Company mortgage invalid where execution breached articles and no special authority or ratification was proved.

A mortgage-bond executed on behalf of a company was held unauthorised because the articles required deeds to be signed by the managing director, secretary and working director, yet the instrument was signed only by the secretary and working director, and no special authority to borrow was proved. The company was therefore not bound by the execution. The protection available to outsiders dealing with a company did not assist the mortgagee, as a party is taken to have notice of the Companies Act and the articles of association, and the defect would have been revealed on proper inspection. Ratification and equitable charge were not entertained because they were not tried as issues. The mortgage-bond could not be enforced against the company or its property.

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Issues: Whether the mortgage-bond was validly executed so as to bind the company, and whether the mortgagee could nevertheless enforce it on principles of apparent authority, constructive notice, or subsequent ratification.

Analysis: The articles required deeds and similar instruments to be signed by the managing director, secretary, and working director. The instrument was signed only by the secretary and working director, and the alleged special authority to borrow was not proved. In the absence of compliance with the articles, the execution was not authorised by the company. The principle protecting outsiders dealing with a company could not assist the plaintiff because a person dealing with the company is taken to have notice of the Companies Act and the articles of association, and the defect would have been apparent on proper inspection. The attempted alternative grounds of ratification and equitable charge were not tried as issues and were not entertained.

Conclusion: The mortgage-bond was invalid and could not be enforced against the company or its property; the appeal therefore failed.

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