Petersen v. Elholm, 130 Wis. 1.

was apparently fully tried out, and upon very familiar principles it must now be considered as having been litigated by

consent.

The finding is challenged as unsupported by the evidence and this contention requires some consideration. It is undisputed that in February, 1902, Petersen and Elholm between them owned the entire stock of the corporation; that Elholm desired to get out of the business; that two persons, Hettrich and Jensen, were considering the advisability of buying two thirds of the business and operating the mill with Petersen; that in view of this contemplated purchase Petersen, Elholm, and one Owens (who was interested as the owner of a large mortgage on the plant) met at the Commercial Bank in Racine with the books of the company and spent considerable time in examination of the books and negotiation as to the terms upon which Elholm was to withdraw; that upon the books it appeared that Elholm owed the concern about $1,200, and that as a result of the meeting Elholm agreed to assume and pay $1,500 of the debts of the corporation (which he subsequently did pay), and surren dered his half of the stock on the condition insisted on by the defendant that whatever was received from Hettrich and Jensen was to go into the treasury of the corporation. It further appears that at the conclusion of this arrangement Elholm stepped out of the business, leaving Petersen and Owens in charge, and that a few days later Hettrich and Jensen purchased two thirds of the business, paying $5,000 therefor into the corporate treasury, and that the business was reorganized and the plaintiff Petersen became secretary of the corporation and superintendent of the business. As to the purpose of this meeting Petersen testified on crossexamination:

"Elholm left the corporation in February, 1902. I cannot tell the date exactly, probably around the 7th or the 8th. Had a settlement with him at the Commercial Bank. Car

Petersen v. Elholm, 130 Wis. 1.

penter and Owens and myself were there. I brought him to the bank to settle. I found him at the office of Mitchell & Lewis Co. I think it was the 7th of February, 1902."

Owens testified:

"We met at the bank to get Elholm, so as to have the stock transferred, and have some understanding so we could run the concern, and some understanding about his account of $1,200 that appeared on the books. We wanted it settled up. We wanted him to pay what he owed the corporation. There was a great deal of talk there. He agreed to pay $1,500. After that three of us went down to the mill and had the stock transferred. Petersen was at the bank."

The defendant, after relating the transaction in detail, testified:

"My assuming these accounts and transferring my stock was to release me from liability, to pay up all irregularities and differences that existed between Petersen or the company and myself, and was considered on that day by Petersen and myself."

Mr. Carpenter, the cashier of the bank where the conference was held, testified: "They arrived at some settlement whereby Elholm was to pay about $1,500."

In view of these facts we find no difficulty in holding that the transaction in question was intended to be a full settlement of the defendant's liabilities to Petersen or the corporation, and was, in fact, a settlement of such liabilities so far as Petersen, acting individually, could make a settlement. But he could not in his capacity as stockholder alone settle and discharge corporate claims. Although he and Elholm owned all the stock they did not thereby become the corporation, and their mere individual action would not bind it. Button v. Hoffman, 61 Wis. 20, 20 N. W. 667; 2 Cook, Corp. (5th ed.) § 709. However, Petersen was more than a mere stockholder: he was president of the company and superintendent of its business from the start, and it appears that he bought all the merchandise, figured out the contracts,

Petersen v. Elholm, 130 Wis. 1.

collected most of the money, and in fact managed the business, leaving the office duties to Elholm. It might be forcibly contended that these broad powers carried with them the power to make the settlement in question, but we are not compelled to rest our conclusions on any doubtful proposition. It is well understood that where a corporation, with notice of the facts, acquiesces in an unauthorized contract made on its behalf and accepts the benefits thereof it becomes bound by the contract. 2 Cook, Corp., supra. Upon the reorganization of the business of the corporation after Hettrich and Jensen came in, Petersen was elected secretary of the corporation and superintendent of its business. He knew all the facts, and his knowledge was notice to the corporation of which he was the executive officer. Brothers v. Bank of Kaukauna, 84 Wis. 381, 54 N. W. 786.

But it further appears that Hettrich and Jensen, who became respectively president and treasurer of the corporation after their purchase, also had knowledge of the material facts of the transaction. The books of the corporation were offered in evidence, and upon the daybook which was then in use and continued to be used afterwards, under date of February 11th, appears an entry signed by the defendant, by which it appears that in consideration of a release from liability he assumed and agreed to pay $1,500 of the corporate liabilities. The corporation records also show that Hettrich and Jensen were present at the last meeting of the corporation before reorganization when defendant surrendered all his stock for cancellation, hence they must have known this fact and also the fact that the $5,000 paid by them for their two-thirds interest, of which $3,750 would ordinarily go to defendant for his half of the stock, was all paid into the corporate treasury and actually used to discharge the mortgage indebtedness of the corporation. This would seem to be plenary proof of knowledge on the part of all the officers as well as all the stockholders of the reorganized corporation

Petersen v. Elholm, 130 Wis. 1.

of the material facts of the settlement with the defendant. Acquiescence in that settlement and acceptance of the benefits thereby secured is undeniable, and it follows that the corporation is now bound thereby.

No further questions are necessary to be considered in this aspect of the case.

By the Court.-Judgment affirmed.

The appellant moved for a rehearing.

The following opinion was filed December 4, 1906:

WINSLOW, J. It is stated in the opinion that, while no defense of settlement was pleaded, the evidence of settlement was received without objection on that ground, and hence that the question must be considered as having been litigated by consent. This statement is challenged by the appellant in his brief upon the motion for rehearing, and it is confidently claimed that the evidence tending to show the settlement at the bank was duly objected to on the trial, as well as the evidence tending to show a prior settlement made with Dunphy. In view of this challenge we have again carefully examined the record to ascertain whether our statement is erroneous. From this examination it appears that the facts concerning the settlement with Dunphy and the transfer of his stock to Elholm were testified to by Mr. Rowlands as a witness for the plaintiff before any testimony for the defense was put in, and the written proposition, acceptance, and release were at the same time offered and received in evidence. The plaintiff, Petersen, also testified directly to the fact of the settlement with Dunphy upon his direct examination, but said that the business was conducted with Elholm. This certainly opened up the whole subject of the Dunphy settlement to explanation by the defendant.

As to the settlement with the defendant, not only did the plaintiff testify upon cross-examination, without objection,

Weidner v. Standard Life and Accident Ins. Co. 130 Wis. 10.

that he had a settlement with Elholm at the bank about February 7th, but, on the case being turned over to the defendant, Elholm testified at length to the fact of settlement and all its terms without objection that it was not pleaded, or any other objection going to the merits. It is true that at the close of Elholm's direct examination, after the testimony of settlement had all gone in, the following entry appears in the bill:

"Plaintiff's counsel reserving in due time and form all right of objection to any portion of the direct examination of defendant on the ground of competency and materiality."

We cannot regard this general notation, made after the reception of the testimony, as fairly apprising either court or counsel of the objection now claimed. Furthermore, the testimony of Mr. Carpenter, the cashier of the bank, tending to show the settlement, was received without objection on this ground. So far as the record before us is concerned (and we can inquire no further) the statement made in the opinion. is fully supported.

By the Court.-Motion for rehearing denied with $10 costs.

WEIDNER, Appellant, vs. STANDARD LIFE AND ACCIDENT INSURANCE COMPANY OF DETROIT, MICHIGAN, Respondent.

October 11-December 4, 1906.

Accord and satisfaction: Part payment of an admitted debt: Consideration: Evidence: Accident insurance: Liability: Questions for jury: Robbery.

1. The part payment of an admitted debt is no consideration for an agreement not to enforce the collection of the balance of the debt.

2. In an action on an insurance policy the answer admitted that a certain sum was due plaintiff under a clause in the policy, de