PUA CASIM & CO., PLAINTIFF AND APPELLEE, VS. W. NEUMARK & CO., DEFENDANT AND APPELLANT.

OSTRAND, J.:

This action is brought to recover the sum of P15,000 with interest and costs.
It is alleged in the complaint that on or about January 20, 1922, the defendant
corporation represented by its president and principal stockholder, W. Neumark,
borrowed from the plaintiff the sum of P15,000 which was delivered to the said
defendant by means of a check drawn in favor of the defendant against the
plaintiff’s account in the China Banking Corporation, which check was deposited
with the Bank of the Philippine Islands and the amount of it credited to the
defendant on its current account.

The defendant’s answer is a general denial together with a special defense to
the effect that W. Neumark had never been authorized by the defendant
corporation to borrow money for its account from the plaintiff to the amount of
P15,000 and that said defendant has never received nor made use of the sum
alleged to have been so borrowed. The court below rendered a judgment in favor
of the plaintiff for the sum of P15,000 with legal interest from October 30,
1922, and with the costs. From this judgment the defendant appeals to this
court.

The appellant presents two assignments of errors, viz.: (1) That the court
erred in holding the defendant responsible for the payment of the money borrowed
by Neumark, and (2) that the court erred in giving the plaintiff judgment for
P15,000 with interest and costs.

The first assignment of error cannot be sustained. The evidence shows that
Neumark was the principal stockholder, the president and the general business
manager of the defendant corporation. On behalf of the corporation he solicited
a loan from the plaintiff and, as alleged in the complaint, was given the
plaintiffs check in favor of the corporation for the sum of P15,000, which check
was endorsed by him in his capacity as president of the corporation and
deposited to the corporation’s account. It may be true that a large part of the
amount so deposited was diverted by Neumark to his own use, but that does not
alter the fact that the money was borrowed for the corporation and was placed in
its’ possession.

It is conceded that Neumark was not expressly authorized by the board of
directors to borrow the money in question and the general rule is that a
business manager or other officer of a corporation has no implied power to
borrow money on its behalf. But much depends upon the circumstances of each
particular case and the rule stated is subject to important exceptions. Thus,
where a general business manager of a corporation is clothed with apparent
authority to borrow and the amount borrowed does not exceed the ordinary
requirements of the business, it has often been held that the authority is
implied and that the corporation is bound. (G. V. B. Mining Co. vs. First
National Bank of Hailey, 95 Fed., 23; Matson vs. Alley, 141 Ill., 284; Topeka
Primary Association University of Builders vs. Martin, 39 Kan., 750; Africa vs.
Duluth News Tribune Co., 82 Minn., 283; Rosemond vs. Northwestern Autographic
Register Co., 62 Minn., 374; Helena National Bank vs. Rocky Mountain Telegraph
Co., 20 Mont., 379; Fensterer vs. Pressure lighting Co., 149 N. Y. S., 49; Clark
vs. Freeport Clays etc., Co., 52 Pa. Super., 1.)

In the present case there are ample indications in the record that the
corporation was in need of funds to carry on its business and it does not appear
that the amount borrowed was disproportionate to the volume of the business. As
president, general manager and principal stock holder Neumark appeared, in a
sense, to be almost the whole corporation and was clothed with apparent
authority to do everything necessary for the conduct of its business. In these
circumstances he must be held to have been impliedly authorized to borrow the
money here in question.

The second assignment of error is well taken; the plaintiff admits that he
has received P5,000 from the corporation on account of the loan.

The judgment appealed from is therefore modified by reducing the amount of
the recovery to the sum of P10,000, with interest at the legal rate from October
30, 1922, and with the costs. So ordered.

Johnson, Street, Malcolm, Avanceña, Villamor, and Romualdez,
JJ., concur.