of directors of a telephone company in purchasing a telephone line, although unauthorized, is ratified where the company uses the purchased line for several years.69 And a corporation which has used the subject-matter of a contract for a long time is estopped to claim that it did not execute the contract which was signed by its president in his individual name.70 The failure to notify one of the directors of a special meeting of the directors does not invalidate the acts of the board at a meeting which such director did not attend, where the corporation accepted the benefits of the acts of the board at such meeting.71 In applying this rule, it is also held that where a corporation accepts and retains the benefits of a transaction induced by the fraudulent representations of its agent, made by him while acting within the scope of his authority, it is liable to the party injured thereby.72 § 2200. Recognition or adoption of act or contract by affirmative acts as ratification-In general. Unless some particular form or mode of ratification is necessary,73 ratification of an unauthorized act or contract will be implied, if the corporation, or officers having authority in the matter, act upon the same, or otherwise perform acts which in effect recognize it as binding.74 Thus a corporation 69 Ege v. Centerville Tel. Exch. Co., 33 S. D. 648, 147 N. W. 70. 70 Belzoni Oil Co. v. Yazoo & M. Val. R. Co., 94 Miss. 58, 47 So. 468. 71 Union Trust Co. v. Electric Park Amusement Co., 163 Mich. 687, 130 N. W. 306. 72 First Nat. Bank v. Exchange Bank of Ong, 90 Neb. 225, 133 N. W. 237. 73 See § 2194, supra. 74 United States. McKenzie V. Poorman Silver Mines of Colorado, 88 Fed. 111. Leroy & Coney Val. Air Line R. Co. v. Sidell, 66 Fed. 27. California. Porter v. Lassen County Land & Cattle Co., 127 Cal. 261, 59 Pac. 563; Shaver v. Bear River & A. Water & Mining Co., 10 Cal. 396. Colorado. Freeman Improvement Co. v. Osborn, 14 Colo. App. 488, 60 Pac. 730. ford Water Co., 73 Conn. 626, 48 Atl. 754; Perry v. Simpson Waterproof Mfg. Co., 37 Conn. 520. District of Columbia. Washington Times Co. v. Wilder, 12 App. Cas. 62. Georgia. Singleton V. Bank of Monticello, 113 Ga. 527, 38 S. E. 947. Illinois. Lake S'. El. R. Co. v. Carmichael, 184 Ill. 348, 56 N. E. 372, aff'g 82 Ill. App. 344; Beach v. Miller, 130 Ill. 162, 17 Am. St. Rep. 291, 22 N. E. 464, rev'g 23 Ill. App. 151; Hull v. Glover, 126 Ill. 122, 18 N. E. 198; Reichwald v. Commercial Hotel Co., 106 Ill. 439. Iowa. Shaver v. Hardin, 82 Iowa 378, 48 N. W. 68. Kentucky. Herring v. Dix River & L. Turnpike Road Co., 23 Ky. L. Rep. 642, 63 S. W. 576. Louisiana. Poche v. New Orleans Home Inv. Co., 52 La. Ann. 1287, 27 So. 797. Connecticut. Smith v. New Hart will be deemed to have ratified an attempted contract of its president by demanding performance thereof.75 So if the higher corporate Massachusetts. Simmons v. Shaw, 172 Mass. 516, 52 N. E. 1087; Burrill v. Nahant Bank, 2 Metc. 163, 35 Am. Dec. 395. Nebraska. German Nat. Bank of Hastings v. First Nat. Bank of Hastings, 59 Neb. 7, 80 N. W. 48. New Jersey. Durar v. Hudson County Mut. Ins. Co., 24 N. J. L. 171; Pomeroy v. New York Smelting & Refining Co. (N. J. Eq.), 48 Atl. 395; Hoyt v. Bridgewater Copper-Min. Co., 6 N. J. Eq. 253. New York. Great Western Turnpike Co. v. Shafer, 57 App. Div. 331, 68 N. Y. Supp. 5; Carr v. National Bank & Loan Co. of Watertown, 43 App. Div. 10, 59 N. Y. Supp. 618, aff'd 167 N. Y. 375, 60 N. E. 649; Simmons v. Thompson, 29 App. Div. 559, 51 N. Y. Supp. 1018; New Britain Nat. Bank v. Cleveland Co., 91 Hun 447, 36 N. Y. Supp. 387, aff'd 158 N. Y. 722, 53 N. E. 1128; Seymour v. Spring Forest Cemetery Ass'n, 64 Hun 632, 19 N. Y. Supp. 94; Manne v. Siegel-Cooper Co., 20 Misc. 592, 46 N. Y. Supp. 352. Pennsylvania. Mohrfeld v. Second German S. E. Bldg. Ass'n, 194 Pa. St. 488, 45 Atl. 335; Dallas v. Columbia Iron & Steel Co., 158 Pa. St. 444, 27 Atl. 1055. South Carolina. Moyer v. East Shore Terminal Co., 41 S. C. 300, 25 L. R. A. 48, 44 Am. St. Rep. 709, 19 S. E. 651. Tennessee. Stainback v. Junk Bros. Lumber & Manufacturing Co., 98 Tenn. 306, 39 S. W. 530. Virginia. Richmond Union Passenger Ry. Co. v. Richmond, F. & P. R. Co., 96 Va. 670, 32 S. E. 787. Washington. Western Timber Co. v. Kalama River Lumber Co., 42 Wash. 620, 6 L. R. A. (N. S.) 397, 114 Am. St. Rep. 137, 7 Ann. Cas. 667, 85 Pac. 338. Wisconsin. Johnson V. Weed & Gumaer Mfg. Co., 103 Wis. 291, 79 N. W. 236; Hubbard v. Haley, 96 Wis. 578, 71 N. W. 1036. Wyoming. Matthews v. Nefsy, 13 Wyo. 458, 110 Am. St. Rep. 1020, 81 Pac. 305. Where a corporation with knowledge executes mortgages, in which recital is made of the execution by it of bonds to which such mortgages are collateral, the execution of the bonds will be deemed to have been ratified, although issued originally under ques tionable authority. Pomeroy v. New York Smelting & Refining Co. (N. J. Ch.), 48 Atl. 395. Where the congregation of a church takes possession of property purchased by its trustees, and gives a mortgage to secure the purchase price, they will be deemed to have ratified the act of the trustees in making the purchase. Roundtree v. Blount, 129 N. C. 25, 39 S. E. 631. An officer of a mortgagee corporation executed an assignment of a note and mortgage without previous authority. The mortgagee corporation was deemed to have ratified his act by delivery of the papers. Matthews v. Nefsy, 13 Wyo. 458, 110 Am. St. Rep. 1020, 81 Pac. 305. In California, however, where bonds secured by mortgage are non-negotiable, a corporation issuing bonds seeured by mortgage, a part of which were delivered to the trustee to take up other bonds, is not estopped to set up their invalidity, although an officer of the trustee wrongfully obtained possession and sold them to third persons. Kohn v. Sacramento Electric, Gas & Railroad Co., 168 Cal. 1, 141 Pac. 626. 75 Mebius & Drescher Co. v. Mills, 150 Cal. 229, 88 Pac. 917. officers or agents recognize the act or contract as binding by proceeding, with knowledge of the facts, to perform the obligations imposed thereby, there is a ratification.76 For instance, where all of the directors and all of the stockholders have knowledge of the facts, the corporation is bound by an agreement partly carried out by them. and recognized by them as binding.77 In like manner, a contract made by the president of a corporation is ratified where the corporation, with full knowledge, acts upon the assumption of the existence of the contract for several years and at no time signifies its dissent.78 The indorsement by the president and general manager of a corporation of notes executed by an unauthorized person to its debtor is a ratification of the execution of the notes.79 Renewal by proper authority of notes executed without authority is a ratification of the original notes.80 When the property of a corporation is sold by an officer, without authority, in payment of its notes, the corporation ratifies the sale by taking up and retaining the canceled notes.81 A manager's unauthorized employment of a person for a year is ratified, where the company allows him to perform services and asks for his resignation for cause.82 The unauthorized borrowing of money is ratified by the act of the corporation in voting to issue stock to the lender in payment of the loan.83 Collection of certificates of deposit received as consideration for a transfer is a ratification of the transfer.84 An officer's unauthorized purchase or lease of premises, to be used as an office, is ratified by the directors or trustees if they acquiesce and hold their meetings there.85 Obtaining an extension of time to pay the debt incurred by the contract is a ratification.86 Acceptance of payments may constitute ratification.87 Thus, the 76 Kincheloe Irrigation Co. v. Hahn Bros. & Co., 105 Tex. 231, 146 S. W. 1187, aff'g-Tex. Civ. App. —, 132 S. W. 78. 77 First Trust Co. v. Miller, 160 Wis. 336, 151 N. W. 813. 78 McKell v. Chesapeake & O. Ry. Co., 175 Fed. 321, 20 Ann. Cas. 1097. 79 Washington Times Co. v. Wilder, 12 App. Cas. (D. C.) 62. 80 Smith v. New Hartford Water Co., 73 Conn. 626, 48 Atl. 754. 81 Beach v. Miller, 130 Ill. 162, 17 Am. St. Rep. 291, 22 N. E. 464, rev'g 23 Ill. App. 151. 82 Moyer v. East Shore Terminal Co., 41 S. C. 300, 25 L. R. A. 48, 44 Am. St. Rep. 709, 19 S. E. 651. 83 Quinn V. American Bankers' Assur. Co., 183 Mo. App. 8, 165 S. W. 823. 84 Fidelity Ins. Co. v. German Sav. Bank, 127 Iowa 591, 103 N. W. 958. 85 Shaver V. Bear River & A. Water & Mining Co., 10 Cal. 396. 86 Lake St. El. R. Co. v. Carmichael, 184 Ill. 348, 56 N. E. 372, aff 'g 82 Ill. App. 344. 87 Lewisville Light & Water Co. v. Lester, 109 Ark. 545, 160 S. W. 861. acceptance of rent is a ratification of a lease.88 And the acceptance of payments on a contract after notice of certain stipulations therein. *is a ratification of such stipulations.89 § 2201.Payments by corporation. Ordinarily, payments made by the corporation, with knowledge of the facts, is a ratification of the contract on which they are made, although the contract was executed irregularly or without authority.90 This rule has been applied to part payment for services rendered under a contract of employment,91 payment of rent,92 payment of interest, and the 88 Clement v. Young-McShea Amusement Co., 69 N. J. Eq. 347, 60 Atl. 419, rev'd on other grounds 70 N. J. Eq. 677, 118 Am. St. Rep. 747, 67 Atl. 82. 89 Rowley v. Hager, 63 Ore. 246, 127 Pac. 36. 90 Fourth Nat. Bank of St. Louis, Missouri v. Camden Lumber Co., 142 Fed. 257; Owyhee Land & Irrigation Co. v. Tautphas, 121 Fed. 343; Birch v. Glasgow Sav. Bank, 114 Mo. App. 711, 90 S. W. 746; Van Norden Trust Co. v. L. Rosenberg, 62 N. Y. Misc. 285, 114 N. Y. Supp. 1025; Carstens Packing Co. v. Lewis C. Troughton, Inc., 90 Wash. 196, 155 Pac. 758. The act of directors in making a payment under a contract made without authority by the president of the corporation is a ratification. Cox v. Baltimore & O. S. W. R. Co., 180 Ind. 495, 50 L. R. A. (N. S.) 453, 103 N. E. 337. 91 Klinck v. Chicago City R. Co., 262 Ill. 280, Ann. Cas. 1915 B 177, 104 N. E. 669, aff'g 177 Ill. App. 165; Birch v. Glasgow Sav. Bank, 114 Mo. App. 711, 90 S. W. 746. Payment of the salary of an employee for several months under an employment contract for a year has been held a ratification of the contract for the entire term. Miller v. Sealy Oil Mill & Manufacturing Co., - Tex. Civ. App., 166 S. W. 1182. So ratification of contract of employ 93 ment is evidenced by the acceptance and payment for services for a week, although the contract was for a long period. Latiner v. Wonderland Amusement Co., 161 N. Y. App. Div. 554, 146 N. Y. Supp. 779. But payment of salary, is not necessarily a ratification of a, contract of employment where the validity of the contract was questioned as soon as its existence was discovered by the còrporation. Laird v. Michigan Lubricator Co., 153 Mich. 52, 17 L. R. A. (N. S.) 177, 116 N. W. 534, 15 Det. L. N. 344. 92 Anchor Steam Bottling Works v. Baumle, Okla., 155 Pac. 518. Where a corporation, with full knowledge of the facts, acquiesced in the act of its officer in renewing a lease in its name, by continuing to occupy the premises and the payment of rent pursuant to the renewal agreement, a sufficient ratification is shown. Fudickar v. Glenn, 237 Fed. 808. execution of a note to cover all or a part of the debt incurred.94 However, payment on account is not necessarily a ratification of a sale by a director to the corporation so far as the purchase price is concerned, but may be considered, it has been held, as a ratification merely of an implied liability to pay what the property sold is worth, rather than the contract price.95 § 2202. Bringing suit. The attempt by a corporation to enforce a contract is a ratification of it and of the authority of the officer to sign it.96 A corporation ratifies a contract made by an officer without authority by bringing an action upon it.97 As said by Professor Mechem, "one of the most unequivocal methods of showing ratification of an agent's act is the bringing of an action at law based upon the validity of such act." 98 Thus, suing upon a note taken by an officer is a ratification of the agreement under which the note was taken.99 And the bringing of an action to recover possession of property transferred to it is a ratification of the transfer. Also the bringing of an action by the corporation to recover the value of property sold by the general manager of a company to himself constitutes a ratification of the contract.2 § 2203. Evidence to show ratification-In general. Where the act of a corporate officer or agent was unauthorized or irregular, any competent and material evidence is admissible which tends to show a subsequent ratification by officers having authority to ratify or Unity Co., 239 Ill. 306, 87 N. E. 924, aff'g 142 Ill. App. 159. The act of the secretary of a corporation in signing a note is ratified by the payment of interest thereon and the retention of property received thereunder. Sesnon v. Lindeberg, 66 Wash. 1, 118 Pac. 900. 94 The execution of notes for deferred payments on a contract is a ratification. The act of one assuming to act as agent of a corporation negotiating a certain contract which involves the execution of notes by the corporation will be deemed ratified by the actual execution of the notes. Western Timber Co. v. Kalama River Lumber Co., 42 Wash. 620, 6 L. R. A. (N. S.) 397, 114 Am. St. Rep. 137, Ann. Cas. 667, 85 Pac. 338. 7 95 Oliver v. Rahway Ice Co., 64 N. J. Eq. 596, 54 Atl. 460. 96 Mebius & Drescher Co. v. Mills, 150 Cal. 229, 88 Pac. 917. 97 U. S. Fire Apparatus Co. v. G. W. Baker Mach. Co., Del. —, 95 Atl. 294; Singleton v. Bank of Monticello, 113 Ga. 527, 38 S. E. 947; Niagara Woolen Co. v. Pacific Bank, 141 N. Y. App. Div. 265, 126 N. Y. Supp. 890. 981 Mechem, Agency (2nd Ed.), § 446. See also 1 Clark & Skyles, Agency, 142. 99 Simmons v. Thompson, 29 N. Y. App. Div. 559, 51 N. Y. Supp. 1018. 1 New England Mut. Life Ins. Co. v. Wing, 191 Mass. 192, 77 N. E. 376. 2 Argo Mfg. Co. v. Parker, 52 Wash. 100, 105, 100 Pac. 188. |