Tilden v. Goldy Machine Co. (1908) · DecisionDepot

Tilden v. Goldy Machine Co.

Name: California Superior Court Tentative Rulings
Creator: DecisionDepot
License: https://creativecommons.org/licenses/by-nc/4.0/

California Court of Appeal Sep 10, 1908 No. Civ. No. 505.Published

Before: Chipman

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Holding. The court held that the defendant corporation was liable as a guarantor on a nonnegotiable promissory note because its executive committee had the authority to endorse the note in the course of current business, and the corporation was further estopped from denying such authority after having received and used the loan proceeds.

Issues

Whether the endorsement of a nonnegotiable promissory note by a corporation creates a liability as a guarantor.
Whether the corporation's executive committee possessed the authority to bind the company to the guarantee.
Whether a corporation is estopped from denying the authority of its agents when it has accepted and utilized the benefits of the transaction.

Disposition. affirmed

Quotations verified verbatim against the opinion

“the company received the money and knowingly used it in its business, it is not in a position now to question the authority under which it obtained the money; it is estopped to set up such defense.”

Synopsis

APPEAL from a judgment of the Superior Court of Santa Clara County, and from an order denying a new trial. A. L.. Rhodes, Judge.

The facts are stated in the opinion of the court.

William A. Bowden, Beasley & Fry, and Emilio Lastretto, for Appellant.

[10]

CHIPMAN, P. J.

Plaintiff recovered judgment, from which and from the order denying its motion for a new trial defendant appeals.

Defendant was sued as guarantor of the following nonnegotiable promissory note:

“15,000.00. San Francisco, Cal. March 24, 1905.

“On demand; for value received, I promise to pay B. B. Tilden, the sum of Fifteen Thousand Dollars ($15,000.00). with interest at the rate of three per cent (3%) per annum.

“WILLIAM T. GARRETT.

“Witness: H. H. BENEDICT.

“Endorsed: The Goldy Machine Company, per S. N. Goldy, H. F. Emme, Executive Committee.”

The court found that the defendant is a corporation duly organized and existing under the laws of New Jersey, doing business at Sunnyvale, Santa Clara county, California; that said Garrett executed and delivered to plaintiff said note, and “that at the time and place of its execution, and as a part of the same transaction, and prior to the delivery thereof,” defendant “by its writing on the back of said note, guaranteed the payment of the same and undertook and promised to pay to said plaintiff the principal sum and interest thereon therein mentioned,” and “that said'defendant received from plaintiff, as a consideration for said indorsement of said note, the sum of ten thousand dollars, gold coin of the United States, then and there loaned by said plaintiff to said defendant”; that demand for payment had been made upon said Garrett and refused, and the same is now due and owing from defendant to plaintiff.

The principal point made by defendant is that the evidence fails to show that defendant executed the indorsement on the note and hence the findings are not supported. A preliminary point is made, to wit, that as the note is not negotiable, “the mere indorsement of the name of the company on the back thereof was not in any sense a guarantee that the company would pay the same.” The supreme court has decided otherwise.

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Briefly stated, the note in question was executed and de- ’ livered under the following circumstances-: Defendant had agreed to purchase certain land in Sunnyvale, Santa Clara county, on which to erect a manufacturing plant, the title to the land depending upon the completion of certain buildings and the operation of an engine thereon; S. N. Goldy was a director, vice-president and general manager of the company. He and H. P. Bmme had been appointed the executive committee of the company; C. H. Geldert was its secretary and also a director; he was also the attorney in fact of B. B. Tilden, payee of the note; W. T. Garrett, its maker, was the agent of the company for the sale of its stock and actively engaged in promoting the enterprise, chiefly by the sale of stock; the company was pressed for money to pay its employees and to meet its engagements and its stock did not find ready sale. Under these' circumstances, Goldy persuaded Geldert to make a loan of $10,000 to the company for Tilden, plaintiff here. It was agreed that Garrett should make a note for $15,000, and that the company would indorse it, the avowed object being to avoid a note by the company which might affect its credit when appearing on the books, and injuriously affect the sale of stock. Garrett accordingly executed the note in this non-negotiable form and the executive committee of the company indorsed it as shown. It was delivered to Geldert as Tilden’s attorney in fact, who hypothecated securities belonging to Tilden, with the Garden City Bank and Trust Company of San Jose, obtained $10,000 thereon and paid this money directly to the Goldy Machine Company, which used it in its business. At the time of the execution of the note, Garrett entered into an agreement with the company by which he subscribed for $15,000 of its stock, the proceeds of the sale of which were to go, first to pay the $10,000 furnished the company and take up the Tilden note, and $5,000 was to go to Garrett as commissions for the sale of the stock—a hard bargain for the company but advisedly entered into under stress of circumstances. Some importance is attached to this latter agreement by defendant, and it is claimed that it was part-of the transaction for the loan, but the evidence was that neither Tilden nor his attorney in fact was a party to it, and never assented to it but refused to have

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Synopsis

CHIPMAN, P. J.

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