While Chen as general manager of Kong Li Po, had
implied authority to bind corp by a reasonable and
usual contract of employment with Yu Chuck such
contract here cannot be so considered. The term of
employment is unusually long and conditions are
so onerous that possibility of corp being thrown
into insolvency is expressly contemplated in
contract. This fact should have put Yu Chuck upon
inquiry as to extent of business manager's
authority.
2. Evidence does not support contention that
contract was impliedly ratified by corp.
It is merely based on fact that Kim Hua, president
of corp for 1920, admitted on stand that he saw Yu
Chuck work as printers in the office but he denied
any knowledge of existence of contract and said it
was never presented to him nor the Board.
Before a contract may be ratified, knowledge of its
existence must be brought to parties who have
authority to ratify it. No such knowledge shown
here.
A ratification by Pres would have been no avail
either because in order to validate a contract,
ratification by the board of directors was necessary.
Fact that pres was required by by-laws to sign docs
evidencing contracts of the corp, does not mean he
had power to make the contracts.
3. Notice given by a Chen Yu Man posted in
the newspaper making null and void all
contracts not signed by TC Chen did not lead
Yu Chuck to think Chen had authority to
make contract.
Notice was published a month after contract was
entered into. Evidence also shows that Chen Yu
Man and Chen is one and the same person.
The notice confers no special powers, but is only an
assertion by Chen that he would recognize no
contracts not duly signed by him.
NO evidence to show that notice ever brought to
attention of officers of corp.
Tropical Homes v. Villaluz (TOFF)
Insular Drug v. PNB (REG)
J. Malcolm
1933
FACTS:
U.E. Foerster, a salesman and collector of
Insular Drug for the Islands of Panay and Negros.
was instructed to take the checks for the drug
company to the Iloilo branch of the Chartered Bank
of India, Australia and China and deposit the
amounts to the credit of the drug company.
Instead, Foerster deposited the checks, including
those of four people, with the Iloilo branch of the
PNB, in his personal account. The amount of the
checks were subsequently withdrawn by U. E.,
Foerster and Carmen E. de Foerster (the former’s
wife).
The drug company investigated the transactions of
Foerster. Upon the discovery of anomalies, Foerster
committed suicide.
The bank argued that the fraud was not proved,
and that Foerster had implied authority to indorse
all checks made out in the name of the Insular
Drug Co.
ISSUE:
WON PNB is liable. YES.
RULING:
As to the first argument, no such special
defense was relied upon by the bank in the trial
court.
