Hoffman v. Farmers Coöperative Shipping Ass'n

Citations

• 78 Kan. 561
• 97 P. 440
• 1908 Kan. LEXIS 103

Syllabus

<p>SYLLABUS BY THE COURT.</p> <p>Corporations — Misconduct of Officers Prohibited by By-laws— Dealing in Futures — Good Faith — Ratification — Notice — Joinder of Actions. A company was chartered to purchase, sell, ship and handle grain, live stock and other farm products. Its by-laws prohibited the company or any of its officers from speculating in options on grain or other farm products, and provided that any officer guilty of such misconduct should be personally liable to the company for any damage resulting therefrom. In an action by the company against one who acted as its general manager to hold him personally liable for losses caused by his speculation in options with the funds of the company, held: (1) A petition which sets up several causes of action which are alleged to have resulted from the failure of the defendant to perform his duties as manager of the company is not subject to demurrer on the ground of misjoinder of causes of action sounding in tort and on contract. (2) The following language of the by-laws of the company: “or shall engage in speculating, or in options on grain, stock, or produce,” taken with its context, means the making of contracts in which the parties speculate in the rise and fall of prices. (3) Where it appears from the findings that the company, under the direction and management of the defendant, engaged in speculating in options on grain, the real question at issue is not whether the transactions were illegal and void, but whether they were in violation of the by-laws and resulted in loss to the company for which the defendant is liable, (4) The fact that the board of directors knew that the defendant was violating the by-laws and failed to take any action to prevent him from so doing can not be held a ratification by the company of his unlawful conduct. The board of directors could not bind the association by ratifying transactions which the by-laws expressly prohibited, for the reason that the by-laws furnished the rules of