Thursday, November 21, 2013

Molasky Enterprises, Inc. v. Carps, Inc. case brief

Molasky Enterprises, Inc. v. Carps, Inc. case brief summary
615 S.W.2d 83 (1981)


CASE SYNOPSIS
Plaintiff second endorser on a promissory note appealed an order of the Circuit Court of St. Louis County (Missouri), which entered judgment in favor of defendant corporation in the second endorser's action to recover amounts he paid on the note.

CASE FACTS
The first endorsers on the note were two brothers who were members of the board of directors and officers of the corporation. The note secured a personal loan that the brothers told the lender was to be used to pay off certain of the corporation's debt. Although the lender asked for a corporate resolution authorizing the loan application, none was ever provided. The lender did require an additional endorser. When the brother's defaulted on the note, the second endorser paid the balance due and sought recovery from the corporation as first endorser. The second endorser contended that the brother's actions bound the corporation and established its liability under the note.

DISCUSSION

  • The court affirmed holding that the actions of the brothers were not sufficient to bind the corporation to the note. 
  • The brothers had no actual authority to pledge the assets of the company themselves and they never obtained a corporate resolution authorizing the loan. 
  • Further, the evidence did not support a finding of apparent authority, ratification, or estoppel such as would bind the corporation to the note.

CONCLUSION
The court affirmed the judgment of the trial court.

Recommended Supplements for Corporations and Business Associations Law

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