the general principles of contract and agency. Where individuals associate themselves for the purpose of promoting and organizing a corporation for the pecuniary gain of its members, and act as an association by electing directors and other officers, through whom contracts are made for and in the name of the proposed corporation, and they afterwards abandon their purpose to form a corporation, their relation, one to the other, as to persons dealing with the association, if not that of partners, is that of agent and principal, and each will be individually liable upon any contracts of the association which he directly or indirectly authorized or ratified. The defendant vigorously challenges the sufficiency of the evidence to bring him within this rule, and insists that there is no evidence in the case that he ever authorized or ratified the contract in question. Where, as in this case, it is shown that the defendant was one of several promoters, and that all acted as a body by a board of directors, and that he was a member thereof, only slight additional evidence is required to establish prima facie his authorization or ratification of contracts made in the name of the association, whether they were made before or after he became a director. We are of the opinion that the evidence in this case is ample to sustain the material findings of fact and conclusion of law of the trial court to the effect that the defendant is liable on the contract in question. The evidence shows that the promoters organized by electing a board of directors, president, cashier, and other officers, and that business was done by the board, which kept a correct record of all its acts and proceedings. At its first meeting, March 2, 1893, a committee on location and fixtures for the bank, consisting of three directors, one of whom was the cashier, was appointed. This committee reported, at the second meeting, held on March 15, the terms upon which a lease of an office could be secured, and the board accepted the terms, and authorized the committee to take the lease. The defendant, at the third meeting, April 15, was elected a director, and at this meeting the committee reported in favor of accepting the bid of the plaintiff for office fixtures, and the report was referred back to it to enter into and complete the contract in their discretion, which it did on April 19. The defendant was not present at any of these meetings, but at the fourth meeting, April 18, he was present as a director, and was present at all subsequent meetings, acting as a director, up to and including June 29, 1893. At the first meeting at which he was present as a director the board voted $300 for advertising purposes, and at the last one, it appointed a committee to arrange the best possible adjustment of all claims against the bank under contracts with various parties. This evidence tends to show that the promoters were acting as an association under a common name, promoting the common enterprise by and through its representatives, its directors, of whom the defendant was one; and that he had ample opportunity to learn, and in the exercise of ordinary prudence and sagacity in the discharge of his duties as director he must have learned, by an examination of the records, of the making of this contract here in question. The records were not voluminous, and afforded the defendant the ready means to learn all about the association he was acting for. It is for this reason that the records of the proceedings of the board of directors prior to the time the defendant became a member thereof were properly received in evidence, notwithstanding his objection to such evidence. The articles of association, although not executed by the defendant, were correctly received in evidence, for they show the organization and purposes of the association of which he afterwards became a member. If the defendant knew that the board of directors had made and were making contracts for and in the name of the association as a reasonably necessary work of preparation for doing a general banking business when it should become incorporated, and with such knowl edge he continued to take an active part in the proceedings of the board as a director, without objection or protest, it would tend to show a ratification of this contract. If he did not do so, and had no notice of the making of this contract, it was a matter peculiarly within his own knowledge; yet he was not a witness on the trial, and there is no explanation of his significant silence. The undis puted evidence tends further to show that he knowingly and without objection, through a third party, paid to the plaintiff $50 on this contract. No further evidence was necessary to make a strong prima facie case against the defendant. 2. The claim of the defendant that the committee on bank fixtures did not make the contract with the plaintiff, but that it was made by one of the individual members of the committee, is not supported by the evidence, which tends to show that the committee acted upon the proposition of the plaintiff to furnish the fixtures, and decided to accept it, and authorized the cashier to sign an acceptance, which he did for the bank. 3. The evidence shows a substantial performance of the contract on the part of the plaintiff. It did all it could do in that direction, for it manufactured the fixtures and furniture in accordance with the contract. It is true that only a portion of them was placed in the bank office, and the rest were stored for the association by direction of one of the directors. This did not constitute an attempted modification of the contract, as claimed, but it does constitute an excuse on the part of the plaintiff for not performing its contract with microscopic exactness. Order affirmed. ROBERTS MANUFACTURING COMPANY v. FREDERICK P. WRIGHT.1 Nov. 4, 1895. Nos. 9491-(51). Corporation-Liability of Promoters. Evidence considered, and held that it sustains the material findings of fact and the conclusions of law of the trial court to the effect that the defendant is individually liable upon the contract which is the subject-matter of this action. Appeal by defendant from an order of the district court for Ramsey county, Egan, J., denying a motion for a new trial, after trial by the court and order for judgment for plaintiff for $179.09. firmed. Stevens, O'Brien, Cole & Albrecht, for appellant. Af START, C. J. The questions involved in this case were considered and decided in Roberts Mnfg. Co. v. Schlick, supra, p. 332, 64 N. W. 826. The evidence in this case differs from that in the 1 Reported in 64 N. W. 827. v.62 M.-22 Schlick Case, in that this defendant was one of the original promoters, and signed the original articles of association, was one of the original directors, and attended only two meetings of the board of directors, on April 18 and May 6, but never paid anything on the contract in question, and denies that he ever had any knowledge of the making of it. We are of the opinion that the material findings of fact and conclusions of law of the trial court are sustained by the evidence. Order affirmed. MORITZ HEIM, Assignee, v. CHARLES E. CHAPEL, Sheriff, and Another.1 Order granting a new trial, because the verdict was not sustained by the evidence, affirmed. Hicks v. Stone, 13 Minn. 398 (434), followed. Fraud on Creditors-Chattel Mortgage-Overstatement of Debt. Where a chattel mortgage is executed in good faith for a valuable consideration, and not for the purpose of defrauding creditors of the mortgagor, the fact that it was given to secure a larger sum than is actually due does not affect its validity, but such overstatement of the debt secured, unexplained, indicates fraud, and the burden is upon the mortgagee claiming under the mortgage as against creditors to explain the overstatement, and establish the bona fides of his mortgage. Appeal by plaintiff from an order of the district court for Ramsey county, Otis, J., granting a motion for a new trial. Affirmed. C. D. & Thos. D. O'Brien, for appellant. Herchmer Johnston and Warner, Richardson & Lawrence, for respondents. START, C. J. The plaintiff brought this action, as assignee in insolvency proceedings of Fergus D. Abbey, to recover the value of certain personal property formerly belonging to his assignor, which he claimed the defendants had unlawfully converted to their own use. 1 Reported in 64 N. W. 825. The defense was that the property was taken, by virtue of a chattel mortgage executed by Abbey and duly filed some 14 months before his assignment to the plaintiff, and lawfully sold to pay the mortgage debt. The only issue of fact in the case, aside from the value of the property, was the validity of this mortgage, the plaintiff claiming that it was fraudulent and void as to creditors. Verdict for the plaintiff, and from an order of the trial court granting the defendants' motion for a new trial on the ground that the verdict was not justified by the evidence, the plaintiff appealed. The only question for our decision is whether the preponderance of the evidence is manifestly and palpably in favor of the verdict, so as to bring the case within the rule laid down in Hicks v. Stone, 13 Minn. 398 (434); Rheiner v. Stillwater S. R. & T. Co., 29 Minn. 147, 12 N. W. 449; and subsequent cases. It is an admitted fact in the case that the mortgage in question was given to secure the sum of $12,000, while the actual debt secured was only $8,200. If a chattel mortgage is executed for a valuable consideration, and in good faith, and not for the purpose of defrauding the creditors of the mortgagor, the fact that it is given to secure a larger sum than is actually due does not affect its validity. Nazro v. Ware, 38 Minn. 443, 38 N. W. 359. But where the mortgage on its face secures a sum largely in excess of the true amount due to the mortgagee, it is an important circumstance to be taken into consideration in determining whether or not the mortgage was in fact made in good faith, and not for the purpose of defrauding creditors. The burden was upon the defendants to establish the bona fides of the mortgage, and in view of the very large overstatement of the amount of the actual debt secured by the mortgage, to satisfactorily explain why it was taken to secure an apparent debt nearly 50 per cent. in excess of the true indebtedness. In the absence of such explanation, such overstatement would be a very strong item of evidence tending to show that the mortgage was fraudulent. The defendants offered such explanation, which was to the effect that the St. Paul National Bank was the beneficiary of the mortgage, and that it was taken in the name of its cashier, to secure an actual indebtedness of $8,200, due from the mortgagor, Abbey, to the bank, and then secured, except $200 thereof, by a mortgage on the property in question; that when this mortgage was renewed it was, at Abbey's |