Scouton v. Stony Brook Lumber Co.

Citations

• 261 Pa. 241
• 104 A. 548
• 7 A.L.R. 1433
• 1918 Pa. LEXIS 721

Syllabus

<p>Corporations — Principal and -agent — Execution of note without signature of treasurer — -Use of money to pay corporate 'debts — Estoppel — Failure to mention loan in corporate minutes — Corporate or personal loan — Conflicting evidence — Case for jury.</p> <p>1. A party cannot avail himself of the benefit of his agent’s act and repudiate his authority.</p> <p>2. A corporation which has received the benefit of a note irregularly issued cannot escape liability thereon by showing it was not executed by the proper officer; -and a director of a company, suing, is not denied the application of such rule.</p> <p>3. A corporation may lawfully borrow money to pay its indebtedness and when used for that purpose the obligation to repay is un5 doubted, and the fact that the loan did not pass through the hands of the treasurer is not controlling, nor is the absence of any reference thereto in the corporate minutes.</p> <p>4. The president of a corporation who owned or controlled a majority of its capital stock agreed to sell his entire holdings to the holder of the balance of the stock for $50,000, on condition that all the liabilities of the company be met at the time of the transfer. The liabilities amounted to $41,000, including a sum of $6,500 owing the president for back salary. The purchaser employed plaintiff as attorney to assist in obtaining the sum of $91,000, of which sum plaintiff himself advanced $5,000. When the deal was consummated the company was reorganized with the purchaser of the stock as president, and plaintiff and three others as directors. In an action against the corporation for the recovery of the $5,000 advanced by plaintiff the evidence was conflicting as to whether such sum was a loan to the corporation and used in part payment of the former president’s salary or whether it was a loan to the purchaser of his stock. Plaintiff offered in evidence a note for such amount to plaintiff’s order, and executed by the new president and secretary in the cor