is contrary to settled principles of law and to the weight of authority. Until the principal ratifies the contract, there is no mutuality or consideration for the other party's promise, and it follows that he may withdraw at any time before the principal becomes bound.98 A corporation, therefore, cannot, by ratification of a contract made by an officer or agent without authority, render it binding on the other party if the latter has withdrawn, and given notice thereof, before the ratification.99 § 2192. Time for. It seems that ratification may be made at any time before the other party repudiates the contract,1 provided, of course, the time is a reasonable one. Ratification of authority to institute a suit is sufficient although the ratification takes place after the commencement of the suit.2 § 2193. How ratification may be effected in general-Express and implied. Ratification need not necessarily be express. It may be deduced from course of conduct on the part of the directors, stockholders or other officers or agents. A contract made or other act done by an officer or officers of a corporation without authority may be ratified in any mode in which it might have been authorized. It need not be under the corporate seal, nor by formal vote of the stockholders or directors, as the case may be, unless this would have been necessary to authorize the contract or act in the first instance; but, as in the case of ratification by a natural person, it may be by parol, or may be implied from the conduct of the corporation, or of officers having authority to ratify, in accepting the benefits, with knowledge of the facts, or otherwise treating or recognizing the contract or act as binding; and under some circumstances it may be implied from a mere failure to repudiate or disaffirm the same. As in case of 98 See Townsend v. Corning, 23 Wend. (N. Y.) 435; McClintock v. South Penn Oil Co., 146 Pa. St. 144, 28 Am. St. Rep. 785, 23 Atl. 211; Consolidated Water Power Co. v. Nash, 109 Wis. 490, 85 N. W. 485; Atlee v. Bartholomew, 69 Wis. 43, 5 Am. St. Rep. 103, 33 N. W. 110; Dodge v. Hopkins, 14 Wis. 630. 99 Consolidated Water Power Co. v. Nash, 109 Wis. 490, 85 N. W. 485. 1 Waratah Oil Co. v. Reward Oil Co., 23 Cal. App. 638, 139 Pac. 91. 2 Massachusetts Const. Co. v. Kidd, 142 Fed. 285. 3 Taylor Gas Producer Co. v. Wood, 119 Fed. 966. 4 Connecticut. Howe v. Keeler, 27 Conn. 538. Illinois. Beach v. Miller, 130 Ill. 162, 17 Am. St. Rep. 291, 22 N. E. 464, rev'g 23 Ill. App. 151. Michigan. McLaughlin v. Detroit & M. Ry. Co., 8 Mich. 100. Missouri. Washington Sav. Bank v. Butchers' & Drovers' Bank, 107 Mo. 133, 28 Am. St. Rep. 405, 17 S. W. 644; First Nat. Bank of Springfield v. Fricke, 75 Mo. 178, 42 Am. Rep. 397. New Hampshire. Despatch Line of a ratification by an individual,5 the ratification may be express implied." If implied, it may result from (1) accepting and retaining the benefits of the act or contract, (2) silence or acquiescence, or (3) other affirmative acts showing an adoption of the act or contract.8 There need not be any formal action of the board of directors, and the ratification need not be express nor shown by vote or resolution of the board of directors.10 But a letter merely expressing the personal approbation of the writer, an officer of the company, is not a ratification.11 § 2194. When particular form or mode of authority is necessary. If it is necessary that authority to do a particular act or enter into a particular contract shall be given in a certain form or mode, either by reason of a mandatory charter or statutory provision, or by reason of a common-law rule, ratification of such an act or contract must be in the prescribed form or mode. "A ratification of an act, done by one assuming to be an agent, relates back, and is equivalent to prior authority. When, therefore, the adoption of any particular form or mode is necessary to confer the authority in the first instance, there can be no valid ratification except in the same manner." 12 Thus, it is held that if a corporation can only authorize * Packets v. Bellamy Mfg. Co., 12 N. H. 205, 37 Am, Dec. 203. Pennsylvania. Bagaley v. Pittsburgh & L. S. Iron Co., 146 Pa. St. 478, 23 Atl. 837. 5 See 1 Clark & Skyles, Agency, §§ 128-142. 6 Idaho. Heath v. Potlatch Lumber Co., 18 Idaho 42, 27 L. R. A. (N. S.) 707, 108 Pac. 343. Louisiana. Poche v. New Orleans Home Inv. Co., 52 La. Ann. 1287, 27 So. 797. New York. First Nat. Bank of Binghamton v. Commercial Travellers' Home Ass'n of America, 108 N. Y. App. Div. 78, 95 N. Y. Supp. 454, aff'd 185 N. Y. 575, 78 N. E. 1103. Oregon. Schreyer v. Turner Flouring Mills Co., 29 Ore. 1, 43 Pac. 719. West Virginia. Flanagan v. Flanagan Coal Co., W. Va., 88 S. E. 402. 7 Ratification may be inferred from acts or acquiescence on the part of the corporation. Schreyer V. Turner Flouring Mills Co., 29 Ore. 1, 48 Pac. 719. 8 See 88 2195-2202, infra. 9 National Life Ins. Co. v. Headrick, Ind. App. —, 112 N. E. 559. 10 Lake St. El. R. Co. v. Carmichael, 82 Ill. App. 344, aff'd 184 Ill. 348, 56 N. E. 372; Wehrung v. Portland Country Club & Live Stock Ass'n, 61 Ore. 48, 120 Pac. 747; Texas &. P. Ry. Co. v. Davis, 93 Tex. 378, 54 S. W. 381. 11 Mexican Nat. Coal, Timber & Iron Co. v. Frank, 154 Fed 217, 231. 12 Despatch Line of Packets v. Bellamy Mfg. Co., 12 N. H. 205, 37 Am. Dec. 203. If the original authorization is required to be in a particular mode, the authority to ratify must be conferred in like manner. Marqusee v. Insurance Co. of North America, 211 Fed. a particular act or contract by a power under seal, or by a formal vote, ratification of such an act or contract must be under seal or by a formal vote, as the case may be.13 However, the old rule that an. instrument under seal can be ratified only by an instrument under seal is largely abrogated by modern statutes dispensing with a seal or limiting the effect of the want of a seal; 14 and it is held that a corporate bond need not be ratified under seal where a statute has abolished the distinction between sealed and unsealed instruments.15 § 2195. Silence or acquiescence as ratification-General rules. The rule that when a principal has not disaffirmed an unauthorized act of his agent within a reasonable time after it came to his knowledge, he will be deemed to have acquiesced in such act, applies to corporate bodies as well as individuals.16 Ratification may be implied, or the 903, 907; Lochwitz v. Pine Tree Mining & Milling Co., 37 Utah 349, 108 Pac. 1128. 13 Blood v. La Serena Land & Water Co., 113 Cal. 221, 45 Pac. 252, 41 Pac. 1017; Melroy v. Central Nat. Bank, 17 Wash. Law Rep. (D. C.) 63; Despatch Line of Packets v. Bellamy Mfg. Co., 12 N. H. 205, 37 Am. Dec. 203. 14 See 1 Mechem, Agency (2nd Ed.), §§ 420-425; 1 Clark & Skyles, Agency, § 132. 15 State v. Parke-Davis & Co., 191 Mo. App. 219, 177 S. W. 1070. 16 First Nat. Bank of Binghamton v. Commercial Travellers' Home Ass'n of America, 108 N. Y. App. Div. 78, 95 N. Y. Supp. 454, aff'd without opinion 185 N. Y. 575, 78 N. E. 1103. Ratification may be inferred from informal acquiescence in and approval of the acts. O'Grady v. Howe & Rogers Co., 166 N. Y. App. Div. 552, 152 N. Y. Supp. 79. Acts of an officer are binding, although unauthorized where the directors have knowledge thereof and make no objection thereto. German-American Indemnity Co. v. State Mercantile Bank, 26 Colo. App. 242, 142 Pac. 189. If the board of directors, on obtaining knowledge of a contract made by an unauthorized officer, do not within The rule that where a principal has Silence by the directors while an officer acts will entail upon the corporation the legal consequences of the officer's act, where the circumstances are such as to place the directors under legal obligation to speak. Alaska & Chicago Commercial Co. v. Solner, 123 Fed. 855; Oliver v. Rahway Ice Co., 64 N. J. Eq. 596, 54 Atl. 460. 1 corporation be held estopped to deny ratification, from acquiescence on the part of the corporation. When the officers or agents of a corporation exceed their powers in entering into contracts or doing other acts, the corporation, when it has knowledge thereof, must promptly disaffirm the contract or act, and not allow the other party or third persons to act in the belief that it was authorized or has been ratified. If it acquiesces, with knowledge of the facts, or fails to disaffirm, a ratification will be implied, or else it will be estopped to deny a ratification.17 After knowledge of the unauthorized or irregular act 17 United States. Sun Prtg. & Pub. Ass'n v. Moore, 183 U. S. 642, 46 L. Ed. 366, aff'g 101 Fed. 591; Union Pac. Ry. Co. v. Chicago, R. I. & P. Ry. Co., 163 U. S. 564, 41 L. Ed. 265; Indianapolis Rolling Mill v. St. Louis, Ft. S. & W. R. Co., 120 U. S. 256, 30 L. Ed. 639, 26 Fed. 140; Illinois Pneumatic Gas Co. v. Berry, 113 U. S. 322, 28 L. Ed. 1003; Freygang v. Vera Cruz & P. R. Co., 154 Fed. 640; Alaska & C. Commercial Co. v. Solner, 123 Fed. 855; G. V. B. Min. Co. v. First Nat. Bank of Hailey, 95 Fed. 23, modifying 89 Fed. 439; Armstrong v. Chemical Nat. Bank of New York, 83 Fed. 556, aff'g 76 Fed. 339; Central Trust Co. v. Ashville Land Co., 72 Fed. 361; Augusta, T. & G. R. Co. v. Kittel, 52 Fed. 63. Alabama. Mobile, J. & K. City R. Co. v. Owen, 121 Ala. 505, 25 So. 612; Alabama Great Southern R. Co. v. South & North Alabama R. Co., 84 Ala. 570, 5 Am. St. Rep. 401, 3 So. 286. California. Phillips v. Sanger Lumber Co., 130 Cal. 431, 62 Pac. 749; Illinois Trust & Savings Bank v. Pacifie Ry. Co., 117 Cal. 332, 49 Pac. 197. Colorado, Union Gold Min. Co. v. Rocky Mountain Nat. Bank, 1 Colo. 531; McCornick V. Bittinger, 13 Colo. App. 170, 57 Pac. 736; Henry v. Colorado Land & Water Co., 10 Colo. App. 14, 51 Pac. 90. Connecticut. Mahoney v. Hartford Inv. Corporation, 82 Conn. 280, 73 Atl. 766. Illinois. Wheeler v. Home Savings & State Bank, 188 Ill. 34, 80 Am. St. Rep. 161, 58 N. E. 598, rev'g 85 Ill. App. 28; Atwater v. American Exch. Nat. Bank, 152 Ill. 605, 38 N. E. 1017, rev'g 40 Ill. App. 501; Grollman v. Montgomery Ward & Co., 181 Ill. App. 598; Ragland v. McFall, 36 Ill. App. 135, aff'd 137 Ill. 81, 27 N. E. 75; Meister v. Cleveland Dryer Co., 11 Ill. App. 227. Indiana. Hawkins v. Fourth Nat. Bank of New York, 150 Ind. 117, 49 N. E. 957; Smith v. Wells Mfg. Co., 148 Ind. 333, 46 N. E. 1000; Whitewater Valley Canal Co. v. Hawkins, 4 Ind. 474. Iowa. Marshall County High School Co. v. Iowa Evangelical Synod, 28 Iowa 360. Kentucky. Pittsburgh, C. & St. L. R. Co. v. Woolley, 12 Bush 451; Bell & Coggeshall Co. v. Kentucky GlassWorks, 20 Ky. L. Rep. 1089, 48 S. W. 440; Deposit Bank of Carlisle v. Fleming, 19 Ky. L. Rep. 1947, 44 S. W. 961. or contract, the corporation must repudiate it within a reasonable 333, 85 N. W. 283; German Nat. Bank v. First Nat. Bank of Hastings, 59 Neb. 7, 80 N. W. 48; Omaha Consol. Vinegar Co. v. Burns, 49 Neb. 229, 68 N. W. 492; Nebraska Nat. Bank of York v. Ferguson, 49 Neb. 109, 59 Am. St. Rep. 522, 68 N. W. 370. Nevada. Henningsen v. Tonopah & G. R. Co., 33 Nev. 208, Ann. Cas. 1913 D 1008, 111 Pac. 36, 119 Pac. 774. New Jersey. Bennett v. Millville Improvement Co., 67 N. J. L. 320, 51 Atl. 706; In re West Jersey Traction Co., 59 N. J. Eq. 63, 45 Atl. 282; Flaherty v. Atlantic Lumber Co., 58 N. J. Eq. 467, 44 Atl. 186. C. 469, 478, 61 S. E. 273; Lewis v. Albemarle & R. R. Co., 95 N. C. 179. Ohio. Larwill v. Burke, 19 Ohio Cir. Ct. 449, 613, 10 Ohio Cir. Dec. 605. Oregon. Finnegan v. Pacific Vinegar Co., 26 Ore. 152, 37 Pac. 457; Currie v. Bowman, 25 Ore. 364, 35 Pac. 848. Pennsylvania. First Nat. Bank v. Colonial Hotel Co., 226 Pa. 292, 75 Atl. 412; Mohrfeld v. Second German S. E. Bldg. Ass'n, 194 Pa. St. 488, 45 Atl. 335; Moller v. Keystone Fibre Co., 187 Pa. St. 553, 41 Atl. 478; Cooper v. Potts, 185 Pa. St. 115, 39 Atl. 824; Balliet v. Brown, 103 Pa. St. 546; Gordon v. Preston, 1 Watts 385, 26 Am. Dec. 75. Tennessee. First Nat. Bank of Nashville v. Shook, 100 Tenn. 436, 45 S. W. 338; Stainback v. Junk Bros. Lumber & Manufacturing Co., 98 Tenn. 306, 39 S. W. 530. Texas. Texas & P. Ry. Co. V. Davis, 93 Tex. 378, 54 S. W. 381. Washington. West Seattle Land & Improvement Co. v. Novelty Mill Co., 31 Wash. 435, 72 Pac. 69; Miller v. Washington Southern Ry. Co., 11 Wash. 414, 39 Pac. 673. West Virginia. Williams v. S. M. Smith Ins. Agency, 90 S. E. 393. New York. Sheldon Hat Blocking Co. v. Eickemeyer Hat-Blocking Mach. Co., 90 N. Y. 607; Hooker v. Eagle Bank of Rochester, 30 N. Y. 83, 86 Am. Dec. 351; Story v. Furman, 25 N. Y. 214; Hoyt v. Thompson's Ex'rs, 19 N. Y. 207; New Hope & D. Bridge Co. v. Phenix Bank, 3 N. Y. 156; First Nat. Bank of Binghamton v. Commercial Travellers' Home Ass'n of America, 108 App. Div. 78, 95 N. Y. Supp. 454, aff'd 185 N. Y. 575, 78 N. E. 1103; President, etc., Great Western Turnpike Co. v. Shafer, 57 App. Div. 331, 58 N. Y. Supp. 5; Jenkins v. John Good Cordage & Machine Co., 56 App. Div. 573, 68 N. Y. Supp. 239; Mesinger v. Mesinger Bicycle Saddle Co., 44 App. Div. 26, 60 N. Y. Supp. 431; White v. Sheppard, 41 App. Div. 113, 58 N. Y. Supp. 563; New Britain Nat. Bank v. Cleveland Co., 91 Hun 447, 19 N. Y. Supp. 94, 158 N. Y. 722, 53 N. E. 1128; Davies v. New York Concert Co., 59 Hun 623, 13 N. Y. Supp. 739; Bronx Hospital v. Grolier Society, 88 Misc. 3, 150 N. Y. Supp. 149. North Carolina. Johnson County Sav. Bank v. Scoggin Drug Co., 152 N. C. 142, 50 L. R. A. (N. S.) 581, 136 Am. St. Rep. 821, 67 S. E. 253; Watson v. Proximity Mfg. Co., 147 N. Wisconsin. Northwestern Fuel Co. v. Lee, 102 Wis. 426, 78 N. W. 584; McLaren v. First Nat. Bank of Milwaukee, 76 Wis. 259, 45 N. W. 223; Walworth County Bank v. Farmers' Loan & Trust Co., 16 Wis. 629. Wyoming. Frank v. Hicks, 4 Wyo. 502, 35 Pac. 475, 1025. A note executed by stockholders of a corporation in the corporate name, without authority from the directors, is ratified if the corporation allows judgment to go against it on the same. Nebraska Nat. Bank of York v. Ferguson, 49 Neb. 109, 59 Am. St. Rep. 522, 68 N. W. 370. |