Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/237

 PART II.] ACTS WITHIN THE CORPORATE POWERS. [§ 254. § 253. So far as to the effect of the non-observance of for- malities when the person dealing with the corporate agent does not know of them, or reasonably assumes tracting If, however, a P art y has * notice of that they have been complied with. person actually knows or is affected with notice of the formal- formalities, and his contract with the corporate rep- quired, resentative is in a form indicating their non-observ- ance, he acts at his peril, 1 and may be unable to hold the cor- poration, unless the formality required was trivial or had been systematically disregarded in the course of the corporate busi- ness. 2 For the corporation may rightfully plead that it is not bound to a party contracting with its agent knowing of the neglect of formalities which it or the legislature has established for its protection. Accordingly, if the contracting party is in any way affected with knowledge that the contract to bind the company should be signed by certain officers, unless it is signed by those officers the corporation will not be bound. 3 § 254. On the other hand, if by a reasonably liberal construc- tion in favor of a person who acts in good faith, although affected with notice of the provisions requiring the formalities, those provisions may be construed to be inapplicable to the contract on which his rights are based, courts will gladly avoid holding the contract invalid. 4 Moreover, if the variance be- tween the manner prescribed and the manner in which the con- 1 See Dana v. Bank of St. Paul, 4 Minn. 385 ; Hackensack Water Co. v. De Kay, supra, § 251. 2 Leonard v. American Ins. Co., 97 Ind. 299 ; Bulkley v. Derby Fishing Co., 2 Conn. 252 ; Kilgore v. Bnlkley, 14 Conn. 362 ; compare In re Royal British Bank, Walton's Case, 26 L. J. Ch. 545. 3 Head v. Providence Ins. Co., 2 Cranch, 127 ; Holbrook v. Fauquier, etc., Turnpike Co., 3 Cranch, Cir. Ct., 425 ; Henning v. United States Ins. Co., 47 Mo. 425 ; Salem Bank v. (Gloucester Bank, 17 Mass. 1 ; Badger v. American Popular Ins. Co., 103 Mass. 244 ; Beatty v. Marine Ins. Co., 2 Johns. 109. Compare Barnes v. Ontario Bank, 19 N. Y. 152 ; Saf- ford v. Wyckoff, 4 Hill, 446 ; Melvin v. Lisenby, 72 111. 63 ; Dana v. Bank of St. Paul, 4 Minn. 385 ; and cases in the last note. 4 See Trustees' First Baptist Church v. Brooklyn Fire Ins. Co., 19 N". Y. 305; Relief Fire Ins. Co. v. Shaw, 94 U. S. 574; New England Ins. Co. v. De Wolf, 8 Pick. 56; Dana v. Bank of St. Paul, 4 Minn. 385; Insurance Co. v. Colt, 20 Wall. 560; Sanborn v. Fireman's Ins. Co., 16 Gray, 448; Mechanics' Bank v. Bank of Colum- bia, 5 Wheat. 326; Rockwell v. Elk- horn Bank, 13 Wis. 653. 217