Andres v. Fry

California Supreme Court Jun 4, 1896 No. No. 15881Published

Before: Vanclief

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Holding. The court held that a board of directors may delegate authority to an executive committee to execute a binding corporate contract, and that the production of a contract signed by the president and secretary with the corporate seal establishes a prima facie case of authorization.

Issues

Whether a contract signed by the president and secretary with the corporate seal is prima facie evidence of corporate authorization.
Whether a board of directors may delegate the authority to execute a binding contract to an executive committee.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The production of the contract, therefore, with proof of its signature and of the corporation seal, made out a prima facie case in favor of the plaintiff.”

“I am therefore of opinion that the act was binding upon the corporation, and that plaintiff is entitled to recover.”

“a board of directors may delegate an authority to a committee of their own number to alienate or mortgage real estate”

Synopsis

Corporations—Authority to Execute Contract—Seal— Presumption —Prima Eacie Evidence.—A contract executed by the president and secretary of a corporation, and bearing the corporate seal, is presumed to have been executed by due authority; and the production of such contract in evidence, with proof of its signature, and of the corporate seal, makes a prima facie showing that the contract is the contract of the corporation.

Id.— Action of Board of Directors — Authority to Executive Committee — Power t<^ Make Contract. — The board of directors of a corporation may authorize an executive committee of the board to make arrangements with a person named for the transfer of patent rights from him to the corporation, and such authority empowers it to execute a contract with such person for that purpose; and it is not essential that such committee should formally report to the board before executing such contract, and attaching the seal of the corporation thereto.

Vanclief, C. The defendants were sued upon their personal liability as stockholders of the Eureka Manufacturing Company, a corporation organized under the laws of this state.

The cause was tried by the court without a jury, and the court found “ that the agreement was duly executed and delivered by the corporation to the plaintiff, and that the officers of said corporation who executed said agreement were duly authorized so to do”; and further found in favor of plaintiff on all other issues, and rendered judgment accordingly.

The defendants have appealed from the judgment and from an order denying their motion for a new trial.

[126]At the time of ordering judgment the court filed the following written opinion, which is incorporated in the statement on motion for a new trial:

“ Hunt, J.—The only question presented in this case is, whether the contract sued upon was the contract of the corporation. It was signed by the president and secretary, and bore the corporate seal. The production of the contract, therefore, with proof of its signature and of the corporation seal, made out a prima facie case in favor of the plaintiff.

“ The defense is founded upon the claim that the execution of the contract in question was not authorized by the corporation, and was therefore without authority.

“After a careful examination of the evidence, I am of opinion that this defense cannot be sustained.

“ The minutes of the board of directors (page 9) show that, upon motion of Garnett, the attention of the board of directors was called to the necessities of acting upon the proposition of the plaintiff, and the board then passed a resolution which, in my opinion, authorized the execution of the contract. This resolution, in terms, referred the matter to the executive committee, and empowered them to make the necessary arrangements with Andres for securing the transfer of his right to this company. It would seem, therefore, that, in the execution of the contract in question, it was entirely satisfactory to the executive committee; they were but carrying out the resolution of the board, which practically authorized and empowered them to close the transaction with Andres, and the sale and transfer of his rights to this company. The power thus delegated to the executive committee was exercised by them; the paper in question was properly signed by the president and secretary, and the corporate seal affixed.

Andres v. Fry

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