« AnteriorContinuar »
majority over the minority as to acts intra a duty which it is capable of performing. vires is implied from the very nature of That a corporation owes duties to its stockthe contract. But the corporate authority holders outside of mere business duties we is considered to have been conferred by the think should admit of no question. One stockholders upon the trust and confidence such duty is that it will perform its corthat it will be exercised within the char- porate functions, according to, and within tered powers, and with a view to advance the meaning of, its charter. The manner of the interests of the stockholders. Dodge v. performing those duties may be left to the Woolsey, 18 How. 331, 15 L. ed. 401; discretion of its directors or majority stockWright v. Oroville Gold, S. & C. Min. Co. holders. But the corporation should not 40 Cal. 20, 3 Mor. Min. Rep. 558; Forbes be permitted to abdicate its corporate v. Memphis, E. P. & P. R. Co. 2 Woods, functions and utterly abandon the perform323, Fed. Cas. No. 4,926. No stockholder ance of its corporate duties, to the prejudice is bound to submit to the doing of ultra of stockholders. These are matters which vires acts. Such submission is not a part involve more than mere internal adminisof his contract. He may have relief from tration, and they are matters which affect ultra vires acts. 2 Cook, Corp. § 669. the interest of each individual stockholder.
It seems also to be well settled that for We recur again to the facts. The defendpractical purposes a corporation may, in ant corporation is the owner in fact of some respects, be treated as a trustee for more than $3,500,000 of the capital stock of the benefit of its stockholders, whenever the New Jersey corporation. It is the ownnecessary for the protection of their inter- er of a controlling interest. Its one corests.
sense it holds the corporate porate power involved in this inquiry is property in trust for the stockholders. the power to "hold" it. Growing out of Peabody v, Flint, 6 Allen, 52; Sawyer v. that power is a duty to hold it so as to Hoag, 17 Wall. 623, 21 L. ed. 736; 1 Mora- enjoy the privileges of ownership. That we wetz, Priv. Corp. § 237.
think is necessarily implied in the case of a There is no doubt, we think, that a court holding corporation. For ten years it has of equity may, at the instance of a stock - neglected, and, as we must assume, now deholder, afford a remedy from the conse- clines, to become the owner of record. As quences, not only of fraudulent acts of the none but stockholders of record can vote corporation or its officers, but of such acts (Warren v. Pim, 66 N. J. Eq. 353, 59 as are a breach of the trust and confidence Atl. 773), it has thereby voluntarily diswhich are implied by the very nature of enabled itself from performing its most the corporate relations. It may control a important function as a stock owner. It corporation and its officers, and restrain has permitted that function to be usurped, them from doing acts even within the scope so far as minority stockholders are of corporate authority, if such acts would cerned, by individuals. It has had no coramount to a breach of the trust upon which porate voice in the management of the New the authority had been conferred. Dodge Jersey corporation. It has subjected itself v. Woolsey, supra; Wright v. Oroville, to the liability of loss with respect to the Gold, S. & C. Min. Co. 40 Cal. 20, 3 Mor. shares themselves. In the present status it Min. Rep. 558; March v. Eastern R. Co. is unable to perform the duties which it 40 N. H. 548, 77 Am. Dec. 732; Taylor owes to its stockholders. v. Holmes (C. C.) 14 Fed. 498; Forbes v. We do not say that a corporation may Memphis, E. P. & P. R. Co. 2 Woods, not, for business reasons, hold property in 323, Fed. Cas. No. 4,926. It may also the name of another. We do not say that control them with respect to acts tending it may not so hold temporarily the capital to the destruction of the corporate fran- stock which it owns in another corporation. chises, and acts in violation of, or incon- | What we do say is that when a holding sistent with, the charter. It may prevent corporation, intentionally, persistently, and the misuse or the misapplication of cor- unreasonably deprives itself of the exercise porate power prejudicial to the stockhold of the highest function and privilege of a ers, and amounting to a breach of trust. stockholder, and so proposes to continue, it Pond v. Vermont Valley R. Co. 12 Blatchf. is such a breach of its duty to its stock280, Fed. Cas. No. 11,265.
holders, and so far removed from any It should be borne in mind that this characteristics of internal management and is not a bill brought in behalf of a corpora control, which the majority stockholders tion which is unwilling or unable to sue, may properly exercise, that a minority against directors who have undertaken to stockholder may invoke the intervention of do ultra vires or otherwise illegal acts, but the court. It is essentially a breach of one against the corporation itself to compel trust. If a corporation has no lawful it to perform a corporate duty which it is power to give away its property,—and it claimed it owes to all its stockholders, and 'has none, -no more should it have authori
ty to devest itself of corporate power and paid from the bank which originally cashed virtually to give away to others the exercise the check, although it indorsed thereon "all of its essentially corporate functions. prior indorsements guaranteed.” The essential purpose of such a holding
(April 22, 1915.) corporation as the defendant is not only to hold shares of stock, but so to hold them
PPEAL by defendant from a judgment as to be able to vote upon them and give A
of the Superior Court for Scotland them their proper effective influence in the County overruling a demurrer to the commanagement of the subsidiary corporation. plaint in an action brought to recover the For such a holding corporation to decline amount paid by plaintiff on a forged check. to hold in its own name the shares of stock
Reversed. that it owns, and thereby to abdicate its
The facts are stated in the opinion. functions and privileges as a stock owner,
Mr. Walter H. Neal for appellant. seems to us to be a perversion of the spirit Messrs. Russell & Weatherspoon for of the one corporate power which it has so
appellee. far undertaken to exercise. It is inconsistent with the character of the
Clark, Ch. J., delivered the opinion of tractual duties which it owes to its stock the court: holders. It is not only a breach of trust, The complaint alleges that the defendant, but it is a neglect to perform the duties a bank in Fayetteville, cashed a check, purwhich are implied from the very fact that porting to be drawn by the Wade Trading it is a holding corporation.
Company, on the plaintiff bank in LaurinIt is no answer to say that the same burg, and purporting to be indorsed by D. gentlemen who now hold of record, and C. Jackson, but that the signature of the vote upon, these shares, will, by reason said drawer and said indorser were forged, of their interests and of the intercorporate and that thereafter in the course of busiassociations, be able to control the exercise ness the said forged check was sent through of the defendant's privileges of stock owner- a bank in Wilmington to the plaintiff with ship after they shall have been transferred the indorsement, “All prior indorsements to it of record. Whatever shall be done guaranteed," and that it was the custom then will be done under corporate responsi- and practice to take such checks relying bility, of which there is none at present. upon the exercise of due prudence and diliBesides that, it is, humanly speaking, cer- gence on the part of the bank which first tain that the gentlemen who now control cashed the check, and alleging that, the the defendant, and in whose interests Dodge signature of the drawer being forged, the and Smith are supposedly acting, will not defendant should refund to the plaintiff do so forever. We think the bill is sus- the amount of said check which the plaintiff tainable.
had paid by reason of the negligence of the Decree below affirmed, with additional defendant bank in failing to use due prucosts.
dence and diligence in accepting and paying the said check. The defendant demurred upon the ground that the complaint does
not state facts sufficient to constitute a NORTH CAROLINA SUPREME COURT.
cause of action. The judge overruled the
demurrer, and the defendant appealed. STATE BANK
The drawee bank pays a check upon the
faith of the genuineness of the signature of CUMBERLAND SAVINGS & TRUST COM. the drawer. PANY, Appt.
When a drawee pays a check "upon which
the drawer's signature had been forged, he (168 N. C. 605, 85 S. E. 5.)
cannot, upon the discovery of the forgery,
recover back the amount if the party to Bank cashing forged check
whom he paid it was a bona fide holder. liance statement that indorse
The drawee is held bound to know the sig. ments are guaranteed.
A bank which pays a check upon itself, nature of his drawer, and the banker, even the signature of drawer and indorser upon more, to know that of his depositor; and which are forged, cannot recover the amount if they fail to discover the forgery before
payment, they must stand the loss." This Vote, As to right of drawee of forged is the heading of an extended note to be check or draft to recover money paid there found in 17 Am. St. Rep. 890, citing very on, see notes to First Nat. Bank v. Bank of Wyndmere, 10 L.R.A.(N.S.) 49; Title numerous, authorities. This rule seems to Guarantee & T. Co. v. Haven, 25 L.R.A. have been established by Lord Mansfield in (N.S.) 1308; and Farmers' Nat. Bank v. 1762 in Price v. Neal, 3 Burr. 1355, who Farmers' & T. Bank, L.R.A.1915A, 77.
said that it was incumbent upon the drawee
to be satisfied of the genuineness of the before receiving on deposit the check drawn drawer's signature before accepting or pay, on another bank does not excuse the drawee ing the bill, and that if he made a mistake bank from its duty to examine its customit was his neglect or misfortune, and not er's signatures to checks presented by anthat of the drawer.
other bank or other holder in due course. In Bank of United States v. Bank of See also numerous citations 10 L.R.A.(N.S.) Georgia, 10 Wheat. 333, 6 L. ed. 334, de 57–59, cided in 1825, Mr. Justice Story, referring The same proposition is fully discussed to Price v. Neal, supra said: “After some and held in Commercial & F. Nat. Bank research we have not been able to find a v. First Nat. Bank, 30 Md. 11, 96 Am. single case in which the general doctrine Dec. 567, and notes,--a very carefully conthus asserted has been shaken or sidered case.
In Howard v. Mississippi doubted."
Valley Bank, 28 La. Ann. 727, 26 Am. Rep. A proposition of mercantile law consid- / 105, it is held, as above stated, that the ered beyond question as correct by Mans- drawee of a bill is presumed to have a field and Story must be deemed settled un- better knowledge of the signature of the less changed by statute.
drawer than the holder. In Farmers' & M. Bank v. Bank of In 2 Morse, Banks, 4th ed. § 463, it is Rutherford, 115 Tenn. 64, 112 Am. St. Rep. said, quoting many cases : "A bank can. 817, 88 S. W. 939, it is held: “It is not recover money paid on a forgery of the negligence for a bank to pay a forged check drawer's name from the person to whom it drawn on it in the name of one of its was paid. The bank is bound to know the customers whose signature is well known signature of the drawer.” to it, where the cashier does not examine Morse, supra, cites among other authorthe signature closely, which would have ities, Bank of St. Albans v. Farmers' & disclosed the forgery, but is thrown off his M. Bank, 10 Vt. 141, 33 Am. Dec. 188, guard my indorsements on the paper. An which was exaetly like the present case, in indorser of a check does not warrant to the that the signature of the drawer drawee, but only to subsequent holders in forged, and the drawee bank, in action due course, the genuineness of the signa- against the cashing bank, asked for instructure."
tions that if the jury should find that the This last proposition seems to be now the cashier of the purchasing bank received well-settled law, though there were some the check without due circumspection or earlier decisions which would seem to indi. the exercise of due diligence in ascertaining cate a liability on the part of the indorser its genuineness, or the title of the person who negligently pays a check without fully presenting it, the drawee bank was entitled satisfying itself as to the genuineness of to recover; but the court held that it was the signature of the drawer. The proposi- only necessary that the cashing bank should tion which now obtains, almost universally, appear to have received the check in ordiis thus laid down in Howard v. Mississippi nary course of business and in good faith. Valley Bank, 28 La. Ann. 727, 26 Am. In 5 Cye. 544, there is quoted in the Rep. 105:
“The drawee of a bill is pre- notes the following proposition: “A factor sumed to have a better knowledge of the who has received drafts from his principal signature of the drawer than the holder. drawn on him, which have been discounted So, where a bank cashed a draft and after- by a bank, and he has paid them, must ward collected it of the drawee, and the stand the loss on those which are discovered draft was a forgery, the drawee cannot to be forgeries.” recover the amount paid from the bank to The latest and fullest discussion of the which it was paid, though the latter had subject will be found in 3 Ruling Case Law, received the draft from an unknown holder $ 244, with full citations of the more rewithout requiring his indorsement." cent authorities. The law is thus summed
In Salt Springs Bank v. Syracuse Sav. / up: “Where a bank receives in good faith Inst. 62 Barb. 101, and Germania Bank v. for collection a check upon another bank, Boutell, 60 Minn. 189, 27 L.R.A. 635, 51 Am. the signature of the drawer of which is St. Rep. 519, 62 N. W. 327, it is held: The forged, and receives payment and pays over holder of a check or draft, presenting it the proceeds to its customer, the drawee to the drawee for payment, owes
bank cannot recover from the collecting it no duty to inquire into the genuineness | bank the money so paid to it. In order, thereof.
however, that the collecting bank may The drawee bank has no right to assume claim protection, it must have been a bona that the holder has made such investiga- fide holder; but the mere fact that the tion. Failure of a bank to follow the usage collecting bank receives the check from a or practice adopted for its own security of stranger does not itself prevent it from requiring evidence of the payee's identity claiming protection as a bona fide holder.” Where the cashing bank acts in good, at the logical end shown by the matter of faith, the drawee cannot recover the amount the will. which it has paid on the forged check. The Swire's Estate, 225 Pa. 188, 73 Atl. 1110; drawee should know the signature of the Stinson’s Estate, 228 Pa. 475, 30 L.R.A. drawer, its own depositor, better than the (N.S.) 1173, 139 Am. St. Rep. 1014, 77 holder. The drawee cannot plead a custom Atl. 807; Baker's Appeal, 107 Pa. 381, 52 that would entitle it to pay such draft Am. Rep. 478. without the signature being genuine.
There is nowhere in the act or in the The demurrer should have been sustained. law any requirement or provision that a Reversed.
testator must keep on signing and resigning his will.
Sheaffer's Estate, 240 Pa. 83, 87 Atl.
577; Wikoff's Appeal, 15 Pa. 281, 53 Am. PENNSYLVANIA SUPREME COURT. 19 Am. St. Rep. 637, 19 Atl. 482.
Dec. 597; Tomlinson's Appeal, 133 Pa. 245.
This will can be sustained as a valid RE ESTATE OF CYRUS C. BROCK, JANE BROCK DU BRUILLE et al., Appts.
will by republication.
Forquer's Estate, 216 Pa. 331, 66 Atl.
92, 8 Ann. Cas. 1146; Kerchner's Estate, (247 Pa. 365, 93 Atl. 487.)
41 Pa. Super. Ct. 112; Manning's Estate, Will – mutilation of signature
46 Pa. Super. Ct. 607.
restoration. A will from which testator tore his signa
Elkin, J., delivered the opinion of the ture, and by so doing mutilated a portion court: of a codicil, is properly admitted to pro- The testator was a lawyer and wrote bate together with the codicil if it was his own will. The language is plain and originally duly executed and he restored unambiguous, and the intention is clearly the portion of the paper torn off, rewrote his signature and the mutilated portion of March 29, 1906, when it was formally
expressed. The original will is dated the codicil, and left it among his papers executed in the presence of witnesses. After at the time of his death.
giving directions as to the removal of the (January 2, 1915.)
remains of his wife and the erection of a
monument, the testator made a small beA a e
the Orphans' Court for Allegheny cemetery lot to his brother. The residue County, dismissing an appeal from a deci- of his estate, which was practically all of sion of the register admitting to probate it, he gave to his two daughters and a the will of Cyrus C. Brock, deceased. Af- granddaughter, share and share alike. In firmed.
other words, he directed a division of his The facts are stated in the opinion. estate into three equal parts and named the
Messrs. F. P. Iams and J. D. Iams for beneficiaries who were to take under his appellants.
will. At a subsequent date, January 17, Mr. George H. Stengel for appellee 1907, he added a codicil which provided that Trust Company.
his grandson should share equally with the Mr. James G, Hays, for appellee Hare: three legatees named in the original will.
Meaningless words, or words not testa- The effect of the codicil was to divide the mentary, following the signature, are not residue of the estate into four equal shares sufficient to strike down the will.
instead of three. If the situation had reWikoff's Appeal, 15 Pa. 281, 53 Am. mained as it then was, no one could have Dec. 597; Swire's Estate, 225 Pa. 188, 73 seriously questioned the proper execution Atl. 1110; Beaumont's Estate, 216 Pa. of the will and codicil. They were testa350, 65 Atl. 799, 9 Ann. Cas. 42; Taylor's mentary in character, were signed at the Estate, 230 Pa. 346, 36 L.R.A. (N.S.) 66, 79 end thereof, and disposed of the entire Atl. 632; Teed's Estate, 225 Pa. 633, 133 estate in language too plain to be misunderAm. St. Rep. 896, 74 Atl. 646.
stood. The present controversy grows out The wills act does not compel a testator of what subsequently happened. During a to sign at the end,—the physical end,—but visit to his daughter who lived in Oregon,
the testator had a dispute with his grandNote. - Cases dealing with the effect of daughter, a beneficiary under the will, and, the cancelation and subsequent restoration of testator's signature are cited at page 177 while angry as a result of that dispute, he of the note to Re Bullivant, 51 L.R.A. tore his signature from the lower right-hand (N.S.! 169, dealing generally with inter- corner of the paper upon which the will was lineations or changes by testator after sign- written, and in doing so mutilated the coding.
icil, which was written on the reverse side thereof. He did this in the presence of, testator was signed after the paper was his granddaughter and others and then attached; and, while this precise question threw the will and that part of the paper was not certified for determination by the which contained his signature upon the jury, it was found as a fact by the learned floor, saying, “You have not only cut your orphans' court, and in our opinion no other self out, but your little brother also.” Very conclusion could be reached without doing soon thereafter the testator picked up the violence to what is plain and obvious to will which he had thrown upon the floor anyone who inspects the writing. With and put it in his pocket. There is no evi- all of these facts found on ample evidence dence as to what became of the detached either by the jury or by the court, the inpart of the will which contained his signa- tention of the testator regarding the dispoture; but the mutilated will, with such adsition of his property is too manifest to additions and corrections as he subsequently mit of doubt. Under these findings of fact, made to it, remained in his possession from there is presented for our consideration upthe time he put it in his pocket after tear- on review, a writing testamentary in charing his signature therefrom until the date acter, signed at the end thereof by the of his death, when it was found among his testator, with his signature proved by more papers.
The will when found showed on than two witnesses, and this is all the law its face that someone had very carefully requires in the execution of a will. We and neatly attached to the original will also agree with what the learned court another piece of paper of the exact size as
below said as to the intention of the testhat containing the signature of the testator tator in republishing his first codicil, and which had been torn from it by him. This are of opinion that this codicil was properattached piece of paper was at the lower ly admitted to probate. right-hand corner of the original will, and The second so-called codicil was in the across it at the proper place was written nature of a letter addressed by the testator the name of the testator. On the back of to his brother, and as to the refusal to it were also written the words of the first admit this paper to probate we concur in codicil which had been eliminated by tear- the views expressed by the learned orphans' ing the signature from the first page of the court. original will.
Decree affirmed. Costs to be paid out of It will thus be seen that, when the will the estate. was found among the papers of the testator at the time of his death, it was a complete testamentary instrument with both will and
TENNESSEE SUPREME COURT. codicil signed at the end thereof as required by the statute. If in point of fact the
J. W. SHAW, Piff. in Certiorari, testator attached the piece of paper to the will with such great care, or caused it to
J. W. WEBB. be done, then rewrote his name at the end thereof, and followed this by rewriting (131 Tenn. 173, 174 S. W. 273.) with his own hand those words which had been eliminated from the first codicil, his Mechanics' lien – statute priority to intention to republish the provisions of the conditional vendor. original will and first codicil which he had The claimed lien of one who has, without attempted in a spirit of pique or anger to the knowledge or consent of the vendor, destroy could not be made to appear more ly sold to a vendee in possession, under a
made repairs on an automobile conditionalclearly. This was the view entertained by statute providing therefor in case of repairs the orphans' court, but the facts were in made at the request of the owner or his dispute, and hence it was that these ques- agents, is subordinated to the title of the tions were certified to the court of common vendor, which is retained in the purchasepleas for determination by a jury. The money notes, although the mechanic had no jury found that the signature on the at- notice of the vendor's title. tached piece of paper was in the handwriting of the testator, as were also the words
(March 6, 1915.) written on the reverse side thereof which Note. - Right to lien for repairs or supplied the words of the first codicil that other services under contract with had been torn therefrom when the testator purchaser under conditional sale. tore his signature from the original will. The jury also found that the testator either
As to the priority of a lien for services attached the paper to the will or authorized mortgage, see note to Reev
on personal property over a prior chattel
& Co. v. Russomeone to do it for him. In either event sell, post, 1149. his intention would be the same. An inspec- For priority as between the lien of a chattion of the will shows that the name of the 'tel mortgage and a lien acquired by furnish