Blanchard v. Kaull

California Supreme Court Jul 1, 1872 No. No. 2,101Published

Before: Rhodes

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Holding. The court held that the defendants were not personally liable on the promissory notes because the notes were executed in their capacity as trustees for the company, not as individuals, and the plaintiffs failed to establish personal liability under the relevant statutes or partnership theories.

Issues

Whether the defendants are personally liable on promissory notes signed as trustees of a company.
Whether the defendants are liable as partners or members of a joint stock company.
Whether the defendants are liable under the Act for the formation of plank and turnpike road companies for debts contracted prior to final organization.

Disposition. reversed and remanded

Quotations verified verbatim against the opinion

“the notes were made and delivered as the notes of the Amador and Nevada Wagon Road Company, and that the Trustees assumed that the company was a corporation, and intended to bind the same, and not themselves personally.”

Synopsis

Promissory Note Given by Trustees oe a Gome any.—A promissory note'signed by three persons, in the body of which they, as Trustees of a company, promise to pay to another a sum of money, and which has the same designation of “ Trustees,” etc., appended to their signatures, does not on its face purport to be the note of the persons signing it, and they are not personally liable in a suit on it.

Idem.—A partnership or a joint stock company is not necessarily the result of an abortive attempt to organize a corporation.

Plank and Turnpike Road Companies are Corporations.—Although the Act for the formation of plank and turnpike road companies denominates companies which may be formed under its provisions “joint stock companies,” still the powers, rights, and liabilities of these companies, as provided for in the Act, show that they are corporations.

Debts Contracted by Members oe Plank Road Company.—In an action to recover from the members of a plank or turnpike road company debts contracted before its final organization, the complaint must allege that the defendants commenced the formation of such company, and that before the final organization thereof debts were contracted which still remain unpaid, etc.

Idem.—In such action no recovery can be had on promissory notes, signed by Trustees of the company, as the contracts of members of the company, for the Act does not make members liable for debts contracted by the agents of the company, but for debts contracted before the organization of the company.

Complaint on Liability oe Directors oe Plank Road Company.— To make the Directors of a plank or turnpike road company personally liable for debts contracted in violation of its by-laws, and after the same have been filed, the complaint must contain allegations that they were thus contracted.

Liability of Trustees on Corporation Notes.—The Trustees of a corporation who make and sign notes, as such Trustees, with the intention, of not binding themselves personally, are not personally liable, even if they had no authority from the corporation to make the notes.

Idem.—If persons, as Trustees of a corporation, execute promissory notes with the intention of binding the corporation, they are not personally liable on the notes, even if there is no such corporation.

By the Court, Rhodes, J.: The two appeals will be considered together, as the first is taken from the judgment and the second from the order denying the defendant’s motion for a new trial, in the same action. The action was brought upon four promissory notes, all of which are in the same form, and were executed in the same manner, but differ only in the amounts and the payees. One of the notes is as follows:

“13,590 50.]

“ Twelve months after date, we, as Trustees of the Amador and Nevada Wagon Road Company, promise to pay to Louis Nikolaus, or order, the sum of three thousand five hundred and ninety dollars and fifty cents, in gold coin of the United States of America, with interest thereon at the rate of two per cent per month from date until paid, the interest to be paid at the expiration of every two months. And if said interest is not paid at the expiration of every two months, the interest then due shall be added to the principal and draw interest at the rate of two per cent per [449]month until paid. For (value) received, this 3d day of December, A. D. 1863.

(Signed) “JOHN M. KAULL,

“LOUIS NIKOLAUS, “J. TULLOCK,

“ Trustees of the Amador and Nevada Wagon Road Co.”

The Court gave judgment against Kaull, Nikolaus, and Tullock, as the makers of the notes.

It is alleged in the complaint, that the defendants were partners, under the name and style of the Amador and Nevada Wagon Road Company, and as such were interested in the construction of a certain wagon road; and that they, as partners under said name and style, “ and by their duly authorized trustees and agents, John M. Kaull, Louis Nikolaus, and J. Tullock, three of said partners, defendants, and who were duly authorized to act for and in the name of said company,” made and delivered the promissory notes to the respective payees. The defendants denied that they were partners, and alleged that the Amador and Nevada Wagon Road Company was a corporation, duly organized under the laws of this State, etc., and that the notes were made and delivered as the notes of the corporation. The plaintiffs failed to prove that the defendants were partners; and the defendants, whose names are signed to the notes, failed to prove that they were authorized by the Amador and Nevada Wagon Road Company to make the notes. The Court, as has been remarked, found that Kaull, Nikolaus, and Tullock made and delivered the notes in their individual capacity; and on that finding the principal question in the case arises.

Blanchard v. Kaull

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