« ForrigeFortsett »
of their anthority. The plaintiff has no power to create an obligation by borrowing money, except in the modes prescribed by its charter, and the law never implies an obligation to do that which it forbids the party to agree to do: 20 Cal. 104-5; 5 Denio, 567; Lindley on Part. 201; Addison on Cont. $ 124.
BOREMAN, J., delivered the opinion of the court.
The respondent (plaintiff below), a mining corporation organized and existing under the laws of Great Britain, made, through its directors, a contract with Erwin Davis, one of the appellants, for the appointment of J. N. H. Patrick as agent and manager of the company's properties and business in Utah, and for Patrick's retention in the position until ont of the profits of the mine Patrick should repay to Davis moneys advanced to the company, and until Patrick should mine and deliver to Davis, and smelt certain ores. By the terms of this contract, Patrick was, for an indefinite time, removable at the pleasure of Davis, but could not be removed by the company. It further provide, that Davis could appoint a successor to Patrick, and Davis expressly reserved all of his rights to proceed against the company for the non-payment of the money to be advanced the company and for non-delivery of the ores sold to him. The company at the saine time executed to Patrick a power of attorney to attend to all of its business in Utah, and to take charge of all its properties in ('tah.
After this contract with Davis and this power of attorney to Patrick had existed about three years, the respondent (the company) assumed to remove Patrick and appoint as its agent in his stead, Andrew G. Hunter Hunter arrived here, and Patrick being out of the Territory, he (Hunter) applied to Patrick's foreman (George Cullen) at the Flagstaff mine, the property of respondent, for possession, and possession was refused him. He thereupon has Cnllen arrested as a trespasser and then entered into possession of the company's property, the other employes at the mine recognizing his anthority to represent the company. The company then bring this suit, alleging that Patrick and Davis are out of the Territory, but that Cullen and Walker, the other two defendants, acting for Patrick and Davis, threaten to seize the mine in dispute, said Davis and Patrick claiming the possession; and plaintiff asks
that the defendants may be restrained from entering into or. upon said mining property.
The application for a temporary injunction was lieard by the judge of the Third District Court at Chambers, and, after the hearing, he granted the temporary injunction prayed for, and thereupon the defendant appealed to this court.
In considering the matter before us, we are to keep in view the fact, that during all the time of the dispute between Patrick and Hunter, the ownership and possession of the mining property in question remained in the respondent, the Flagstaff company; that Patrick acted as agent for the company, and Hunter does likewise. So plaintiff has not been out of possession, and the dispute is alone as to who is the authorized agent of the company, Patrick or Hunter. We think that this fact has, to some extent, been lost sight of in the consideration of the case by the parties.
But the defendants say that the possession of plaintiff was only through Patrick, under the contract with Davis, and that “plaintiff's possession was obtained by wrongful and unlawful means," thereby referring to the possession of the company under Hunter, and ask that the parties be restored to the positions occupied before such possession by Hunter took place.
If Patrick was entitled to retain the agency, the conduct of Hunter in taking possession as plaintiff's agent was unauthorized and wholly illegal. If Hunter was the agent, duly appointed, and Patrick was not, then when this fact was brought to the knowledge of those in the Territory having charge of the mining property, the company, by its agent, Hunter, was entitled to the possession and control of the mine, and no one had the right to resist such anthority. The resisting of the authority of the company and a refusal to yield up the mining property was unlawful. The moment the knowledge of the change of agents came to the employes, that moment their power to act under an agent who had been removed ceased, and they had no rights in or to the property or to the possession. Such would not be like the case of a lease where the rights of landlord and tenant liave to be considered, but it would be siinilar to a case where a man owns a piece of real estate and is in possession, and employs an agent, overseer or
superintendent under himself. In such a case, the principal's power to discharge such overseer or agent could not be questioned; and if such agent or overseer refused to leave the premises, but persisted in continuing to discharge the duties formerly devolving on him, he could be proceeded against as for trespass. If this could not be done, the employe could remain and discharge the duties of agent or overseer against the will of the principal and in violation of the rights of the principal, and the principal could not help himself. It would be the employe that wonld control the business and not the owner and possessor. This can not be the law.
But it must be further kept in view that the object of such temporary injunction is not to decide whether possession was obtained rightfully or wrongfully, but is merely to prevent any forcible and illegal attempts to gain or disturb the possession of property during litigation, and that its office is merely to keep matters in statu quo until the questions involved in the suit are decided: High on Inj., $ 4.
It is a general doctrine that an agent holds his power only at the pleasure of the principal and when the principal discharges an agent all power and authority of that agent ceases. But there are exceptions to the rule, as when the power of attorney is coupled with an interest, or is for a consideration, or as security to the agent. Such power of attorney is said to be coupled with an interest when the interest is an estate in the thing about which the agency is created, and not in the proceeds, and when the agent could act in his own name and not in the name of the company in carrying out the powers conferred: Ilunt v. Rousmanier, 8 Wheat. 203, et seq.
In the case at bar the power of attorney is made at the same time that a contract is made by the company with Davis. This contract requires the making of the power of attorney. Defendants claim that Patrick has the right to continue to act as agent, and to retain control of the property, by virtue of these two papers together. Patrick is not a party to the contract and has no interest therein. He can claim no rights except under his power of attorney. Davis has, however, an interest in both the contract and in the power of attorney, as the latter was made merely to carry out the former. Under the ruling in Ilunt v. Rousmanier, above referred to, his in
terest is not such as is contemplated by the role as to irrevocability of power of attorney; that is, it is not an interest in the property, but only in the proceeds of the mining business: Barr v. Schroeder, 32 Cal. 609. By the language of soine
. other anthorities it is such an interest as may be embraced under the exceptions to the rule, as it was made to protect the rights of Davis: Wharton's Ayency, § 95 and note; Story on Agency, $ 477.
If the power of attorney alone existed, it would not be pretended that the removal of Patrick was not within the authority of the coinpany; but the contract, so far as Davis is concerned, goes with it. And, assuming then that the power of attorney is a power conpled with an interest, if the contract be valid, we pass to the consideration of the question whether this contract with Davis is valid and binding upon the company. It is simply a question as to whether the directors transcended their powers in making it.
Chief Justice Marshall, in delivering the opinion of the court in Dartmouth College v. Woodward, held, that a corporation “ being the mere creature of the law, it possesses only those powers which the charter of its creation confers upon it, either expressly or as incidental to its very existence": 4 Wheat. 636.
The same doctrine is again laid down by the Supreme Court of the United States, in alınost the same language, in the case of Perrine v. Chesapeake and Del. Canal Co., 9 How. 184. And this seems to be the settled doctrine: Angell & Ames on Corp., p. 86.
The power then to make the contract, if it existed, was either by the express words of the statute, or as incidental and necessary to the existence of the company. The contract is alleged to have gone beyond the powers of the directors in several respects. It is urged that the directors transcended their authority in borrowing money froin said Davis in larger sums than specified in $ 20 of the “ Articles of Association,” and in trying to bind the company by such a contract for the repayment thereof. It is answered, that although the amount is above that specified in $ 20, yet that it was proper, as that section only had reference to borrowing on mortgage or debentures and did not restrict the directors in borrowing without mortgage or debenture, and that the general authority given to the directors was equivalent to and covered the authority to borrow money. The general power is embraced in the clos. ing lines of § 33 of the Articles of Association, which section, after detailing a number of powers specially granted, says: “And generally to do all matters and things which are necessary or may be deemed expedient for carrying on the business of the coinpany.” This power is quite broad.
It is probably true that “in general an express authority is not indispensable to confer upon a corporation the right to borrow inoney," and “it is sufficient if it be implied as the usual and proper means to accomplish the purposes of the charter": Angell & Ames on Corp., $ 257.
The difficulty, however, is to ascertain whether the contract is embraced in the implied powers of the corporation under this general clause. There is no express authority given to borrow money except on mortgage or debentures, under certain circunstances.
If the power to borrow money by the directors, without the consent of the stockholders is given under this general clause, it can only be limited by what the directors may deem “expedient for carrying on the business of the company." The power is conveyed if it be within the " letter and spirit of the act of incorporation”: Angell & Ames on Corp., pp. 86-7; Beaty v. Knowler, 4 Pet. 162. Was it, therefore, within the “intention of the charter?” Utica Ins. Co. v. Scott, 19 John. 1.
The power to borrow money by such a corporation is a very important power and one that the corporate articles would likely make express provision for, but yet they might not do
To a certain extent such provision was made in § 20 of the Corporation Act, which provides that:
Şec. 20. “The company may, from time to time, with the sanction of a general meeting, borrow on mortgage or debentures, either transterable or to bearer, any sun or sims not exceeding £100,000, at such rate of interest as such meeting shall determine; and the board may borrow, without the sanc. tion of a general meeting, on the like securities or on bills of exchange, any guin or sums not exceeding £10,000, at such rate as the board shall think tit.”