him without authority from them.' And it has been claimed that in the absence of anything in the incorporating act conferring special powers upon the president, he is by reason of his official position vested with no more power than any other director. But it has been held that a managing director may properly have the custody of its assets, and if the corporation allows him, without objection, to hold himself forth as competent to dispose of its assets, strangers are entitled to presume that he has authority to do so. And under authority from the directors, the president may convey the property of the company. So also where the management of the affairs of a corporation is entrusted to a general managing agent, he has the power to assign its choses in action to its creditors, either in payment of, or as security for, a debt of the corporation, without express authority from the directors. Although as a general rule the president can not, without express authority, mortgage the property of the company, when authority is delegated to him by the directors to perform a specific act, his powers in respect thereto are measured by the resolution of the board, and his general powers as president have no bearing upon the case. If the president die his place may be taken by the vice-president, although the office of vice-president was created by the directors merely under a general provision in the by-laws empowering them to create other officers.8

1 Bright v. Metairie Cemetery Assoc., (1881) 33 La. Ann. 58. And, generally, the president has by virtue of his office but little authority to bind the corporation except upon such contracts as come plainly within its ordinary routine business. Taylor on Corporations, § 236; Risley v. Indianapolis &c. R. Co., 1 Hun, 202. 2 Titus v. Cairo &c. R. Co., (1874) 37 N. J. 98, 102; Walworth County Bank v. Farmers' Loan & Trust Co., (1861) 14 Wis. 325. But see Smith v. Smith, (1872) 62 Ill. 493, 496.

3 Walker v. Detroit Transit Ry. Co., (1881) 47 Mich. 338.

4 State v. Glenn, 18 Nev. 34.

6 Luse v. Isthmus Transit Ry. Co., 6 Oregon, 125; s. c. 25 Am. Rep. 506. Not even where a person owns nearly all the stock of a company and is its president, superintendent and general manager, can he in that capacity mortgage the corporate property. Chicago & N. W. R. Co. v. Jones, 24 Wis. 388; Stow v. Wise, 1 Conn. 214; s. c. 18 Am. Dec. 99; England v. Dearborn, 141 Mass. 590; Stokes v. New Jersey Pottery Co., 46 N. J. L. 237.

7 Second Avenue R. Co. v. Mehrbach, (1883) 49 N. Y. Super. Ct. 267.

8 Coleman v. West Virginia Oil

5 McKiernan v. Lenzen, (1881) 56 &c. Co., 25 W. Va. 148. Cal. 61.

§ 203. The president's power to make contracts. The contracts of the president must be based upon authority conferred upon him, but such authority may be given in general terms. But a contract, regular on its face, executed on behalf of a corporation, and within the scope of its business, by the president and secretary, is prima facie evidence of their authority to execute it, and in an action for its breach the burden. of proof is on the party denying such authority. In this case where a contract is executed on behalf of a corporation by the president and secretary, who, with the acquiescence of the directors, act publicly as its agents in making such contracts, the corporation will not be relieved from liability for its breach merely on the ground that the requisite authority was not conferred on the officers executing it by resolution of the board of directors, entered on the records of the corporation. So a contract executed and sealed in the name of a corporation by its president and secretary, though without the express consent of the directors, is binding on the corporation when it has received benefits under the contract, and conducted its business in compliance therewith in such a manner that the directors must have known of it. But where the president and general manager of a company, incorporated

1 Defendant corporation was organized to buy and sell land, cattle, etc., and to do business incidental to stock-raising. In addition to the powers usually conferred on the general officers of corporations, defendant's president and secretary had been duly empowered to purchase certain ranches, with the horses and stock thereon. They accordingly entered into an agreement with plaintiff, who was not a member of the corporation, in order to procure the money to pay the purchase price. And it was held that the agreement was within the scope of their authority, notwithstanding the existence of a by-law, of which plaintiff had no notice, forbidding the officers to contract debts for the corporation except by order of the board of directors.

Arapahoe Cattle & Land Co. v. Stevens, (Colo. 1890) 22 Pacif. Rep. 823.

2 Sherman Center Town Co. v. Swigert, (Kan. 1890) 23 Pacif. Rep. 560.

3 Jourdan v. Long Island Ry. Co., (1889) 115 N. Y. 380; s. c. 6 Ry. & Corp. Law J. 457. A deed signed by the president and secretary without authority of the trustees and without the corporate seal is void. Mott v. Danville Seminary, 21 N. E. Rep. 927. And if a corporation, when sued on a contract, would rely on the fact that the president had not the written authority to make it that the statute requires, such fact must be pleaded. Kenner v. Lexington Manuf. Co., (1885) 91 N. C. 421.

for the purposes of "conversion and disposal of agricultural products by means of mills, elevators, stores, or otherwise," purchases flour, and such purchase is unknown and unauthorized by the company, and no benefit results to it by reason of such purchase, such facts alone will not create a liability against the company. And of course where a corporation adopts a by-law providing that all contracts by it involving a liability for a certain amount or more must be in writing executed by both the president and treasurer, and attested by the seal of the company, it can not be held liable on a lease upon a rental exceeding that amount, executed by the president alone, without the seal of the company; and this whether the lessor had notice of the by-law or not. The president can not, of course, bind his corporation to an ultra vires contract; nor by a fraudulent one. His contract made in his own name may inure to the benefit of his corporation.5

1 Getty v. Barnes Milling Co., (Kan. and not as the agent of the com1888) 19 Pacif. Rep. 617.

pany, the loss of her stock must fall on her and not on the company. Wright's Appeal, (1882) 99 Pa. St. 425.

2 In such a case, no ratification can be based on the treasurer's knowledge of the facts where his testimony that he refused to sign the lease is wholly uncontradicted. Bohm v. Loewer's Gambrinus Brewery Co., (1890) 9 N. Y. Supl. 514. Holt v. Winfield Bank, 25 Fed. mails, and subsequently succeeding Rep. 812.

4 As where A., the president of a street railroad company, by, fraudulently representing to B., his aunt, that a loan of her shares of the company's stock was needed by the company, induced her to part with them. He immediately pledged them for his own debt. The company paid her interest on the shares for some time. A. conspired with other officers of the company to procure a fraudulent over-issue of stock, some of which he transferred to B. in lieu of her own; and it was held that this stock was worthless in B.'s hands, and that as A. had acted, in obtaining her stock, as her agent,

Clubb v. Davidson, (1888) 95 Mo. 467. Where the president of a packet company having failed to make a contract for his company with the government for carrying the

in making such a contract in his own behalf, employing the boats of his company to the extent of its capacity so long as the said company operated boats on that route, but employing other boats when necessary, will be required to use all the facilities afforded by the company, and to account to the company for all money received for the service performed by it, but not for that received for services rendered by the other boats. In Davis v. Gemmell, (1889) 70 Md. 356, it was held that where third persons had actual notice that the contract made by the president in his own name related to the corporate property, and that

§ 204. Necessarily incidental powers of the president.The authority of the president may be extended so that without express authority he may do any acts necessarily incident to others which he has been authorized to perform.' And it has been decided that, although a president of a corporation should have consulted the board of directors before authorizing certain expenditures, yet if he acted in good faith, and only did what they probably would have authorized, he is not liable to the corporation for damages; nor can it set up his conduct, by set-off or otherwise, in bar of his action for salary." He may defend prosecutions against the company, petition for a writ of error, and engage or discharge counsel, in the absence of any restraining acts on the part of the directors, or any restrictions in the constitution and by-laws of the company. He may also in some cases bring suit in the name of the company. And there is evidence to support a finding

complainant claimed to be a stockholder to a large amount, and proposed to assert his rights as such, they dealt with the president, in relation to the contract, at their peril. Moreover it appearing that the directors of the corporation were the relatives of the president, and had not held a meeting for eight years, and that without notifying complainant, who was also a director and owner of one-half the stock, they called a meeting, and approved and ratified a contract made by the president in his own name, to furnish to a railroad company large quantities of coal belonging to the corporation at a certain price per ton, the only advantage to the corporation being the payment by him of a small royalty, it cannot be said that the directors acted in good faith for the benefit of the corporation.

1 Northern Central Ry. Co. v. Bastian, 15 Md. 494. The president and superintendent of a corporation having authority to buy and sell material, and to make contracts for it,

their authority extended to releasing the purchaser (who had become unable to meet his payments), and to substituting a third person in his stead. Indianapolis Rolling Mill Co. v. St. Louis, Fort Scott &c. R. Co., 26 Fed. Rep. 140.

2 Davis v. Memphis City Ry. Co., 22 Fed. Rep. 883.

3 Coleman v. West Virginia Oil &c. Co., 25 W. Va. 148. And an indictment under U. S. Rev. Stat. § 5209, charging the defendant with committing the offense charged as president and agent, is good. United States v. Northway, (1887) 120 U. S. 327. But it is not within the power of a president of a corporation to execute a bond and warrant of attorney for the entering of judgment against the corporation. Stokes v. New Jersey Pottery Co., 46 N. J. 237. 4 As, for example, a suit to enjoin a party from illegally using water belonging to the corporation has been held to have been properly brought by the president. Reno Water Co. v. Leete, (1883) 17 Nev. 203.

that the president of a corporation had authority to agree to pay plaintiff for legal services in stock, where it appears that prior to the hiring of plaintiff other attorneys hired by him with the approval of the directors had been paid in stock, and that plaintiff's services were performed with the knowledge of the directors. And the president of a corporation, who is also a trustee, may authorize and maintain an action for an accounting and an injunction in the name of the corporation, without the authority of the board of trustees, or against its express direction, where a majority of the directors or trustees have wrongfully converted corporate funds, and threaten to convert others, and where the neglect of the board of trustees to sue, and its resolution to discontinue the suit already commenced, are simply acts in furtherance of the unlawful design of such majority. Where a board of directors refers a matter to a committee of three, one of whom is the president of the corporation, the president can not act alone so as to bind the corporation.3 And a by-law giving the president of a corporation "the general charge and direction of the business of the company, as well as all matters connected with the interests and objects of the corporation," does not authorize him to do an act which, by another by-law, is expressly given to a separate committee. But there is nothing to prevent the president of a corporation from acting as its secretary also at a meeting of its board of trustees."

§ 205. The president's powers in respect of negotiable paper. The authority of the president and managing agent of a corporation to borrow money in its behalf may be implied from the circumstances of the case. Thus a general

Merrill v. Consumers' Coal Co., (1889) 114 N. Y. 216.

cover of a corporation money raised by K. at the request of F., its presi

2 Recamier Manuf. Co. v. Seymour, dent and financial agent, and deliv(1899) 5 N. Y. Supl. 648. ered to F. as a loan to the corpora

3 Third Avenue R. Co. v. Ebling, tion, it was held, that in the absence (1885) 12 Daly, 99. of any showing that K. knew F. in

4 Twelfth Street Market Co. y. tended not to use the money in the Jackson, (1883) 102 Pa. St. 69. corporation business, evidence that Budd v. Walla-Walla &c. Co., 2 it was not so used was immaterial; Wash. 347.

6 Spangler v. Butterfield, (1883) 6 Colo. 356. In an action by K, to re

and that evidence that the board had passed no resolution authorizing F. to borrow money, and that some