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to issue to the selling shareholders its own shares in payment for the assets sold. Suit was brought to compel delivery of the shares; but the court, among other objections to the transaction, said that there was no consideration for the agreement made by the appellant, because "a conveyance of all the assets of a corporation is not within the powers of the shareholders, even though they all sign it, without formal action at a meeting held for that purpose." In Duke v. Markham, 105 N. C. 131, the appellant was claiming as mortgagee against a subsequent judgment creditor. The mortgage had been executed in due form, but not in pursuance of any resolution of the directors. It appeared that the secretary had consulted, informally, a majority of the directors, who were also shareholders, and had been told to go ahead. He went; but the court held the mortgage void, although the corporation had received and used the mortgage money. On the other hand, in Stokes v. Detrick, 75 Md. 257, there were two corporations having some. directors and shareholders in common. By a resolution of the board, but without the formal sanction of the shareholders, one company had conveyed all of its assets to the other. The act was conceded to be beyond the power of the board; but the court sustained the deed, saying that the assent of the shareholders could be "inferred from their failure to protest against and promptly condemn the unauthorized acts of the officers of the corporation." In Miller v. Matthews, 87 Md. 474, the president and the secretary of a corporation, without any resolution of the board, executed an assignment for the benefit of its creditors and subsequently announced the fact to the other parties in interest. The deed was upheld on the ground that "the act which they performed, if subsequently acquiesced in by the other directors or a majority of them, rendered the assign

ment in all respects as valid as if it had been made in pursuance of a resolution passed by the whole board of directors."1

2

§ 46. Modal requirements. In the old law the common seal was the mode, and the only mode, of uniting the assent of the members and evidencing the will of the corporation. If this seal was attached to a writing purporting to bind the corporation, it became bound, even if the seal had been stolen and affixed without authority. The early rule broke down progressively and substantially in the following order: First it was admitted that the acts of an agent resting in parol, would bind the corporation if he had been appointed under the common seal; then, writing was recognized as a substitute for the seal; and finally came the rule that the authority of the agent and the will of the corporation may be proved and manifested orally, except where form is inherent in the transaction itself or is required by statute. It is substantially true that today the corporate seal is needed only where the seal of a natural person would be required in a similar transaction. The progressive stages

1 For the opposing view see the cases collected in the brief of the appellant's counsel; and particularly 3 Thompson Corp. 3905-3908.

2 Pollock and Maitland's History of English Law, 490. The same thing was true of a natural person: "He has himself to blame if some one, at all events some one whom he has trusted, puts his seal to a bad use." And see I Blackstone 475: "For a corporation, being an invisible body, cannot manifest its intentions by any personal act or oral discourse; it therefore acts and speaks only by its common seal. For, though the particular members may express their private consents to any acts, by words, or signing their names, yet this does not bind the corporation; it is the fixing of the seal, and that only, which unites the several assents of the individuals who compose the community, and makes one joint assent of the whole."

by which the present position has been reached are illustrated in the following cases:

In Bank v. Dandridge, 12 Wheat. 64, the appellant was suing the sureties of a defaulting cashier. The defense was that there was no minute or other writing showing the approval of the bond, although the cashier had filled the office for several years. The lower court sustained the defense. and was reversed on appeal; but Chief Justice Marshall dissented and insisted that the inability of a corporation to manifest its will other than by writing was immutable. "The corporation being one entire entity, distinct from the individuals who compose it, must be endowed with a mode of action peculiar to itself, which will always distinguish its transactions from those of its members. Can such a being speak or act otherwise than by writing; being destitute of the natural organs of man, being distinct from all its members, can it communicate its resolutions or declare its will without the aid of some adequate substitute for those organs? If the answer to this question must be in the negative, what is that substitute? I can imagine none other than writing." This case was decided in 1827, and the best answer to the question put by the Chief Justice is to be found in a contemporaneous opinion of the Maryland Court of Appeals, delivered by Chief Judge Buchanan. In Bank v. Ridgely, I H. & G. 426, also a suit on the bond of a cashier, two objections were taken. First, that the by-laws offered in evidence did not appear by any minute in writing to have been adopted by the corporation; and, second, that there was no written evidence that the cashier's bond had been accepted. The court said: "The attenuated notion that the seal only was capable of binding the several assents of the individuals composing the community and making one joint assent of the whole, has yielded to the sober sense of

mankind, which no longer delights in mere technicalities. * * * By what law or on what principle has writing been substituted for the common seal? ** * We know of no such rule in practice; the general principles of evidence acknowledge none such, and when the Acts creating the corporation do not direct it, we do not perceive why their acts must be established by positive record proof only; and why the corporate assent may not be inferred from facts and circumstances which in regard to individuals would be decisive in relation to transactions of a similar character." So, it has been held that "not only the appointment but the authority of the agent may be implied from the adoption of his acts by the corporation or its directors;" that in the absence of written minutes, transactions at a corporate meeting may be proven by oral testimony;2 and that oral testimony is admissible to prove that a written order entered on the minutes of the directors was rescinded by a subsequent verbal order of which no minute was made."

§ 47. The passing of the seal. So little remains of the old doctrine, that "in the absence of evidence to the contrary, a scroll or rectangle containing the word seal, opposite the signature of a corporation by its president will be deemed to be the proper and common seal of the company;" and even where the charter requires an act to be

1 Eckenrode v. Chemical Co., 55 Md. 65. 2 Handley v. Stutz, 139 U. S. 417.

3 Whittington v. Bank, 5 H. & J. 489.

Jacksonville v. Hooper, 160 U. S. 518. For the effect of a corporate seal on negotiable instruments, see Jackson v. Myers, 43 Md. 452; Muth v. Dolfield, 43 Md. 466; Hamburger v. Miller, 48 Md. 317. In Insurance Co. v. Anderson, 79 Md. 379, it is said that "policies

done under the corporate seal, non-compliance will not invalidate the transaction. In Insurance Co. v. McGowan, 16 Md. 47, suit was brought in covenant on a policy of insurance and it appeared at the trial that the policy had expired before the fire, and had been renewed by a renewal receipt not under seal. The pleadings were amended to assumpsit and the plaintiff recovered. The charter of the company provided that all of its policies should be sealed with the common seal; and on appeal the court, two of the judges dissenting, said that the company had no authority to issue any other than a sealed policy; and that "this prohibition, if there were none other, would be a sufficient answer to the plaintiff's right of recovery." But in Cahill v. Insurance Company, 90 Md. 333, a grant of an annuity was attacked on the ground that it was not under the corporate seal. The court said that even if this formality was required by the charter, the grant was none the less good, because at most the defect constituted merely an irregular exercise of a granted power.

of life insurance not declared on as sealed instruments, will not be excluded from the consideration of the jury as specialties where the seal consists simply of an emblem or symbol printed by the printer when the printed blanks were struck off, which was never adopted by the company as its seal"; and see further: Smith v. Medical College, 110 Md. 441; Phillips v. Insley, 113 Md. 348.

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