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decided: January 31, 1887.



Author: Miller

[ 120 U.S. Page 256]

 MR. JUSTICE MILLER delivered the opinion of the court.

This is a writ of error to the Circuit Court of the United States for the District of Kansas.

The plaintiff in error, which was also the plaintiff below, is a corporation existing under the laws of Indiana, and doing business in that state. The defendant in error is a corporation of the State of Kansas. The latter company, while building its railroad, contracted, on the 8th day of October, 1881, with the former for the purchase of iron rails. The contract was

[ 120 U.S. Page 257]

     for ten thousand tons, to be delivered, during the period between October and June inclusive, on board of the railroad cars at Indianapolis. A jury was waived and the case was tried before the court, which made a finding of facts on which it declared the law to be for the defendant, and rendered judgment accordingly.

During the trial the defendant company produced a release, apparently executed by the plaintiff company, from the obligation of the contract to receive and pay for the iron, except so far as it had been fulfilled, and upon the validity of this release the decision depends.

It appears from the facts found by the court that the plaintiff was in the habit of receiving payment for iron delivered, by drafts on the defendant, payable in New York, and that Moran Brothers were the financial agents of the defendant, through whom such payments were made; that drafts to the amount of $54,000 were due on the 4th day of October, 1882, and the company, being hard pressed for money, asked an extension of payment, which was granted for four months; that when these drafts again fell due they were protested for nonpayment, and the defendant company was insolvent, which fact was well known to the plaintiff. It appears, also, that Mr. Thomas, who was the treasurer of the plaintiff company, visited New York and called upon the firm of Moran Brothers, at whose banking-house said drafts were payable, and endeavored to induce them to pay the drafts, but that Moran Brothers, who had no funds of the defendant's at the time, declined to do so, but finally said: "We, Moran Brothers, will pay these drafts if you will sign a release for the balance of the contract." To this Mr. Thomas replied that he was not authorized to execute such a release, but he communicated with Mr. Jones, who was the president and superintendent of the company, and obtained from him authority to accept the money and sign the release. This was accordingly done, the release being dated "New York, 8th February, 1883," and signed "Indianapolis Rolling Mill Co., by J. Thomas, treasurer."

It is said by the plaintiff that Mr. Thomas had no authority to execute this release, or to make this contract, and, therefore,

[ 120 U.S. Page 258]

     it is void. Bearing upon this proposition, it is found as a matter of fact by the court, that Mr. Jones was president and Mr. Thomas treasurer at the time of this transaction. The original contract for the sale of the iron is executed by Mr. Jones, as president, without the seal of the company, and there is no evidence of any resolution of the board of directors authorizing or approving that contract. The by-laws of the plaintiff corporation, as the court finds, declare that the superintendent, who in this case was Mr. Jones, "shall have charge of the works, property, and operations of the company, and shall employ all operatives and certify all wages due and other expenditures to the secretary, . . . and shall, with the approval of the president, buy and sell material and make all contracts for the same, and for work," &c. And the court further finds that under this by-law Mr. Jones had the power to buy and sell material, and to make all contracts for the same. Another by-law declares that "the superintendent and all other persons shall in all cases be subject to the control of the board of directors, in everything where the board shall elect to exercise such control;" and the court finds that, in the making of the original contract sued on, and in the extension of the time for the payment of drafts, as hereinafter mentioned, the board of directors of plaintiff did not at any time or in any way elect to exercise the control over its officers given said board by said by-laws.

The court further finds "that, after the return of Mr. Thomas from the city of New York to Indianapolis, some time in March, there was a meeting of the board of directors of plaintiff, at which the validity of the release executed by Mr. Thomas was discussed; but the records do not show that at that particular meeting any definite action was taken; that the directors at that meeting did in fact agree to submit the question to counsel of plaintiff, let him investigate it, and then act upon his advice; that about two years after this meeting and a year and a half after this suit was commenced, a nunc pro tunc entry was made ...

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