FORD V. HILL.

[92 WISCONSIN, 188.]

JUDGMENTS, RELIEF AGAINST.-IF A JUDGMENT IS JUST, equity will not relieve against it, though the plaintiff had no right to take it. Hence, relief in equity will not be granted against a judgment by confession against a corporation, on the ground that its president, who had executed the power of attorney authorizing such confession, had no authority to do so. Under such circumstances, the defendant will be left to contend against the judgment as best it can at law.

THE INSOLVENCY OF A CORPORATION DOES NOT CONVERT ITS PROPERTY INTO A TRUST FUND for the benefit of its creditors, so as to prevent it from confessing a judgment, and thereby giving a preference to one of such creditors.

CORPORATION. THE AUTHORITY OF THE PRESIDENT of a corporation to do the act in question need not appear by the record or by any formal vote or resolution, but may be implied from acquiescence and from the nature and course of business transacted by the corporation, as where the doing of the act was known to the directors, and no objection was made to it at any time, and the president had been in the habit of exercising extraordinary powers.

CORPORATION. THE AUTHORITY OF THE PRESIDENT OF A CORPORATION TO EXECUTE A WARRANT OF ATTOR NEY to confess a judgment against it may be inferred from the fact that such execution was known to the directors, who did not object thereto, and from the fact that the president was in the habit of practically exercising the whole power of the corporation, with the knowledge and concurrence of the directors and persons directly interested, whose duties required them to object if he was exceeding his authority.

CORPORATIONS, IMPLIED AUTHORITY OF MANAGING OFFICERS.-If a corporation allows its managing officer to so conduct himself in his dealings and transactions on its part as to lead the public or those dealing with him to reasonably believe he possessed certain powers, the corporation will not be allowed to question such apparent authority against one relying in good faith on the same.

CORPORATIONS.-THE CORPORATE SEAL is not essential to the validity of an instrument authorizing the confession of judg ment against a corporation. The corporation may act without a seal very much as individuals may, except when otherwise provided by statute or their articles of incorporation.

Action against a corporation by judgment creditors to sequestrate its property, wind up its affairs, and for the purpose of testing the validity of a judgment by confession against the corporation and in favor of the defendant, Hill. The corporation was organized for the purpose of carrying on the furniture business. It had a board consisting of three directors, one of whom acted as president and another as secretary. The entire management of the corporation during the time it was in business was intrusted to the president and secretary with the general consent of the directors. The articles of incorporation declared that the principal duties of the president should be to preside

at meetings of the board and of the stockholders, and "to generally represent the corporation in matters of more than ordinary importance." In December, 1892, the corporation, by Tanner as secretary, executed a note to the Wisconsin National Bank of Milwaukee for twenty thousand dollars, and at the same time the president executed in the name of the corporation a power of attorney, not sealed, purporting to authorize a judgment by confession upon the note so executed. The authority of the president to execute this instrument did not appear by any action of the board of directors, though there was presented at the time to the attorney of the bank in whose favor the instrument was taken what purported to be a certified copy of the resolution of the board giving the president of the corporation authority to execute the power of attorney. The note was received in good faith, and in May, 1893, was transferred for value to the defendant, Hill, who, a few days later, took judgment thereon by confession, pursuant to the authority granted by the power of attorney given when the note was executed. Though the corporation was solvent when the note was given, then possessing assets of the value of seventy-five thousand dollars, and being indebted in the sum of five thousand dollars only, still it had become insolvent before the entry of the judgment against it by confession. The judgment upon which the plaintiff relied bore date later than that of the judgment by confession. The trial court entered judgment in favor of the defendants, and the plaintiffs appealed.

Turner, Bloodgood, Kemper, Ryan, and J. F. Burke, for the appellants.

Quarles, Spence & Quarles, for the respondent.

192 MARSHALL, J. The question presented here, at the outset, is not whether the president of a corporation, without having been specially authorized thereunto by the board of directors, but by reason of the general and ordinary powers pertaining to his office, can bind the corporation by the execution of a power of attorney to confess a judgment. There is no controversy but that the note was taken by the bank in good faith; that it loaned the twenty thousand dollars on the faith of the note and the accompanying power of attorney, and 193 that it supposed, and had good reason to suppose, that the president, Lappen, was duly authorized to execute such power of attorney; that the corporation received the full benefit of the money loaned, and that it was borrowed in furtherance of its regular business; that it was then solvent, having a large amount of

property in excess of its liabilities; and that, if the claim under the judgment is not legal, it cannot be said that it is inequitable. In this state of the case, ought a court of equity to interfere to set aside such judgment? That is the question at the threshold of this case, and we conclude that such question must be answered in the negative. It has been held by a long line of decisions in this state that courts of equity will not enjoin judgments at law on grounds showing that the judgment creditor had no right to take the same, even where there was no jurisdiction in the court to enter it, if the party seeking such relief can say nothing against the justice of the judgment. When the party is so circumstanced, equity will let him contend against the judgment as best he can at law: Stokes v. Knarr, 11 Wis. 389; Crandall v. Bacon, 20 Wis. 639; 91 Am. Dec. 451; Bonnell v. Gray, 36 Wis. 574; McCabe v. Sumner, 40 Wis. 386; Pirie v. Hughes, 43 Wis. 531; Rogers v. Cherrier, 75 Wis. 54; Marshall etc. Bank v. Milwaukee Worsted Mills, 84 Wis. 23; Knox Co. v. Harshman, 133 U. S. 152; Walker v. Robbins, 14 How. 584.

It is said in the brief of counsel for appellants that the complaint in this case has already been before the court, and that it has been held that, if there was fraud in the entry of the judg ment against the corporation, it can be properly set aside in this action: Referring to Ford v. Plankinton Bank, 87 Wis. 363. But the difficulty is, in applying what the court there said, that there is no fraud shown here on the part of the judgment creditor. The bank acted in good faith, and its assignee, Hill, as well, from the beginning to the end. Hill v. Pioneer L. Co., 113 N. C. 173, 37 Am. St. Rep. 621, 194 and Atwater v. American etc. Nat. Bank, 152 Ill. 605, cited by counsel to the effect that this proceeding may be maintained because the judgment has the effect to give the judgment creditor a preference over the other creditors of the corporation, have no application here. In the jurisdictions where those cases were decided, the mere fact of insolvency of the corporation converted the property into a trust fund for the benefit of all the creditors, and, for that reason, it was held that the corporation could not confess the judgment nor give any preference; but that rule does not obtain here. The mere fact of insolvency of a corporation, in this state, does not convert the corporate property into a trust fund, so as to prevent preferences: Ballin v. Merchants' etc. Bank, 89 Wis. 278; 46 Am. St. Rep. 834. The case of Ford v. Plankinton Bank, 87 Wis. 363, to which counsel refers, is authority only for the maintenance of such an action as this where the circumstances are such as to show fraud, either upon the corporation or the other

creditors, in the entry of the judgment. The case goes no further, as is sufficiently explained in the opinion of Mr. Justice Winslow in Ballin v. Merchants' etc. Bank, 89 Wis. 278; 46 Am. St. Rep. 834.

But we think the judgment must be sustained upon another and a broader ground. It appears that the president, by the articles of organization, was expressly clothed with extraordinary powers in managing the business of the corporation. The course of business, from the beginning to the end, shows that he exersed such extraordinary powers; that his acts in that regard, and particularly the act here challenged, were known to all the directors of the corporation, and no objection was made thereto at any time.

Now, while many cases might be cited that restrict the powers of the president of a corporation, which he may exercise merely as such, within very narrow limits, they should be relied upon with caution; for the circumstances of each individual case are likely to have, within certain limits, controlling 195 force. While it is true that in all cases an act done by the president, in order to be binding upon the corporation, must be shown to be within the scope of his authority, that does not necessarily mean that such authority must be shown by the record. The power may exist, as to innocent third parties, and may be shown to exist by acquiescence and the nature and course of business which the president transacts for the corporation. In Sherman v. Fitch, 98 Mass. 59, it was held that the authority of the president to mortgage corporate property may be presumed, so as to bind the corporation, by the course of business and by acquiescence. Mr. Justice Wells, speaking for the court, said: "It is not necessary that authority should be given by a formal vote. Such an act by the president and general manager of the business of the corporation, with the knowledge and acquiescence of the directors, or with their subsequent and long-continued acquiescnce, may properly be regarded as the act of the corporation. Authority in the agent of the corporation may be inferred from the conduct of its officers, or from their knowledge and neglect to make objection, as well as in case of individuals": Emerson v. Providence Hat Mfg. Co., 12 Mass. 237; 7 Am. Dec. 66; Melledge v. Boston Iron Co., 5 Cush. 158; 51 Am. Dec. 59; Lester v. Webb, 1 Allen, 34. To the same effect is Martin v. Webb, 110 U. S. 7, where it is said by Mr. Justice Harlan, in effect, that the authority of the officer of a corporation may be implied from acquiescence from the course of business as it has been carried on for a considerable length of time without objection-and in such

cases his act will be taken to be the act of the corporation, where those who have had for a long time the right to object, with knowledge of the facts, have neglected to do so.

The same principle is recognized in Stokes v. New Jersey Pottery Co., 46 N. J. L. 237, cited by appellants and referred to in Thompson on Corporations to the point that the act of the president in confessing judgment must be specially authorized, 196 where a corporation appeared in the action and moved to set aside a judgment taken by confession, as in this case, on the ground that the president had no authority to execute the warrant of attorney. The court there referred with approval to the long line of cases in which the powers of officers of corporations were held to have been enlarged beyond the ordinary powers inherent in the offices, from the assent of the directors, proved by their consent and acquiescence in permitting the officers to assume and direct the control of the business; but the court did not apply the rule of such cases, because it was held that the facts were not sufficient to warrant such application. But such is not the case here, where it is shown conclusively, not only that extraordinary power was vested in the president under the articles of organization, but that he exercised practically the whole power of the corporation with the knowledge and concurrence of all the directors and persons directly interested, whose duties required them to object if he was exceeding his authority, and that they neither objected to the general conduct of the president before the act complained of, nor to such act after they had knowledge of it. Under such circumstances, where the act is manifestly for the benefit of the corporation, in pursuance of its legitimate business, and it has the benefit, as against those who acted in good faith, relying upon the apparent authority of the officer to act in the particular case, such act must be held to be the act of the corporation and binding upon it and its creditors as well.

This is not inconsistent with the law as laid down by this court, that corporations are fictitious bodies and act through directors (Ford v. Plankinton Bank, 87 Wis. 363), but goes upon the principle that responsibilities will be laid upon the principal for the acts of the agent done within the apparent scope of his authority, according to the course of business as ordinarily carried on, and that the doctrine of estoppel by the conduct of the principal applies to corporations the 197 same as to individuals. These principles have been more and more recognized in such cases, and applied with greater liberality for the protection of those who do business with corporate officers in matters in furtherance of the general purposes of the corporations, as the busi