McQuaide v. Enterprise Brewing Co.
Before: Cooper
Synopsis
Corporations—Lease op Land por Building—Authority—Control op Building — Payment op Bent — Pinal Dispute — Corporation Bound.—A written lease of land agreed to be taken by the trustees of a corporation duly assembled, but without a formal resolution, which was executed in the corporate name, and under the corporate seal, by its president and secretary, the rent of which was to begin when a building to be erected upon the land, for the use of the corporation, was completed, which then controlled and sublet the building, and paid rent under the lease for fifteen months, and then for the first time disputed its authority to make the lease, and refused to pay more rent, is binding upon the corporation. Honesty and fair dealing require that the corporation be held to the terms of the lease, and it may be enforced by the lessor against it.
Id.—Formal Resolution of Directors not Essential to Authorize Lease—Proof of Votes by President.—Under the circumstances disclosed by the record, it was not necessary to show a formal resolution in writing, signed by the board of directors, authorizing the lease. The testimony of the president, who was at the meeting of the trustees, that the lease was both authorized and ratified by the trustees, is sufficient evidence of authority.
ID.—Doctrine of Ultra Vires—Distinction Between Executory and Executed Contracts.—The doctrine of ultra vires as applied to executory contracts of a corporation, in violation of its charter or entirely outside of the scope and purpose of its creation, is regarded very differently than it is when it is relied upon by a corporation as a shield to escape just liability under an executed contract. In such ease, it is regarded with disfavor; and the rights of the party with whom the corporation has made the contract and the consequences to him will be carefully weighed before the court will hold the contract void.
Id.—Reception of Benefits Under Executed Contract—Estoppel in Pais.—In passing upon the claim of ultra vires, as applied to executed contracts, the courts will simply consider the facts as to the circumstances of the contract, as to whether or not the corporation has received benefits under it; as to whether or not the doctrine of estoppel in pais may be invoked.
Id.—Policy of Law—Contracts of Corporations.—It is the policy of the law and the endeavor of the courts to hold corporations as well as natural persons to their contracts, and make them liable for the obligations they have incurred. The rule is based upon the strongest principles of justice and public policy, that a contract should' be enforced against a corporation when it has received the consideration or the benefits of the contract.
Id.—Contracts not Enforceable—Doctrine of Ultra Vires Limited. As to contracts of corporations that are malum in se, or malum prohibitum, they will not be enforced; but as to contracts not thus objectionable, justice and public policy require that the doctrine of ultra vires should be limited in its scope and application.
COOPER, P. J.
This action was brought to recover of defendant corporation the sum of $500 for rent of the premises described in the complaint for the month ending November 30, 1908. The case was tried before the court without a jury, and findings filed, in which judgment was ordered for the plaintiff in the amount claimed.
The first contention of appellant is that the defendant corporation never leased the premises from the plaintiff, and hence is not liable for rent of said premises. This was one of the issues made by the pleadings, and the court found in favor of the plaintiff, to the effect that the defendant did execute the lease and that it thereafter entered into posses'sion of the premises and has ever since remained in such possession ; and “that the signatures of the president and secretary of said corporation to said lease were not without authorization on the part of said corporation defendant, and are not
ultra vires
or null or void, but, on the contrary, each of said signatures was affixed to said lease with the authorization of said corporation defendant.”
We have carefully examined the evidence, and find that it supports the findings in this regard. The evidence shows without conflict that the lease was in writing, signed in the corporate name and under the corporate seal of defendant, by its president and secretary, with their several official designations attached. That the land was vacant when the lease
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was made, and that plaintiff erected a building thereon at a cost of $27,000, according to the plans and specifications submitted to and approved by defendant’s officers, in pursuance of the stipulations contained in the lease.. That the rent was to begin when the building was completed, and when it was so completed the keys were delivered to defendant’s president, and the defendant thereafter paid the monthly rent for fifteen months by checks signed with the name of the corporation, which payments .were entered in the corporation’s boobs in the regular course, of business. That after defendant went into possession of said premises it sublet the premises in its own name by different leases to different tenants, part of them being sublet for the purposes of a saloon, and a part for a workingmen’s hotel, and it collected the rents from the subtenants for its benefit. The rents so collected were placed to the credit of the subtenants in the regular course of the corporation’s business. That it sold beer manufactured by it to its subtenant who occupied the saloon and the hotel; that when some of its subtenants defaulted in the payment of their rent it brought suit in its corporate name to eject said tenants and to obtain judgment of restitution of the premises against such subtenants. That upon the completion of the building it placed in said hotel and saloon some sixteen hundred dollars’ worth of furniture and fixtures. Remensberger, the defendant’s president, testified as follows: “I read the lease. I guess Mr. Windeler read it—I don’t know for sure—:and the terms of the lease were mentioned at the time of the meeting of the board of directors.
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