« ForrigeFortsett »
by its board of dire tors; such contract can be treated as ultra rires and
is not binding upon the corporation. Allegations on information and belief. Under section 113 of the Practice
Act the allegations of a complaint can be made on information and
belief. Injunction to prevent interference with possession. Where there is a well
grounded fear that a discharged agent of a corporation will use force to repossess the property in charge of its duly appointed agent, a court of equity will protect such possession by injunction.
Appeal from the Third Judicial District Court.
The plaintiff was a mining corporation, organized under the "Companies Act” of 1862 and 1867, of the Kingdom of Great Britain, and its board of directors ordered the secretary to enter into a contract in its behalf with Erwin Davis, one of the defendants, by which it agreed to appoint defendant Patrick, agent and manager of all its mining property (which was situated in Utal Territory), and for his retention in that position, until out of the profits of the workings of the property, its said manager should pay to Davis certain moneys then claimed to be due him from the corporation. By the terms of this contract Patrick was removable at the pleasure of Davis.
Davis reserved in the contract his right to proceed against the corporation for his debt.
Patrick had under this contract received a power of attorney from the corporation, and acted as its agent and manager for about three years, at which time the corporation assumed to remove Patrick and appoint one A. G. Hunter as its agent, who by means of the arrest of one of the principal men at the mine on some charge, obtained possession of the mine and ousted the Patrick management, and refused to recognize any right of possession either in Patrick or Davis, or any obligation of the contract, claiming it to be void. Patrick and Davis, it was alleged, threatened to play the same tactics as Hunter did in getting possession of the mine, in order to regain the possession, whereupon Hunter being in possession commenced this action in the name of the company to quiet the possession.
The other facts are stated in the opinion of the court.
BASKIN & DEWOLF and HEMPSTEAD & GAMBLE, for appellants.
The grounds upon which the plaintiff in the complaint predicates its right to an injunction, are stated on information and belief.
A traverse of allegations made on information and belief raises no triable issue: Baskin & De Wolfe v. Godbe, 1 Utah, 28; High on Inj., &$ 36, 986, 987.
The complaint alleges fraud in general terms, without specifying the facts constituting the fraud.
Fraud is a conclusion of law, and if the facts showing fraud are not set out, the evidence to prove fraud is inadmissible: Kerr on Fraud, pp. 365-366; High on Inj., $ 28.
Equity will not lend its aid to one who has acted fraudulently, or who by deceit or any unfair means has gained an advantage: Bein et al. v. IIeath, 6 How. 247; Broom's Legal Maxims, t. p. 545-547.
The plaintiff's possession was obtained by wrongful and unlawful means: See evidence and $ 1196, p. 392, and $ 2066, p. 616, Revised Statutes.
The contract between the plaintiff and Davis set up in the answer did not require the seal of the Flagstaff Company to make it valid and binding: S 37 Amendment of Companies Act, 30 and 31 Victoria, c. 131; Cook v. Corporation of Seaford, 10 Chancery, 678; Ang. & Ames on Corp. $ 219, and cases cited; Addison on Cont. § 122; 4 Kent's Com. 451, note K.
Section 20 of said articles limits this general power in this: it prohibits the company froin borrowing on mortgage or debentures, either transferable or to bearer, any sum exceeding one hundred thousand pounds, and the board from borrowing without the sanction of a general meeting, on like securities or on bills of exchange, any sum exceeding ten thousand pounds.
As the advancements by Davis were not made on mortgage, debentures or bills of exchange, the transaction was not in violation of the articles, but was authorized by the general powers of the company, which section 20 does not limit but leaves in full force: Agar v. Atheneum Ass. Soc., 3. C. B. (N. S.) 725-750; see Fay et al. v. Noble et al., 12 Cush. 1; Campbell 5. The Merchants', etc., 37 N. H. 41.
In regard to the objects of its creation it has the same
power as a natural person, and may do any act which an individual could do in relation to similar objects, unless restricted by statute or charter: Angell & Ames on Corp. SS 110, 6, 2 and 4; Smith v. R. R., 27 N. H. 94; Dana v. Bank of U.S. 5 Watts & S. 243; Bank of U. S v. Dandridge, 12 Wheat. 64.
It is well settled that an agency coupled with an interest, either in favor of the agent or a third party, if recognized or acted on by such third party, is irrevocable: Story on Agency, SS 476, 477; 2 Story's Equity Jurisp., SS 1041, 1012.
It therefore follows that any act in violation of said articles may be ratified, and even if the contract between plaintiff and Davis was (as it is not) ultra vires, Davis having performed all of the conditions of the same on his part, and the plaintiff having received, used in its business and retained large sums of money under said contract, and having recognized and acted under the same for three years is estopped as an individual would be under like circumstances, from denying the validity of said contract, and is bound by the same: Bradley v. Ballard, 55 Ill. 413 (8 American Rep. 656); Bissell v. Michigan Southern R. R., 22 N. Y. 258; Parish v. Wheeler, Ibid. 494; Argenti v. San Francisco, 16 Cal. 256; San Francisco Gas Co. v. City, 9 Cal. 453; Fause v. Wines, Hopkin's Chan. 322; Steam Navigation Co. v. Weed, 17 Barb. 380, and cases cited; Moss v. Lead Co., 5 Hill, 137; Hale v. The Union Mutual Insurance Co., 32 N. H. 295; Moran v. Commissioners, 2 Black, 722; State Board v. Citizen's Street R. R., 47 Ind. 407; 1 Addison on Conts., $ 124, Ib. 3 vol. p. 410; Township of Pine Grove v. Talcott, 19 Wall. 679; City Fire Insurance Co. v. Carrugi, 41 Ga. 660; 2 U. S. Diy. (New Series), 174, S 80; Backman v. Charleston, 42 N. 11.125; Agar v. Athenæum Ass. Soc., 3 C. B. (N. S.) 725-750; Royal British Bank v. Turquand, 5 Ell. & B. 248; Royal British Bank v. Turquand, 6 Ell. & B. 327; Lindley on Partnership, 202, 207–212; Phosphate of Lime Co. v. Green, 1 Moak, 98; Gorilon v. Preston, 1 Watts, 387.
A party can not rescind a contract even for fraud, without restoring the other party to the same condition that he would have been in had the contract not been made, and if the party injured chooses to rescind, he must du so at once on discovering the fraud, otherwise he ratifies the contract and is bound thereby: 2 Parsons on Contracts, p. 679, note , 780–786, and cases cited; -Cobb v. Hatfield, 46 N. Y. 533; Kerr on Fraud, 47; many cases might be cited to the same effect.
Under the law and the facts disclosed, the court should, by mandatory injunction, restrain the plaintiff from further interfering with the discharge, by Patrick, of his trust under said contract, pending tlie litigation; thereby restoring the parties to the condition which they occupied at tre time the plaintiff restored to force and the unwarranted use of criminal process to enforce a right which the courts alone had the right to determine or enforce. As to the power of the court to issue such an injunction, see High on Inj, SS 2, 478; Hilliard on Inj., p. 39, § 31; Adams' Equity, p. 428; Rankin v. Iluskis8on, 4 Sim. 16; Lane v. Newdigate, 10 Ves. 192.
SUTHERLAND & McBride and ROSBOROUGH & MERRITT, for respondents.
The complaint makes ont a sufficient case under $ 254, Pr. Act. It sets up plaintiff's title in fee and possession of the mine, which are admitted, and that defendant, Davis, claims an adverse interest in the property, and asks that the same be deterinined. $ 254 enlarges the class of cases in which equitable relief could formerly be sought in qnieting title: Curtis v. Sutter, 15 Cal. 259; 32 Cal. 109.
The allegation upon inforination and belief is sufficient under $ 113, Pr. Act.
There has been no change of possession of the mine. The Flagstaff Company has been in possession of it more than three years; there was only a change of managers or agents of
; the company.
But, even if the entry had been forcible and wrongful, a court of equity will not grant the injunction sought against the plaintiff: 50 III. 459; 32 Cal. 109.
On the facts of this case, however, there was no force. On this snbject see 45 Cal. 677; 45 Cal. 673; 38 Cal. 422.
But appellants insist that the alleged contract of December 16, 1873, created a lien upon the mine or unsevered ore thereiu in favor of Davis, and a trust for its enforcement, and took from the company its corporate power of appointment on a motion of its chief executive officer, and invested that power in Davis, and that the court ought now to exercise that power by imposing Patrick still as manager.
The contract with Davis is ultra vires, becanse it takes away from the company the power to appoint and remove its chief officer. The manager of an English mining corporation is its most important officer, and holds in his hands its property, its credit and all its chances of success. The
The power of appointinent and removal of officers is necessarily incident to every corporation: Angell & Ames on Corp., SS 110, 433-4; 2 Kente, 297; Grant on Corp. 243; Neall v. Hill, 16 Cal. 145; Atty. Gen. v. Earl of Clarendon, 17 Vesey, 491; Bayless v. Orne, 1 Freeman Ch. R. 171; Plaintiff's By-laws, $ 33.
How can the court then grant the relief asked in this case? By ousting the present manager and remitting a discharged agent? Such a proceeding would be to decree a dissolution of the corporation: 17 Vesey, 491; 1 Freeman Ch. R. 171; Neall v. Hill, 16 Cal. 145, supra.
A corporation is not bound by acts of its directors or officers, ultra vires, and such acts are not capable of ratification in any case where the power to act or contract in the partienlar matter does not exist: Miners? Ditch Co. v. Zellerbach,
: ' , 37 Cal. 543; Martin v. Same, 38 Cal. 300; Zottman v. San Francisco, 20 Cal. 96.
It is admitted that a corporation may, in its ordinary business concerns, make contracts not under seal; but the rule has always been and still is, that in conveying land, or creating an interest in, or charge or lien upon land, the contract of a corporation must be under its corporate seal: Angell & Ames on Corp., $219; 5 East, 240; 8 East, 228; 2 Cranch, 166; Grant on Corp. 147; Bank of U. 8. v. Dandridge, 12 Wheat. 64; 1 Parsons on Con. 140-1; Lindley on Part. 287.
The contract is illegal and void, having been entered into for fraudulent and illegal purposes, and in violation of the by-laws and charter of the company: Art. Association, $ 20; Affi't of IIunter, Tr. p. 61–2; Pearce v. Madison R. R., 21 Ilow. 442; Martin v. Zellerbach, 38 Cal. 300.
Parties dealing with directors of a corporation as well as those dealing with any other agents, are bound to take notice