the first instance, there can be no ratification except in the same manner, or it should be made to appear that the company was in the habit of issuing promissory notes without such authorization. In order to hold the corporation responsible upon the note of 1886, it was necessary to show that the officers had authority to renew the same, or that the company had at that time the use of the money. Middlesex County Bank v. Hirsch Bros. Veneer Manuf'g Co., (City Ct. N. Y.) 4 N. Y. Supp. 385.

Plaintiffs contend that the action of the president and secretary in executing the note of 1886 has been ratified by the defendant by reason of its having paid the interest becoming due each month from 1886 until 1889. We do not think that the evidence supports the plaintiffs' contention. Mr. Helm, the president, and Mr. Richards, the secretary, testified that the interest was paid by Helm from 1881 until the payment of interest was discontinued, in 1889. True it is that it was paid by company's check, but always on account of A. Helm; and, as we understand the evidence, the amounts were charged against Helm's private account on the books of the company. Mr. Helm says: "No member of the company knew anything about this transaction with Wright except myself." Mr. Richards says: "I knew nothing about the giving of the note of 1886, or why it was given, except as Helm told me it was to secure a reduction in the rate of interest; and at Helm's request I signed it." Mr. Yernigton testified "that he was a trustee of the company from 1877 until 1889, when he was elected president. He was the owner of two-thirds of the stock, and never knew of the existence of the note until after his election as president in 1889. As soon as he heard of the existence of the note, he sent for Helm, the former president, and Richards, the secretary, and, after being informed by them as to how the note of 1886 was executed, he went and saw Mr. Wright, and informed him that it was not company's note, and that the company would not pay it, and instructed Richards, the secretary, not to pay any more interest on the note." There is no testimony in the transcript from which we could nfer that the corporation had the use of or received any benefit from the Wright money after 1881. Under these circumstances, the making of the note of 1886 should not be held to be a corporate act. Craft v. Railroad Co., 150 Mass. 208, 22 N. E. Rep. 920; First Nat. Bank of Middletown v. Council Bluffs City Water Works Co., (Sup.) 9 N. Y. Supp. 860; Bohn v. Brewery Co., (Com. Pl. N. Y.) Id. 514; Wahlig v. Manufacturing Co., (City Ct. N. Y.) Id. 739; Westervelt v. Radde, 55 How. Pr. 370.

the

With regard to the question of ratification, it is to be observed that this is not a case, as presented to us, in which the officers of a corporation have exceeded the powers delegated to them by the corporate body in entering into an unauthorized contract. When the proceeds of such unauthorized act have come into the defendant's treasury, and had been used in the regular course of its business, with the knowledge of the trustees or stockholders, under such circumstances, very slight evidence would be sufficient to establish the company's liability. But when it is made to appear that such unauthorized contract was entered into by two of the three trustees, without the knowledge or consent of the third, and in fact one of the two who signed the note not knowing the facts connected with such renewal, and, as appears from the evidence, not for the benefit of the corporation, but for the individual benefit of one of the two who signed the note, the property of the third, or that of the otuer stockholders, if there are any, ought not to be held liable on the void contract, without it is made clear that the third acquiesced in the proceedings, and ratified the acts of the other two, after having been fully advised as to all the material facts in the case, and given an opportunity to act. The evidence, in our judgment, is insufficient to show a subsequent ratification, either express or implied. The president and secretary certainly were not competent to ratify their own unauthorized acts. Hotchin v. Kent, 8 Mich. 527; Dabney v. Stevens, 40 How. Pr. 344; Story, Ag. § 243; Howell v. McCrie, 36 Kan. 652, 14 Pac. Rep. 257; Combs v. Scott, 12 Allen, 496; Mallory v. Mallory Wheeler Co., 61 Conn 141, 23 Atl. Rep. 708; Dispatch Line of Packets v. Bellamy Manuf'g Co., 12 N. H. 232; Lyndon Mill Co. v. Lyndon Literary & Biblical Inst., (Vt.) 22 Atl. Rep. 577; Owings v. Hull, 9 Pet. 629; Bohm v. Brewery Co., (Com. Pl. N. Y.) 9 N. Y. Supp. 515; Murray v. Lumber Co., 143 Mass. 250, 9 N. E. Rep. 634: Fitzhugh v. Land Co., 81 Tex. 310, 16 S. W. Rep. 1078; Institution v. Slack, 6 Cush. 411.

The plaintiffs argue that by reason of the fact that the secretary made out statements showing the indebtedness of the company, in which the claim of Wright was included, was sufficient notice from which the stockholders could have informed themseives as to this claim; and, they not having done so, the company is now bound by the acts of the officers who signed the note. Mr. Richards testified that he did make out statements of the company's affairs in gross. How many or how often such statements were made out he does not state, but he does say that he never made out and submitted to the board of trustees an itemized

statement, prior to 1889, and that the Wright note was never mentioned at any of the meetings of the board, to his knowledge. We do not think that statements made out in the manner in which it is said they were were sufficient to impart knowledge to the stockholders as to who the creditors or debtors of the company were. As we understand the law to be, it is this: That before an individual or corporation can be held to have ratified the unauthorized acts of his or its agents, every detail of the transaction must have been made known to the principal. If, after obtaining such knowledge, the principal fails to act, long and continued silence will be deemed an approval of the act, and such ratification relates back and is equivalent to a prior authority to make the contract. 1 Daniel, Neg. Inst. §§ 316319; Stark Bank v. United States Pottery Co., 34 Vt. 146; Story, Ag. § 239; Bank v. Jones, 18 Tex. 816; Smith v. Tracy, 36 N. Y. 82; French v. O'Brien, 52 How. Pr. 398; Combs v. Scott, 12 Allen, 497. In the case of Mining Co. v. Stevenson, 5 Nev. 228, Lewis, C. J., speaking for the court, said: "So, where it is sought to charge a corporation with the ratification of an unauthorized act of an agent by reason of its acceptance of some benefit or advantage from it, it should appear that such benefit was accepted with full knowledge of the character of the act. The evidence in this case, however, is clear and positive that the board of trustees, which was the authorized agent of the corporation, knew nothing of the terms, nor even of the existence, of the lease in question. The money paid by the appellants was reported by the superintendent to the board as received for ores sold. Nothing seems ever to have appeared in his reports from which it could even have been inferred that the money paid by or due from Stevenson to the company was for the use or rental of any portion of the mine. How, then, can it be held that the acceptance of money by the board, reported to it as being for ores sold, was a ratification of the lease executed to the appellant? The company did not know of such lease, nor were there any such circumstances connected with the acceptance of the money as to place it upon inquiry, or to charge it with presumptive notice of its existence. If, then, it be the law that there must be a full knowledge of all the material facts before the acceptance of profit or advantage by the principal will be held to constitute a ratification, surely the respondent here cannot be held upon the lease in question, for it knew nothing of the material facts respecting it. If it were shown that the board knew of the lease, the acceptance of payment from Stevenson for the ore extracted would doubtless be sufficient to establish a ratification; but, the contrary being shown, it would manifestly be opposed to the well-settled rules of

law to hold such acceptance to be a ratification. * * # It cannot, we think, be maintained that the knowledge obtained unofficially by three of the trustees that Stevenson was engaged in extracting ore from the mine is sufficient to charge the company with such knowledge. As any number of trustees, acting individually and not as a board, cannot act for the corporation, so any information obtained by individual trustees, and not communicated to the board, should not, it would seem, become the foundation of a contract binding upon the company. The trustees represent the corporation only when assembled together and acting as a board. Such being the law, how can it be claimed that information communicated to them individually, but not to the board, can be made the foundation of an implied contract on the part of the corporation?" Hillyer v. Mining Co., 6 Nev.

55.

It is to the interest of the public that there should be a speedy termination of a lawsuit; but there is another principle of public policy that should not be lost sight of, and that is that no man should be deprived of his property to pay another's debts without it clearly appears that he has placed himself in that position wherein the law says, "You have assumed the responsibility, and you cannot be released therefrom." The evidence in this case is conflicting and obscure in many particulars. The motion for a new trial was made upon the ground. among others, that the findings of fact were contrary to, and not supported by, the evidence, and that the judgment was contrary to law. It does not appear on what ground the motion was granted. The granting or refusal of a motion for a new trial on the ground of the insufficiency of the evidence to support the findings is addressed to the sound discretion of the judge who presided at the trial of the case in the lower court, and on an appeal from such order, where the court below, in the exercise of a sound discretion, grants a new trial on conflicting evidence, appellate courts have always refused to disturb the order. Kellenberger v. Railway Co., (Cal.) 33 Pac. Rep. 90. The order of the district court in granting the new trial is affirmed.

BELKNAP, J., concurs.

BIGELOW, J.. (dissenting.) For the purpose of clearing away the cloud of dust that seems to envelop this case, I propose to first ascertain what the case is, and what the issues were that were to be tried in the district court. The complaint alleges that on December 1, 1886, the defendant made, executed, and delivered to the plaintiffs a certain promissory note, which, at the commencement of the action, was, with a portion of the interest, due and unpaid, and for

which it asked judgment. The answer as to the note consists of denials only. It denies that the defendant ever made, executed, cr delivered the note in suit. Neither want of consideration, fraud in its execution, estoppel, or payment is pleaded. To cite authorities to the effect that without such pleas neither of these defenses should be considered is carrying coals to Newcastle, but I will refer to the following: Pom. Rem. & Rem. Rights, §§ 664, 675, 709, 712, 730; Bliss, Code Pl. §§ 211, 269, 274, 357; Sharon v. Minnock, 6 Nev. 377; Hanson v. Chiatovich, 13 Nev. 395. This, then, was the sole issue to be tried: Was the note the defendant's note? If it was, judgment should go against it; if not, in its favor. A corporation can act only through its officers or agents. When we wish to ascertain what a corporation has done, we ask what its authorized agents have done. In this country, for all practical purposes, the board of trustees is the corporation, so far, at least, as its relations to the public are concerned. Railway Co. v. McVay, 98 Ind. 391. In this case there is no question but that the power to execute promissory notes rested in the board of trustees. As the note of 1879, which had been executed alone by the president and secretary, had been recognized and acted upon by the corporation for a number of years as a legal and binding obligation against it, it admits of large question whether these officials were not impliedly authorized to execute also the note in suit, (Wilcox v. Railroad Co., 24 Minn. 269; Mechem, Ag. §§ 84, 274; Story, Ag. §§ 55, 87;) but I will pass that by, and look only to the acts of the trustees. That body could have authorized its execution in the first place, or they could subsequently ratify the act of making it. Story, Ag. § 244. In Cook v. Tullis, 18 Wall. 332, 338, Justice Field said: "The ratification operates upon the act ratified precisely as though authority to do the act had been previously given." The same principle applies equally to corporations 2 Mor. Corp. § 618. There was no formal resolution of the board ratifying the making of the note, but the evidence is, to my mind, overwhelming and conclusive that they did so ratify it by silence and acquiescence, and are now estopped to question its validity. In Kelsey v. Bank, 69 Pa. St. 426, 429, the court uses this language: "The law is well settled that a principal who neglects promptly to disavow an act of his agent, by which the latter has transcended his authority, makes the act his own; and the maxim which makes ratification equivalent to a precedent authority is as much predicable of a ratification by a corporation as it is of a ratification by any other principal, and it is equally to be presumed from the absence of dissent." Again, in Murray v. Lumber Co., 143 Mass. 250, 9 N. E. Rep. 634, the court said: "When the alleged principal is a corporation, a ratification may be shown by proving that the offi

cers who had the power to authorize the act knew of it, and adopted it as a valid act of the corporation, although no formal vote is passed by them." Mr. Morawitz says: "The ratification by a corporation, acting through one of its agents, of an unauthorized act performed by an inferior agent, may be shown in the same manner as a ratification by the company directly. Acquiescence is good evidence of consent, and if the agents of a corporation who have the power to ratify an unauthorized act performed by another agent manifest no dissent after full notice, a ratification of the act may often be presumed." Mor. Corp. § 633. In 1 Beach, Corp. 195, the rule is stated thus: "Any officer or agent of a corporation may give validity to the unauthorized acts of his subordinates, provided they be of a kind which he might have authorized them to perform. Thus directors may ratify the unauthorized acts of their appointees, or the acts of other corporate officers, which should not have been done without authority first obtained from the directors. * * Ratification by directors may be made by accepting the report of a committee stating the facts, or by the acquiescence of a majority of the directors with full knowledge of the contract so ratified. Ratification may also be presumed from a failure to exercise promptly the right of disaffirmance." Sherman v. Fitch, 98 Mass. 59, was an action upon a mortgage executed by the president of the corporation without formal authority. The court said, (page 64:) "The remaining consideration relates to the authority of Sampson to execute the mortgage in behalf of the corporation. It is not necessary that the authority should be given by formal vote. Such an act by the president and general manager of the business of the corporation, with the knowledge and consent of the directors, or with their subsequent and long-continued acquiescence, may properly be regarded as the act of the corporation. Authority in the agent of a corporation may be inferred from the conduct of its officers, or from their knowledge and neglect to make objection, as well as in the case of individuals. The absence of one of the directors in Europe could not deprive the corporation of the capacity to act and bind itself by the acts of the officers in actual charge of its affairs." Hundreds of authorities could be cited to the same effect, but these are sufficient to demonstrate that, if a board of trustees of a corporation, or a majority of them, know of and acquiesce in the making of a promissory note by an unauthorized officer, it becomes the note of the corporation. Upon this point it only remains to show from the evidence that such was the case here. In 1875 the plaintiff purchased a note against defendant for the sum of $2,000. On August 2d of that year, by resolution of the board of trustees, a new note was duly made and delivered to him in place of the old one. Interest was

paid on this every month up to 1879, when it was renewed by the president and secretary, but without any formal authorization by the board of trustees. Interest was regularly paid on this note up to 1886, when it was again renewed by the giving of the note in suit, on which interest was paid up to 1889. I do not overlook the fact that from 1881 the interest so paid was charged to Mr. Helm, but that fact, as I will hereafter show, is immaterial, and is certainly im material to the question now in hand, which, I will again repeat. is simply whether this note is the note of the corporation. From 1881 the board consisted of Mr. Helm, the president, Mr. Richards, the secretary, and Mr. Yernigton. Two of these trustees, composing a majority of the board, signed this note. These two could have met at any time, and, either with or without the consent of the third, could have entered upon the minutes a formal order authorizing the making of the note, or ratifying it after it was made. The fact that they also occupied the positions of president and secretary would in no manner curtail their power as trustees. These two-a majority of the board-cer"tainly knew of and acquiesced in the continued existence of the note of 1879, and, as they made the note of 1886, and knew all about it, there is not much chance to say that they did not, as trustees, acquiesce in and ratify their act as president and secretary in executing the latter. This, under all the law that I have found or have knowledge of, made it the note of the corporation, and entitled the plaintiff to the judgment obtained by him. In Dexter. Horton & Co. v. Long, 2 Wash. St. 435, 27 Pac. Rep. 271, where a somewhat similar situation existed, the court said: "Another objection raised by the appellant is that the mortgage was not executed by the trustees of the defendant corporation, but that the president and secretary, by whom the mortgage was executed, had no authority to enter into such a contract, and that it was, therefore, ultra vires. Even conceding that the contract was ultra vires, and that the appellant has placed himself in a position in this case to legally allege it, under the testimony in this case it will not avail against the plaintiff. The corporation was trying to execute a bona fide mortgage. It was within the power of the corporation to execute it, and its officers and agents were trying to carry out the will of the corporation. There were but three trustees, and two of them signed the mortgage, but not as trustees. They did not go through the form of an authorization by resolution, but a majority of those who had power to pass the resolution, by a short cut, brought about the result which the resolution would have authorized."

In regard to the want of action by the board, Mr. Helm testified: "Question. With reference to the note of 1879, was the making of that note, or the execution and deliv

ery of that note of July, 1879, to Mr. Wright, ever ratified by the board of trustees of the corporation? Answer. I always supposed that the note had been authorized by the board, and how it happened that the record was not made of it I cannot tell. * ** Q. It was the same course of proceeding

8, 1886, that was proceeded with with reference to the issuance of the note of 1879; that is, there was no ratification or authorization of either, so far as the records show, or so far as your recollection serves you? A. I never thought about it being required by the by-laws." If these two trustees that signed this note had entered a formal resolution upon the minutes, directing or ratifying its execution, there could then be no question that it would be the note of the corporation; and, under the circumstances existing here, to make the case turn upon the fact that they neglected to do so, or overlooked the necessity of its being done, is, in my judgment, to sacrifice justice to the veriest technicality. But if these two trustees had had nothing to do with the execution of the note, and had known no more of it than Mr. Yernigton did, under the uncontradicted evidence in the case the corporation should still be held to be estopped by acquiescence and laches from contesting its validity. Mr. Richards, the secretary, testified as follows: "Question. Did you, as secretary of the defendant corporation, make out and submit to the board of trustees of defendant, at its meetings held at various times between December 8, 1886, and August 1, 1889, and also between December 8, 1886, and the date you became secretary of defendant, statements and balance sheets, showing in gross that this note, with other indebtedness, was, during said time, outstanding, and also that interest was being paid on it monthly by the company to Wright? Answer. I did. Q. Was there ever any objection raised at any time to the payment of the interest on this note? A. No, sir. Q. No member of the board ever objected to the payment of the interest? Not until the time of its discontinuance. That was in 1889? A. Yes, sir. The note of 1886 appears on your books as an outstanding indebtedness? A. Yes, sir. Q. Why was bills payable never credited to that? A. I am not aware of that. I presume the credit is there." Then, during all these years, the books of the company showed that this note was a part of its outstanding indebtedness. In every report made by the secretary it was included as a part of that indebtedness, and these reports showed, as of course the books did, that interest was being paid upon it every month. In addition, every member of the company must have known, if he knew anything about the company's business, that the $2,000 borrowed to pay the note were still in Mr. Helm's hands. Mr. Yernigton testified that

A.

Q. Q.

he did not know of the existence of either the note of 1879 or of 1886, but, if not, with all these means of information before him, it must be admitted that he was not paying very close attention to the affairs of the company. It is possible that he had such confidence in the other trustees that he did not attend the meetings of the board, or paid but little attention to the business when he did; but it is hardly necessary to say that, under the circumstances, such voluntary want of knowledge upon the part of one or all the trustees should not relieve the company of a liability that would have existed if they had had such knowledge. Every member of the company had such knowledge or such notice and means of knowledge of the note that he must be held to have known it. It is one of the simplest principles of justice that a man must not shut his eyes to the means of knowledge surrounding him, and then claim that he did not know that which he could so easily have ascertained. If his confidence in others has misled him, he, or the company he represents, and not another, who had no means of knowing of the ignorance of the first, should suffer the consequences. Under the circumstances shown by the testimony, Wright had no possible reason to suppose that Yernigton and all other members of the company did not know of this note. The slightest examination of the books or reports, a mere inquiry as to whom or for what the company owed this money, would have made the whole thing clear. The authorities to the effect that want of knowledge, under such circumstances, constitutes no defense, are numerous and well considered. In Morawitz on Corporations (section 630) the author says: "In some instances a principal may be estopped from repudiating an unauthorized act of which he had no actual knowledge; as, where the principal ought, by reason of the relation of the parties, to have known of the act, and cannot, in equity and good conscience, set up his ignorance. Nor can the stockholders of a corporation avoid responsibility for the unauthorized acts of their agents by abstaining from inquiry into the affairs of the company, or by absenting themselves from the company's meetings, and at the same time reap the benefit of their acts in case of success. If a shareholder fails to take the trouble of inquiring into the affairs of the corporation of which he is a member, or to attend its meetings, it seems no more than just that his supineness should be construed as an acquiescence in the proceedings of the majority." In Olcott v. Railroad Co., 27 N. Y. 546, where the question was whether the corporation had ratified the unauthorized act of the president in executing a bill of exchange, the court said, (page, 560:) "But the subsequent rendering of accounts of the board of managers containing entries of such payments, unobjected to on the part of the

board, affords a strong presumption of a ratification of those acts." In Conover v. Insurance Co., 1 N. Y. 290, 292, it was said: "And it is insisted that, inasmuch as the board never by any formal act gave their sanction, and the by-laws required the consent in writing of the directors to any conditional alienation by mortgage subsequent to the insurance, the consent in this case was unauthorized and void. I cannot subscribe to this doctrine. The directors were bound to know the uniform course pursued by their sole agent in the transaction of their business at their office, especially where regular entries of his acts were made in their books; and they must be held responsible on the ground of a tacit assent and approval, unless they can show that by a strict vigilance and scrutiny into his acts they were unable to ascertain the course he was pursuing, and could not therefore arrest it, or put the public on their guard." In Jones v. Agricultural Co., 38 Ark. 17, it was held that the directors are conclusively presumed to know the pecuniary condition of their company; and in Corbett v. Woodward, 5 Sawy. 403, 417, Deady, J., said: "Be this as it may, the law will not permit a person to become a director in a corporation, and neglect the duties and avoid the responsibilities thereof as to third persons with impunity. A voluntary ignorance of what it was his duty to know and understand is no excuse for him when the rights of others are in question. By becoming a director, which includes the taking of an oath to 'faithfully and honestly discharge' the duties of the office, he engages to take good care of the interests of the stockholders and creditors intrusted to his charge, and this necessarily implies that he will use due diligence to keep himself properly informed concerning the same."

There is a distinction sometimes drawn, but more often ignored, between ratification of an unauthorized act and such acquiescence and laches in the matter as will be held to estop the principal from denying the want of authority. 2 Mor. Corp. § 628. It is unnec essary to more than refer to it here, for the reason that, rejecting the plaintiffs' testimony wherever it conflicts with that of the defendant, and taking the view of it most favorable to the defendant, it shows both ratification of the note by the corporation and such facts as should estop it from contesting its validity. There can be no question that the note of 1875 was a valid and binding obligation. If the corporation did not intend to ratify the execution of the note of 1879, taken in its place, it should have promptly notified the plaintiffs, and returned the old note, and then they could have still maintained an action upon the latter. Not having done so, but, on the other hand, having paid interest on the new note, and recognized it in every way as the company's note. that also became a valid ob