by stockholders where they may ratify. If the ratification was express, then of course the records are the best evidence. If the ratification is alleged to have been implied from the acts and conduct of the corporate officers or stockholders, then evidence of such acts or conduct is admissible.⭑ As to the sufficiency of the evidence to show ratification, no general rule can be laid down, each case depending upon its own facts." The facts necessary to be shown may, however, be established by circumstantial evidence, in case of an implied ratification. Of course the evidence must show directly or indirectly all the necessary elements of ratification such as knowledge of the facts, etc. § 2204. Presumptions. If the unauthorized act of an agent is clearly beneficial to the corporation, a presumption of ratification will arise from slight circumstances. As said by Justice Story in a federal decision, "grants and proceedings beneficial to the corporation are presumed to be accepted; and slight acts on their part, which can be reasonably accounted for only upon the supposition of such accept 3 For instance, see Salem Iron Co. v. Commonwealth Iron Co., 119 Fed. 593; Central Lumber Co. v. Kelter, 201 Ill. 503, 66 N. E. 543, aff'g 102 Ill. App. 333; Topeka Capital Co. v. March, 10 Kan. App. 40, 61 Pac. 876; Peach River Lumber Co. v. Ayers, 41 Tex. Civ. App. 334, 91 S. W. 387. 4 While the fact that a contract made by the corporate officers on behalf of the corporation has not been objected to by the directors may not be sufficient to prove ratification, it may nevertheless be introduced as tending to show same. Salem Iron Co. v. Commonwealth Iron Co., 119 Fed. 593. 5 Sufficiency of evidence in particular cases see the following: Illinois. Strawn Farmers' Elevator Co. v. West, 189 Ill. App. 213. Montana, Spelman v. Gold Coin Mining & Milling Co., 26 Mont. 76, 55 L. R. A. 640, 91 Am. St. Rep. 402, 66 Pac. 597. New Hampshire. Smith v. Bank of New England, 72 N. H. 4, 54 Atl. 385. New Jersey. Audenried v. East Coast Milling Co., 68 N. J. Eq. 450, 59 Atl. 577. Oregon. McMahan V. Canadian Ry. Co., 40 Ore. 148, 66 Pac. 708. 6 Brooklyn Heights R. Co. v. Brooklyn City R. Co., 151 N. Y. App. Div. 465, 135 N. Y. Supp. 990; Topolewski v. Plankinton Packing Co., 143 Wis. 52, 126 N. W. 554. 7 Ham & Ham Lead & Zine Inv. Co. v. Catherine Lead Co., 251 Mo. 721, 158 S. W. 369; Washington Sav. Bank v. Butchers' & Drovers' Bank, 107 Mo. 133, 28 Am. St. Rep. 405, 17 S. W. 644; Pierce City Nat. Bank v. Hughlett, 84 Mo. App. 268; Canadian Long Distance Tel. Co. v. Seiber, - Tex. Civ. App., 159 S. W. 897; Knowles v. Northern Texas Traction Co. (Tex. Civ. App.), 121 S. W. 232. Very slight circumstances suffice to establish a ratification where the benefits have all inured to the advantage of the corporation. Love V. Metropolitan Church Ass'n, 184 Ill. App. 102. ance, are admitted as presumptions of the fact." The rule has been laid down by Justice Carroll of the Kentucky court as follows: "Where the unauthorized act is beneficial to the corporation, and the directors have individual knowledge of it, slight evidence will be sufficient to establish ratification by acquiescence or failure to repudiate, and this upon the theory that a party who accepts benefits will be deemed to have done so with a knowledge of the conditions and circumstances surrounding the transaction out of which the act creating the benefit arose, and must take the burdens with the benefits. But where the corporation does not derive any benefit from an unauthorized act, or when it is doubtful if it has derived benefit, and no third party or innocent party has suffered a loss, evidence of ratification by mere individual acquiescence or failure to repudiate must be clearly shown, and this upon the ground that a party is not to be bound by an act that he did not authorize when he has received no benefits from it, and when the other party or an innocent party has not suffered any loss."9 Mr. Morawetz, in his work on corporations, states the rule as follows: "If a contract or other act of an agent of a corporation appears to have been manifestly to the injury of the company at the time of the alleged ratification, clear evidence of ratification should be required; but if a ratification would apparently have been beneficial to the company, a contrary presumption is but reasonable. Thus, very slight evidence of acquiescence is sufficient to give validity to a transfer of real or personal property to an agent who was not authorized to receive it; and ratification may even be presumed without evidence." 10 § 2205. Burden of proof. The burden of showing ratification is on the party claiming it. This rule is too well established to require any extensive citation of authorities. § 2206. Question for jury. The question as to whether a corporation has ratified a contract made by one of its officers or agents is generally one of fact for the jury.12 And it is error for the court to 8 Bank of United States v. Dandrige, 25 U. S. 64, 6 L. Ed. 552. 9 Elk Valley Coal Co. v. Thompson, 150 Ky. 614, 624, 150 S. W. 817. 102 Morawetz, Corporations (2nd Ed.), § 629. 11 Marqusee v. Insurance Co. of North America, 211 Fed. 903; De Forest v. Northwest Townsite Co., 236 Pa. 125, 84 Atl. 674; National Bank of 12 United States. Salem Iron Co. v. Lake Superior Consol. Iron Mines, 112 Fed. 239. Arkansas. Merchants' & Farmers' Bank v. Harris Lumber Co., 103 Ark. withdraw from the jury evidence tending to show acquiescence by the corporation in the acts of an officer alleged by it to have been unauthorized.13 14 On the other hand, whether there is any evidence legally sufficient tending to establish ratification is a question of law for the court,' and the same is true where the evidence is such that only one conclusion could be drawn therefrom by reasonable men.15 § 2207. Effect of ratification-General rules. Except as to intervening rights of strangers, ratification by a corporation of an unauthorized act or contract by its officers or others relates back to the time of the act or contract ratified, and is equivalent to original authority. The corporation and the other party to the transaction are in precisely the same position as if the act or contract had been authorized at the time.16 A corporation may enforce an unauthorized 283, Ann. Cas. 1914 B 713, 146 S. W. 508. Massachusetts. Beacon Trust Co. v. Souther, 183 Mass. 413, 67 N. E. 345. Minnesota. Matteson V. United States & Canada Land Co., 112 Minn. 190, 127 N. W. 629, aff'd on rehearing 127 N. W. 997. Montana. Trent v. Sherlock, 26 Mont. 85, 66 Pac. 700, aff'g 24 Mont. 255, 61 Pac. 650. Nebraska. Alexander v. Culbertson Irrigation & Water Power Co., 61 Neb. 333, 85 N. W. 283. Rhode Island. Ward v. J. Samuels & Bro., 37 R. I. 438, 93 Atl. 649; Hall v. New York, N. H. & H. R. Co., 27 R. I. 525, 65 Atl. 278. 13 Alexander v. Culbertson Irrigation & Water Power Co., 61 Neb. 333, 85 N. W. 283. 14 Bank of Commerce v. Bernero, 17 Mo. App. 313. 15 Marqusee v. Insurance Co. of North America, 211 Fed. 903. Throp v. Payne Bros., 86 N. J. L. 304, 90 Atl. 1048. 16 United States. Fleckner v. Bank of United States, 8 Wheat. 338, 5 L. Ed. 631. Alabama. Perryman & Co. v. Farmers' Union Ginning & Manufactur ing Co., 167 Ala. 414, 52 So. 644. Colorado. Lincoln Mountain Gold Min. Co. v. Williams, 37 Colo. 193, 85 Pac. 844. Illinois. Ohio & M. R. Co. v. Middleton, 20 Ill. 629. Iowa. Kimball Bros. Co. v. Citizens Gas & Electric Co., 141 Iowa 632, 118 N. W. 891. Kansas. Neosho Valley Inv. Co. v. Hannum, 63 Kan. 621, 66 Pac. 631. Louisiana. Jackson Brewing Co. v. Canton, 118 La. 823, 43 So. 454. Missouri. Browning v. North Missouri Cent, R. Co., 188 S. W. 143; First Nat. Bank of Springfield v. Fricke, 75 Mo. 178, 42 Am. Rep. 397; Kiley v. Forsee, 57 Mo. 390. New Jersey. In re West Jersey Traction Co., 59 N. J. Eq. 63, 45 Atl. 282. New York. New York Security & Trust Co. v. Saratoga Gas & Electric Light Co., 88 Hun 569, 34 N. Y. Supp. 890, aff'd 157 N. Y. 689, 51 N. E. 1092; Durignac v. Bernstrom, 37 Misc. 677, 76 N. Y. Supp. 381. Oklahoma. Derr v. Fisher, 22 Okla. 126, 98 Pac. 978. Pennsylvania. Gordon v. Preston, 1 Watts 385, 26 Am. Dec. 75. Texas. West Texas Supply Co. v. contract made on its behalf which it has ratified, provided it is not ultra vires.17 But ratification cannot relate back so as to defeat intervening rights of strangers to the transaction, such as attaching or execution creditors, purchasers of the subject-matter of the transaction, etc. "Although the general rule is, that the ratification relates back to the time of the inception of the transaction, and has a complete retroactive efficacy, or as the maxim is, Omnis ratihabitio retro trahitur, yet this doctrine is not universally applicable. Thus, if third persons acquire rights, after the act is done and before it has received the sanction of the principal, the ratification cannot operate retrospectively so as to overreach and defeat those rights." 18 For example, ratification by the board of directors of a corporation of an unauthorized assignment by an officer for the benefit of creditors, after a creditor of the corporation has commenced suit by attachment and summoned the assignee as garnishee, cannot affect the rights of the attaching creditor.19 It has been held in some jurisdictions that ratification of an unauthorized assignment of a chose in action after suit is commenced by the assignee will not relate back to the date of the assignment, so as to support the action.20 The better opinion, however, is to the contrary.2 21 A resolution by the board of directors of a corporation which is trustee under a mortgage, ratifying and approving the act of its Dunivan, Tex. Civ. App. -, 182 S. W. 425; Peach River Lumber Co. v. Ayers, 41 Tex. Civ. App. 334, 91 S. W. 387; W. F. Taylor Co. v. Baines Grocery Co., 31 Tex. Civ. App. 385, 72 S. W. 260. West Virginia. Third Nat. Bank v. Laboringman's Mercantile & Manufacturing Co., 56 W. Va. 446, 49 S. E. 554. 17 W. B. Clarkson & Co. v. Gans Steamship Line, Tex. Civ. App. —, 187 S. W. 1106. 18 Wood v. McCain, 7 Ala. 800, 42 Am. Dec. 612. Where the directors, at a meeting legally held, confirm a mortgage previously executed pursuant to a resolution which was void because adopted at an unauthorized meeting, their action, while it renders the mortgage valid, cannot affect the rights acquired by attaching creditors after the execution of the mortgage, and before the ratification. State Nat. Bank of St. Joseph v. Union Nat. Bank of Chicago, 168 Ill. 519, 48 N. E. 82, aff'g 68 Ill. App. 25. 19 Calumet Paper Co. v. Haskell Show Printing Co., 144 Mo. 331, 66 Am. St. Rep. 425, 45 S. W. 1115. See also Vaught v. Ohio County Fair Co., 20 Ky. L. Rep. 1471, 49 S. W. 426. 20 Read v. Buffum, 79 Cal. 77, 12 Am. St. Rep. 131, 21 Pac. 555; Wittenbrock v. Bellmer, 57 Cal. 12. 21 Persons v. McKibben, 5 Ind. 261, 61 Am. Dec. 85. See also New York Security & Trust Co. v. Saratoga Gas & Electric Light Co., 88 Hun (N. Y.) 569, 34 N. Y. Supp. 890, aff'd 157 N. Y. 689, 51 N. E. 1092. secretary in giving notice that the corporation exercised its option under the mortgage to declare the principal sum due, is a sufficient confirmation or ratification of the secretary's act to support an action to foreclose the mortgage, although not passed until after commencement of the action.22 25 § 2208. Ratification of part. It is well settled that the corporation cannot ratify in part or repudiate in part, but that it must either repudiate or ratify the whole transaction.23 Thus, express ratification of a sale by a broker of corporate property not only ratifies the sale but also the employment of the broker.24 However, it has been held that payment of wages does not ratify that part of a contract of employment calling for payment of the employee's house rent in addition, where the company had no notice of such agreement.2 Moreover, simple acceptance of services of one so employed may be deemed to be ratification of the employment without ratification of the amount of compensation promised by the officer, where knowledge of the amount of the compensation agreed upon never came to the ratifying officer.26 Likewise, ratification of a lease of property is not a ratification of an alleged sale created by a separate and distinct contract in writing.27 § 2209. Ratifications as creating apparent power. If the corporation has acquiesced in the past in the exercise of power by a corporate officer or agent beyond the scope of his express authority, the corporation is estopped to deny the existence of the apparent power which the officer or agent has been clothed with. This rule has already been considered at length.28 22 New York Security & Trust Co. v. Saratoga Gas & Electric Light Co., 157 N. Y. 689, 51 N. E. 1092, aff'g 88 Hun 569, 34 N. Y. Supp. 890. 23 Mulford v. Torrey Exploration Co., 45 Colo. 81, 100 Pac. 596; Windsor v. St. Paul, M. & M. R. Co., 37 Wash. 156, 3 Ann. Cas. 62, 79 Pac. 613, where the acceptance of land purchased by an officer was held to ratify his agreement to pay a sum in addition to the consideration recited in the deed. A corporation cannot contend that to the extent that an act of its agent is beneficial it has ratified same, while denying ratification of that portion IV Priv. Corp.-5 |