Browning v. Hinkle

This is an action by a receiver of an insolvent corporation, the Price-Condit Fence Company, to recover the price of fifty shares of the stock of the corporation, which were issued to the defendant, and for which, as is alleged, only partial payment has been made. It is admitted on the part of the defendant that he did not pay to the corporation the price of the stock, but it is claimed that he did not purchase the stock from the corporation, but from one Foote, one of its members, and that Foote, being entitled to receive the stock, transferred his right to the defendant, and that the corporation issued the stock to the defendant in place of Foote, in accordance with the agreement of the parties. It is also claimed that the stock was fully paid for by Foote and his associates, the original incorporators, by the transfer by them to the corporation of certain patent rights and property at a valuation agreed upon, which, with some money paid, amounted to $80,000, which was designated in the articles of incorporation as the amount of the capital stock.

Upon the case as presented at the trial, the court directed a verdict for the defendant. The reason upon which the court acted was that the evidence was deemed to show, without contradiction, that before the defendant purchased the stock, or the.interest represented by it, he made inquiry of some of the officers of the corporation, and that they stated to him that the stock had all been paid for in the manner above indicated, and that the defendant was thus induced to purchase from Foote, and to receive the certificate of stock from the corporation; and it is upon this ground that the respondent here seeks to sustain the ruling of the court. It is not here claimed that the evidence of payment, in fact, was so conclusive that the court would have been justified in taking that issue from the jury. The declarations of the officers of the corporation, that the stock had been paid for, were not shown to have been made under such circumstances that they would be binding upon the cor*548poration as its declarations, or preclude it from afterwards asserting the fact to be otherwise than as represented. Aside from the somewhat vague and uncertain character of the proof as to who made the alleged declarations, the evidence is defective in not showing in any manner that, when the officers or directors made the alleged representations, they were clothed with authority to speak for the corporation. The mere fact that one is a director, president, secretary, or other officer of a corporation, does not make all his acts or declarations, even though relating to the affairs of the corporation, binding upon the latter. Such persons are mere agents, and their declarations are binding upon the corporation only when made in the course of the performance of their authorized duties as agents, so that the declarations constitute a part of their conduct as agents, — a part of the res gestee. Presley v. Lowry, 25 Minn. 114; Tripp v. New Metallic Packing Co., 137 Mass. 499; Peek v. Detroit Novelty Works, 29 Mich. 313; Johnston v. Elizabeth B. & L. Ass’n, 104 Pa. St. 394; Cook, Stocks, (2d Ed.) § 726, and cases cited. There was no proof of authority on the part of any of the persons whose declarations are relied on, beyond the fact that they were officers or directors. Nor are the circumstances disclosed under which the representations were made. So far as appears, the statements were in no way connected or associated with the performance of any duty devolving upon, or any power delegated to, the agents who made them. While the representations relate to the subject of the-corporate stock, yet the theory of the defendant, and the evidence in support of it, are opposed to the idea that the representations constituted a part of a transaction of sale of the stock by the corporation; for the contention of the defendant is that he did not purchase from the corporation at all, but from Eoote. Our conclusion is that the evidence was incompetent, and did not justify the court in directing a verdict for the defendant.

Order reversed.

(Opinion published 51 N. W. Rep. 605.)