Padgham v. Inyo Marble Co.

MR. JUSTICE KNIGHT Delivered the Opinion of the Court.

Plaintiff brought this action to recover certain sums of money alleged to he due on several assigned claims against the defendant corporation, one of which was based on a promissory, note for $5,000. The trial took place before the court sitting without a jury, and judgment was given in favor of plaintiff on all counts hut one, which related to the promissory note. With reference thereto the court found that the note was executed and delivered to R. H. Tune “by the officers of said corporation without authority and that in so executing and delivering said note, they acted in excess of their authority and there was no consideration whatsoever therefor”. Accordingly judgment on that count was rendered in favor of defendant, and plaintiff appeals therefrom.

A copy of the note was not set out in the complaint, nor was the original or a copy thereof produced at the trial, but it appears from the findings that the note was executed and delivered on or about December 31, 1926, that it bore seven per cent interest, and provided for the allowance of an attorney’s fee in case suit was brought to collect it. The circumstances leading up to the execution and delivery of the note, briefly stated, were as follows: On the date of its execution and for the several months preceding the plaintiff herein, A. J. Padgham, was the president and E. D. Rasmussen was the treasurer of said corporation. R. H. Tune, the payee named in the note, had been its general manager and secretary for several years, but whether or not he occupied either of those positions on the date of or shortly preceding the execution of the note is not clear

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from the record. A man named Dunn owned the controlling interest in the company, but had held no office therein since 1915. The company had much outstanding indebtedness, and on , November 5, 1925, the directors sought to adjust its financial affairs by borrowing money or issuing the notes of the corporation in liquidation or renewal of said indebtednesses, and to that end adopted a resolution authorizing and directing “the president or vice-president and the secretary or assistant secretary” of the corporation “to issue a note or notes or to borrow money from any private individual, firm, or company or bank for' and in the name of this corporation, and on such terms as may be agreed to by said officers, such sum or sums of money as in the judgment o'f said officers this corporation may require for the purpose of liquidating, renewing, or funding any indebtedness of this corporation now owing and due, provided the" aggregate amount of such loans or notes shall not at any time exceed the sum of $10,000 ’ ’; and' the resolution further provided that “said president or vice-president and said secretary or assistant secretary are hereby authorized, directed and empowered to execute in its corporate name for such moneys so borrowed or for. such obligations so renewed, extended or refunded, and interest, the note or notes of this corporation, and deliver the same to said • respective payees ...” The plaintiff herein, A. J. Padgham, as one .of the directors of said corporation, was present at the directors’ meeting at the time the resolution wa£. passed and voted for its adoption. Shortly after the adoption of the resolution Dunn, although not an officer of the corporation, prepared and handed to Tune the promissory note in question, which as stated was made payable to Tune, and requested the latter to obtain Padgham’s signature thereto, jvhich Tune did. Dunn then secured the signature of Rasmussen' (the treasurer of the corporation) thereto, and after leaving the note with Tune for a short while took it from Tune’s desk without having it. indorsed by Tune. About a month later Tune saw the note for the last time. It was then on Dunn’s desk, and he attempted to take possession of it, but was unable to do so. Shortly after these transactions took place a new directorate and set of officers took control of the corporation and thereafter conducted its affairs. At the, time of trial (July, 1928),, Dunn