officers of corporation deposited bonds with bank as collateral for loan; corporation used proceeds of loan to meet payroll
How later courts described this case
- officers of corporation deposited bonds with bank as collateral for loan; corporation used proceeds of loan to meet payroll
Written by the judges who cited it.
The opinion
Certain officers of the Herman Z. Cutler Company, Incorporated, deposited with the American National Bank of Camden, New Jersey, twenty-five $1,000 gold bonds as collateral for loans then and thereafter made by the bank, the proceeds of which loans were used by the company in the discharge of its obligations, principally for payroll purposes.
It is manifest that the depositing of these bonds was made by the officers without any formal authority of the board of directors. but it is as manifest that all of the directors, with the possible exception of one, knew of the transaction and acquiesced in it.
"To obligate a corporation upon a contract, it must be proven that the contract was its act, either by corporate action, that of an authorized agent, or by adoption and ratification. Ratification will be implied from acquiesence or the acceptance of the benefits of such contract. It is essential to implied ratification that it and the acceptance of benefits be with knowledge of the facts." Feist Feist, Inc. , v. A. A. Realty Co. ( Court of Errors and Appeals ), 105 N.J. Law 461 .
See Joseph S. Naame Co. v. Louis Satanov Real Estate and Mortgage Corp., 109 N.J. Eq. 165 .
I find that this corporation and the officers and directors thereof ratified the action of the officers who pledged these bonds and that they accepted the benefits and proceeds of the loans with knowledge thereof.
I will advise a decree dismissing the bill.
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