that the written instructions were not set forth in or attached to the trust deed, but that the defendants represented that by the instructions said Barney was required to sell the mine for the sum of fifty thousand dollars, to be paid to and received by the corporation and defendants in California before said first day of October, 1865, and in case payment was not made by that time the trust deed was to become null and void.
The complaint further averred that on the second day of October, 1865, the defendants represented that the sum of fifty thousand dollars had not been paid, and that they then had power to sell the mine, and that the plaintiffs on said last mentioned day bought the mine, and paid therefor the sum of twenty-five thousand dollars, took possession thereof, and expended money in erecting machinery on and improving it. That soon after doing so, plaintiffs discovered that the representations with regard to the written instructions requiring the fifty thousand dollars to be paid in California on or before the first day of October, 1865, were false, and that the instructions only required the money to be paid to said Barney in New York on or before said last named day, and that on the 27th day of September, 1865, said Barney had sold the mine to other parties in New York, and received the sum of fifty thousand dollars therefor, and that the plaintiffs, to avoid litigation, had been compelled, on the payment to them of the sum of fifty thousand dollars received by Barney, to convey and had conveyed the mine to the grantees of Barney. Plaintiffs averred that they had sustained twenty-five thousand dollars damages by the false representations of defendants, and asked judgment for that amount.
On the trial, as a part of their case, the plaintiffs offered in evidence the trust deed to Barney. The plaintiffs were nonsuited and appealed.
COUNSEL:
The conveyance ruled out did not require a seal, because the property conveyed was a mining claim, and the estate created a trust estate.
On the 16th of April, 1850, the Legislature of this State passed the Act concerning conveyances. The following is section one:
" Conveyances of lands, or of any estate or interest therein, may be made by deed signed by the person from whom the estate or interest is intended to pass, being of lawful age, or by his lawful agent or attorney, and acknowledged, or proved and recorded as hereinafter directed." (Hittell's Digest, Art. 643.)
The resolution of the stockholders was the solemn act of thecorporation and entire stockholders assembled at a corporate meeting and authorizing the trustees of the corporation to convey to D. N. Barney in trust for such corporation. (Willard's Eq. Jur. 413; 2 Story's Eq. Jur., Sec. 972; 2 Wash. on Real Property, 190 et seq. )
A trust is expressly declared by our statute (Hittell's Digest, 3,150) as capable of being created by an " instrument in writing." Neither at common law nor by statute was it ever held to require any seal. The corporate vote and entry on its minutes were ample evidence of the power of the Trustees to convey in trust to Barney. (Commercial Bank v. Newport Manufacturing Co., 1 B. Monroe, 14; Elysville Manufacturing Co. v. Okisko Co. , 1 Md. Ch. 392; Angell & Ames on Corp., Secs. 224, 228-230, 282-284.)
This attempted deed was also good against plaintiffs as a contract to convey, enforceable in equity, and which would render our purchase of the property in question a mere nullity as part performance had taken place by the third party, or prior purchasers, to wit, payment to Barney, the Trustee of the corporation, of the entire purchase money for its benefit. (Salmon v. Hoffman , 2 Cal. 142; Owen v. Frink , 24 Cal. 171.)
Besides these conclusions, on the ground of its being the unsealed instrument of the corporation, it was valid as the sealed instrument of such corporation. " A deed of a corporation may be good, though sealed with any other seal than their own common seal, if adopted and used by such corporation, and though it be not alleged in the executing clause of the deed that it is their common seal." (2 Washburn on Real Property, 570, Secs. 6, 7; Bank of Middlebury v. Rutland Railroad Co. , 30 Vt., 1 Shaw, 159; Milldam Foundry Co. v. Hovey, 21 Pick. 417.) We are not aware that the Trustees possess any power to convey the entire property and stock without a vote of or authorization by the stockholders. The Trustees are mere statute agents of the corporation for the transaction of the business of such corporation--not to convey away its entire property, except in compliance with a vote of the corporation for that purpose. (Rollins v. Clay, 33 Maine, 132.)
H. P. Barber, and James H. Hardy, for Appellants.
John B. Hall, and Caleb Dorsey, for Respondents.
The Courts have given to mining claims the recognition of a legal estate of freehold, (Merritt v. Judd , 14 Cal.,) and as such, subject to the general law requiring a sealed instrument for a transfer thereof. (Goller v. Fett , 30 Cal. 481.)
The instrument of June 5th, (assuming that the Trustees were duly authorized to convey by deed,) is not the act of the Rawhide Ranch Gold and Silver Mining Company, nor operative to pass its title--it being neither signed nor sealed by the corporation, but signed by and sealed with the private seals of Turner, Willis and Hodges. (Elwell v. Shaw , 16 Mass. 42; 4 Cruise on Real Property, Sec. 33; Dubois v. The Delaware and Hudson Canal Company, 4 Wend. 285; Evans v. Wells, 22 Wend. 324; Randall v. Vetchen, 19 Johns.; Bank, etc., v. Guttschlick, 14 Peters, 19; McDonough v. Templeman, 1 Harris & Johnson; Townsend v. Corning, 23 Wend. 435; Echols v. Cheney , 28 Cal. 157.)
The doctrine of the last two cases is, that a description of official character following the signature, does not render it or the seal annexed the signature and seal of the principal; it is the exclusive individual act of the agent, in which the principal is not involved to any extent whatever, where the transaction is one requiring aseal for its validity. And where a corporation is the actor, and a deed is the instrument to be executed by its agent, a fortiori must the corporate, and not the private seal of the agent, be used.
The instrument of June 5th is void for want of power in Turner, Willis and Hodges, to convey, and would have been equally void had it been duly signed and sealed. The power was derived from a vote of stockholders. Stockholders have no title, legal or equitable, in, nor are they tenants in common or copartners in reference to the corporate property; nor does the clause in the Act (Wood's Digest, Art. 448) declaring stock personalty, change the nature of the corporate estate, and a deed by them of all the shares does not affect the corporation's title to its own property. (Angell & Ames on Corporations, Sec. 221, p. 3; Mickles v. The Rochester City Bank, 11 Paige, 118; Mohawk and Hudson Railroad Company v. Clute, 4 Paige, 385, 393; Gorham v. Gilson , 28 Cal. 480.) Neither do stockholders possess any corporate powers whatever, these being expressly and exclusively vested in a Board of Trustees. (See Wood's Digest, Arts. 484-486.)
The Board of Trustees constitute, in legal effect, under the Act of incorporation, the corporation itself. (Head v. The Providence Insurance Company, 2 Cranch, 127; Bank of the United States v. Danbridge, 12 Wheat. 64; Fleckner v. Bank of the United States, 8 Wheat. 338.)
JUDGES: Sawyer, J. Mr. Justice Rhodes did not express an opinion.
OPINION
SAWYER, Judge
By the Court, Sawyer, J., on petition for rehearing:
The consequences assumed as the only basis of the argument in the petition for rehearing do not follow from anything determined or in any way suggested in the opinion in this case. We have nowhere held, or even intimated, that the Board of Trustees of a corporation can convey all the property of the corporation necessary to enable it to carry on the business for which it was organized, or do anything else destructive of the objects of its creation without the consent of its stockholders. We have not even held that it was competent for the Trustees, acting as a Board, to authorize the conveyance of the property now in question without the consent of the stockholders. There was no such question in the case. We simply held that the stockholders themselves could not authorize the Trustees, acting as individual Trustees, or anybody else, to convey it--that nobody could convey it unless authorized by some act of the Board of Trustees, acting as a Board. It may be conceded for the purposes of this case that the Board of Trustees itself could not authorize a conveyance of the property in question without the consent of the stockholders. But it is unnecessary to consider that question, for the case does not present or even suggest it. It will be time enough to decide that question when it arises.
Rehearing denied.